Document ID: SEC-2009-0190-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2009-02-10T05:00Z

[Federal Register: February 10, 2009 (Volume 74, Number 26)]
[Notices]
[Page 6683]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10fe09-128]

[[Page 6683]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59354; File No. SR-NYSE-2008-101]

Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Approving Proposed Rule Change To Establish the Risk Management Gateway
Service

February 3, 2009.

I. Introduction

    On December 12, 2008, New York Stock Exchange LLC (``Exchange'' or
``NYSE'') filed with the Securities and Exchange Commission
(``Commission'') pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to establish the Risk Management Gateway (``RMG'')
service. The proposed rule change was published for comment in the
Federal Register on December 31, 2008.\3\ The Commission received no
comment letters on the proposed rule change. This order approves the
proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59145 (December 22,
2008), 73 FR 80492.
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II. Description of the Proposed Rule Change

    The Exchange proposes to offer, through its wholly-owned subsidiary
NYSE Euronext Advanced Trading Solutions, Inc., the RMG service to NYSE
members and member organizations pursuant to voluntary, contractual
arrangements.\4\ NYSE Transact Tools, Inc, a division of the NYSE
Euronext Advanced Trading Solutions Group (``NYXATS''), owns RMG.\5\
NYSE Rule 123B.30 permits NYSE members and member organizations (a
``Sponsoring Member Organization'') to provide sponsored access to non-
member firms or customers (``Sponsored Participants'') to Exchange
trading systems. Pursuant to this proposal, the Exchange would offer
RMG to facilitate a Sponsoring Member Organization's ability to monitor
and supervise the trading activity of its Sponsored Participants. RMG
is a risk filter that verifies orders entered by Sponsored Participants
prior to the receipt of the order by the Exchange's trading systems.
Specifically, RMG verifies whether a Sponsored Participant's order
complies with order criteria established by the Sponsoring Member
Organization for the Sponsored Participant, including, amongst other
things, criteria related to order size (per order or daily quantity
limits), credit limits (per order or daily value), specific symbols or
end users. If the order is consistent with the parameters set by the
Sponsoring Member Organization, after RMG's verification, the order
would be permitted to continue along its path to the Exchange's trading
systems. However, if the order did not meet the specified parameters,
RMG would return the order to the Sponsored Participant.
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    \4\ A similar service has been approved for NYSE Alternext. See
Securities Exchange Act Release No. 59353 (February 3, 2009) (SR-
NYSEAlternext-2008-12).
    \5\ NYXATS will host the RMG software on its infrastructure.
After passing through the RMG software, each order will enter the
NYSE Common Customer Gateway for connectivity to the Exchange's
matching engine. According to the Exchange, in the future, NYXATS
may integrate RMG into the NYSE CCG for more direct access to the
Exchange's matching engine.
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    RMG would only interact with a Sponsored Participant's order prior
to the order's receipt by the Exchange's trading system. In addition,
RMG would only return an order to the Sponsored Participant if the
order did not meet the criteria set by the Sponsoring Member
Organization. RMG would not provide order execution or trade reporting
capabilities, but RMG would maintain records of all messages related to
Sponsored Participants' transactions and provide the applicable
Sponsoring Member Organization copies of those records.
    The Sponsoring Member Organization, 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 the RMG by a Member Organization does not
automatically constitute compliance with Exchange rules.
    The Exchange proposes to make RMG available to its members and
member organizations pursuant to contractual arrangements. The Exchange
states that it believes that RMG will offer its members and member
organizations another option in the efficient risk management of its
Sponsored Participant's access to the NYSE.

III. Discussion and Commission's Findings

    After careful review, the Commission finds that the Exchange's
proposal to establish its RMG service is consistent with the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\6\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(5) of the Act,\7\ which
requires 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 a national market system
and, in general, to protect investors and the public interest. The
Commission believes that RMG should be a useful risk management tool
for NYSE member firms that provide sponsored access to the Exchange.
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    \6\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
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    For the foregoing reasons, the Commission believes that the
proposal to establish the RMG service is consistent with the Act.
    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that the proposed rule change (SR-NYSE-2008-101) be, and it
hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

For the Commission, by the Division of Trading and Markets, pursuant
to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-2700 Filed 2-9-09; 8:45 am]

BILLING CODE 8011-01-P