Document ID: SEC-2009-0397-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Alternext US LLC
Posted Date: 2009-03-24T04:00Z

[Federal Register: March 24, 2009 (Volume 74, Number 55)]
[Notices]               
[Page 12420-12423]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24mr09-139]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59593; File No. NYSEALTR-2009-28]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Alternext U.S. LLC 
Amending NYSE Alternext Rules To Delete References to Specific Exchange 
Systems and To Remove the Requirement that Opening Transactions Receive 
Specific Designations Pursuant to NYSE Alternext Rules 79A and 115A. 
These Amendments are Proposed To Conform to Amendments Filed by the New 
York Stock Exchange LLC \1\
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    \1\ See SR-NYSE-2009-29, to be filed March 13, 2009.

 March 17, 2009.
    Pursuant to Section 19(b)(1) \2\ of the Securities Exchange Act of 
1934 (the ``Act'') \3\ and Rule 19b-4 thereunder,\4\ notice is hereby 
given that, on March 13, 2009, NYSE Alternext U.S. LLC (the 
``Exchange'' or ``NYSE Alternext'') filed with the Securities and 
Exchange Commission (the ``Commission'') the proposed rule change as 
described in Items I and II, 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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    \2\ 15 U.S.C. 78s(b)(1).
    \3\ 15 U.S.C. 78a.
    \4\ 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 Alternext rules to delete 
references to specific Exchange systems and to remove the requirement 
that opening transactions receive specific designations pursuant to 
NYSE Alternext Rules 79A and 115A.

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
    Through this filing, the Exchange proposes to amend its rule book 
to delete references to specific Exchange systems. The Exchange seeks 
to replace references to ``DOT'', ``SuperDot'', ``Limit Order System'' 
and ``Opening Automated Report Service'' (``OARS'') with ``Exchange 
systems''. In addition, the Exchange seeks to remove the requirement 
that certain opening transactions be designated ``OPD'', ``OPN'' 
pursuant to NYSE Alternext Rule 79A (Miscellaneous Requirements on 
Stock Market Procedures) and Rule 115A (Orders at Opening or in Unusual 
Situations).

I. Background

    As described more fully in a related rule filing,\5\ NYSE Euronext 
acquired The Amex Membership Corporation (``AMC'') pursuant to an 
Agreement and Plan of Merger, dated January 17, 2008 (the ``Merger''). 
In connection with the Merger, the Exchange's predecessor, the American 
Stock Exchange LLC (``Amex''), a subsidiary of AMC, became a subsidiary 
of NYSE Euronext called NYSE Alternext U.S. LLC, and continues to 
operate as a national securities exchange registered under Section 6 of 
the Securities Exchange Act of 1934, as amended (the ``Act'').\6\ The 
effective date of the Merger was October 1, 2008.
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    \5\ See Securities Exchange Act Release No. 58673 (September 29, 
2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-2008-60 and SR-Amex 
2008-62) (approving the Merger).
    \6\ 15 U.S.C. 78f.
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    In connection with the Merger, on December 1, 2008, the Exchange 
relocated all equities trading conducted on the Exchange legacy trading 
systems and facilities located at 86 Trinity Place, New York, New York, 
to trading systems and facilities located at 11 Wall Street, New York, 
New York (the ``Equities Relocation''). The Exchange's equity trading 
systems and facilities at 11 Wall Street (the ``NYSE Alternext Trading 
Systems'') are operated by the NYSE on behalf of the Exchange.\7\
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    \7\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63) (approving 
the Equities Relocation).
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    As part of the Equities Relocation, NYSE Alternext adopted NYSE 
Rules 1-1004, subject to such changes as necessary to apply the Rules 
to the Exchange, as the NYSE Alternext Equities Rules to govern trading 
on the

[[Page 12421]]

NYSE Alternext Trading Systems.\8\ The NYSE Alternext Equities Rules, 
which became operative on December 1, 2008, are substantially identical 
to the current NYSE Rules 1-1004 and the Exchange continues to update 
the NYSE Alternext Equities Rules as necessary to conform with rule 
changes to corresponding NYSE Rules filed by the NYSE.
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    \8\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63) (approving 
the Equities Relocation); Securities Exchange Act Release No. 58833 
(October 22, 2008), 73 FR 64642 (October 30, 2008) (SR-NYSE-2008-
106) and Securities Exchange Act Release No. 58839 (October 23, 
2008), 73 FR 64645 (October 30, 2008) (SR-NYSEALTR-2008-03) 
(together, approving the Bonds Relocation); Securities Exchange Act 
Release No. 59022 (November 26, 2008), 73 FR 73683 (December 3, 
2008) (SR-NYSEALTR-2008-10) (adopting amendments to NYSE Alternext 
Equities Rules to track changes to corresponding NYSE Rules); 
Securities Exchange Act Release No. 59027 (November 28, 2008), 73 FR 
73681 (December 3, 2008) (SR-NYSEALTR-2008-11) (adopting amendments 
to Rule 62--NYSE Alternext Equities to track changes to 
corresponding NYSE Rule 62).
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    On March 1, 1976, the NYSE commenced the operation of its 
Designated Order Turnaround (``DOT'') system. It was re-designated 
``SuperDot'' (or sometimes cited as ``SuperDOT'') in 1984. Today, 
SuperDot[supreg] is an electronic order-routing system used by NYSE and 
NYSE Alternext member organizations to send market and limit orders 
directly to the trading post where the security is traded. The system 
provides members and member organizations the ability to enter and 
manage their order flow on the NYSE and the Exchange electronically. 
After the orders have been executed, SuperDot uses the same electronic 
circuit to send post-trade reports back to member firms.
    At one time, the NYSE's Limit Order System electronically files 
orders to be executed when and if the specific limit price of an order 
is reached and electronically updates the Display Book. Good 'til 
Cancelled orders not executed on the day of submission are 
automatically stored in this system until executed or cancelled.
    When first introduced on the NYSE in 1980,\9\ OARS was designed to 
facilitate more efficient and accurate processing of orders received by 
the NYSE prior to the opening, a critical point in the trading day. It 
provided automation of certain clerical functions carried out at the 
trading post, issued reports on executions and substantially reduced 
the number of potential unmatched trades since processing was done 
electronically.
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    \9\ See Securities Exchange Act Release No. 16649 (March 13, 
1980) 45 FR 18541 approving SR-NYSE-80-09 and Securities Exchange 
Act Release No. 17132 (September 8, 1980) 45 FR 60526 (September 12, 
1980), approving SR-NYSE-80-25.
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    OARS accepts member organizations' pre-opening market orders for 
execution at the opening. OARS automatically pairs buy and sell orders 
and presents the imbalance to the DMM up to the time of the opening to 
assist the DMM in determining the opening price. Once that price is 
determined and transmitted by the DMM, the OARS system assigns the 
price to the orders it holds and issues reports back to the entering 
firms and brokers immediately.

Opening Report ``OPD'' Opened Designation

    NYSE Alternext Rule 79A.20 requires a Designated Market Maker to 
obtain prior Floor Official approval if a security is going to open at 
one or more dollars away from the closing price at the Exchange when 
the closing price was under $20 a share, or two dollars or more away 
from the closing price at the Exchange when the closing price was $20 
per share or more. Under (c) of Rule 79A.20, when such a transaction is 
an opening trade, the symbol ``OPD'', which means opened, will appear 
next to the transaction when published to the Consolidated Tape.
    The ``OPD'' designation traces back to when executions were 
manually entered to be reported to the Consolidated Tape. The ``OPD'' 
designation served two functions. First, because getting Floor Official 
approval required time, securities that were opening at one or more 
dollars away from the closing price usually had delayed openings. The 
``OPD'' designation provided notice that the stock had in fact 
commenced trading. In addition, ``OPD'' provided a validation to the 
individual charged with manually entering the opening transaction 
information that the price associated with the opening transaction 
being reported was valid as the transaction would be a dollar or more 
away from the closing price.
    NYSE Alternext Rule 115A.30 provides that orders stored in OARS 
will receive ``OPN'' or ``such other universal contra as the Exchange 
may designate'' to identify that the trade took place in Exchange 
systems at the opening. ``OPN'' is used as an omnibus account 
designation to identify market orders executed through OARS to the 
member or member organization receiving the report of the execution of 
the trade.

Proposed Amendments

Exchange Systems

    The NYSE, and therefore NYSE Alternext, is enhancing its systems to 
create a strong platform for technological growth that offers its 
customers the most comprehensive set of trading technology solutions to 
meet their needs and expectations. In order to attain this goal, the 
NYSE is continually upgrading its systems that accept, manage and 
report orders. In this process, legacy systems that once performed the 
functions governed by certain NYSE and NYSE Alternext Rules may be 
upgraded or replaced in their entirety. In order to keep pace with the 
enhancements to its technology, the Exchange seeks to replace 
references to specific systems that perform a function and replace it 
with the phrase ``Exchange systems''.
    The Exchange therefore proposes to amend NYSE Alternext Rules 123C 
(Market on The Close Policy And Expiration Procedures), 123D (Openings 
and Halts in Trading), 130 (Overnight Comparison of Exchange 
Transactions) and 132B (Order Tracking Requirements) to replace any 
references to ``Designated Order Turnaround'', ``Limit Order System'', 
``DOT'', ``SuperDot'' or ``SuperDOT'' with ``Exchange systems''.
    The OARS system functioning will be carried out through similar 
functioning in the Display Book[supreg],\10\ and as a result, there 
will no longer be a separate system for processing openings. As a 
result, the Exchange seeks to remove the references to ``Opening 
Automated Report Service'' from .30 in the Supplementary Material to 
NYSE Alternext Rule 91 (Taking or Supplying Securities Named in Order), 
from various references in .30 of NYSE Alternext Rule 115A (Orders at 
Opening or in Unusual Situations) and in .10 under Supplementary 
Material to Rule 134 (Differences and Omissions--Cleared Transactions). 
The Exchange seeks to insert the phrase ``Exchange systems'' in NYSE 
Alternext Rules 91.10, 115A.30 and 134 to replace the references to the 
``Opening Automated Report Service'' or ``the Service''. In addition, 
the Exchange proposes to substitute the phrase ``securities on the 
Exchange'' and similar wording to replace the phrase ``designated 
stock'', ``designated stocks'' or ``stocks''. In practice, the instant 
rules apply to all instruments traded on the Exchange, which include 
structured products such as capital trusts and warrants. As such,

[[Page 12422]]

the broader term ``securities'' more accurately reflects the types of 
instruments traded on the Exchange than the narrower term ``stock''. 
Finally, the Exchange proposes to remove the specific references to 
``OPN and OARS'' as contras in NYSE Alternext Rule 115A and proposes to 
add language to the Rule to indicate that the designation by the 
Exchange of universal contras for orders stored in Exchange systems 
will not be deemed inconsistent with NYSE Alternext Rules 121.10 and 
138. Both these rules allow that a substitute name may be used with 
respect to trade reports and the use of universal contras designated by 
the Exchange is deemed consistent with those requirements.
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    \10\ Display Book[supreg] is an order management and execution 
facility that receives and displays orders to the DMM and provides a 
mechanism to execute and report transactions and publish the results 
to the Consolidated Tape. In addition, the Display Book is connected 
to a variety of other Exchange systems for the purposes of 
comparison, surveillance, and reporting information to customers and 
other market data and national market systems.
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``OPD'' and ``OPN'' Designations

    These enhancements to NYSE systems have also negated the need for 
the ``OPD'' and ``OPN'' designations. Currently NYSE systems process 
orders, allocate the executed shares to the various participants, and 
publish reports of executions automatically. Given this change from how 
interest was processed in the manual environment, ``OPD'' no longer 
serves the purpose of validating the transaction price and is therefore 
no longer necessary, as the opening price is systemically validated. As 
such, the Exchange seeks through this filing to eliminate the 
requirement pursuant to NYSE Alternext Rule 79A.20(c) that opening 
transactions at one or more dollars away from the closing price ``be 
accompanied when published on tape by the symbol ``OPD''. In addition, 
as explained above, the Exchange also seeks to remove the reference to 
``OPN'' in NYSE Alternext Rule 115A since, with the transference of the 
functions of OARS to the NYSE Display Book, the universal contra of 
``OPN'' will no longer be used.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirement under Section 6(b)(5) \11\ of the Act that an 
Exchange have rules that are designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
of a free and open market and national market system, and, in general, 
to protect investors and the public interest. The Exchange believes 
that the rescission of the references to outdated systems and processes 
promotes just and equitable principles of trade and protects investors 
and the public interest because it allows the Exchange to upgrade its 
systems in a timely manner thus providing customers the most 
comprehensive and all-encompassing set of trading technology solutions 
and mechanisms for efficient executions.
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    \11\ 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 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) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\
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    \12\15 U.S.C. 78s(b)(3)(A).
    \13\17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing.\14\ However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Exchange requested that the Commission waive 
the 30-day operative delay.
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    \14\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the self-regulatory organization to give the 
Commission 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. NYSE Alternext has satisfied this requirement.
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. By 
waiving the operative delay, the proposed rule change may take effect 
on or about March 16, 2009, when the Exchange expects to install these 
technological changes. A waiver of the 30-day operative delay will also 
allow timely removal of outdated language in Exchange rules and avoid 
any potential confusion, and it will ensure that Exchange rule text is 
more accurate. For these reasons, the Commission designates the 
proposed rule change as operative upon filing.\15\
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    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's effect 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 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.\16\
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    \16\ 15 U.S.C. 78s(b)(3)(C).
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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 NYSEALTR-2009-28 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 NYSEALTR-2009-28. 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

[[Page 12423]]

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 NYSEALTR-2009-28 and should be 
submitted on or before April 14, 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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-6405 Filed 3-23-09; 8:45 am]

BILLING CODE 8010-01-P