Document ID: SEC-2008-1672-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2008-12-15T05:00Z

[Federal Register: December 15, 2008 (Volume 73, Number 241)]
[Notices]               
[Page 76081-76082]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15de08-108]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59069; File No. SR-NYSE-2008-124]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC 
Extending for Three Months to March 31, 2009 the Moratorium Related to 
the Qualification and Registration of Registered Competitive Market 
Makers Pursuant to NYSE Rule 107A and Competitive Traders Pursuant to 
NYSE Rule 110

December 8, 2008.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on December 2, 2008, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend for three months to March 31, 2009 
the moratorium related to the qualification and registration of 
Registered Competitive Market Makers (``RCMMs'') pursuant to NYSE Rule 
107A and Competitive Traders (``CTs'') pursuant to NYSE Rule 110. The 
text of the proposed rule change is available at www.nyse.com, the 
NYSE, and the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

 1. Purpose
    The Exchange proposes to extend for three months to March 31, 2009 
the moratorium related to the qualification and registration of RCMMs 
pursuant to NYSE Rule 107A and CTs pursuant to NYSE Rule 110.
    On September 22, 2005, the Exchange filed SR-NYSE-2005-63 \4\ with 
the Securities and Exchange Commission (``Commission'') proposing to 
implement a moratorium on the qualification and registration of new 
RCMMS and CTs (``Moratorium''). The purpose of the Moratorium was to 
allow the Exchange an opportunity to review the viability of RCMMs and 
CTs in the NYSE HYBRID MARKET\SM\ (``Hybrid Market'').\5\
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    \4\ See Securities Exchange Act Release No. 52648 (October 21, 
2005), 70 FR 62155 (October 28, 2005) (SR-NYSE-2005-63).
    \5\ See Securities Exchange Act Release No. 53539 (March 22, 
2006), 71 FR 16353 (March 31, 2006) (SR-NYSE-2004-05) (establishing 
the NYSE HYBRID MARKET\SM\).
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    During each phase of the Hybrid Market, the NYSE implemented new 
system functionality that generated additional data to review. As a 
result, the Exchange was unable to make an informed decision as to the 
viability of RCMMs and CTs in the Hybrid Market. The phasing in 
implementation of the Hybrid Market required the Exchange to extend the 
Moratorium an additional six times over a twenty-four (24) month 
period.\6\
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    \6\ See e-mail from Jennifer Kim, Counsel, NYSE to Sara Gillis, 
Special Counsel, Division of Trading and Markets, Commission, dated 
December 4, 2008; See Securities Exchange Act Release Numbers 54140 
(July 13, 2006), 71 FR 41491 (July 21, 2006) (SR-NYSE-2006-48); 
54985 (December 21, 2006), 72 FR 171 (January 3, 2007) (SR-NYSE-
2006-113); 55992 (June 29, 2007), 72 FR 37289 (July 9, 2007) (SR-
NYSE-2007-57); 56556 (September 27, 2007), 72 FR 56421 (October 3, 
2007) (SR-NYSE-2007-86); 57072 (December 31, 2007), 73 FR 1252 
(January 7, 2008) (SR-NYSE-2007-125); 57601 (April 2, 2008), 73 FR 
19123 (April 8, 2008) (SR-NYSE-2008-22).
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    On October 24, 2008, the Commission approved the Exchange's new 
market model filing (``New Model'').\7\ The New Model filing: (i) 
Provided market participants with additional abilities to post hidden 
liquidity on Exchange systems; (ii) created a Designated Market Maker 
(``DMM''), and phased out the NYSE specialist; and (iii) enhanced the 
speed of execution through technological enhancements and a reduction 
in message traffic between Exchange systems and its DMMs. In light of 
the implementation of the New Model, the Exchange requested an 
extension of the Moratorium to evaluate the viability of the RCMMs and 
CTs in the proposed New Model two times over a six (6) month period.\8\
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    \7\ See Securities Exchange Act Release No. 58845 (October 24, 
2008), 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46).
    \8\ See e-mail from Jennifer Kim, Counsel, NYSE to Sara Gillis, 
Special Counsel, Division of Trading and Markets, Commission, dated 
December 4, 2008; See Securities Exchange Act Release Numbers 58033 
(June 26, 2008), 73 FR 38265 (July 3, 2008) (SR-NYSE-2008-49); 58713 
(October 2, 2008), 73 FR 59024 (October 8, 2008) (SR-NYSE-2008-96).
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    The Exchange is currently implementing the second phase (``Phase 
2'') of technology required for the operation of the New Model. Upon 
completion of the installation of the Phase 2 technology,\9\ the New 
Model will operate as a pilot scheduled to end on October 1, 2009. 
Accordingly, the Exchange seeks to have the ability to review data that 
will be generated as a

[[Page 76082]]

part of the complete operation of the New Model related to RCMM and CT 
trading. Once Phase 2 implementation is complete, the NYSE will have 
the fuller data set to decide what roles, if any, RCMMs and CTs should 
perform at the NYSE. Thereafter, the Exchange will formally submit a 
proposal to the Commission outlining the roles, if any, these classes 
of traders have in the Exchange's New Model market. The Exchange is 
therefore proposing to extend the Moratorium as amended \10\ for an 
additional three (3) months to March 31, 2009 in order to finalize its 
determination as to the roles of RCMMs and CTs at the NYSE.
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    \9\ Phase 2 is scheduled to be completed no later than January 
2, 2009.
    \10\ See Securities Exchange Act Release No. 53549 (March 24, 
2006), 71 FR 16388 (March 31, 2006) (SR-NYSE-2006-11) (making 
certain amendments to the Moratorium).
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    The Exchange will issue an Information Memo announcing the 
extension of the Moratorium.
2. Statutory Basis
    The basis under the Act \11\ for this proposed rule change is the 
requirement under Section 6(b)(5) \12\ that an exchange have rules that 
are designed to promote just and equitable principles of trade, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system and, in general, to protect 
investors and the public interest. The Exchange believes that the 
instant filing is consistent with these principles in that the review 
of data associated with RCMM and CT trading in light of the significant 
developments in its technology and New Model will allow the Exchange to 
make an informed decision as to the viability of RCMMs and CTs in this 
evolving marketplace and may potentially remove impediments to and 
better improve the mechanism of a free and open market.
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    \11\ 15 U.S.C. 78a.
    \12\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) of the Act.\13\ The Exchange asserts that the 
proposed rule change (i) will not significantly affect the protection 
of investors or the public interest, (ii) will not impose any 
significant burden on competition, and (iii) by its terms, will not 
become operative for 30 days after the date of this filing, or such 
shorter time as the Commission may designate, if consistent with the 
protection of investors and the public interest; provided that the 
self-regulatory organization has given the Commission written notice of 
its intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule change, 
or such shorter time as designated by the Commission. The Exchange has 
satisfied the requirement that it give the Commission written notice of 
its intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule change, 
or such shorter time as designated by the Commission.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate the rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2008-124 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2008-124. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room, on official business 
days between the hours of 10 a.m. and 3 p.m. Copies of the filing also 
will be available for inspection and copying at the principal office of 
the Exchange. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSE-2008-124 and should be submitted on or before January 5, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-29554 Filed 12-12-08; 8:45 am]

BILLING CODE 8011-01-P