Document ID: SEC-2010-1965-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2010-12-21T05:00Z

[Federal Register Volume 75, Number 244 (Tuesday, December 21, 2010)]
[Notices]
[Pages 80101-80102]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-31928]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63538; File No. SR-NYSE-2010-75]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Rule 123C To Clarify That Exchange Systems Enforce Rule 123C 
With Respect to Market At-The-Close and Limit At-The-Close Order Entry 
After 3:45 p.m.

December 14, 2010.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on December 6, 2010, 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\ 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 amend Rule 123C to clarify that Exchange 
systems enforce Rule 123C with respect to Market At-The-Close (``MOC'') 
and Limit At-The-Close (``LOC'') order entry after 3:45 p.m. The text 
of the proposed rule change is available at the Exchange, the 
Commission's Public Reference Room, and http://www.nyse.com.

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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule change is to amend Rule 123C to 
clarify that Exchange systems enforce Rule 123C with respect to MOC \3\ 
and LOC \4\ order entry after 3:45 p.m.
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    \3\ A MOC order is a market order in a security that, by its 
terms, is to be executed in its entirety at the closing price. If 
not executed due to tick restrictions or a trading halt, the order 
will be cancelled. See Rule 13 (Definitions of Orders).
    \4\ A LOC order is a limit order in a security that is entered 
for execution at the closing price of the security on the Exchange 
provided that the closing price is at or within the specified limit. 
If not executed due to a trading halt or because, by its terms it is 
not marketable at the closing price, the order will be cancelled. 
See Rule 13 (Definitions of Orders).
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    Rule 123C governs certain closing procedures on the Exchange, 
including MOC, LOC and CO order entry, cancellation of such orders and 
the calculation and publication of imbalances. In particular, Rule 
123C(2)(b) currently provides that MOC/LOC interest may be entered 
after 3:45 p.m. only to offset a Mandatory MOC/LOC Imbalance 
Publication. The rule therefore suggests that members or member 
organizations entering MOC or LOC orders are actively responsible for 
compliance therewith (e.g., ``orders may be entered''). However, 
Exchange systems enforce compliance with this rule pursuant to system 
functionality that allows only the entry of offsetting MOC/LOC interest 
after 3:45 p.m. and blocks the entry of all MOC/LOC orders that would 
join the same side of a published MOC/LOC imbalance and the entry of 
MOC/LOC orders after 3:45 p.m. for securities for which there has not 
been a Mandatory MOC/LOC Imbalance Publication.\5\ Exchange systems 
also enforce compliance with this rule pursuant to system functionality 
that allows or blocks, depending upon the circumstances, MOC/LOC order 
entry in the event of a Trading Halt.
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    \5\ See Information Memos 09-12 and 10-11, respectively.
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    The Exchange proposes to amend Rule 123C(2) and (3) generally to 
clarify that Exchange systems enforce compliance with the rules, and 
therefore clarify that members and member organizations are not 
responsible for ensuring compliance with this aspect of the rule.
    The Exchange proposes additional clean-up amendments to Rule 123C. 
Specifically, the Exchange proposes to delete certain text in Rule

[[Page 80102]]

123C(2)(b)(ii) \6\ and 123C(2)(c)(iii) \7\ pertaining to a ``no 
imbalance'' notification after dissemination of an Informational 
Imbalance as well as the text of current Rule 123C(2)(b)(iii), because 
these provisions are no longer necessary due to the system-enforced 
compliance with MOC/LOC order entry. In addition, the Exchange proposes 
to amend Rule 123C(3)(c) to clarify that Exchange systems will reject 
cancellations of MOC, LOC and CO orders after 3:58 p.m. and to add a 
reference to Rule 123C(9), which pertains to alternative procedures in 
the case of extreme order imbalances at the close.
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    \6\ See e-mail from Clare F. Saperstein, Vice President, 
Regulatory Policy and Management, NYSE Regulation, Inc., to Nathan 
Saunders, Special Counsel, Division of Trading and Markets, 
Commission, dated December 10, 2010 (amending the proposed rule 
change by replacing the reference to ``Rule 123C(2) and (3)'' with 
``Rule 123C(2)(b)(ii) and 123C(2)(c)(iii)'').
    \7\ See id.
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    Because the Exchange previously disclosed this system functionality 
to member organizations, the Exchange believes that this rule proposal 
would not require technical programming and/or modification by members 
or member organizations.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\9\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, 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. Specifically, 
the changes proposed herein would reflect that Exchange systems enforce 
compliance with Rule 123C(2) and (3) and therefore clarify that 
Exchange members and member organizations are not responsible for 
ensuring such compliance.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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 foregoing proposed rule change will take effect upon filing 
with the Commission pursuant to Section 19(b)(3)(A)(i) of the Act \10\ 
and Rule 19b-4(f)(1) thereunder,\11\ because it constitutes a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule. Specifically, the 
change proposed herein would reflect that Exchange systems enforce 
compliance with Rule 123C(2) and (3) and therefore clarify that 
Exchange members and member organizations are not responsible for 
ensuring such compliance.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(i).
    \11\ 17 CFR 240.19b-4(f)(1).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such 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-2010-75 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2010-75. 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, 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-2010-75 and should be 
submitted on or before January 11, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31928 Filed 12-20-10; 8:45 am]
BILLING CODE 8011-01-P