Document ID: SEC-2008-1638-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Alternext US LLC
Posted Date: 2008-12-03T05:00Z

[Federal Register: December 3, 2008 (Volume 73, Number 233)]
[Notices]               
[Page 73681-73683]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03de08-43]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59027; File No. SR-NYSEALTR-2008-11]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Alternext US LLC To 
Establish the Minimum Price Variation of $0.0001 for Orders and 
Quotations in Equity Securities that are Priced Below $1.00 Per Share

November 28, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on November 26, 2008, NYSE Alternext US LLC (the ``Exchange'' or 
``NYSE Alternext'') 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 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 Rule 62-NYSE Alternext Equities to 
conform with amendments to NYSE Rule 62 recently filed by the New York 
Stock Exchange LLC (``NYSE'').

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. The text of the proposed rule 
change is available on the Exchange's Web site, at the Exchange's 
principal office, and at the Commission's Public Reference Room.

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

1. Purpose
    The purpose of the proposed rule change is to amend Rule 62-NYSE 
Alternext Equities to conform with amendments to NYSE Rule 62 recently 
filed by the NYSE.

Background

    As described more fully in a related rule filing, NYSE Euronext 
acquired The Amex Membership Corporation (``AMC'') pursuant to an 
Agreement and Plan of Merger, dated January 17, 2008 (the ``Merger''). 
In connection with the Merger, the Exchange's predecessor, the American 
Stock Exchange LLC (``Amex''), a subsidiary of AMC, became a subsidiary 
of NYSE Euronext called NYSE Alternext U.S. LLC,\3\ and will continue 
to operate as a national securities exchange registered under Section 6 
of the Act.\4\ The effective date of the Merger was October 1, 2008.
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    \3\ See Securities Exchange Act Release No. 58673 (September 29, 
2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-2008-60 and SR-Amex 
2008-62) (approving the Merger).
    \4\ 15 U.S.C. 78f.
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    In connection with the Merger, the Exchange will relocate all 
equities trading conducted on the Exchange legacy trading systems and 
facilities located at 86 Trinity Place, New York, New York (the ``86 
Trinity Trading Systems''), to trading systems and facilities located 
at 11 Wall Street, New York, New York (the ``Equities Relocation''). 
The Exchange's equity trading systems and facilities at 11 Wall Street 
(the ``NYSE Alternext Trading Systems'') will be operated by the NYSE 
on behalf of the Exchange.\5\
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    \5\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63) (approving 
the Equities Relocation).
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    Similarly, the Exchange will relocate the trading of certain debt 
securities currently conducted on the 86 Trinity Trading Systems to an 
automated bond trading system (``NYSE Alternext Bonds'') that will be 
operated by the NYSE on behalf of the Exchange (the ``Bonds 
Relocation''). The Exchange will also relocate all options trading 
currently conducted on the 86 Trinity Trading Systems to new facilities 
of the Exchange to be located at 11 Wall Street, which will use a 
trading system based on the options trading system used by NYSE Arca, 
Inc. (the ``Options Relocation'').\6\
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    \6\ See 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) (together, approving 
the Bonds Relocation). The Exchange will submit a separate rule 
filing to adopt a new rule set to govern NYSE Alternext options 
trading following the Options Relocation.

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[[Page 73682]]

    Post-Merger, all Exchange members and member organizations that 
were authorized to trade on the Exchange before the Merger will receive 
trading permits (referred to as ``86 Trinity Permits'') that authorize 
continued trading on the 86 Trinity Trading Systems. Holders of the 86 
Trinity Permits are eligible to apply for NYSE Alternext equities 
trading licenses or options trading permits upon the Equities or 
Options Relocation, as applicable.\7\ In addition, pursuant to the 
Merger, all NYSE Alternext members and member organizations that apply 
for NYSE Alternext equities trading licenses are automatically waived 
in as NYSE members and member organizations.\8\ Similarly, all NYSE 
members and member organizations are automatically waived in as NYSE 
Alternext members and member organizations.\9\
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    \7\ See Securities Exchange Act Release No. 58706 (October 1, 
2008), 73 FR 59019 (October 8, 2008) (SR-NYSE-2008-70) (describing 
and approving membership rule changes related to the Merger); 
Securities Exchange Act Release No. 58705 (October 1, 2008), 73 FR 
58995 (October 8, 2008) (SR-Amex 2008-63) (approving the Equities 
Relocation).
    \8\ See NYSE Rules 2.10 and 2.20. NYSE Alternext members and 
member organizations will have a six-month grace period within which 
to meet NYSE and NYSE Alternext Equities membership requirements. 
See NYSE Rule 300.10T and NYSE Alternext Equities Rule 300.10T.
    \9\ See NYSE Alternext Equities Rules 2.10 and .20.
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The NYSE Alternext Equities Rules

    In order to implement the Equities and Bonds Relocations, the 
Exchange adopted NYSE Rules 1-1004 as the NYSE Alternext Equities Rules 
to govern all trading on the NYSE Alternext Trading Systems and NYSE 
Alternext Bonds. Because the NYSE Alternext Trading Systems and NYSE 
Alternext Bonds will be operated by the NYSE on behalf of the Exchange, 
the NYSE Alternext Equities Rules, which will become operative as of 
the date of the Equities and Bonds Relocations, are substantially 
identical to the current NYSE Rules 1-1004, subject to such changes as 
were necessary to apply the rules to the Exchange.\10\
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    \10\ 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) 
(together, approving the Bonds Relocation); and SR-NYSEALTR-2008-10 
(formally filed November 26, 2008) (adopting amendments to NYSE 
Alternext Equities Rules to track changes to corresponding NYSE 
Rules).
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Proposed Amendments to Rule 62-NYSE Alternext Equities

    The Exchange proposes to amend Rule 62-NYSE Alternext Equities to 
conform to amendments recently filed by the NYSE for its Rule 62.\11\
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    \11\ In its rule filing the NYSE proposed, in accordance with 
SEC Rule 612, to establish a minimum price variation of $0.0001 for 
orders and quotations in equity securities that are priced below 
$1.00 per share in order to enable the NYSE to accept orders in sub-
penny increments for those securities. See SR-NYSE-2008-123 
(formally filed November 26, 2008). The Exchange understands that 
the NYSE is in the process of modifying its trading systems to, in 
addition to accepting sub-penny orders, enable quotation and trading 
in sub-penny increments on the NYSE. These modifications to the NYSE 
trading systems will similarly modify the NYSE Alternext Trading 
Systems, and the Exchange will submit a companion rule filing at the 
same time the NYSE submits its rule filing for these system 
modifications.
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    The Exchange therefore proposes to amend Supplementary Material .10 
of Rule 62-NYSE Alternext Equities to include the following table of 
minimum price variation (MPV) values:

------------------------------------------------------------------------
                                                               Minimum
                 Price of order or interest                     price
                                                              variation
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Less than $1.00............................................       $.0001
$1.00-99,999.99............................................          .01
$100,000 and greater.......................................          .10
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    The Exchange further proposes to amend Supplementary Material .20 
of Rule 62-NYSE Alternext Equities to provide that, when an order for a 
security containing a sub-penny component (i.e., with MPV of $.0001) is 
received by the Exchange, the Exchange will round any bid price down to 
the next round penny and round any offer price up to the next round 
penny. The order will be sent to the NYSE Alternext Trading Systems and 
the Consolidated Quotation System with the rounded price, which will be 
used for all order handling purposes, including routing and execution.

Operative Date

    The Exchange proposes that the operative date of the proposed rule 
change be the date of the Equities and Bonds Relocations, currently 
scheduled for December 1, 2008.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\12\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\13\ in particular, in that it is designed to 
promote just and equitable principles of trade, 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 proposal 
also supports the principles of Section 11A(a)(1) \14\ of the Act in 
that it seeks to ensure the economically efficient execution of 
securities transactions, to make it practicable for brokers to execute 
investors' orders in the best market, and to provide an opportunity for 
investors' orders to be executed without the participation of a dealer.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ 15 U.S.C. 78k-1(a)(1).
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    The Exchange believes that the proposed rule change is necessary 
and appropriate to update the NYSE Alternext Trading Systems in 
conformity with changes made to the NYSE trading systems on which they 
are based, and, specifically, to conform Rule 62-NYSE Alternext 
Equities with the provisions of SEC Rule 612 by establishing the 
minimum price variation for securities trading on the Exchange below a 
$1.00.

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

    The Exchange believes that this proposal qualifies for immediate 
effectiveness upon filing as a non-controversial rule change pursuant 
to Section 19(b)(3)(A) of the Act \15\ and Rule 19b-4(f)(6) 
thereunder.\16\ The Exchange asserts that the proposed rule change (i) 
will not significantly affect the protection of investors or the public 
interest, (ii) will not impose any significant burden on competition, 
and (iii) by its terms, will not become operative for 30 days after the 
date of

[[Page 73683]]

this filing, or such shorter time as the Commission may designate, if 
consistent with the protection of investors and the public 
interest.\17\
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ In addition, Rule 19b-4(f)(6) requires a self-regulatory 
organization to give the Commission written notice of its intent to 
file 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 Commission has determined to 
waive the five-day pre-filing period in this case.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay, and designate the proposal as operative as of December 
1, 2008. NYSE Alternext notes that it has previously announced its 
intention to relocate its equities and bonds trading from the 86 
Trinity Trading Systems to the NYSE Alternext Trading Systems and NYSE 
Alternext Bonds on December 1, 2008, and has previously advised the 
Commission staff of its intention to harmonize the rules between NYSE 
and NYSE Alternext in order to facilitate this transition. Moreover, 
the Exchange believes that this filing is non-controversial because it 
is consistent with one that was previously submitted by NYSE for 
immediate effectiveness.\18\
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    \18\ See Securities Exchange Act Release No. 59025 (November 26, 
2008) (SR-NYSE-2008-123).
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    The Commission hereby grants the Exchange's request \19\ and 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest. The rule being adopted 
through this filing is based on a previously established rule of NYSE, 
and does not appear to raise any novel or significant issues. 
Furthermore, waiving the operative delay will facilitate the Equities 
Relocation, which is scheduled to occur on December 1, 2008. Therefore, 
the Commission designates the proposal operative as of December 1, 
2008.
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    \19\ 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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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-NYSEALTR-2008-11 the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEALTR-2008-11. 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 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-NYSEALTR-2008-11 and should be submitted on or before 
December 24, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).

J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E8-28679 Filed 12-2-08; 8:45 am]

BILLING CODE 8011-01-P