Document ID: SEC-2009-1272-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the Risk Management Gateway ("RMG") Service
Posted Date: 2009-09-08T04:00Z

[Federal Register: September 8, 2009 (Volume 74, Number 172)]
[Notices]               
[Page 46275-46277]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08se09-143]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60607; File No. SR-NYSEArca-2009-80]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Establish the 
Risk Management Gateway (``RMG'') Service

September 1, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on August 28, 2009, NYSE Arca, Inc. (``NYSE Arca'' 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to establish its Risk Management Gateway 
(``RMG'') service. A copy of this filing is available on the Exchange's 
Web site at http://www.nyse.com, at the Exchange's principal office and 
at the Commission's Public Reference Room.

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 Exchange proposes to offer, through its wholly-owned subsidiary 
NYSE Euronext Advanced Trading Solutions, Inc., the Risk Management 
Gateway (``RMG'') service as a facility \3\ of the Exchange, to NYSE 
Arca Users.\4\ NYSE Transact Tools, Inc, a division of the NYSE 
Euronext Advanced Trading Solutions Group (``NYXATS''), owns RMG.
---------------------------------------------------------------------------

    \3\ The term ``facility'' as defined in Section 3(a)(2) of the 
Act, as amended, provides, when used with respect to an exchange 
includes its premises, tangible or intangible property whether on 
the premises or not, any rights to the use of such premises or 
property or any service thereof for the purpose of effecting or 
reporting a transaction on an exchange (including, among other 
things, any system of communication to or from the exchange, by 
ticker or otherwise, maintained by or with the consent of the 
exchange), and any right of the exchange to the use of any property 
or service. See 15 U.S.C. 78c(a)(2).
    \4\ See NYSE Arca Equities Rule 1.1(yy).
---------------------------------------------------------------------------

    Traditionally, the customers of an ETP Holder gave orders to the 
ETP Holder who then submitted those orders to the Exchange on behalf of 
the customer. By means of sponsored access, an ETP Holder may allow its 
customers to enter orders directly into the trading systems of the 
Exchange as Sponsored Participants, without the Sponsoring ETP Holder 
acting as an intermediary.\5\
---------------------------------------------------------------------------

    \5\ See NYSE Arca Equities Rule 7.29(b).
---------------------------------------------------------------------------

    To facilitate the ability of Sponsoring ETP Holders to monitor and 
oversee the sponsored access activity of their Sponsored Participants, 
NYXATS will offer an order-verification service to Sponsoring ETP 
Holders. This service will act as a risk filter by causing the orders 
of Sponsored Participants to pass through RMG prior to entering the 
Exchange's trading systems for execution. When a Sponsored 
Participant's order passes through RMG,

[[Page 46276]]

RMG software determines whether the order complies with order criteria 
that the ETP Holder has established for that Sponsored Participant. The 
order criteria pertain to such matters as the size of the order (per 
order or daily quantity limits) or the credit limit (per order or daily 
value) that the Sponsoring ETP Holder has established for the Sponsored 
Participant. Additional risk filters may also be selected by the 
Sponsoring ETP Holder's relating to specific symbols or end users.
    If the order is consistent with the parameters set by the ETP 
Holder, then RMG allows the order to continue along its path to the 
Exchange's trading systems. If the order falls outside of those 
parameters, then RMG returns the order to the Sponsored Participant. 
RMG will only return an order to the Sponsored Participant when the 
order fails to comply with the criteria set by the Sponsoring ETP 
Holder.
    RMG software interacts with orders only prior to the orders' entry 
into the Exchange's trading system for execution. RMG does not have 
order execution or trade reporting capabilities (though it will allow a 
Sponsoring ETP Holder to monitor the orders of its Sponsored 
Participants). RMG maintains a record of all messages relating to 
Sponsored Participants' transactions and supplies a copy of such 
messages to the applicable Sponsoring ETP Holder.
    The Sponsoring ETP Holder, and not RMG, will have full 
responsibility for ensuring that Sponsored Participants' sponsored 
access to the Exchange complies with the Exchange's sponsored access 
rules. The use of RMG by an ETP Holder does not automatically 
constitute compliance with Exchange rules.
    NYXATS will host RMG software on NYXATS' infrastructure. After 
passing through RMG software, each order will enter the NYSE Arca's 
Gateway.
    The Exchange does not require Sponsoring ETP Holders to use RMG. 
Sponsoring ETP Holders are free to use a competing risk-management 
service or to use none at all. The Exchange will not provide 
preferential treatment to Sponsoring ETP Holders using RMG.
    The Exchange proposes to make RMG available to its Users, as a 
facility of the Exchange, pursuant to contractual arrangements.\6\ The 
Exchange believes that RMG will offer its Users another option in the 
efficient risk management of its Sponsored Participant's access to NYSE 
Arca.
---------------------------------------------------------------------------

    \6\ The Exchange will file with the Commission all fees 
associated with the RMG Service.
---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \7\ of the 
Securities Exchange Act of 1934 (the ``Exchange Act''), in general, and 
furthers the objectives of Section 6(b)(5) \8\ in particular in that it 
is 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 mechanism of a free and open market and a national market system. 
This service will allow firms to better monitor the order flow of their 
Sponsored Participants.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 \9\ and Rule 19b-4(f)(6) thereunder.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing.\11\ 
However, Rule 19b-4(f)(6)(iii) \12\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay and designate the proposed 
rule change operative upon filing so that the expected benefits to 
Exchange Users from use of the risk-management service would not be 
delayed. The Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest. The Commission notes that other self-regulatory organizations 
have similar functionality \13\ and that this filing raises no new 
regulatory issues. Therefore, the Commission designates the proposal 
operative upon filing.\14\
---------------------------------------------------------------------------

    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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 complied with this requirement.
    \12\ Id.
    \13\ See Securities Exchange Act Release Nos. 59354 (February 3, 
2009), 74 FR 6683 (February 10, 2009) (SR-NYSE-2008-101); 60236 
(July 2, 2009), 74 FR 34068 (July 14, 2009) (SR-BATS-2009-019).
    \14\ 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).
---------------------------------------------------------------------------

    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-NYSEArca-2009-80 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-2009-80. 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

[[Page 46277]]

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 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-2009-80 and should be submitted on or before September 29, 
2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-21640 Filed 9-4-09; 8:45 am]

BILLING CODE 8010-01-P