Document ID: SEC-2009-1145-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2009-08-11T04:00Z

[Federal Register: August 11, 2009 (Volume 74, Number 153)]
[Notices]               
[Page 40247-40249]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11au09-127]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60426; File No. SR-NYSE-2009-74]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC 
Amending NYSE Rule 103B to Modify the Composition of the Exchange 
Selection Panel; and Prohibit Any Ex Parte Communications During and 
Regarding the Selection Process Between the DMM Units and the 
Individuals Serving on the Exchange Selection Panel

August 4, 2009.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on July 27, 2009, 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 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 Rule 103B (``Security 
Allocation and Reallocation'') to: (1) Modify the composition of the 
Exchange Selection Panel; and 2) prohibit any ex parte communications 
during and regarding the selection process between the DMM units and 
the individuals serving on the Exchange Selection Panel. The text of 
the proposed rule change is available at the Exchange, the Commission's 
Public Reference Room, and http://www.nyse.com.\4\
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    \4\ The Commission notes that the Exchange inadvertently marked 
certain portions of the rule text incorrectly. Specifically, in 
paragraph (III)(B)(1) of Rule 103B the Exchange failed to indicate 
the deletion of a comma after ``his or her designee''and failed to 
mark ``; (b)'' as new text. In addition, the Exchange marked as new 
text one letter in a sentence being deleted from paragraph 
(III)(B)(1) of Rule 103B.
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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 New York Stock Exchange LLC (``NYSE'' or ``Exchange'') proposes 
to amend NYSE Rule 103B (``Security Allocation and Reallocation'') to: 
(1) Modify the composition of the Exchange Selection Panel; and (2) 
prohibit any ex parte communications during and regarding the selection 
process between

[[Page 40248]]

the DMM units and the individuals serving on the Exchange Selection 
Panel.
    The Exchange notes that parallel changes are proposed to be made to 
the rules of NYSE Amex LLC (formerly the American Stock Exchange).\5\
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    \5\ See SR-NYSEAmex-2009-49.
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Background
    Currently, pursuant to NYSE Rule 103B, an issuer may select the DMM 
unit that will be assigned its security or delegate the selection of 
the DMM unit to the Exchange. If the issuer authorizes the Exchange to 
select the DMM unit to trade its security, an Exchange Selection Panel 
(the ``ESP'' or the ``Panel'') is convened to select the DMM unit based 
on a review of all information that would be available to the issuer. 
The Panel is comprised of three members of the Exchange's Senior 
Management, as designated by the Chief Executive Officer (``CEO'') of 
the Exchange or his or her designee, one non-DMM Executive Floor 
Governor (``EFG'') and two non-DMM Floor Governors (``FGs''). The non-
DMM EFG and non-DMM FGs are designated on a rotating basis. The Panel's 
decision is made by majority vote. In the event of a tie, the CEO of 
the Exchange or his/her designee makes the final decision. The Exchange 
then informs the issuer of the DMM unit selected by the Panel.
Proposed Amendments
    The Exchange proposes to amend NYSE Rule 103B to modify the 
composition of the Panel in order to ensure consistent Floor 
participation in the selection process and minimize delays due to 
scheduling conflicts.
    The current composition of the Panel has proven difficult when 
scheduling the required participants within five days of the issuer's 
request. The Exchange therefore seeks to amend NYSE Rule 103B to modify 
the representation on the Panel to include: (1) At least one member of 
the Exchange's Senior Management; (2) any combination of two Exchange 
Senior Management or Exchange Floor Operations Staff, to be designated 
by the Executive Vice-President of Exchange Floor Operations or his/her 
designee; and (3) any combination of three non-DMM EFGs or non-DMM FGs 
for a total of six members.
    Finally, to reinforce the integrity and objectivity of the ESP 
selection process, the Exchange proposes to amend NYSE Rule 103B to 
explicitly prohibit any communications regarding the selection process 
between the Panelists and the DMM units. The Exchange proposes to have 
communication regarding the selection process cease from the time the 
issuer delegates the selection responsibility to the Exchange until the 
Panel selects the DMM unit to trade the issuer's security.
2. Statutory Basis
    The basis under the Act for the proposed rule change is the 
requirement under Section 6(b)(5),\6\ which requires that an exchange 
have rules that are designed 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. The Exchange believes that 
the proposed amendments are consistent with these objectives. The 
amendments sought herein seek to streamline and facilitate the process 
of assigning securities to DMM units by allowing for more flexibility 
in composing the Panel which ultimately facilitates and expedites the 
allocation and ultimately the trading of securities on the Exchange. 
Furthermore, the proposed amendment to prohibit communications between 
the Panel and the DMM units preserves the integrity and impartiality of 
the allocation process and therefore protects the public interest.
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    \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. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, 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) \7\ of the Act and Rule 19b-4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with 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 fulfilled this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \9\ normally 
may not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \10\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange requests that the 
Commission waive the 30-day operative delay, as specified in Rule 19b-
4(f)(6)(iii),\11\ which would make the rule change operative upon 
filing. The Commission believes that waiving the 30-day operative delay 
is consistent with the protection of investors and the public interest 
because such waiver will allow the Exchange to immediately streamline 
the process of allocating securities to DMM units. In addition, by 
prohibiting communications regarding the selection process between 
members of the Panel and DMM units, the Exchange will be able to 
immediately reinforce impartiality and fairness during the selection 
process.\12\ Accordingly, the Commission designates the proposed rule 
change operative upon filing with the Commission.
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    \9\ Id.
    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ Id.
    \12\ For purposes only of waiving the operative delay for this 
proposal, 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 such 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:

[[Page 40249]]

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-2009-74 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-2009-74. 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, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of the filing will also be available for 
inspection and copying at the principal office of the self-regulatory 
organization. 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-2009-74 and should be submitted on or before September 1, 2009.

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-19119 Filed 8-10-09; 8:45 am]

BILLING CODE 8010-01-P