Document ID: SEC-2009-0716-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Revising Rules Governing the Use of Telephones on the Options Trading Floor
Posted Date: 2009-05-29T04:00Z

[Federal Register Volume 74, Number 102 (Friday, May 29, 2009)]
[Notices]
[Pages 25779-25782]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-12448]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59939; File No. SR-NYSEAmex-2009-17]

Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 
Thereto Revising Rules Governing the Use of Telephones on the Options 
Trading Floor

May 19, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on May 4, 2009, NYSE Amex LLC (``NYSE Amex'' or the ``Exchange'') 
filed with the

[[Page 25780]]

Securities and Exchange Commission (the ``Commission'') the proposed 
rule change as described in Items I, II, and III below, which Items 
have been prepared by the Exchange. The Exchange filed the proposed 
rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 
19b-4(f)(6) thereunder,\4\ which renders it effective upon filing with 
the Commission. The Exchange filed Amendment No. 1 to the proposed rule 
change on May 18, 2009.\5\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ Amendment No. 1 amended the Exchange's proposed revision of 
Part 1C(i)(12) of the Supplementary Material to Rule 476A 
(Imposition of Fines for Minor Violations of Rules) to more 
accurately cite Exchange Rule 902NY(i)(1). Amendment No. 1 further 
amended the description of the violation in Part 1C(i)(12) to more 
closely reflect Rule 902NY(i)(1), which prohibits an employee of an 
ATP Holder, as well as an ATP Holder, to employ any alternative 
communication device on the Trading Floor without prior approval of 
the Exchange. In addition, Amendment No. l made corresponding 
changes to the Minor Rule Plan Recommended Fine Schedule also 
contained in Rule 476A.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to (i) eliminate old rules governing 
telephones and hand held devices, (ii) introduce new rules governing 
the use of telephones on the Trading Floor, and (iii) clarify recently 
adopted language regarding the removal of hand held devices from the 
Trading Floor. The text of the proposed rule change is attached as 
Exhibit 5 to the 19b-4 form. A copy of this filing is available on the 
Exchange's Web site at http://www.nyse.com, at the Exchange's principal 
office and at 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 purpose of this filing is to (i) eliminate old rules governing 
telephones, hand held devices, and Floor Wires, (ii) introduce new 
rules governing the use of telephones on the Trading Floor \6\ and 
(iii) clarify recently adopted language regarding the removal of hand 
held devices from the Trading Floor.
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    \6\ NYSE Amex LLC recently relocated its Options Trading Floor 
to 11 Wall Street, New York, New York, effective with the approval 
of SR-NYSEALTR-2008-14. See Securities Exchange Act Release No. 
59472 (February 27, 2009), 74 FR 9843 (March 6, 2009) (notice of 
filing of Amendment No. 1 and order granting accelerated approval of 
the SR-NYSEALTR-2008-14 as modified by Amendment No. 1).
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    The Exchange proposes to delete, from PART II--Rules Principally 
Applicable to Floor Transactions, Section 6--Floor Wires in its 
entirety. This section is obsolete given changes in telecommunications 
devices, changes in market structure, enhanced requirements for the 
systematization of orders, and maintenance of electronic records.
    In its place, the Exchange proposes new Rule 902NY(i), Telephones 
on the Trading Floor. The new Rule is modeled on NYSE Arca Rule 6.2(h), 
although it does not include certain outdated or inapplicable concepts 
of the NYSE Arca Rule.\7\
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    \7\ Certain concepts in NYSE Arca Rule 6.2(h) have no natural 
corollary within NYSE Amex rules, including, for example, the terms 
OTP Firm and trading posts. In the alternative, NYSE Amex rules 
refer to employees of ATP Holders or Trading Zones, respectively--
and such concepts will be so reflected throughout the proposed rule. 
Further, concepts such as Floor Managers or General Access Phones 
are not applicable to NYSE Amex and therefore are not included in 
the proposed NYSE Amex rule.
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    The proposed rule requires all ATP Holders to register with the 
Exchange, prior to use, any telephone to be used on the Trading 
Floor.\8\ At the time of registration, ATP Holder representatives must 
agree that they are aware of and understand the rules governing 
telephones on the Trading Floor.
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    \8\ The Exchange is not proposing to require ATP Holders to 
register by category of user. Such a requirement is inapplicable 
since (i) the proposed rule applies to ATP Holders and all employees 
of ATP Holders, regardless of category and (ii) such a requirement 
was a historical response to capacity limitations (which no longer 
apply) thereby allowing the Exchange to restrict use by certain 
categories of users if capacity issues arose.
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    In addition, the Exchange notes that separate from the registration 
and use of telephones, the Exchange shall retain the authority to 
review and approve, prior to their use, any alternative communication 
device (including but not limited to devices offering capabilities such 
as e-mail, instant messaging, texting, or Internet-supported 
communications). Also, according to proposed Rule 902NY(i)(1): no ATP 
Holder or employee of an ATP Holder, may employ any alternative 
communication device (other than telephones as described herein) on the 
Trading Floor without prior approval of the Exchange.
    The proposed rule specifically prohibits the use of any device to 
maintain an open line of continuous communication that would allow a 
person off the Trading Floor to continuously monitor the activities in 
the Trading Crowd. This prohibition covers intercoms, walkie-talkies 
and any similar devices.\9\
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    \9\ Certain capacity restrictions set forth in NYSE Arca Rule 
6.2(h)(2) are no longer relevant and will not be included in the 
NYSE Amex proposed rule.
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    The proposed rule governs all ATP Holders and employees of ATP 
Holders while on the Floor.\10\ As with NYSE Arca Rule 6.2(h)(3), this 
proposed rule restricts the transmission of quotation information to 
only those quotations that have been publicly disseminated. It requires 
any order that is transmitted over the phone to be immediately recorded 
in the EOC device. It prohibits the receipt of an order over a phone 
when the call is placed from off the Floor into the Trading Crowd. The 
Rule also provides that the Exchange may require the taping of any 
telephone line, and that ATP Holders and their employees agree to 
consent to tape recording of any line.
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    \10\ By applying the proposed rule to ATP Holders and employees 
of ATP Holders, the Exchange is using a term designed to encompass 
the same scope of individuals as the equivalent NYSE Arca rule. In 
doing so, NYSE Amex eliminates the need to specifically reference, 
as NYSE Arca Rule 6.2(h) does, each type of covered employee, such 
as Floor Broker, Market Maker, or Clerk. As a result, NYSE Amex (i) 
collapsed the substantive provisions of NYSE Arca Rule 6.2(h)(4)-(5) 
into proposed Rule 902NY(i)(4) and (ii) has not carried over the 
specific references to Floor Broker Clerks, Stock Execution Clerks 
and Market Maker Clerks set forth in the NYSE Arca Rule. Finally, 
NYSE Arca Rule 6.2(h)(5)(D), regarding Lead Market Makers, is 
entirely inapplicable and therefore not copied into the proposed 
rule.
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    The Exchange also proposes Rule 902(i)(5), Records, in order to 
require the retention of certain records of all telephones and all 
other approved communications devices used to conduct business on the 
Exchange.\11\ NYSE Amex further proposes a retention period of three 
years, the first two years in an accessible place, consistent with the 
retention period of

[[Page 25781]]

Securities and Exchange Commission Rule 17a-4.
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    \11\ This proposed rule is modeled on NYSE Arca Rule 6.2(h)(9).
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    The Exchange further proposes Rule 902(i)(6), Revocation of 
Registration, which establishes the Exchange's authority to deny, limit 
or revoke an ATP Holder's permission to use of any registered telephone 
on the Trading Floor. Although an ATP Holder need only register with 
the Exchange, prior to use, any telephone to be used on the Trading 
Floor, the Exchange retains the right to deny, limit, or revoke an ATP 
Holder's permission. Specifically, according to the proposed rule, the 
Exchange may deny, limit or revoke registration of any telephone 
whenever it determines, in accordance with the procedures set forth in 
Rule 476,\12\ that use of such device is inconsistent with the public 
interest, the protection of investors, or just and equitable principles 
of trade, or such device has been or is being used to facilitate any 
violation of the Securities Exchange Act of 1934, as amended, or rules 
thereunder, or the Exchange rules.
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    \12\ See e-mail from Andrew Stevens, Chief Counsel--U.S. 
Equities & Derivatives, NYSE Euronext, to Gary Rubin, Attorney-
Advisor, Commission, dated May 19, 2009, confirming that the 
reference to Rule 475 in the Purpose section and Exhibit 1 of the 
proposal should be corrected to refer to Rule 476.
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    Finally, similar to NYSE Arca Rule 6.2(h)(10), the Exchange will 
not assume any liability for problems associated with the use of 
telephones or other communication devices.\13\
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    \13\ The Exchange notes that Commentaries .01-.02 and .04 to 
NYSE Arca Rule 6.2 do not apply specifically to subsection (h) and 
therefore are not reflected in the NYSE Amex proposed rule. The 
Exchange also notes that the concept reflected in Commentary .03 to 
NYSE Arca Rule 6.2 is incorporated into NYSE Amex proposed Rule 
902NY(i)(3)(B) and (4)(C).
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    The Exchange proposes changes to Rule 476A (Imposition of Fines for 
Minor Violations of Rules) to replace obsolete references to Exchange 
Rule 220 with accurate references to Exchange Rule 902NY(i). The 
Exchange also proposes adding text designed to specifically address 
violations of Exchange Rule 902NY(i) pertaining to the pre-approval of 
alternative communication devices. Consistent with violations of 
Exchange Rule 902NY(i) regarding an ATP Holder's failure to register 
telephones prior to their use, the Exchange proposes to establish 
first, second, and third level monetary fines of $500.00, $1,000.00, 
and $2,500.00 regarding an ATP Holder's unauthorized use of alternative 
communication devices.
    The Exchange also seeks to clarify recently adopted language in 
Rule 902NY(g) governing the removal of Hand Held Trading Devices from 
the Trading Floor to make it clear that removal of such devices is 
prohibited, that the prohibition extends to any person, including but 
not limited to ATP Holders and ATP Holder employees, and that such 
violation is subject to disciplinary action pursuant to Rules 476 or 
476A.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \14\ of the Act, in general, and furthers the 
objectives of Section 6(b)(5),\15\ in particular, in that it is 
designed to facilitate transactions in securities, to promote just and 
equitable principles of trade, to enhance competition, and to protect 
investors and the public interest, in that it proposes to modernize and 
clarify rules for the use of telephones and other communication devices 
on the Trading Floor.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 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 Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \16\ and Rule 19b-4(f)(6) thereunder.\17\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \18\ and Rule 19b-
4(f)(6)(iii) thereunder.\19\
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    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 pre-filing requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\21\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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.\22\
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    \22\ For purposes of calculating the 60-day abrogation period, 
the Commission considers the proposed rule change to have been filed 
on May 18, 2009, the date the Exchange filed Amendment No. 1.
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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-NYSEAmex-2009-17 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-NYSEAmex-2009-17. 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/

[[Page 25782]]

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 such 
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-NYSEAmex-2009-17 and should be submitted on or before 
June 19, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-12448 Filed 5-28-09; 8:45 am]
BILLING CODE 8010-01-P