Document ID: SEC-2010-0907-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2010-06-23T04:00Z

[Federal Register: June 23, 2010 (Volume 75, Number 120)]
[Notices]               
[Page 35865-35871]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23jn10-140]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62303; File No. SR-NYSEAmex-2010-53]

 
Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by NYSE Amex LLC Amending Its Rules To Incorporate the Receipt 
and Execution of Odd-Lot Interest Into the Round Lot Market and 
Decommission the Use of the ``Odd-Lot System''

June 16, 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 June 10, 2010, NYSE Amex LLC (the ``Exchange'' or ``NYSE 
Amex'') 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 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 its rules to incorporate the receipt 
and execution of odd-lot interest into the round lot market and 
decommission the use of the ``Odd-lot System''. The text of the 
proposed rule change is available at the Exchange, on the Commission's 
Web site at http://www.sec.gov, 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.

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

    1. Purpose. The Exchange proposes to amend its rules to incorporate 
the receipt and execution of odd-lot interest into the round lot market 
and decommission the use of the ``Odd-lot system.''\4\
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    \4\ The Exchange notes that parallel changes are proposed to be 
made to the rules of the New York Stock Exchange LLC (``NYSE''). See 
SR-NYSE-2010-43.
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Background
    Round lot interest on the Exchange is executed by Display 
Book[supreg] \5\ pursuant to NYSE Amex Equities Rule 72 on a priority 
or parity basis.\6\ Odd-lot interest, however, is processed in an 
Exchange system designated solely for handling and execution of odd-lot

[[Page 35866]]

interest (the ``Odd-lot System'').\7\ The Odd-lot System is a separate 
system from the Display Book that executes odd-lot interest and the 
odd-lot portion of part of round lot (``PRL'') interest.\8\
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    \5\ The Display Book system is an Exchange order management and 
execution facility. The Display Book system receives and displays 
interest to the DMM, provides the data feed for NYSE Amex 
OpenBook[supreg] that is available to market participants, contains 
order information and provides a mechanism to execute and report 
transactions and publish results to the Consolidated Tape. The 
Display Book system is connected to a number of other Exchange 
systems for the purposes of comparison, surveillance, and reporting 
information to customers and other market data and national market 
systems. NYSE Amex OpenBook provides subscribers a real-time view of 
the Exchange's limit-order book for all NYSE-Amex traded securities.
    \6\ NYSE Amex Equities Rule 72 provides that all market 
participants receive an allocation of executed shares on an equal 
basis (``parity'') with other interest available at that price. In 
addition, where there is more than one bidder (offerer) 
participating in an execution and one of the bids (offers) was 
clearly established as the first made at a particular price and such 
bid or offer is the only interest when such price is or becomes the 
best bid or offer published by the Exchange (the ``Setting 
Interest''), that [sic] the displayed portion of such Setting 
Interest is entitled to priority. In order to qualify as Setting 
Interest, it must have been the only interest quoted at a price. 
Only the quoted (i.e., displayed) portion of the Setting Interest is 
entitled to priority (``Priority Interest'').
    \7\ See NYSE Amex Equities Rule 124(a).
    In connection with the NYSE Euronext acquisition of The Amex 
Membership Corporation (``AMC'') pursuant to an Agreement and Plan 
of Merger, dated January 17, 2008 (the ``Merger''), the Exchange 
relocated all equities trading conducted on the Exchange legacy 
trading systems and facilities located at 86 Trinity Place, New 
York, New York, to trading systems and facilities located at 11 Wall 
Street, New York, New York (the ``Equities Relocation'') on December 
1, 2008. The Exchange's equity trading systems and facilities at 11 
Wall Street (the ``NYSE Amex Trading Systems'') are operated by the 
NYSE on behalf of the Exchange. See Securities Exchange Act Release 
No. 58705 (October 1, 2008), 73 FR 58995 (October 8, 2008) (SR-Amex 
2008-63) (approving the Equities Relocation); Securities Exchange 
Act Release No. 58833 (October 22, 2008), 73 FR 64642 (October 30, 
2008) (SR-NYSE-2008-106) and Securities Exchange Act Release No. 
58839 (October 23, 2008), 73 FR 64645 (October 30, 2008) (SR-
NYSEALTR-2008-03) (implementing the Bonds Relocation); Securities 
Exchange Act Release No. 59022 (November 26, 2008), 73 FR 73683 
(December 3, 2008) (SR-NYSEALTR-2008-10) (adopting amendments to 
NYSE Amex Equities Rules to track changes to corresponding NYSE 
Rules); Securities Exchange Act Release No. 59027 (November 28, 
2008), 73 FR 73681 (December 3, 2008) (SR-NYSEALTR-2008-11) 
(adopting amendments to Rule 62--NYSE Amex Equities to track changes 
to corresponding NYSE Rule 62).
    \8\ PRL orders are for a size within the standard unit (round-
lot) of trading, which is 100 shares for most stocks, but contains a 
portion that is smaller than the standard unit of trading, e.g. 199 
shares. See Supplementary Material .40 of NYSE Amex Equities Rule 
124.
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    NYSE Amex Equities Rule 124 governs handling and execution of odd-
lot interest and the odd-lot portion of PRL interest in the Odd-lot 
System. Pursuant to the provisions of NYSE Amex Equities Rule 124 all 
odd-lot interest and odd-lot portion of PRL interest is executed 
against the DMM as the contra party.\9\ NYSE Amex Equities Rule 124 
outlines the complex pricing formula used to determine the price of 
odd-lot executions. Generally, the execution price of odd-lot interest 
is determined based on: (i) The price of executions in the round lot 
market; (ii) whether the odd-lot interest was marketable or non-
marketable upon receipt in the Odd-lot system; and (iii) in certain 
instances the Exchange system that initially received the interest.\10\
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    \9\ See NYSE Amex Equities Rule 124(a).
    \10\ For a fuller discussion of the operation of the current 
odd-lot system see, Securities Exchange Act Release No. 56551 
(September 27, 2007), 72 FR 56415 (October 3, 2007) (SR-NYSE-2007-
82) (NYSE modifications to methodology of pricing and executing 
orders in the Odd-lot system). See also Securities Exchange Act 
Release No. 59614 (March 20, 2009), 74 FR 13501 (March 27, 2009) 
(NYSE Alternext-2009-27) (modification to pricing and execution 
methodology to execute odd-lot portion of the PRL orders pursuant to 
pricing structure in NYSE Amex Equities Rule 124(c) and (d).); 
Securities Exchange Act Release No. 60139 (June 18, 2009), 74 FR 
30342 (June 25, 2009) (SR-NYSEAmex-2009-18) (Clarification of the 
pricing methodology for the odd-lot portion of a PRL order and the 
systems capable of accepting PRL and Good 'Til Cancelled Orders 
during the implementation of Exchange system enhancements).
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Proposed Amendments To Incorporate Odd-Lots and Odd-Lot Portion of PRL 
Interest in the Round Lot Market
    The Exchange is proposing to terminate the Odd-lot System and 
incorporate odd-lot interest and the odd-lot portion of PRL interest 
into the round lot market thus enabling such interest to interact with 
all other market interest and be priced in accordance with overall 
supply and demand dynamics. Pursuant to the proposed rule change, odd-
lot interest and odd-lot portion of PRL interest will be accepted and 
executed in the Display Book.
    In order to incorporate interest for fewer than 100 shares into the 
round lot market, the Exchange proposes that the new unit of trading 
for all securities be 1 share.\11\ Although the new unit of trade will 
be 1 share, the concepts of round lots and odd-lots remain for the 
purposes of quoting as explained in more detail below.
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    \11\ See Proposed NYSE Amex Equities Rule 55 and 56. In 
addition, proposed NYSE Amex Equities Rule 55 retains the ability of 
the Exchange to designate securities to be quoted in less than 100 
shares. Investors may subscribe to an NYSE market data product to 
obtain information on the securities designated to quote in less 
than 100 share increments. Securities so designated pursuant to NYSE 
Amex Equities Rule 65 are to ``be dealt in as provided in NYSE Amex 
Equities Rules 64.'' Because the other provisions of NYSE Amex 
Equities Rule 65 no longer apply when odd-lots are incorporated into 
the round lot market, the Exchange further proposes to incorporate 
this concept into the provisions of proposed NYSE Amex Equities Rule 
55 and delete the provision of NYSE Amex Equities Rule 65 in its 
entirety. The Exchange further proposes to amend Supplementary 
Material subparagraph (2)(c) of NYSE Amex Equities Rule 115A 
(``Orders at Opening or in Unusual Situations'') to change the term 
``unit of trading'' to one round lot.
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    There will no longer be a separate execution pricing structure for 
odd-lot interest and the odd-lot portion of PRL interest. Further, 
because the trading of odd-lot interest and the odd-lot portion of PRL 
interest is being incorporated in the round lot market the Exchange no 
longer needs the DMM to act in the capacity of odd-lot dealer. The DMM 
will no longer be the contra party to all odd-lot executions except for 
odd-lot size quantity that pursuant to Exchange rules is to be executed 
in the opening, re-opening and closing transactions that remain 
unpaired.\12\ The Exchange therefore seeks to rescind rules that govern 
odd-lot dealers and the distinct pricing for odd-lot interest and the 
odd-lot portion of PRL interest. Specifically, the Exchange proposes to 
rescind the provisions of NYSE Amex Equities Rules 99 (``Round-Lot 
Transactions of Odd-Lot Dealer and Broker'') 99 Former (``Round-Lot 
Transactions of Odd-Lot Dealer and Broker''), 100 (Round-Lot 
Transactions of Odd-Lot Dealer or Broker Affecting Odd-Lot Orders''), 
101(``Registration of Odd-lot Dealers and Brokers'') and 124 (``Odd-Lot 
Orders'') and retain the rule numbers as reserved. Similarly, the 
Exchange proposes to delete all references to Odd-Lot Dealers in NYSE 
Amex Equities Rules 94 (``Designated Market Markers or Odd-Lot Dealers 
Interest in Joint Accounts'') and 108 (``Limitation on Members' Bids 
and Offers'').
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    \12\ See Proposed NYSE Amex Equities Rule 104(e).
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    Odd-lot interest and the odd-lot portion of PRL interest will be 
generally subject to all the provisions of Exchange rules that 
heretofore applied only to interest executed in the round lot market 
except as described herein. The Exchange therefore seeks to delete 
current subparagraph (e) of NYSE Amex Equities Rule 13 under the Auto 
Ex Order and make conforming changes to the lettering. The inclusion of 
odd-lot interest and the odd-lot portion of PRL interest in the round 
lot market will obviate the need for a specific provision authorizing 
automatic execution for the round lot portion of a PRL order. In 
addition, the Exchange proposes to delete the provisions of current 
subparagraph (f) of NYSE Amex Equities Rule 14, which restricts non-
regular way settlement instructions solely to round lot and PRL 
interest. Floor brokers will now be permitted to accept orders 
containing non-regular way settlement instructions in odd-lot 
quantities because they will be able to represent them in the round lot 
market. Current subparagraph (g) of NYSE Amex Equities Rule 14 will be 
amended to become new subparagraph (f) of proposed NYSE Amex Equities 
Rule 14.
Order Handling, Execution, Allocation
    In order to incorporate odd-lot interest and the odd-lot portion of 
PRL interest into the round lot market, the Exchange must amend rules 
governing order handling, execution and allocation to reflect that odd-
lot quantities will not be displayed as the Exchange quotation and odd-
lot executions are not published to the Consolidated Tape.
    The Exchange proposes to amend NYSE Amex Rule 61 to delete: (i) The 
requirement that odd-lot orders be executed via the Odd-lot System; and 
(ii) references to rescinded rule text. The Exchange further proposes 
to re-order the remaining substantive provisions of

[[Page 35867]]

the rule and update the rule text with currently recognized references, 
for example wordy descriptions of PRL will be replaced with part of 
round lot or PRL.
    Pursuant to the instant proposal Display Book will aggregate all 
interest at each limit price, including odd-lot interest and the odd-
lot portion of PRL interest. Interest will be quoted if it is equal to 
or greater than a round lot when the price point becomes the Exchange 
best bid and offer (``Exchange BBO''). For example, Table 1 below 
depicts the Exchange BBO as 200 shares bid at $20.05 and 200 shares 
offered at $20.10. The quoted offer includes two non-reserve orders for 
100 shares each; however, the quoted bid includes one non-reserve order 
to buy for 100 shares and two odd-lot non-reserve orders for 50 shares 
each. The 50 shares at the price point of $20.07 are not quoted because 
it is less than a round lot.

                                                                         Table 1
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                                                                                                                                           Displayable
                Displayable interest available                   Quoted interest      Bid price        Offer price     Quoted interest      interest
                                                                                                                                            available
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0.............................................................                 0                 0            $20.10               200          100, 100
50............................................................                 0            $20.07                 0                 0                 0
50, 50, 100...................................................               200            $20.05                 0                 0                 0
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    Display Book will continue publishing the Exchange BBO which may 
now include aggregated odd-lot interest and the odd-lot portion of PRL 
interest. The Exchange therefore proposes to amend NYSE Amex Equities 
Rule 60 to include a fuller citation to Regulation National Market 
System (``Reg. NMS'') and clarify that a bid or offer may also be the 
aggregation of odd-lot interest and the odd-lot portion of PRL 
interest, the sum of which is equal to or greater than a round lot.\13\ 
The Exchange BBO will still be quoted in round lots.\14\ The Exchange 
proposes to include odd-lot interest and the odd-lot portion of PRL 
interest in the Exchange BBO only when such odd-lot interest may be 
aggregated with other interest at the price point resulting in a sum 
that would be equal to or greater than a round lot.\15\
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    \13\ NYSE Amex Equities Rule 60 currently provides that the 
terms ``bid'' or ``offer'' shall have the meaning given to them in 
Sec.  242.600(b) (``Rule 602'') of Regulation NMS. Reg. NMS, Rule 
600 provides that: Bid or offer means the bid price or the offer 
price communicated by a member of a national securities exchange or 
member of a national securities association to any broker or dealer, 
or to any customer, at which it is willing to buy or sell one or 
more round lots of an NMS security, as either principal or agent, 
but shall not include indications of interest.
    The Exchange proposes to amend the citation in NYSE Amex 
Equities Rule 60 to: Section 242.602 (``Rule 602'') of Regulation 
National Market System (``Reg. NMS''), 17 CFR part 242.
    \14\ See Consolidated Tape Plan (``CTA Plan'') Second 
Restatement of Plan Submitted to The Securities and Exchange 
Commission Pursuant to Rule 11Aa3-1 Under the Securities Exchange 
Act of 1934 at page 26 section VI.(d)(iv). See also Securities 
Exchange Act Release Nos. 10787 (May 10, 1974), 39 FR 17799 (order 
approving CTA Plan). The most recent restatement of the CTA Plan was 
in 1995. The CTA Plan, pursuant to which markets collect and 
disseminate last sale price information for non- NASDAQ listed 
securities, is a ``transaction reporting plan'' under Rule 601 under 
the Act, 17 CFR 242.601, and a ``national market system plan'' under 
Rule 608 under the Act, 17 CFR 242.608. See Securities Exchange Act 
Release No. 51808 (June 9, 2005), 70 FR 37496 (June 29, 2005).
    \15\ See Proposed NYSE Amex Equities Rule 72(a).
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    Because odd-lot interest and the odd-lot portion of PRL interest 
will be eligible for inclusion in the Exchange BBO such interest will 
be considered ``displayable'' interest for the purposes of execution 
and allocation pursuant to the provisions of NYSE Amex Equities Rule 
72. Consistent with the current operation of NYSE Amex Equities Rule 
72, interest will not be considered displayable when such interest is 
affirmatively designated as excluded interest (e.g. reserve interest).
    In addition, consistent with the current logic of priority and 
parity, incoming single odd-lot interest will never be eligible to be 
the Priority Interest because it can never be the only interest quoted 
at the price point.\16\ For example, Table 2 and 3 below depict the 
Exchange BBO in XYZ security. Initially, the Exchange BBO is 200 shares 
bid at $20.05 and 100 shares offered at $20.11. The quoted offer 
includes two non-reserve orders for 50 shares each and the quoted bid 
includes one non-reserve order to buy for 150 shares and two odd-lot 
non-reserve orders for 50 shares each.\17\ There is no Priority 
Interest in the Exchange BBO because none of the orders were the only 
independently displayable interest quoted at the price point when it 
became the Exchange BBO. Subsequently an order to sell 200 shares at 
$20.10 is received. Table 3 shows the Exchange BBO is updated to 
reflect 200 shares offered at $20.10 and 200 shares bid at $20.05. The 
200 share order at $20.10 is Priority Interest because it was the only 
independently displayable interest capable of being quoted at the price 
point when the price point became the Exchange BBO.
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    \16\ See supra, note 11.
    \17\ It is also important to note that in this example although 
the total number of shares bid on the Exchange at the Exchange best 
bid is 250 shares the quoted bid is 200 shares consistent with the 
provisions of proposed NYSE Amex Equities Rule 55. See also supra, 
note 11.

                                                                         Table 2
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                                                                                                                                           Displayable
                Displayable interest available                   Quoted interest      Bid price        Offer price     Quoted interest      interest
                                                                                                                                            available
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0.............................................................                 0                 0            $20.11               100            50, 50
0.............................................................                 0                 0            $20.10                 0                 0
0.............................................................                 0            $20.09            $20.09                 0                 0
0.............................................................                 0            $20.08                 0                 0                 0
10, 20, 30....................................................                 0            $20.07                 0                 0                 0
10, 10, 25, 50................................................                 0            $20.06                 0                 0                 0
50, 50, 150...................................................               200            $20.05                 0                 0                 0
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[[Page 35868]]

                                                                         Table 3
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                                                                                                                                           Displayable
                Displayable interest available                   Quoted interest      Bid price        Offer price     Quoted interest      interest
                                                                                                                                            available
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.............................................................                 0                 0            $20.11               100            50, 50
0.............................................................                 0                 0            $20.10               200               200
0.............................................................                 0            $20.09            $20.09                 0                 0
0.............................................................                 0            $20.08                 0                 0                 0
10, 20, 30....................................................                 0            $20.07                 0                 0                 0
10, 10, 25, 50................................................                 0            $20.06                 0                 0                 0
50, 50, 150...................................................               200            $20.05                 0                 0                 0
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    For the same reason, single odd-lot interest at a price point may 
not prevent single displayable round lot or PRL interest from 
establishing itself as Priority Interest. When single round lot or PRL 
interest joins odd-lot interest at a price point and the sum of the 
odd-lot interest is not equal to a round lot, the single round lot or 
PRL that is published as the Exchange BBO is considered the setting 
interest and has established priority at that price point.\18\ For 
example, Table 4 and 5 below depict the Exchange BBO in XYZ security. 
Initially, the Exchange BBO is 200 shares bid at $20.05 and 100 shares 
offered at $20.11. The quoted offer includes two non-reserve orders for 
50 shares each and the quoted bid includes one non-reserve order to buy 
for 100 shares and two odd-lot non-reserve orders for 50 shares each. 
There is no Priority Interest in the Exchange BBO because none of the 
displayable orders were the only independently displayable interest 
quoted at the price point when the price point became the Exchange BBO. 
Subsequently an order to sell 150 shares at $20.10 is received. Table 5 
shows the Exchange BBO is updated to reflect 200 shares offered at 
$20.10 and 200 shares bid at $20.05. The 150 share order at $20.10 is 
entitled to be Priority Interest because it was the only independently 
displayable interest capable of being quoted at the price point when it 
became the Exchange BBO.
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    \18\ See Proposed NYSE Amex Equities Rule 72 (a)(iv).

                                                                         Table 4
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                                                                                                                                           Displayable
                Displayable interest available                   Quoted interest      Bid price        Offer price     Quoted interest      interest
                                                                                                                                            available
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.............................................................                 0  ................            $20.11               100            50, 50
0.............................................................                 0  ................            $20.10                 0                50
0.............................................................                 0            $20.09            $20.09                 0                 0
0.............................................................                 0            $20.08                 0                 0                 0
10, 20, 30....................................................                 0            $20.07                 0                 0                 0
10, 10, 25, 50................................................                 0            $20.06                 0                 0                 0
50, 50, 100...................................................               200            $20.05                 0                 0                 0
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                                                                         Table 5
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                                                                                                                                           Displayable
                Displayable interest available                   Quoted interest      Bid price        Offer price     Quoted interest      interest
                                                                                                                                            available
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.............................................................                 0                 0            $20.11               100            50, 50
0.............................................................                 0                 0            $20.10               200           50, 150
0.............................................................                 0            $20.09            $20.09                 0                 0
0.............................................................                 0            $20.08                 0                 0                 0
10, 20, 30....................................................                 0            $20.07                 0                 0                 0
10, 10, 25, 50................................................                 0            $20.06                 0                 0                 0
50, 50, 100...................................................               200            $20.05                 0                 0                 0
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    PRL interest that is established as Priority Interest, establishes 
priority for the full quantity of the PRL interest. For example, a 199 
share buy limit order with no designated reserve quantity that is the 
only interest available at the price point when it is quoted will 
constitute 199 shares of Priority Interest although the Exchange Bid 
will only quote 100 shares. Moreover, and consistent with the handling 
of Priority Interest of round lot interest, PRL interest will retain 
its Priority Interest status even if subsequent executions of the 
original interest decrement the quantity of the shares remaining in the 
interest to less than a round lot. Priority Interest will only lose its 
priority status if it is cancelled, executed in full or routed away for 
execution and returned unexecuted.\19\
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    \19\ See Proposed NYSE Amex Equities Rule 72(b)(iv). Priority of 
the setting interest is not retained on any portion of Priority 
Interest that routes to an away market and is returned unexecuted 
unless, such returned Priority Interest is greater than a round lot 
and there is no other interest available at the price point or any 
other interest available at the price point is less than a round 
lot.
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    Display Book as the matching engine for the Exchange will be 
responsible for the execution of all incoming interest regardless of 
the share size consistent with all applicable Exchange rules and 
Federal securities laws. All incoming interest will be eligible to be 
executed against eligible contra side interest.

[[Page 35869]]

    DMM CCS interest will be accessed to fill or partially fill \20\ 
incoming interest except, that Display Book will not access DMM CCS 
interest to provide an execution for an incoming odd-lot order. The 
Exchange proposes to amend NYSE Amex Equities Rule 1000 (d)(i) to 
clarify that DMM CCS interest will be accessed in reaction to incoming 
contra side interest that is equal to or greater than one round lot. As 
is the case today, DMM CCS interest must be for a minimum of a round 
lot however, a DMM will be allowed to provide interest in PRL 
quantities.\21\ For example, today a DMM unit may be willing to provide 
150 shares of additional liquidity at the price point. Pursuant to 
current NYSE Amex Equities Rule 1000 the DMM unit is only allowed to 
provide 100 shares or must go past its risk tolerance to provide 200 
shares. Pursuant to the proposal DMM CCS interest may be designated at 
the price point in any amount equal to or greater than a round lot, 
(i.e. 150 shares in the previous example).
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    \20\ CCS interest shall be accessed by Exchange systems to 
partially fill incoming Regulation NMS-compliant Immediate or Cancel 
Order, Exchange Immediate or Cancel Order and any order whose 
partial execution will result in a remaining unfilled quantity of 
less than one round lot even if such CCS interest is not designated 
for partial execution. See proposed NYSE Amex Equities Rule 
1000(e)(iii)(A)(4).
    \21\ See Proposed NYSE Amex Equities Rule 1000(d)(ii).
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    Executions will be printed to the Consolidated Tape in round lots 
or PRL quantities. Transactions that result in executions of less than 
a round lot will not: (i) Print to the Consolidated Tape; \22\ (ii) be 
considered the last sale; and (iii) elect buy minus, sell plus or stop 
interest for execution.\23\ The Exchange therefore proposes to amend 
NYSE Amex Equities Rule 1004 to clarify that buy minus, sell plus and 
stop interest are elected by executions that are reported to the 
Consolidated Tape.\24\ Moreover, because liquidity replenishment points 
(``LRP'') values are calculated based on the last sale on the Exchange, 
NYSE Amex Equities Rule 1000 will be amended to clarify that for 
automatic executions, Exchange systems will recalculate LRP values 
after executions that are reported to the Consolidated Tape.
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    \22\ See supra, note 11.
    \23\ See Proposed NYSE Amex Equities Rules 13 and 61.
    \24\ The Exchange further proposes to amend NYSE Amex Equities 
Rule 1004 to remove legacy references to Percentage Orders, which 
are no longer order types accepted on the Exchange.
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    Display Book will continue to allocate executed shares in round 
lots; however, if the quantity of shares to be allocated to a specific 
participant is for a quantity less than a round lot, the Display Book 
will allocate to the participant the specific number of shares bid or 
offered. The Exchange proposes to amend NYSE Amex Equities Rule 
72(c)(viii) to state that shares are allocated in round lots or the 
size of the order if less than one round lot.
    Below see specific trading examples demonstrating the execution 
logic employing priority parity rules: \25\
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    \25\ See Proposed NYSE Amex Equities Rules 72(c).

    (A) On each trading day, the allocation wheel for each security 
is set to begin with the participant whose interest is entered or 
retained first on a time basis. Thereafter, participants are added 
to the wheel as their interest joins existing interest at a 
particular price point. If a participant cancels his, her or its 
interest and then rejoins, that participant joins as the last 
position on the wheel at that time.

Parity Example 1

    Assume there is interest of the Book Participant (representing 
orders entered by two different public customers), three Floor 
brokers and the DMM are bidding at the same price, with no 
participant established as Priority Interest. An order to sell is 
received by the Exchange. Exchange systems will divide the 
allocations among the participants, listed in time order, as 
follows:

Public Order 1 100 shares and Public Order 2 100 
shares Book Participant
Floor Broker 1 Participant A
DMM Participant B
Floor Broker 2 Participant C
Floor Broker 3 Participant D

    A market order for 300 shares to sell entered in Exchange 
systems will allocate 100 shares to the Book Participant (Public 
Order 1), Participant A and Participant B above. 
Subsequently, another order to sell 300 shares at the same price is 
received by Exchange systems. Those shares will be allocated to 
Participant C, Participant D, and Book Participant (Public Order 
2).
    (B) The allocation wheel will move to the next participant when 
an odd-lot allocation completely fills the interest of such 
participant.

Parity Example 2

    Assume there is interest of the Book Participant (representing 
orders entered by two different public customers), three Floor 
brokers and the DMM are bidding at the same price, with no 
participant having priority. An order to sell is received by the 
Exchange. Exchange systems will divide the allocations among the 
participants as follows:

Public Order 1 100 shares and Public Order 2 100 
shares Book Participant
Floor Broker 1 Participant A 50 shares
DMM Participant B 50 shares
Floor Broker 2 Participant C 300 shares
Floor Broker 3 Participant D 300 shares

    A market order for 200 shares to sell entered in Exchange 
systems will allocate 100 shares to the Book Participant (Public 
Order 1), Participant A will receive 50 shares, Participant 
B above will receive 50 shares. Subsequently, another order to sell 
300 shares at the same price is received by Exchange systems. Those 
shares will be allocated to Participant C, Participant D, and Book 
Participant (Public Order 2).

Parity Example 3

    Assume there is interest of the Book Participant (representing 
orders entered by two different public customers), three Floor 
brokers and the DMM are bidding at the same price, with no 
participant having priority. An order to sell is received by the 
Exchange. Exchange systems will divide the allocations among the 
participants as follows:

Public Order 1 100 shares and Public Order 2 100 
shares Book Participant
Floor Broker 1 Participant A 50 shares
DMM Participant B 75 shares
Floor Broker 2 Participant C 300 shares
Floor Broker 3 Participant D 300 shares

    A market order for 200 shares to sell entered in Exchange 
systems will allocate 100 shares to the Book Participant (Public 
Order 1), Participant A will receive 50 shares, Participant 
B above will receive 50 shares. Subsequently, another order to sell 
300 shares at the same price is received by Exchange systems. The 
allocation wheel will start with Participant B. Participant B is 
allocated 25 shares, Participant C is allocated 100 shares, 
Participant D is allocated 100 shares, and Book Participant (Public 
Order 2) is allocated 75 shares. Exchange systems will 
retain Book Participant (Public Order 2) as the participant 
eligible to receive the next allocation at that price point.
    (C) The allocation wheel will also move to the next participant 
where Exchange systems execute remaining displayable odd-lot 
interest prior to replenishing the displayable quantity of a 
participant.

Parity Example 4

    Assume the available bid interest on the Exchange consists of a 
single Book Participant and two Floor brokers listed below in order 
of their position on the allocation wheel None of the participants 
have priority.

Floor Broker 1 Participant A--200 shares displayed and 4800 shares 
reserve
Book Participant Public Order 1 Participant B--500 shares 
displayed
Floor Broker 2 Participant C--500 shares displayed

    An order to sell 350 shares is received by the Exchange. 
Exchange systems will divide the allocations among the participants 
as follows:

Participant A--150 shares
Book Participant--100 shares
Participant C--100 shares

    Each participant receives a round lot allocation. The Allocation 
wheel returns to Participant A as the first participant on the wheel 
and allocates the remaining 50 shares. The allocation wheel remains 
on Participant A. The remaining interest of the three participants 
is as follows:

Floor Broker 1 Participant A--50 shares displayed and 4800 shares 
reserve
Book Participant Public Order 1 Participant B 400 shares 
displayed
Floor Broker 2 Participant C 400 shares displayed

[[Page 35870]]

    Prior to the system replenishing the displayed quantity of 
Participant A, an order to sell 100 shares is received by Exchange 
systems. The system will allocate 50 shares to Participants A and B. 
The next allocation at the price point will begin with Participant 
B.
Miscellaneous Amendments
    The Exchange proposes to amend the section title for the grouped 
NYSE Amex Equities Rules 99-114 to delete: (i) Legacy references to 
specialists and registered traders; and (ii) the reference to Odd-lot 
Dealers. The amended title will read, ``Designated Market Makers' 
(``DMMs'') and Member Organizations' Dealings on the Floor''. The 
Exchange also proposes to make conforming amendments to other Exchange 
rules that refer to odd-lot systems and dealers, including NYSE Amex 
Equities Rules 92, 94, and 104.
    In addition, the Exchange proposes to amend Rule 411 to delete the 
requirement that when a person gives, either for his own account, for 
various accounts in which he has an actual monetary interest, or for 
accounts over which such person is exercising investment discretion, 
buy or sell odd-lot orders that aggregate 100 shares or more, such odd-
lot orders must be consolidated into round lots. The Exchange proposes 
to delete this requirement as moot now that Exchange systems will 
receive odd-lot orders in the same system that handles round lot 
orders.
Additional New Systemic Capabilities
    The system changes required to decommission the Odd-lot System will 
also enable the Exchange to expand its price fields. Previous 
constraints on the number of characters that could be included in a 
price field required a ten cent ($.10) minimum price variation for 
quoting and order entry in securities priced at or greater than 
$100,000. As a result of the new systemic capability to include 
additional characters in the price fields, the Exchange proposes to 
amend NYSE Amex Equities Rules 62 (``Variations'') to remove the 
requirement that $.10 be the minimum variation for securities priced at 
or greater than $100,000. Specifically, the Exchange proposes to amend 
Supplementary Material .10 of NYSE Amex Equities Rule 62 to state that 
the minimum price variation for quoting and entry of interest in 
securities priced at or greater than a $1.00 will be a penny 
(``$.01'').
    In addition, the incorporation of odd-lot interest and the odd-lot 
portion of PRL interest into Display Book will provide Exchange market 
data systems access to odd-lot volumes. Market participants will 
therefore benefit from additional transparency because the depth of 
book information published by the Exchange via its market data systems 
will now include those quantities. NYSE Amex OpenBook[supreg] will 
publish in shares the total volume of interest available at each price 
point.\26\
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    \26\ NYSE Amex OpenBook provides subscribers a real-time view of 
the Exchange's limit-order book for all NYSE-traded securities. NYSE 
OpenBook shows the aggregate limit-order volume at every bid and 
offer price, thus responding to customer demand for more depth-of-
market data and raising the NYSE Amex market to an even greater 
level of transparency.
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Implementation of Proposed Amendments \27\
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    \27\ See e-mail from Clare F. Saperstein, Managing Director, 
NYSE Regulation, Inc., to Nathan Saunders, Special Counsel, and Gary 
Rubin, Attorney, Commission, dated June 14, 2010.
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    Subject to Commission approval, the Exchange intends to 
progressively implement these systemic changes on a security by 
security basis as it gains experience with the new technology until it 
is operative in all securities traded on the Floor. During the 
implementation, the Exchange will identify on its Web site which 
securities have been transitioned to the new system. In addition, the 
Exchange will provide information to its constituents about any 
modifications to the start or end date related to the implementation of 
such proposal via its Trader Update Notices that are sent via e-mail to 
subscribers and posted on the Exchange Web site.
    2. Statutory basis. The basis under the Act for this proposed rule 
change is the requirement under section 6(b)(5) \28\ 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. The instant proposal is in 
keeping with these principles in that it removes timing restrictions on 
the execution of odd-lot interest and the odd-lot portion of PRL 
interest by allowing such interest, if marketable to be immediately and 
automatically executed. It further promotes the interaction of such 
interest with all other market interest and enables it to be priced in 
accordance with supply and demand dynamics.
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    \28\ 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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 Exchange 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-2010-53 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-2010-53. 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

[[Page 35871]]

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 am and 3 pm. 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-NYSEAmex-2010-53 and should be submitted on or before July 14, 2010.

    Dated: June 16, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-15133 Filed 6-22-10; 8:45 am]
BILLING CODE 8010-01-P