Document ID: SEC-2010-0525-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2010-04-07T04:00Z

[Federal Register: April 7, 2010 (Volume 75, Number 66)]
[Notices]               
[Page 17816-17818]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07ap10-116]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61810; File No. SR-NYSE-2010-26]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC 
Amending NYSE Rule 1 To Provide for the Designation of Qualified 
Employees and NYSE Rule 51 To Clarify the Scope of Authority Vested in 
the Chief Executive Officer

March 31, 2010.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on March 25, 2010, New York Stock Exchange LLC (``NYSE'' 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 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 Rule 1 (``The Exchange'') to 
provide that the Exchange may formally designate one or more qualified 
employees to act in place of any person named in a rule as having 
authority to act under such rule if the named person is not available 
to administer the rule; and (2) amend NYSE Rule 51 (``Hours of 
Business'') to clarify the scope of authority vested in the Chief 
Executive Officer (``CEO'') and to make several non-substantive 
stylistic changes to the rule text. The text of the proposed rule 
change is available at the Exchange, the Commission's Public Reference 
Room, http://www.sec.gov, and http://www.nyse.com.

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
    NYSE proposes to amend NYSE Rule 1 to provide that the Exchange may 
formally designate one or more qualified employees to act in place of 
any person named in a rule as having authority to act under such rule 
in the event that the named person is not available. The Exchange 
believes that providing for such delegations will enable administration 
of NYSE rules in a more efficient manner in the event the specified 
individual is unavailable. Separately, the Exchange proposes to amend 
NYSE Rule 51 to clarify the scope of authority vested in the Chief 
Executive Officer (``CEO'') to take certain actions when he deems such 
actions necessary or appropriate for the maintenance of a fair and 
orderly market, the protection of investors or otherwise in the public 
interest, due to extraordinary circumstances.
    The Exchange notes that parallel changes are proposed to be made to 
the rules of NYSE Amex LLC (formerly the American Stock Exchange).\4\
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    \4\ See SR-NYSEAmex-2009-29 [sic].
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NYSE Rule 1
    NYSE Rule 1 provides that ``the Exchange'' is defined as the New 
York Stock Exchange LLC or the officer, employee, person, entity or 
committee to whom appropriate authority to administer such rule has 
been delegated by the Exchange when used with reference to the 
administration of any rule.
    Additionally, NYSE Rule 1 provides that all references to the 
``Board,'' ``Board of Directors,'' ``Chairman,'' ``Chairman of the 
Board,'' ``Chief Executive Officer'' and ``CEO'' refer to those persons 
and entities of the Exchange.

[[Page 17817]]

    Through this filing, the Exchange proposes to amend NYSE Rule 1 to 
include a provision that the CEO or the Chief Regulatory Officer 
(``CRO'') of the Exchange may formally designate one or more qualified 
employees of NYSE Euronext to act in place of any person named in a 
rule as having authority to act under such rule in the event that the 
named person is not available to administer the rule. For purposes of 
designation by a CEO, a qualified employee is defined as: (1) Any 
officer of NYSE Euronext; or (2) any employee of the Exchange that the 
Board of Directors deems to possess the requisite knowledge and job 
qualifications to administer that rule.\5\
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    \5\ Rule 46.10 provides that for purposes of Rule 46 only, the 
term ``qualified NYSE Euronext employee'' shall mean ``employees of 
NYSE Euronext, Inc. or any of its subsidiaries, excluding employees 
of NYSE Regulation, Inc., who shall have satisfied any applicable 
testing or qualification required by the NYSE for all Floor 
Governors.'' That definition shall not be applied to any other NYSE 
Rule and is separate and distinct from the Rule 1 definition 
discussed herein.
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    Additionally, in certain instances, the Exchange's CRO is one of 
the named persons identified to administer particular NYSE rules. In 
these situations, a qualified employee of NYSE Regulation, Inc. 
(``NYSER'') may serve as the CRO's designee if the CRO and the Board of 
Directors of NYSER deem such employee to have the requisite knowledge 
and job qualifications to administer the rule in place of the CRO. All 
qualified employees of NYSE Euronext shall be subject to the 
jurisdictions set forth in Section 7.1 of NYSE Euronext's Amended and 
Restated Bylaws.\6\
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    \6\ Article VII, Section 7.1 of the Amended and Restated Bylaws 
of NYSE Euronext states the following:
    Submission to Jurisdiction of U.S. Courts and the SEC. The 
Corporation, its directors and officers, and those of its employees 
whose principal place of business and residence is outside of the 
United States shall be deemed to irrevocably submit to the 
jurisdiction of the U.S. federal courts and the SEC for the purposes 
of any suit, action or proceeding pursuant to the U.S. federal 
securities laws and the rules and regulations thereunder, commenced 
or initiated by the SEC arising out of, or relating to, the 
activities of the U.S. Regulated Subsidiaries (and shall be deemed 
to agree that the Corporation may serve as the U.S. agent for 
purposes of service of process in such suit, action or proceeding), 
and the Corporation and each such director, officer or employee, in 
the case of any such director, officer or employee by virtue of his 
acceptance of any such position, shall be deemed to waive, and agree 
not to assert by way of motion, as a defense or otherwise in any 
such suit, action or proceeding, any claims that it or they are not 
personally subject to the jurisdiction of the SEC, that such suit, 
action or proceeding is an inconvenient forum or that the venue of 
such suit, action or proceeding is improper, or that the subject 
matter thereof may not be enforced in or by such courts or agency.
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    The Exchange believes that it is important that its rules provide 
for appropriate delegations of authority to ensure business continuity 
and that all rules can be properly administered even if the specified 
official is unavailable. The proposed provision applicable to all NYSE 
rules will enable consistent delegation standards and eliminate any 
potential for confusion that could result because some rules currently 
provide for delegation while others do not.
    The Exchange has implemented policies and procedures to formally 
identify the officers and employee [sic] who have been delegated 
authority to administer a particular rule on behalf of any named person 
identified in that rule. The Exchange considers the delegation of 
authority to be a corporate function; accordingly, such formal 
delegation is subject to approval by the CEO, CRO and Boards of 
Directors of the Exchange or NYSER, as applicable, as well as 
compliance with all applicable Bylaws of the Exchange. These 
delegations of authority are centrally maintained and periodically 
updated by the Office of General Counsel to remain current with final 
approval by the CEO of the Exchange or NYSER as applicable.
NYSE Rule 51
    NYSE Rule 51 vests the CEO with the powers to suspend or halt 
trading in any security traded on the Exchange, as well as to close 
some or all Exchange facilities, if he deems such action to be 
necessary or appropriate for the maintenance of a fair and orderly 
market, or the protection of investors, or otherwise in the public 
interest, due to extraordinary circumstances. ``Extraordinary 
circumstances'' are defined in NYSE Rule 51 as ``(1) actual or 
threatened physical danger, severe climatic conditions, civil unrest, 
terrorism, acts of war, or loss or interruption of facilities utilized 
by the Exchange, (2) a request by a governmental agency or official, or 
(3) a period of mourning or recognition for a person or event.''
    The Exchange proposes to amend NYSE Rule 51 to clarify that the CEO 
has the authority to extend the hours for the transaction of business 
on the Exchange and to set a delayed closing time if the CEO deems such 
action to be necessary or appropriate for the maintenance of a fair and 
orderly market, or the protection of investors, or otherwise in the 
public interest, due to extraordinary circumstances. The Exchange has 
interpreted the CEO's authority to halt securities and determine the 
length of such halt to include extending the regular closing, in order 
to ensure that closing trades in securities traded on the Exchange are 
conducted in a manner consistent with a fair and order market and the 
protection of investors and the public interest.\7\ However, in order 
to provide appropriate transparency to market participants, the 
Exchange proposes to clarify and codify the CEO's authority in this 
regard.
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    \7\ NYSER has previously announced this policy in several 
Information Memos that were issued in connection with the Russell 
Reconstitution in June 2008 and June 2009. Those memos described 
(among other things) the Exchange's various contingency scenarios 
and procedures, including extending the closing time in the event 
that a systems malfunction occurs at or near the regular 4:00 p.m. 
closing time. See NYSE Rule 51; See also IM 08-30 and IM 09-27. The 
Exchange has also periodically issued memoranda from its Floor 
Operations staff, advising of the same contingency scenarios and 
procedures.
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    The Exchange also proposes to make several non-substantive changes 
to the rule text by amending the rule text in Rule 51(a) to conform 
with proposed Rule 51(b)(ii) and by abbreviating references to ``Chief 
Executive Officer'' with ``CEO.''
2. Statutory Basis
    The basis under the Act for the proposed rule change is the 
requirement under Section 6(b)(5),\8\ which requires that an exchange 
have rules that are designed to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, 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 proposed rule change is 
consistent with these objectives in that these amendments establish the 
appropriate Exchange protocols and procedures to administer Exchange 
rules designed to protect investors and the public interest.
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    \8\ 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.

[[Page 17818]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
Because the 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 prior to 
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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
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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-NYSE-2010-26 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-NYSE-2010-26. 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 publicly available. All 
submissions should refer to File Number SR-NYSE-2010-26 and should be 
submitted on or before April 28, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-7838 Filed 4-6-10; 8:45 am]
BILLING CODE 8011-01-P