Document ID: SEC-2009-0651-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by New York Stock Exchange LLC Extending Until October 1, 2009 the Six-Month Pilot Program Which Established a New Class of NYSE Market Participants Referred to as "Supplemental Liquidity Providers" and Is Designated as Exchange Rule 107B
Posted Date: 2009-05-14T04:00Z

[Federal Register: May 14, 2009 (Volume 74, Number 92)]
[Notices]               
[Page 22796-22798]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14my09-90]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59869; File No. SR-NYSE-2009-46]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC 
Extending Until October 1, 2009 the Six-Month Pilot Program Which 
Established a New Class of NYSE Market Participants Referred to as 
``Supplemental Liquidity Providers'' and Is Designated as Exchange Rule 
107B

May 6, 2009.
    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 April 30, 2009, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend until October 1, 2009, the six-
month pilot program (``Pilot'' or ``program'') which established a new 
class of NYSE market participants referred to as ``Supplemental 
Liquidity Providers'' (``SLPs'') and is designated as Exchange Rule 
107B. The text of the proposed rule change is available at the 
Exchange, the Commission's Public Reference Room, 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.

[[Page 22797]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to extend until October 1, 2009, the six-
month pilot program (``Pilot'' or ``program'') for ``Supplemental 
Liquidity Providers'' (``SLPs'') under Rule 107B. The SLP pilot program 
commenced operation on or about the date the SEC approved the NYSE 
``New Market Model'' pilot \4\ which is scheduled to be in operation 
until October 1, 2009. The Exchange proposes to extend the SLP pilot 
until October 1, 2009, the termination date of the New Market Model 
pilot, as the SLP program was designed to operate in the New Market 
Model and was established to supplement the liquidity provided by 
Designated Market Makers (``DMMs'') in the New Market Model.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 58845 (October 24, 
2008), 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46) (``New 
Market Model'').
---------------------------------------------------------------------------

    SLPs have a 5% average quoting requirement per assigned security. 
Additionally, if an SLP posts displayed or non-displayed liquidity in 
its assigned securities that results in an execution, the Exchange will 
pay the SLP a financial rebate. By requiring SLPs to quote at the NBB 
or the NBO a percentage of the regular trading day in their assigned 
securities, and by paying a rebate when the SLP's interest results in 
an execution, the Exchange rewards aggressive liquidity providers in 
the market. The Exchange contends that this quoting and rebate program 
encourages the additional utilization of, and interaction with, the 
NYSE and has provided customers with the premier venue for price 
discovery, liquidity, competitive quotes and price improvement and 
should, therefore, be extended until October 1, 2009.
    The Exchange believes that the SLP program has added meaningful 
liquidity to the marketplace and improved both NYSE and overall market 
quality. The Exchange will continue to monitor the efficacy of the 
program during the proposed extended pilot period. In the future, the 
Exchange may propose certain changes to Rule 107B, which will be the 
subject of a 19(b)-4 rule filing and filed with the Commission. Until 
such time that the Exchange proposes changes to Rule 107B, the Exchange 
is requesting to extend the operation of Rule 107B until October 1, 
2009.
2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'') 
\5\ for this proposed rule change is the requirement under Section 
6(b)(5) \6\ 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.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(a).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange proposes to extend the SLP pilot until October 1, 
2009, the termination date of the New Market Model pilot, as the SLP 
program was designed to operate in the New Market Model and run 
parallel with DMM trading activity. The SLP program has provided 
benefits to all NYSE customers by bringing price discovery, liquidity, 
competitive quotes and price improvement to the market and the Exchange 
seeks to continue providing such benefits to its customer at least 
until October 1, 2009 with an extension of the SLP pilot program.

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: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms, does not become operative for 30 days after the 
date of filing, 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 \7\ and Rule 19b-4(f)(6) thereunder.\8\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing.\9\ However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Exchange requested that the Commission waive 
the 30-day operative delay and designate the proposed rule change 
operative upon filing.
---------------------------------------------------------------------------

    \9\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the self-regulatory organization to give the 
Commission 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. NYSE has satisfied this requirement.
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
The Commission notes that because the SLP pilot will expire on April 
30, 2009, waiver of this time period is necessary so that no 
interruption of the pilot will occur. Therefore, the Commission 
designates the proposal operative upon filing.\10\
---------------------------------------------------------------------------

    \10\ 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).
---------------------------------------------------------------------------

    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.\11\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

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-2009-46 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.

[[Page 22798]]

    All submissions should refer to File Number SR-NYSE-2009-46. 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-NYSE-2009-46 and should be submitted on or before June 
4, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-11166 Filed 5-13-09; 8:45 am]

BILLING CODE 8010-01-P