Document ID: SEC-2013-1077-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2013-06-17T04:00Z

[Federal Register Volume 78, Number 116 (Monday, June 17, 2013)]
[Notices]
[Pages 36279-36281]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-14256]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69735; File No. SR-NYSE-2013-39]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending NYSE Rule 103B, Section III(A) To Increase From Three to Four 
the Minimum Number of DMM Units an Issuer Must Interview From the Pool 
of DMM Units Eligible To Participate in the Allocation Process

June 11, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\

[[Page 36280]]

notice is hereby given that, on June 6, 2013, New York Stock Exchange 
LLC (the ``Exchange'' or ``NYSE'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I and II 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 amend NYSE Rule 103B, Section III(A) to 
increase from three to four the minimum number of DMM units an issuer 
must interview from the pool of DMM units eligible to participate in 
the allocation. The text of the proposed rule change is available on 
the Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, 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 is proposing to amend Rule 103B, Section III(A) 
(``Security Allocation and Reallocation'') to increase from three to 
four the minimum number of DMM units an issuer must interview from the 
pool of DMM units eligible to participate in the allocation process.
    Rule 103B provides two options for the allocation of securities to 
DMMs: (1) The issuer selects the DMM unit; or (2) the issuer delegates 
selection of the DMM unit to the Exchange.\3\ If the issuer proceeds 
under the first option, the listing company selects the DMM units it 
wishes to interview. A DMM unit's eligibility to participate in the 
allocation process is based on objective criteria and determined at the 
time the interview is scheduled.
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    \3\ In 2008, the Commission approved the Exchange's amendments 
to its rules to allow an issuer to select the DMM units it chooses 
to interview directly from the DMM units that are eligible to 
participate in the allocation process and eliminated the Allocation 
Committee. See Securities Exchange Act Release No. 58857 (Oct. 24, 
2008), 73 FR 65435 (Nov. 3, 2008) (SR-NYSE-2008-52) (Approval 
Order).
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    Within five business days after the issuer selects the DMM units to 
be interviewed, the issuer meets with representatives of each of the 
DMM units. At least one representative of the listing company must be a 
senior official of the rank of Corporate Secretary or above of that 
company. Additionally, no more than three representatives of each DMM 
unit may participate in the meeting, each of whom must be an employee 
of the DMM unit, and one of whom must be the individual DMM who is 
proposed to trade the company's security, unless that DMM is 
unavailable to appear, in which case a telephone interview is 
permitted.
    Following the interview, a DMM unit may not have any contact with 
an issuer. If an issuer has a follow-up question regarding any DMM 
unit(s) it interviewed, it must be conveyed to the Exchange. The 
Exchange then contacts the unit(s) to which the question pertains and 
provides any available information received from the unit(s) to the 
listing company. Within two business days of the issuer's interviews 
with the DMM units, the issuer selects its DMM unit in writing. The 
Exchange then confirms the allocation of the security to that DMM unit, 
at which time the security is deemed to have been so allocated.
    If the issuer decides to select the DMM unit itself and conducts 
interviews pursuant to the above process, the issuer is currently 
required to select a minimum of three DMM units to interview from the 
pool of DMM units eligible to participate in the allocation process. 
The Exchange is proposing to increase the minimum number of DMM units 
that must be interviewed from three to four.\4\ By increasing the 
minimum number of DMM units that must be interviewed, a larger number 
of DMM firms will have an opportunity to participate in the allocation 
process, which will lead to an increase in competition without being 
overly burdensome on the issuer. The increase in number of DMM units to 
interview will also provide the issuer with more choice in the 
selection of its assigned DMM unit. The Exchange believes that the 
increase in competition will provide DMM units with a greater incentive 
to perform optimally.\5\
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    \4\ When a security is put up for reallocation, pursuant to NYSE 
Rule 103B, Section IV, the allocation process set forth in NYSE Rule 
103B, Section III is followed. Under the proposed amendment, 
therefore, if an issuer chooses to select the DMM unit itself during 
the reallocation process, the issuer will have to interview a 
minimum of four DMM units.
    \5\ The Exchange also proposes to make technical, non-
substantive changes to Rule 103B to conform the style of the 
headings in the rule.
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Section 
6(b)(5),\7\ in particular, in that it is designed to promote just and 
equitable principles of trade, to remove impediments to, and perfect 
the mechanism of a free and open market and, in general, to protect 
investors and the public interest. The Exchange believes that the 
proposal will promote just and equitable principles of trade because it 
will allow more DMM units to participate in the allocation process. The 
inclusion of these additional DMM units, moreover, will be based on 
objective criteria. Additionally, the Exchange believes that the 
proposal is designed to remove impediments to, and perfect the 
mechanism of a free and open market because increasing the number of 
DMMs participating in the allocations will increase competition to 
provide services to issuers and, thus, provide DMM units with a greater 
incentive to perform optimally, and will provide the issuer with more 
choice in the selection of its assigned DMM unit.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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. The Exchange believes that 
the proposed rule change will increase competition among DMM units by 
allowing more DMM units to participate in the interview process and 
provide DMM units with a greater incentive to perform optimally 
potentially and enhance the quality of the services DMMs provide to 
issuers. While the proposal may increase the burden on issuers during 
the allocation process, the Exchange believes that any such increase 
will be small relative to the benefits that additional competition 
between DMM units may provide. Issuers could, moreover, permit the 
Exchange to select the DMM unit pursuant to the process

[[Page 36281]]

found in NYSE Rule 103B, Section III(B), which would lessen the burden 
of the allocation process on such issuers.\8\
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    \8\ Despite delegating authority to the Exchange to select its 
DMM unit, an issuer may choose to submit a letter to the Exchange 
Selection Panel (``ESP'') indicating its preference and supporting 
justification for a particular DMM unit. See NYSE Rule 103B, Section 
III(B)(1).
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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 significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, 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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 that the Commission waive the 30-day 
operative delay. The Commission believes that waiver of the 30-day 
operative delay will benefit the Exchange's market, issuers, and 
investors. Therefore, the Commission designates the proposal operative 
upon filing.\11\
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    \11\ For purposes only of waiving the 30-day operative delay, 
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 such proposed rule 
change, the Commission summarily may temporarily suspend 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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \12\ 15 U.S.C. 78s(b)(2)(B).
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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 email to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2013-39 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-2013-39. This file 
number should be included on the subject line if email 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 
10:00 a.m. and 3:00 p.m. Copies of the 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-NYSE-2013-39 and should be 
submitted on or before July 8, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-14256 Filed 6-14-13; 8:45 am]
BILLING CODE 8011-01-P