Document ID: SEC-2010-0298-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2010-02-26T05:00Z

[Federal Register: February 26, 2010 (Volume 75, Number 38)]
[Notices]               
[Page 9009-9010]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26fe10-135]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61549; File No. SR-NYSE-2010-09]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Extending the Time Allowed To Temporarily Suspend Certain NYSE 
Requirements Relating to the Closing of Securities on the Exchange 
Which Currently Operates as a Pilot Pursuant to Former NYSE Rule 
123C(8)(a)(1) Currently NYSE Rule 123C(9)(a)(1)

February 19, 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 12, 2010,\4\ 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.
    \4\ The Exchange attempted to file this proposed rule change 
prior to the close of business on February 12, 2010, but experienced 
delays with the electronic filing system which caused this filing to 
be received after the close of business and to be assigned a filing 
date of February 16, 2010, the next business day. Because the delay 
was caused by technical issues, the Commission deems the official 
filing date of this proposed rule change to be February 12, 2010.
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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 the time allowed to temporarily 
suspend certain NYSE requirements relating to the closing of securities 
on the Exchange which currently operates as a pilot pursuant to former 
NYSE Rule 123C(8)(a)(1) currently NYSE Rule 123C(9)(a)(1). 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
    NYSE Rule 123C(9)(a)(1), formerly NYSE Rule 123C(8)(a)(1), allows 
the Exchange to temporarily suspend certain rule requirements at the 
close when extreme order imbalances may cause significant dislocation 
to the closing price. The rule has operated on a pilot basis since 
April 2009 (``Extreme Order Imbalance Pilot'' or Pilot).\5\ Through 
this filing, [sic] proposes to temporarily extend the time allowed to 
temporarily suspend certain NYSE requirements relating to the closing 
of securities on the Exchange which currently operates as a pilot 
pursuant to 123C(9)(a)(1).
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    \5\ See Securities Exchange Act Release No. 59755 (April 13, 
2009), 74 FR 18009 (April 20, 2009) (SR-NYSE-2009-15).
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Background
    Pursuant to NYSE Rule 123C(9)(a)(1), the Exchange may suspend NYSE 
Rules 52 (Hours of Operation) to resolve an extreme order imbalance 
that may result in a price dislocation at the close as a result of an 
order entered into Exchange systems, or represented to a DMM orally at 
or near the close.\6\
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    \6\ See NYSE Rule 123C(9)(a)(1).
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    The provisions of NYSE Rule 123C(9)(a)(1) operate as the Extreme 
Order Imbalance Pilot. The Exchange invokes NYSE Rule 123C(9)(a)(1) to 
attract offsetting interest in those rare circumstances where there 
exists such a large imbalance at the close that a DMM is unable to 
close the security without significantly dislocating the price. 
Further, pursuant to NYSE Rule 123C(9)(ii) the time to receive such 
off-setting interest must not be later than 4:30 p.m. (or 30 minutes 
after the scheduled close in the case of an earlier close).
Proposal To Extend the Time To Receive Off-Setting Interest in 
Berkshire Hathaway A Security on February 12, 2010
    On February 12, 2009, significant corporate actions in Berkshire 
Hathaway Class A and B securities significantly increased the trading 
volume in those securities. It was determined based on the fact that 
there is a relation between the price of the two securities and the 
fact that there was significantly greater liquidity in the Class B 
shares than the Class A shares that the most efficient manner to effect 
the close of trading in those securities was to effect the closing 
transaction in Berkshire Hathaway Class B securities first.
    The significant volume resulted in [sic] Class B security closing 
transaction be [sic] completed at 4:19 p.m. Thereafter the DMM 
immediately assessed the shares eligible to be executed in the closing 
transaction for the Class A securities. At 4:27 p.m. when the imbalance 
was determined the Exchange sought off-setting interest; however, the 
remaining 3 minutes was not a sufficient amount of time to receive and 
effect the closing transaction in the Class A security.
    As to effect a fair and orderly close, the closing transaction for 
the Class A security occurred after 4:30 p.m.\7\
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    \7\ Specifically, the order acceptance cut-off time period 
designated by the Exchange was 4:35 p.m. Thereafter, once such 
offsetting interest from both on-Floor and off-Floor participants 
was received, the closing transaction for the Class A security was 
completed at approximately 4:41 p.m. See E-mail from Deanna G. W. 
Logan, Managing Director, NYSE Regulation, to David Liu, Assistant 
Director, et al., Division of Trading and Markets, Commission, dated 
February 16, 2010.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Securities Exchange Act of 1934

[[Page 9010]]

(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. The Exchange 
believes the proposal facilitates the fair and orderly execution of the 
closing transactions in an unusual market situation and thus ultimately 
served to protect investors and the public interest.
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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

    Because the foregoing proposed rule change: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) by its terms, does not become operative for 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, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the self-regulatory organization to submit to 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 this requirement.
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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
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2010-09 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-2010-09. 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 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-
NYSE-2010-09 and should be submitted on or before March 19, 2010.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-3946 Filed 2-25-10; 8:45 am]
BILLING CODE 8011-01-P