Document ID: SEC-2009-1777-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2009-12-18T05:00Z

[Federal Register: December 18, 2009 (Volume 74, Number 242)]
[Notices]               
[Page 67282-67284]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18de09-108]                         

[[Page 67282]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61156; File No. SR-NYSEArca-2009-109]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Revising Its 
Telephone Policies

December 11, 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 December 3, 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 Exchange. The Exchange 
filed the proposed rule change pursuant to Section 19(b)(3)(A) of the 
Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders it effective 
upon filing with the Commission. 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\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to revise its policies governing the use of 
telephones on the Trading Floor. The text of the proposed rule change 
is attached as Exhibit 5 to the 19b-4 form. The text of the proposed 
rule change is available on the Exchange's Web site at http://
www.nyse.com, on the Commission's Web site at http://www.sec.gov, 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 purpose of this filing is to revise NYSE Arca Rule 6.2(h) 
governing the use of telephones on the Trading Floor. The proposed 
revisions of Rule 6.2(h) are modeled on NYSE Amex Options Rule 
902NY(i).\5\
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    \5\ See Securities Exchange Act Release No. 59939 (May 19, 
2009), 74 FR 25779 (May 29, 2009) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change, SR-NYSEAmex-2009-17, and 
Amendment No. 1 Thereto Revising Rules Governing the Use of 
Telephones on the Options Trading Floor).
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    The Exchange proposes to simplify and expedite its telephone 
registration process by allowing OTP Holder representatives to register 
their telephones by submitting an e-mail to the NYSE Arca Options 
Operations Department. This policy is consistent with NYSE Amex Options 
Rule 902NY(h)(i)(1).
    In addition, the Exchange notes that separate from the registration 
and use of telephones, the Exchange shall retain the authority to 
review and approve, prior to their use, any alternative communication 
device (including but not limited to devices offering capabilities such 
as e-mail, instant messaging, texting, or Internet-supported 
communications). Therefore, according to proposed Rule 6.2(h)(1): No 
OTP Holder, OTP Firm, or employee thereof may employ any alternative 
communication device (other than telephones as described herein) on the 
Trading Floor without prior approval of the Exchange.
    The Exchange also proposes to combine the various designations in 
Rule 6.2(h)(4)-(7) into a single section applying to all OTP Holders 
and Employees of OTP Firms. In doing so, the Exchange seeks to clarify 
and simplify its policy without substantively altering the scope of the 
rule.\6\ This change will also result in the renumbering of the 
subsections under Rule 6.2(h). This change is consistent with NYSE Amex 
Options Rule 902NY(i).
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    \6\ The Exchange is not proposing to require OTP Holders and OTP 
Firms to register by category of user. Such a requirement is 
inapplicable since (i) the proposed rule applies to OTP Holders, OTP 
Firms, and all employees thereof, regardless of category and (ii) 
such a requirement was a historical response to capacity limitations 
(which no longer apply) thereby allowing the Exchange to restrict 
use by certain categories of users if capacity issues arose.
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    The Exchange also proposes to modify Rule 6.2(h)(5)(C) in order to 
adopt the recently approved structure of NYSE Amex Rule 902NY(i)(4)(C) 
pertaining to broker representations of telephonic orders to the 
trading crowd. Currently, Section (h)(5)(C) sets forth that a Floor 
Broker in a trading crowd who receives a telephonic order may represent 
the order in the trading crowd only if an order ticket was first time-
stamped in the OTP Holder or OTP Firm's booth. The order ticket must 
also be taken to the Floor Broker in the trading crowd immediately 
after it is prepared. The new policy avoids this unnecessary process by 
allowing Floor Brokers to represent a telephonic order to the trading 
crowd so long as the order is immediately recorded into the EOC or the 
Electronic Tablet. However, in cases where the exception set forth in 
Rule 6.67(d)(1) applies, the EOC/Electronic Tablet Contingency 
Reporting Procedures will be in effect in accordance with Rule 
6.67(d)(2).\7\ In implementing this new policy, the Exchange seeks to 
keep pace with the technologies utilized on its options floor.
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    \7\ Rule 6.67(d)(1) states in pertinent part, ``The EOC or 
Electronic Tablet entry requirement provision of subsection (c) will 
not apply to any EOC or Electronic Tablet system disruption or 
malfunction as confirmed by a Trading Official.'' Rule 6.67(d)(2) 
provides a procedure for reporting during periods of system 
disruption of malfunction.
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    The Exchange proposes to remove all obsolete references to LMM 
phones and General Access Phones. These phones were provided by the 
Exchange and located at various locations on the options floor. The 
Exchange no longer supports these phones, and as such, they are no 
longer in operation.
    In addition, the Exchange proposes to update Rule 6.2(h)(9), 
Telephone Records, in order to increase the record retention period to 
three years. The Exchange proposes to require that OTP Holders and OTP 
Firms retain said records in an accessible place for the first two 
years. This requirement is consistent with the retention period of 
Securities and Exchange Commission Rule 17a-4.\8\ The Rule will also be 
renumbered as 6.2(h)(5).
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    \8\ This proposed rule is modeled on NYSE Amex Rule 902(i)(5).
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    Consistent with NYSE Amex Rule 902NY(i)(6), the Exchange further 
proposes to add Rule 6.22(h)(6) [sic],\9\ Revocation of Registration, 
which establishes the Exchange's authority to deny, limit or revoke an 
OTP Holder's permission to use of any registered telephone on the 
Trading Floor. Although an OTP Holder need only register with the 
Exchange, prior to use, any telephone to be used on the Trading Floor, 
the Exchange retains the right to

[[Page 67283]]

deny, limit, or revoke an OTP Holder's permission. Specifically, 
according to the proposed rule, the Exchange may deny, limit or revoke 
registration of any telephone whenever it determines that use of such 
device is inconsistent with the public interest, the protection of 
investors, or just and equitable principles of trade, or such device 
has been or is being used to facilitate any violation of the Securities 
Exchange Act of 1934, as amended, or rules thereunder, or the Exchange 
rules.
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    \9\ The Exchange intended to refer to Rule 6.2(h)(6).
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    The Exchange also proposes to update subsections (h)(13) and 
(k)(i)(13) of Rule 10.12, Minor Rule Plan, in order to replace obsolete 
references to prior Exchange policy and to add text designed to 
specifically address violations of Exchange Rule 6.2(h) as revised 
herein.
    Finally, the Exchange proposes to delete Rule 11.15 as it is 
duplicative of proposed Rule 6.2(h)(1) which states:
    No OTP Holder, OTP Firm, or employee thereof may employ any 
alternative communication device (other than telephones as described 
herein) on the Trading Floor without prior approval of the Exchange.
    The Exchange also proposes to remove the reference to Rule 11.15 in 
Rule 6.1(e).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \10\ of the Act, in general, and furthers the 
objectives of Section 6(b)(5),\11\ in particular, in that it is 
designed to facilitate transactions in securities, to promote just and 
equitable principles of trade, to enhance competition, and to protect 
investors and the public interest, in that it proposes to modernize and 
clarify rules for the use of telephones and other communication devices 
on the Trading Floor.
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    \10\ 15 U.S.C. 78f(b).
    \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 does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) Impose any significant burden on competition; and
    (iii) 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 \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). In addition, Rule 19b-4(f)(6)(iii) 
requires the self-regulatory organization to submit to the 
Commission 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 satisfied this requirement.
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    The Exchange has requested the Commission to waive the 30-day 
operative delay to the extent that the proposal will allow NYSE Arca 
to: (i) Modernize its rules regarding telephones, consistent with other 
market centers; and (ii) eliminate any unnecessary discrepancies among 
affiliated markets governing the use of telephones by their respective 
market participants, without delay. The Commission notes that the 
proposal is closely based on NYSE Amex Rule 902NY(i).\14\ The 
Commission hereby grants the Exchange's request and believes that such 
waiver is consistent with the protection of investors and the public 
interest.\15\ Accordingly, the Commission designates the proposed rule 
change operative upon filing with the Commission.
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    \14\ See Securities Exchange Act Release No. 59939 (May 19, 
2009), 74 FR 25779 (May 29, 2009) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto 
Revising Rules Governing the Use of Telephones on the Options 
Trading Floor).
    \15\ 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. 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.

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-2009-109 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-2009-109. 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 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-2009-109 and should be submitted on or before 
January 8, 2010.

[[Page 67284]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-30085 Filed 12-17-09; 8:45 am]

BILLING CODE 8011-01-P