Document ID: SEC-2010-2011-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2010-12-28T05:00Z

[Federal Register Volume 75, Number 248 (Tuesday, December 28, 2010)]
[Notices]
[Pages 81685-81687]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-32607]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63584; File No. SR-NYSEArca-2010-88]

Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Amending 
Various NYSE Arca Equities Rules To Harmonize Them With Financial 
Industry Regulatory Authority Rules

December 21, 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 December 13, 2010, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') 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 various NYSE Arca Equities rules in 
order to (1) harmonize them with Financial Industry Regulatory 
Authority (``FINRA'') rules and (2) make certain administrative changes 
that include, but are not limited to, correcting spelling

[[Page 81686]]

errors and eliminating confusing or duplicative language and 
unnecessary references to terms or systems that are now obsolete. 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 rule filing is (1) to make minor substantive 
amendments to NYSE Arca Equities Rule 2.16 in order to harmonize it 
with Article V, Section 3 and Article IV, Section 1(c) of FINRA's By-
Laws and (2) to make certain administrative changes to various NYSE 
Arca Equities rules in order to remove confusing or duplicative 
language and unnecessary references to terms or systems that are now 
obsolete. By making such administrative changes, the Exchange is not 
changing or altering any obligations, rights, policies, or practices 
enumerated within its rules.
    NYSE Arca Equities Rule 2.16(b) requires an ETP Holder to 
electronically file amendments to any document in connection with an 
application for an ETP within ten business days of the occurrence 
requiring the amendment. Article IV, Section 1(c) of FINRA's By-Laws 
permits thirty days for such filing. Similarly, NYSE Arca Equities Rule 
2.16(c) requires an ETP Holder to electronically file within ten 
business days the Uniform Termination Notice for Securities Industry 
Registration (Form U-5) with FINRA's Web CRD when a person associated 
with the ETP Holder terminates his or her affiliation with the ETP 
Holder. Article V, Section 3 of FINRA's By-Laws permits thirty days for 
such filing. Accordingly, the Exchange proposes to extend the ten 
business day requirement in the above rules to thirty days in order to 
harmonize with FINRA's By-Laws.
Administrative Changes
    In July, 2007, the NASD and certain departments within NYSE 
Regulation were consolidated into FINRA. However, some NYSE Arca 
Equities rules still incorrectly reference the NASD. Where appropriate, 
the Exchange proposes to replace references to NASD with FINRA. The 
following NYSE Arca Equities rules will reflect this change: Rule 1.1, 
Rule 2.3, Rule 6.18, Rule 9.13, and Rule 12. These changes are 
administrative in nature and do not impose any new regulatory 
requirements on ETP Holders or other market participants on NYSE Arca 
Equities.
    The SEC's Regulation NMS, which became effective in August, 2005, 
was designed to modernize and strengthen the national market system for 
equities and replace the outdated Intermarket Trading System (``ITS''). 
However, several NYSE Arca Equities rules still reference ITS. 
Accordingly, the Exchange proposes to eliminate all outdated references 
to ITS. The following NYSE Arca Equities rules will reflect this 
change: Rule 1.1, Rule 3.5, Rule 6.8, Rule 6.10, Rule 6.12, Rule 7.31, 
Rule 7.37, Rule 9.14, and Rule 10.12. Additionally, before Regulation 
NMS and before Nasdaq became a national securities exchange, the NBBO 
price protection provision set forth in NYSE Arca Equities Rule 7.37 
did not apply to orders in Nasdaq securities. The Exchange proposes to 
eliminate all language in NYSE Arca Equities Rule 7.31 that states the 
NBBO price protection provision set forth in Rule 7.37 will not apply 
to orders in Nasdaq securities. Finally, because no securities are 
trade-through exempt under Regulation NMS, the Exchange proposes to 
eliminate all references to trade-through exempt securities in NYSE 
Arca Equities Rule 7.31.
    NYSE Arca Equities Rule 1.1(z) provides that ``[t]he term `Nasdaq 
Market Maker' shall mean (1) a Nasdaq market maker as defined in NASD 
Rule 4200(a)(22), as amended from time to time, or (2) an electronic 
communications network (``ECN'').'' On August 1, 2006, NASDAQ ceased 
operations as an ECN and began operations as a national securities 
exchange, rendering the ``Nasdaq Market Maker'' concept obsolete. As a 
result, NASD Rule 4200(a)(22) was replaced by FINRA Rule 6320A(a)(4), 
which does not contain any reference to ``Nasdaq Market Makers.'' 
Therefore, the Exchange proposes to eliminate existing NYSE Arca 
Equities Rule 1.1(z) in order to remove outdated and unnecessary 
references to terms and systems that are now obsolete. Similarly, 
because Rule 7.18(a) is concerned only with access to the NYSE Arca 
Marketplace by ``Nasdaq Market Makers,'' the Exchange proposes to 
eliminate Rule 7.18(a) and change the title of NYSE Arca Equities Rule 
7.18 from ``Trading in Nasdaq Securities'' to ``UTP Regulatory Halts.'' 
Such change in title is appropriate because the only remaining rule 
text under Rule 7.18, which is currently contained in Rule 7.18(b), 
will provide that the Exchange will halt trading in a Nasdaq security 
when the UTP Listing Market for such security determines that a UTP 
Regulatory Halt is appropriate. Finally, because the title of Nasdaq's 
Unlisted Trading Privileges Plan no longer includes the term ``OTC,'' 
the Exchange proposes to remove ``OTC'' from the following NYSE Arca 
Equities Rule 1.1(hh)-(kk) and Rule 7.18.
    Stop Orders and Stop Limit Orders are no longer a valid order types 
on the NYSE Arca Marketplace. Accordingly, the Exchange proposes to 
eliminate all outdated references to Stop Orders and Stop Limit Orders. 
The following NYSE Arca Equities rules will reflect this change: Rule 
1.1, Rule 7.31, Rule 7.34, Rule 7.35, Rule 7.37, Rule 7.39, and Rule 
7.63.
    Because Discretion Limit Orders may be entered in any security, the 
Exchange proposes to eliminate the language ``A Discretionary Order may 
be designated as a Discretion Limit Order for Nasdaq securities only'' 
from NYSE Arca Equities Rule 7.31(h)(2)(B).
    The Exchange proposes to amend NYSE Arca Equities Rule 7.7 to 
correct a spelling error.
    NYSE Arca Equities Rules 2.24 and 9.17 both require ETP Holders to 
maintain books and records pursuant to SEC Rules 17a-3 and 17a-4. 
Because Rule 9.17 also requires that ETP Holders maintain books and 
records as prescribed by the rules and regulations of other Self 
Regulatory Organizations and other governmental bodies, and because the 
Exchange only requires one such rule, the Exchange proposes to replace 
the text of Rule 2.24 with the text of Rule 9.17 and eliminate Rule 
9.17.
    NYSE Arca Equities Rule 7.17(b) requires that all bids and offers 
made shall be in accordance with the provisions of Rule 11Ac1-1 of the 
Securities Exchange Act of 1934. When Regulation NMS became effective 
in August, 2005, Rule 11Ac1-1 was re-designated as Rule 602 of 
Regulation NMS. Accordingly, the Exchange proposes to replace the 
reference to Rule

[[Page 81687]]

11Ac1-1 within Rule 7.17(b) with Rule 602.
2. Statutory Basis
    The proposed rule changes are consistent with Section 6(b) \4\ of 
the Securities Exchange Act of 1934 (the ``Act''), in general, and 
further the objectives of Section 6(b)(5),\5\ in particular. By 
amending various NYSE Arca Equities rules in order to harmonize them 
with FINRA rules and federal rules and to eliminate confusing or 
duplicative language and unnecessary references to terms or systems 
that are now obsolete, the proposed rule changes are 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 facilitating transactions in 
securities, and to remove impediments to and perfect the mechanisms of 
a free and open market and a national market system.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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 \6\ and Rule 19b-4(f)(6) thereunder.\7\ 
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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    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \8\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\9\ 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 has 
determined that waiving the 30-day operative delay of the Exchange's 
proposal is consistent with the protection of investors and the public 
interest because such waiver will allow the Exchange to promptly 
harmonize its rules with FINRA rules and and to correct non-substantive 
changes, thereby avoiding further potential confusion and ensuring that 
the rule text of the Exchange is accurate.\10\ Therefore, the 
Commission designates the proposed rule change to be operative upon 
filing.
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    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 17 CFR 240.19b-4(f)(6)(iii).
    \10\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 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 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-NYSEArca-2010-88 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-NYSEArca-2010-88. 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-NYSEArca-2010-88 and should be submitted on or before 
January 18, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-32607 Filed 12-27-10; 8:45 am]
BILLING CODE 8011-01-P