Document ID: SEC-2009-0965-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change to Amend the Scope of the Exchange's Prior Approval to Receive Inbound Routes from Archipelago Securities LLC ("ArcaSec"), an Affiliated Member
Posted Date: 2009-07-14T04:00Z

[Federal Register Volume 74, Number 133 (Tuesday, July 14, 2009)]
[Notices]
[Pages 34065-34067]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-16548]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60255; File No. SR-NYSE-2009-58]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change to Amend the Scope of the Exchange's Prior Approval to 
Receive Inbound Routes from Archipelago Securities LLC (``ArcaSec''), 
an Affiliated Member

July 7, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 23, 2009, the New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons, and is approving the 
proposal on an accelerated basis.
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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 the scope of the Exchange's prior 
approval to receive inbound routes of PO Plus Orders from Archipelago 
Securities LLC (``ArcaSec''), an NYSE affiliated member. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    ArcaSec is the approved outbound order routing facility of the 
NYSE, NYSE Arca Inc. (``NYSE Arca'') and NYSE Amex LLC.\3\ In this 
context, the Exchange has been previously authorized, on a pilot basis, 
to receive inbound PO Plus Orders from ArcaSec, acting in its capacity 
as the outbound order routing facility for NYSE Arca.\4\ The Exchange 
hereby proposes that, in addition to PO Plus Orders, the Commission 
authorize the NYSE to receive all NYSE Arca order types approved or 
implemented on or after the date of approval of this proposal. The 
Exchange does not propose any further changes to its authorization to 
receive inbound routes from ArcaSec or to the term of the pilot period. 
All existing conditions currently in place with respect to ArcaSec 
routing orders to the NYSE, in its capacity as an outbound order 
routing facility for NYSE Arca, will continue to apply. The Exchange 
believes that this proposal, if approved, will authorize the Exchange 
to receive any NYSE Arca order types approved subsequent to the 
approval of this proposal and going forward through the end of the 
pilot period.
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    \3\ See Securities Exchange Act Release No. 52497 (September 22, 
2005), 70 FR 56949 (September 29, 2005) (SR-PCX-2005-90); see also 
Securities Exchange Act Release No. 44983 (October 25, 2001), 66 FR 
55225 (November 1, 2001) (SR-PCX-00-25); see also Securities 
Exchange Act Release No. 58681 (September 29, 2008), 73 FR 58285 
(October 6, 2008) (order approving NYSEArca-2008-90). See Securities 
Exchange Act Release No. 55590 (April 5, 2007), 72 FR 18707 (April 
13, 2007) (notice of immediate effectiveness of SR-NYSE-2007-29); 
see also Securities Exchange Act Release No. 58680 (September 29, 
2008), 73 FR 58283 (October 6, 2008) (order approving SR-NYSE-2008-
76). See Securities Exchange Act Release No. 59009 (November 24, 
2008), 73 FR 73363 (December 2, 2008) (SR-NYSEALTR-2008-07).
    \4\ See Securities Exchange Act Release No. 58680 (September 29, 
2008), 73 FR 58283 (October 6, 2008) (order approving SR-NYSE-2008-
76). ArcaSec had been previously authorized to deliver inbound 
routes to the NYSE, acting in its capacity as an order routing 
facility for NYSE Arca. See supra note 3.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \5\ of the 
Securities Exchange Act of 1934 (the ``Act''), in general, and furthers 
the objectives of Section 6(b)(5),\6\ in particular, in that it is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster

[[Page 34066]]

cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanisms of a free and open market and a national market system. 
The Exchange believes authorizing the Exchange to receive inbound 
routes, via ArcaSec, of all NYSE Arca order types approved or 
implemented on or after the date of approval of this proposal reflects 
the Exchange's ongoing efforts to effectively address the concerns 
previously identified by the Commission regarding the potential for 
informational advantages favoring ArcaSec vis-[agrave]-vis other non-
affiliated NYSE members.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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. 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-2009-58 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-2009-58. 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-2009-58 and should be submitted on or before August 4, 2009.

IV. Commission's Findings and Order Granting Accelerated Approval of a 
Proposed Rule Change

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\7\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\8\ which requires, among 
other things, that the rules of a national securities exchange be 
designed to prevent fraudulent and manipulative acts and practices; to 
promote just and equitable principles of trade; to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities; 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; and are not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \7\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
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    In the past, the Commission has expressed concern that the 
affiliation of an exchange with one of its members raises potential 
conflicts of interest, and the potential for unfair competitive 
advantage.\9\Although the Commission continues to be concerned about 
potential unfair competition and conflicts of interest between an 
exchange's self-regulatory obligations and its commercial interests 
when the exchange is affiliated with one of its members, the Commission 
believes that it is consistent with the Act to permit ArcaSec to 
provide inbound routing to the NYSE from NYSE Arca for all NYSE Arca 
order types approved or implemented on or after the date of this 
approval order on a pilot basis and subject to certain conditions. The 
Commission notes that this proposal seeks to expand a previously 
approved pilot program that allows the NYSE to receive PO Plus Orders 
from NYSE Arca via ArcaSec \10\ to include any additional order types 
approved or implemented on or after the date of this approval order. 
The Commission also notes that all existing conditions currently in 
place with respect to ArcaSec routing orders to the NYSE, in its 
capacity as an outbound routing facility for NYSE Arca, will continue 
to apply.\11\
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    \9\ See, e.g., Securities Exchange Act Release Nos. 54170 (July 
18, 2006), 71 FR 42149 (July 25, 2006) (SR-NASDAQ-2006-006) (order 
approving Nasdaq's proposal to adopt Nasdaq Rule 2140, restricting 
affiliations between Nasdaq and its members); and 53382 (February 
27, 2006), 71 FR 11251 (March 6, 2006) (SR-NYSE-2005-77) (order 
approving the combination of the New York Stock Exchange, Inc. and 
Archipelago Holdings) at 11255; see also Securities Exchange Act 
Release No. 58681, supra note 3.
    \10\ See Securities Exchange Act Release No. 58680, supra note 
4.
    \11\ See id at notes 16-21 and accompanying text. ArcaSec's 
routing of orders to the NYSE, in its capacity as an outbound 
routing facility for NYSE Arca with respect to order types in effect 
prior to the establishment of the pilot program for PO Plus Orders, 
is not subject to the pilot program.
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    The NYSE has asked the Commission to accelerate approval of the 
proposed rule change. The NYSE notes that the proposed rule change 
reflects the Exchange's efforts to effectively include within the pilot 
program authorizing the NYSE to receive certain inbound orders routed 
via ArcaSec, all NYSE Arca order types approved or implemented on or 
after the date of approval of this proposal.\12\ NYSE also states that 
accelerated approval will authorize the Exchange to receive such order 
types through the end of the pilot period, including certain pending 
NYSE Arca proposed order types.\13\ The Commission finds good cause for 
approving the proposed rule change before the thirtieth day after the 
date of publication of notice of filing thereof in the Federal 
Register. The Commission notes that the protections currently in place 
with respect to ArcaSec routing orders to the NYSE, in its capacity as 
an outbound routing facility for NYSE

[[Page 34067]]

Arca, which are designed to address conflicts of interest concerns 
identified by the Commission in connection with inbound routing of 
orders to an exchange when the routing broker-dealer is an affiliate of 
the exchange, will continue to apply and were previously approved by 
the Commission.\14\ The Commission also notes that no comments were 
received in connection with SR-NYSE-2008-76.\15\ Accordingly, the 
Commission finds good cause, consistent with Section 19(b)(2) of the 
Act,\16\ to approve the proposed rule change on an accelerated basis 
for a pilot period expiring September 29, 2009.
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    \12\ See SR-NYSE-2009-58, Item 7.
    \13\ See id. See also SR-NYSEArca-2009-56.
    \14\ See Securities Exchange Act Release No. 58680, supra note 
4.
    \15\ See id.
    \16\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-NYSE-2009-58) is hereby approved on 
an accelerated basis for a pilot period to expire on September 29, 
2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
 [FR Doc. E9-16548 Filed 7-13-09; 8:45 am]
BILLING CODE 8010-01-P 17 CFR 200.30-3(a)(12).