Document ID: SEC-2010-0892-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2010-06-17T04:00Z

[Federal Register: June 17, 2010 (Volume 75, Number 116)]
[Notices]               
[Page 34513-34515]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17jn10-130]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62263; File No. SR-NYSEAmex-2010-49]

 
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Rescind Rule 
60A--NYSE Amex Equities

June 10, 2010.
    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 May 20, 2010, NYSE Amex LLC (``NYSE Amex'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to rescind Rule 60A--NYSE Amex Equities 
(``Vendor Liability Disclaimer''). The text of the proposed rule change 
is available on NYSE Amex's Web site at http://www.nyse.com, on the 
Commission's Web site at http://www.sec.gov, at the

[[Page 34514]]

principal office of NYSE Amex, 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 rescind Rule 60A--NYSE Amex Equities 
(``Vendor Liability Disclaimer'').
    Background
    Effective October 1, 2008, NYSE Euronext acquired The Amex 
Membership Corporation (``AMC'') pursuant to an Agreement and Plan of 
Merger dated January 17, 2008 (the ``Acquisition''). Pursuant to the 
Acquisition the Exchange's predecessor, the American Stock Exchange LLC 
(``Amex''), a subsidiary of AMC, became a subsidiary of NYSE 
Euronext.\3\ In connection with the Acquisition, on December 1, 2008, 
the Exchange relocated all equities trading to systems and facilities 
located at 11 Wall Street, New York, New York (the ``NYSE Amex Equities 
Trading Systems''), which are operated by the Exchange's corporate 
affiliate, the New York Stock Exchange LLC (``NYSE''), on behalf of the 
Exchange.\4\ Correspondingly, the Exchange adopted NYSE Rules 1-1004, 
subject to such changes as necessary to apply the Rules to the 
Exchange, as the NYSE Amex Equities Rules to govern trading on the NYSE 
Amex Equities Trading Systems.\5\
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    \3\ 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 Acquisition).
    \4\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63) (approving 
the equities trading relocation and the adoption of the NYSE Amex 
Equities rules).
    \5\ See Securities Exchange Act Release Nos. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63); 58833 
(October 22, 2008), 73 FR 64642 (October 30, 2008) (SR-NYSE-2008-
106); 58839 (October 23, 2008), 73 FR 64645 (October 30, 2008) (SR-
NYSEALTR-2008-03); 59022 (November 26, 2008), 73 FR 73683 (December 
3, 2008) (SR-NYSEALTR-2008-10); and 59027 (November 28, 2008), 73 FR 
73681 (December 3, 2008) (SR-NYSEALTR-2008-11).
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Rule 60A--NYSE Amex Equities

    Shortly after the Acquisition, the Exchange adopted the provisions 
of legacy Amex Rule 60 as Rule 60A--NYSE Amex Equities (``Vendor 
Liability Disclaimer'') to address third-party vendor liability.\6\ 
Rule 60A--NYSE Amex Equities provides that, in connection with member 
or member organization use of any electronic system, service or 
facility provided by the Exchange to members for the conduct of their 
business on the Exchange, the Exchange may expressly provide in the 
contract with the vendor(s) providing all or part of such electronic 
system, service or facility to the Exchange, that the vendor will not 
be liable for any damages sustained by a member or member organization 
arising out of the use of the vendor's system. In addition, the Rule 
provides that members and member organizations must indemnify both the 
Exchange and the vendor for any and all damages as a result of any 
claim or proceeding that arises out of or relates to the member's or 
member organization's use of such vendor's system.
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    \6\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63).
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    At the time the NYSE Amex Equities Rules were adopted, Rules 17- 
and 18- NYSE Amex Equities did not address third-party vendor 
liability.

Current Rules 17- and 18-NYSE Amex Equities

    In March 2009, concurrent with the NYSE, the Exchange amended Rules 
17- and 18-NYSE Amex Equities to address third-party vendor liability 
in the context of the NYSE and NYSE Amex Compensation Review Panels.\7\
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    \7\ See Securities and Exchange Act Release Nos. 59482 (March 2, 
2009, 74 FR 10114 (March 9, 2009) (SR-NYSEALTR-2009-13) (amending 
Rules 17- and 18-NYSE Amex Equities) and 59486 (March 2, 2009), 74 
FR 10104 (March 9, 2009) (SR-NYSE-2009-16) (amending NYSE Rules 17 
and 18).
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    Pursuant to these amendments, Rule 17(b)-NYSE Amex Equities 
currently provides that, except as provided in Rule 18-NYSE Amex 
Equities, the Exchange is not liable for any damages sustained by a 
member, principal executive or member organization arising out of its 
use or enjoyment of any third-party electronic system, service or 
facility (``third-party vendor'') provided by the Exchange for the 
conduct of business on the Exchange.
    Rule 18-NYSE Amex Equities permits a member or member organization 
to file a claim with the Exchange for losses arising out of a ``system 
failure'', which includes ``any malfunction of any third-party 
electronic system, service, or facility * * * provided by the Exchange 
that results in an incorrect execution of an order or no execution of a 
marketable order that was received in Exchange systems.'' In addition, 
Rule 18-NYSE Amex Equities specifies that each month a ``Compensation 
Review Panel'' consisting of three Floor Governors and three Exchange 
employees reviews claims submitted pursuant to the Rule and determines 
their eligibility for payment and whether the claims are subject to 
reduction. The Exchange then submits all eligible claims to the NYSE 
for reimbursement under the terms of NYSE Rule 18.\8\ If the aggregate 
claims submitted by the Exchange cannot be fully satisfied because they 
exceed the funds available for payment, the available funds are 
allocated among all eligible claims based on the proportion that each 
claim bears to the total amount eligible to receive payment. Where 
claims arising out of a third-party vendor system failure cannot be 
fully satisfied, the aggrieved member or member organization may file a 
claim directly against the third-party vendor for the unpaid loss.
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    \8\ Because the Exchange and the NYSE share a common trading 
platform, NYSE Rule 18 provides a mechanism for the Exchange to seek 
reimbursement from NYSE for the amounts that the Exchange undertakes 
to pay out to NYSE Amex Equities members and member organizations 
under Rule 18-NYSE Amex Equities. Each claim by an Exchange member 
or member organization under these Rules is considered separately. 
See NYSE Rule 18. See e-mail from Jason Harman, NYSE Regulation, 
Inc., to Ira L. Brandriss, Special Counsel, Commission, dated June 
8, 2010.
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Proposed Rule Changes

    The Exchange proposes to rescind Rule 60A-NYSE Amex Equities as it 
is duplicative of Rule 17-NYSE Amex Equities. Rules 17- and 18- NYSE 
Amex Equities comprehensively address third-party vendor liability, and 
maintaining Rule 60A-NYSE Amex Equities in the NYSE Amex Equities 
rulebook is potentially confusing to members and member organizations 
since, unlike the other Rules, it does not specify the process for 
submission of claims for losses arising out of the use of third-party 
vendor systems provided by the Exchange.
2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with Section 6 of the Act,\9\ in general, and further the objectives of 
Section

[[Page 34515]]

6(b)(5) of the Act,\10\ in particular, in that they are designed to 
prevent fraudulent and manipulative acts and practices, 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.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule changes support the 
objectives of the Act by rescinding a duplicative rule and fully 
conforming NYSE and NYSE Amex Equities rules regarding vendor 
liability.

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 \11\ and Rule 19b-4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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 asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. The Commission believes that waiving the 30-day operative delay 
is consistent with the protection of investors and the public interest, 
because the proposal raises no novel issues and seeks to rescind a 
duplicative rule that was left in the NYSE Amex Equities rulebook after 
the Acquisition. Therefore, the Commission designates the proposal 
operative upon filing.\13\
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    \13\ 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 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-NYSEAmex-2010-49 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-NYSEAmex-2010-49. 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 Web site 
viewing and printing 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 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-
NYSEAmex-2010-49 and should be submitted on or before July 8, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-14601 Filed 6-16-10; 8:45 am]
BILLING CODE 8010-01-P