Document ID: SEC-2009-1378-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by New York Stock Exchange LLC, as Modified by Amendment No. 1, Amending NYSE Rule 36 To Permit the Use of Personal Portable or Wireless Communication Devices Off the Exchange Trading Floor and Outside Other Restricted Access Areas
Posted Date: 2009-09-28T04:00Z

[Federal Register: September 28, 2009 (Volume 74, Number 186)]
[Notices]               
[Page 49431-49434]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28se09-116]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60691; File No. SR-NYSE-2009-84]

 
Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by New York Stock Exchange LLC, as Modified by Amendment No. 1, 
Amending NYSE Rule 36 To Permit the Use of Personal Portable or 
Wireless Communication Devices Off the Exchange Trading Floor and 
Outside Other Restricted Access Areas

September 18, 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 August 27, 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, 
II, and III below, which Items have been prepared by the Exchange. On 
September 17, 2009, the Exchange filed Amendment No. 1 to the proposed 
rule change.\4\ The Commission is publishing this notice to solicit 
comments on the proposed rule change, as modified by Amendment No. 1, 
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.
    \4\ Amendment No. 1 supersedes and replaces the original filing 
in its entirety.
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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 36 (Communications Between 
Exchange and Members' Offices) to permit the use of personal portable 
or wireless communication devices off the Exchange Trading Floor. 
Amendment No. 1 supersedes the original filing in its entirety. 
Amendment No. 1 serves to clarify in the rule text the specific areas 
where employees of member organizations are permitted to use personal 
portable or wireless communications devices.\5\ The text of the 
proposed rule change is available at the Exchange, the Commission's 
Public Reference Room, and http://www.nyse.com.
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    \5\ The Commission notes that the rule text makes clear that 
personal portable or wireless communication devices can only be used 
outside of the Trading Floor and all other restricted access areas.
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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
    This Amendment No. 1 to SR-NYSE-2009-84 supersedes and replaces the 
original filing in its entirety.
    The purpose of the proposed rule changes is to amend NYSE Rule 36 
(Communications Between Exchange and Members' Offices) to permit the 
use of personal portable or wireless communication devices off the 
Exchange Trading Floor.\6\
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    \6\ The Exchange's corporate affiliate, NYSE Amex LLC (``NYSE 
Amex''), has submitted a companion filing. See SR-NYSE-Amex-2009-57. 
The Commission notes that the rule text makes clear that personal 
portable or wireless communication devices can only be used outside 
of the Trading Floor and all other restricted access areas. See 
supra note 5.
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Current Rule 36
    NYSE Rule 36 prohibits members and member organizations from 
establishing or maintaining any telephonic or electronic communication, 
including the usage of any portable or wireless communication devices 
(i.e. cellular phone, wireless pager, BlackBerryTM etc.), 
between the Floor and any other location without prior Exchange 
approval.
    Under Rule 36, notwithstanding the general prohibition on the use 
of portable or wireless communication devices, Floor brokers may use 
Exchange authorized and issued portable phones on the Floor to 
communicate with both member firms and non-members off the Floor, 
subject to certain restrictions.\7\ Floor brokers

[[Page 49432]]

may not, however, use Exchange authorized and issued devices on the 
NYSE Amex Options Trading Floor (as defined in NYSE Rule 6A).\8\ See 
Rule 36, Supplementary Material .20-.23.
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    \7\ Prior to the implementation of a pilot program in 2003, Rule 
36 prohibited, inter alia, the use of any portable or wireless 
communication devices on the Floor of the Exchange. In 2003, the 
Commission approved a six-month pilot program under NYSE Rule 36 for 
the use of portable phones by Floor brokers on the Floor of the 
Exchange, which was subsequently extended several times to June 30, 
2008. See footnotes 5 through 7 in Securities Exchange Act Release 
No. 58068 (June 30, 2008), 73 FR 39363 (July 9, 2008) (SR-NYSE-2008-
20). In July 2008 the Commission approved the Exchange's proposed 
amendments to Rule 36, making the pilot program permanent. See id. 
(order approving the amendments to Rule 36).
    \8\ All members and member firm employees who use an Exchange 
authorized and issued portable phone must execute a written 
acknowledgement as to the usage of the phone and authorizing the 
Exchange to receive data and records related to incoming and 
outgoing calls. See NYSE Information Memos 08-40 (August 14, 2008) 
and 08-41 (August 14, 2008) (concerning the use of Exchange 
authorized and issued portable phones on the Floor). See also NYSE/
NYSE Amex Information Memo 08-66 (December 22, 2008).
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    Designated Market Makers (``DMMs'') may, subject to restriction, 
maintain at their posts telephone lines to the off-Floor offices of the 
DMM unit or the unit's clearing firm.\9\ Such telephone lines may only 
be used to enter options or futures hedging orders through the DMM 
unit's off-Floor office or the unit's clearing firm, or through a 
member (on the Floor) of an options or futures exchange. These lines 
may not, however, be used for the purpose of transmitting to the Floor 
orders for the purchase or sale of securities. DMMs are also permitted 
to use at their posts wired or wireless devices, including computer 
terminals or laptops, that are registered with the Exchange to 
communicate with their system algorithms. See Rule 36.30.
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    \9\ The role of DMMs and their obligations on the Exchange are 
described in Securities Exchange Act Release No. 58845 (October 24, 
2008), 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46).
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    Under Rule 36, the use of all other portable or wireless 
communication devices on the Floor is prohibited.
    The prescriptions of Rule 36 must be viewed in conjunction with 
NYSE Rules 6 (``Floor'') and 6A (``Trading Floor''). Under Rule 6, the 
term ``Floor'' is defined as ``the trading Floor of the Exchange and 
the premises immediately adjacent thereto, such as the various 
entrances and lobbies of the 11 Wall Street, 18 New Street, 8 Broad 
Street, 12 Broad Street and 18 Broad Street Buildings, and also means 
the telephone facilities available in these locations.'' The Exchange 
has issued interpretive guidance that the ``Floor'' also includes the 
areas outside the ``Blue Line'' (member and member organization booths 
adjacent to the trading Floor) and ``any area reserved primarily for 
members, including members' lounges and bathrooms.''\10\
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    \10\ See NYSE/NYSE Amex Information Memo 08-66 (December 22, 
2008).
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    In addition, under recently adopted Rule 6A, the ``Trading Floor'' 
is within the area of the ``Floor'' and defined as ``the restricted-
access physical areas designated by the Exchange for the trading of 
securities, commonly known as the `Main Room' and the `Garage.''' In 
accordance with Rule 6A, the Trading Floor does not, however, include 
the areas where NYSE Amex-listed options are traded, commonly known as 
the ``Blue Room'' and the ``Extended Blue Room'' (the ``NYSE Amex 
Options Trading Floor'').\11\
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    \11\ Pursuant to the definitions of ``Floor'' and ``Trading 
Floor'' in NYSE Rules 6 and 6A, and corresponding Rules 6- and 6A--
NYSE Amex Equities, the NYSE and NYSE Amex Equities Trading Floors 
overlap and thus references in the proposed rule text as well as in 
the 19b-4 to ``Trading Floor'' include the NYSE Amex Equities 
Trading Floor. See Securities Exchange Act Release No. 59479 (March 
2, 2009), 74 FR 10325 (March 10, 2009) (SR-NYSE-2009-23) (adopting, 
inter alia, NYSE Rule 6A). As noted in footnote 4, NYSE Amex has 
proposed corresponding rule changes for its members and member 
organizations. See SR-NYSE-Amex-2009-57.
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Proposed Rule Changes
    The Exchange proposes to amend Rule 36.23 to permit members and 
member firm employees to use personal portable or wireless 
communications devices outside the Trading Floor (i.e. outside the 
turnstiles or card swipe pads that electronically release locked doors 
to permit authorized entry).\12\
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    \12\ See supra note 5.
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    Although there are other areas on the Exchange's premises where 
personal communications devices may be used by members and member firm 
employees (e.g., the cafeteria in 11 Wall Street), these areas are 
either too far from the Trading Floor to be practical or do not have 
adequate reception for such devices. Thus, due to the prescriptions of 
Rule 36 and the broad definition of ``Floor'' under Rule 6, Exchange 
members and member firm employees are effectively required to leave the 
physical premises of the Exchange's buildings and facilities in order 
to use their personal portable or wireless communications devices. Once 
outside, members and member firm employees may use their personal 
phones, BlackBerryTM or other devices to make personal calls 
and these conversations are not subject to the requirements of Rule 36. 
The requirement to leave the physical premises of the Exchange's 
buildings and facilities to make personal communications can be overly 
burdensome, particularly during times of inclement weather. It is also 
burdensome to ask a member or member firm employee to go outside to 
make a personal call when there is no regulatory purpose for requiring 
personal calls to be made outside as opposed to inside the Exchange's 
facilities.
    The Exchange thus proposes to amend Rule 36.23 to provide a limited 
exception permitting members and member firm employees to use personal 
portable or wireless communications devices in designated areas of the 
Exchange's buildings and facilities that fall within the technical 
definition of the Floor under Rule 6, but that are outside the Trading 
Floor as defined under Rule 6A. The proposed changes would permit 
members and member firm employees to use their personal communications 
devices in the hallways, stairwells, lobbies or members-only areas of 
the Exchange premises that are adjacent to the Trading Floors of the 
Exchange, NYSE Amex Options and/or NYSE Amex Equities.\13\ 
Specifically, such usage would be permitted in the lobby areas of the 
Exchange's facilities at 11 Wall Street, 6 and 18 New Street, and 2, 
12, 18 and 20 Broad Street, as well as in the corridor in front of the 
interior elevator bank inside of 18 Broad Street. Again, it is 
important to note that a member would need to re-enter the Trading 
Floor from these areas through a restricted access point (i.e. 
turnstiles or card swipe pads that electronically release locked doors 
to permit authorized entry).\14\
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    \13\ It is important to note that the NYSE Amex Options Trading 
Floor is within the restricted access perimeter that encompasses the 
NYSE Trading Floor and thus member and member firm employees would 
not be permitted to use such devices in that space under the terms 
of the proposed Rule defining where such devices are permissible. 
See proposed NYSE Rule 36.23. In addition, while the NYSE Amex 
Options Rules permit NYSE Amex Options members to use personal 
communications devices on the NYSE Amex Options Trading Floor, those 
rules prohibit NYSE Amex Options members from using those devices on 
the Trading Floor of the Exchange. See NYSE Amex Options Rule 902NY.
    \14\ The majority of the doors that require card swipe for entry 
are opaque.
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    In addition, such usage would need to be consistent with all other 
Exchange Rules and/or federal securities laws, including, but not 
limited to, the requirements of Securities Exchange Act Release Nos. 
33-7288 and 34-37182, concerning the ``Use of Electronic Media by 
Broker-Dealers, Transfer Agents, and Investment Advisers for Delivery 
of Information.''\15\ The Exchange represents that it will issue a 
notice to members that will, inter alia, remind them of their 
obligations under these

[[Page 49433]]

releases. Finally, the Exchange proposes corresponding technical 
amendments to Rule 36.20.
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    \15\ See Securities Exchange Act Release Nos. 33-7288 and 34-
37182 (May 9, 1996), 61 FR 24643 (May 15, 1996) (S7-13-96). See also 
FINRA Regulatory Notice 2007-59 (December 7, 2007), concerning the 
supervision of electronic communications.
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    In proposing this limited exception, the Exchange seeks to provide 
its members and member firm employees with a reasonable and comfortable 
space inside the physical confines of the Exchange's buildings and 
facilities within which they may use their personal portable or 
wireless communication devices, without diminishing the ability to 
monitor and regulate their conduct. The Exchange believes that the 
distance afforded by allowing a DMM, for example, to use a personal 
portable or wireless communication device outside the turnstiles is, in 
essence, equivalent to requiring a DMM to leave the Exchange's premises 
to do the same. Any time or place advantage to using such devices 
outside the turnstiles is significantly reduced by the fact that a DMM 
has no line of sight and no ability to hear trading activity on the 
Floor and the speed of electronic trading would likely render stale any 
information a DMM had prior to leaving his or her post on the Trading 
Floor.
    In addition, the proposed amendments do not change the current 
obligations of members and member firm employees to use their personal 
portable or wireless communication devices consistent with Exchange 
Rules and federal securities laws. Floor brokers would still be limited 
to using only Exchange authorized and issued portable phones on the 
Exchange Trading Floor and DMMs would still only be permitted to use 
registered telephone lines and/or wired or wireless devices at their 
posts, and all such devices and communications would continue to be 
regulated by the Exchange. All other usage of portable or wireless 
communication devices on the Trading Floor would continue to be 
prohibited.
    Finally, the Exchange would still retain jurisdiction over its 
members and member firm employees to regulate conduct that is 
inconsistent with Exchange Rules and/or the federal securities laws 
(e.g., trading ahead, insider trading, market manipulation).
2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with, and further the objectives of, Section 6(b)(5) of the Act,\16\ in 
that they are designed to prevent fraudulent and manipulative acts and 
practices, 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.
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    \16\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule changes are consistent 
with these principles because they do not modify the current prescribed 
uses (and limitations thereof) of personal portable or wireless 
communications devices. Rather, they merely change where those devices 
may be used to reflect the reality of the current trading environment, 
in which any time and place advantage to using such devices outside the 
Trading Floor and other restricted access areas is significantly 
reduced by the fact that a DMM or Floor broker has no line of sight or 
ability to hear trading activity on the Trading Floor. The Exchange 
further believes that, given the current speed of Exchange systems and 
the marketplace, any information a DMM obtained prior to leaving his or 
her post would be rendered stale by the time the DMM is outside the 
turnstiles. As such, the location change for the use of personal 
portable or wireless communication devices in the current trading 
environment is consistent with the Exchange's current regulatory 
controls governing the used of personable portable or wireless 
communication devices on the Floor, which were previously approved by 
the Commission or submitted by the Exchange for immediate 
effectiveness.\17\
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    \17\ See Securities Exchange Act Release No. 58068 (June 30, 
2008), 73 FR 39363 (July 9, 2008) (SR-NYSE-2008-20); and Securities 
Exchange Act Release No. 59479 (March 2, 2009), 74 FR 10325 (March 
10, 2009) (SR-NYSE-2009-23).
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    The Exchange further believes that the proposal will permit 
Exchange members and member firm employees to, within the existing 
regulatory framework at the Exchange, efficiently and effectively 
conduct business on the Trading Floor and engage in personal 
communications while off the Trading Floor.

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 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-2009-84 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-2009-84. 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 Section, 100 F Street, 
NE., Washington, DC 20549, on official business days

[[Page 49434]]

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-
NYSE-2009-84 and should be submitted on or before October 19, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-23304 Filed 9-25-09; 8:45 am]

BILLING CODE 8010-01-P