Document ID: SEC-2010-0357-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2010-03-09T05:00Z

[Federal Register: March 9, 2010 (Volume 75, Number 45)]
[Notices]               
[Page 10858-10860]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09mr10-105]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61627; File No. SR-NYSEAMEX-2010-11]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Amex LLC Amending NYSE 
Amex Rule 476 To Add a Provision for Violations Relating To Failing to 
Observe High Standards of Commercial Honor and Just and Equitable 
Principles of Trade

March 2, 2010.
    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 February 9, 2010, NYSE Amex LLC (the ``Exchange'' or 
``NYSE Amex'') 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 amend NYSE Amex Rule 476 to add a 
provision for violations relating to failing to observe high standards 
of commercial honor and just and equitable principles of trade. 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
    In this filing, NYSE Amex LLC (``NYSE Amex'' or the ``Exchange'') 
proposes to amend NYSE Amex Rule 476 to add a provision for violations 
relating to failing to observe high standards of commercial honor and 
just and equitable principles of trade. The Commission previously 
approved an amendment to NYSE Amex Rule 476 to delete subsection 
(a)(6), which concerned just and equitable principles of trade.\4\ The 
rationale for that deletion was because NYSE Amex adopted an equities 
rule--NYSE Amex Equities Rule 2010--that provided for the same content 
as the prior version of Rule 476(a)(6) and that harmonized the Exchange 
rule with the New York Stock

[[Page 10859]]

Exchange LLC (``NYSE'') and Financial Industry Regulatory Authority, 
Inc. (``FINRA'') standards for just and equitable principles of trade.
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    \4\ See Securities Exchange [sic] Release No. 59975 (May 27, 
2009) [sic], 74 FR 26449 (June 2, 2009) (SR-NYSEAmex-2009-26) [sic].
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    However, in deleting Rule 476(a)(6) as part of the NYSE Amex 
equities harmonization process, the Exchange inadvertently deleted this 
standard for its options trading platform. Accordingly, the Exchange 
proposes to amend Rule 476 to add subsection (a)(6) to cover the same 
content that was previously deleted. To ensure that the standards for 
just and equitable principles of trade are consistent across the 
Exchange, NYSE, and FINRA, the Exchange proposes to adopt rule text 
that mirrors the standard set forth in NYSE Amex Equities Rule 2010, 
which is virtually identical to NYSE Rule 2010 and FINRA Rule 2010. As 
proposed, NYSE Amex Rule 476(a)(6) would read as follows: ``failing to 
observe high standards of commercial honor and just and equitable 
principles of trade.''
    In adopting this revised rule text for Rule 476(a)(6), the Exchange 
would also be able to bring a charge relating to failing to observe 
high standards of commercial honor and just and equitable principles of 
trade against not only members and member organizations, but also 
against principal executives, approved persons, and employees of member 
organizations. This proposal is consistent with FINRA Rule 2010 because 
under FINRA Rule 0140, persons associated with a FINRA member have the 
same duties and obligations as a member under FINRA rules. Accordingly, 
FINRA has the authority to charge an associated person with a violation 
of Rule 2010. By adding this standard to Rule 476(a)(6), the Exchange 
will similarly have the authority to charge an employee of a member 
organization with a violation relating to failing to observe high 
standards of commercial honor and just and equitable principles of 
trade.
    To ensure full harmonization, the Exchange also proposes amending 
Rule 476(a)(5) and deleting the phrase ``fraud or fraudulent acts'' and 
replacing it with the rule text from NYSE Amex Equities Rule 2020 to 
provide that the Exchange can bring charges against an employee of a 
member organization for effecting any transaction in, or inducing the 
purchase or sale of, any security by means of any manipulative, 
deceptive or other fraudulent device or contrivance.
    Finally, the Exchange proposes fixing a typographical error and 
replacing the term ``principle'' with ``principal'' in connection with 
the rule text relating to ``principal executives.''
2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Act \5\ which requires the rules of an exchange 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 
proposed rule change also is designed to support the principles of 
Section 11A(a)(1) \6\ of the Act in that it seeks to assure fair 
competition among brokers and dealers and among exchange markets. The 
Exchange believes this rule proposal ensures that it will be enabled to 
charge, as necessary, when a member, member organization, principal 
executive, approved person, or employee of a member organization fails 
to observe high standards of commercial honor and just and equitable 
principles of trade, as contemplated by the Act, or effects any 
transaction in, or induces the purchase or sale of, any security by 
means of any manipulative, deceptive or other fraudulent device or 
contrivance.
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    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78k-1(a)(1).
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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 \7\ and Rule 19b-4(f)(6) thereunder.\8\ 
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 and Rule 19b-
4(f)(6)(iii) thereunder.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6)\9\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\10\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Commission notes that 
the proposed rule change is restoring rule text that was inadvertently 
deleted and is providing the Exchange with the authority to bring 
charges against an employee of a member organization under paragraphs 
(a)(5) and (a)(6) of NYSEAmex Rule 476. The proposed rule change does 
not raise any new substantive issues and will harmonize NYSE, NYSEAmex 
and Finra's rules in this regard. For these reasons, the Commission 
believes that the waiver of the 30-day operative date is consistent 
with the protection of investors and the public interest.\11\
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    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires that a self-regulatory organization submit to the 
Commission written notice of its intent to file the proposed rule 
change, along with a brief description and test of the proposed rule 
change, at least 5 business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Commission notes that the Exchange has satisfied the 
five-day pre-filing notice requirement.
    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition and capital formation. 15 U.S.C. 
78c(f).
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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.

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

[[Page 10860]]

     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEAMEX-2010-11 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-2010-11. 
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,\12\ 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 Section, 100 F Street, NE., Washington, DC 20549-1090. Copies 
of the filing will also be available for inspection and copying at the 
NYSE's principal office and on its Internet Web site at http://
www.nyse.com. 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-2010-11 and should be submitted on or before March 30, 2010.
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    \12\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov/.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Florence E. Harmon,
Deputy Secretary.
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    \13\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2010-4911 Filed 3-8-10; 8:45 am]
BILLING CODE 8011-01-P