Document ID: SEC-2009-1140-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2009-08-11T04:00Z

[Federal Register: August 11, 2009 (Volume 74, Number 153)]
[Notices]               
[Page 40271-40273]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11au09-139]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60425; File No. SR-NYSEAMEX-2009-49]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Amex LLC Amending NYSE 
Amex Equities Rule 103B to Modify the Composition of the Exchange 
Selection Panel; and Prohibit any Ex Parte Communications During and 
Regarding the Selection Process between the DMM Units and the 
Individuals Serving on the Exchange Selection Panel

August 4, 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 July 27, 2009, 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 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.
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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 NYSE Amex Equities Rule 103B 
(``Security Allocation and Reallocation'') to: (1) Modify the 
composition of the Exchange Selection Panel; and (2) prohibit any ex 
parte communications during and regarding the selection process between 
the DMM units and the individuals serving on the Exchange Selection 
Panel. The text of the proposed rule change is available at the 
Exchange, the Commission's Public Reference Room, and http://
www.nyse.com.\4\
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    \4\ The Commission notes that the Exchange inadvertently marked 
certain portions of the rule text incorrectly. Specifically, in 
paragraph (III)(B)(1) of Rule 103B the Exchange failed to indicate 
the deletion of a comma after ``his or her designee''and failed to 
mark ``; (b)'' as new text. In addition, the Exchange marked as new 
text one letter in a sentence being deleted from paragraph 
(III)(B)(1) of Rule 103B.
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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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NYSE Amex LLC (``NYSE Amex'' or ``Exchange''), formerly the 
American Stock Exchange LLC, proposes to amend NYSE Amex Equities Rule 
103B (``Security Allocation and Reallocation'') to: (1) Modify the 
composition of the Exchange Selection Panel; and (2) Prohibit any ex 
parte communications during and regarding the selection process between 
the DMM units and the individuals serving on the Exchange Selection 
Panel.
    The Exchange notes that parallel changes are proposed to be made to 
the rules of the New York Stock Exchange LLC (``NYSE'').\5\
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    \5\ See SR-NYSE-2009-74.
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Background
    As described more fully in a related rule filing,\6\ 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 US LLC, and continues to operate 
as a national securities exchange registered under Section 6 of the 
Securities Exchange Act of 1934, as amended (the ``Act'').\7\ The 
effective date of the Merger was October 1, 2008.
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    \6\ 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).
    \7\ 15 U.S.C. 78f.
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    In connection with the Merger, on December 1, 2008, 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''). The Exchange's equity trading 
systems and facilities at 11 Wall Street (the ``NYSE Amex Trading

[[Page 40272]]

Systems'') are operated by the NYSE on behalf of the Exchange.\8\
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    \8\ 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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    As part of the Equities Relocation, NYSE Amex adopted NYSE Rules 1-
1004, subject to such changes as necessary to apply the Rules to the 
Exchange, as the NYSE Amex Equities Rules to govern trading on the NYSE 
Amex Trading Systems.\9\ The NYSE Amex Equities Rules, which became 
operative on December 1, 2008, are substantially identical to the 
current NYSE Rules 1-1004 and the Exchange continues to update the NYSE 
Amex Equities Rules as necessary to conform with rule changes to 
corresponding NYSE Rules filed by the NYSE.
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    \9\ 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, 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 Alternext 
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 Alternext Equities to track changes to 
corresponding NYSE Rule 62).
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NYSE Amex Equities Rule 103B--Allocation Process
    Currently, pursuant to NYSE Amex Equities Rule 103B, an issuer may 
select the DMM unit that will be assigned its security or delegate the 
selection of the DMM unit to the Exchange. If the issuer authorizes the 
Exchange to select the DMM unit to trade its security, an Exchange 
Selection Panel (the ``ESP'' or the ``Panel'') is convened to select 
the DMM unit based on a review of all information that would be 
available to the issuer. The Panel is comprised of three members of the 
Exchange's Senior Management, as designated by the Chief Executive 
Officer (``CEO'') of the Exchange or his or her designee, one non-DMM 
Executive Floor Governor (``EFG'') and two non-DMM Floor Governors 
(``FGs''). The non-DMM EFG and non-DMM FGs are designated on a rotating 
basis. The Panel's decision is made by majority vote. In the event of a 
tie, the CEO of the Exchange or his/her designee makes the final 
decision. The Exchange then informs the issuer of the DMM unit selected 
by the Panel.
Proposed Amendments
    The Exchange proposes to amend NYSE Amex Equities Rule 103B to 
modify the composition of the Panel in order to ensure consistent Floor 
participation in the selection process and minimize delays due to 
scheduling conflicts.
    The current composition of the Panel has proven difficult when 
scheduling the required participants within five days of the issuer's 
request. The Exchange therefore seeks to amend NYSE Amex Equities Rule 
103B to modify the representation on the Panel to include: (1) At least 
one member of the Exchange's Senior Management; (2) any combination of 
two Exchange Senior Management or Exchange Floor Operations Staff, to 
be designated by the Executive Vice-President of Exchange Floor 
Operations or his/her designee; and (3) any combination of three non-
DMM EFGs or non-DMM FGs for a total of six members.
    Finally, to reinforce the integrity and objectivity of the ESP 
selection process, the Exchange proposes to amend NYSE Amex Equities 
Rule 103B to explicitly prohibit any communications regarding the 
selection process between the Panelists and the DMM units. The Exchange 
proposes to have communication regarding the selection process cease 
from the time the issuer delegates the selection responsibility to the 
Exchange until the Panel selects the DMM unit to trade the issuer's 
security.
2. Statutory Basis
    The basis under the Act for the proposed rule change is the 
requirement under Section 6(b)(5),\10\ which requires that an exchange 
have rules that are designed 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 Exchange believes that 
the proposed amendments are consistent with these objectives. The 
amendments sought herein seek to streamline and facilitate the process 
of assigning securities to DMM units by allowing for more flexibility 
in composing the Panel which ultimately facilitates and expedites the 
allocation and ultimately the trading of securities on the Exchange. 
Furthermore, the proposed amendment to prohibit communications between 
the Panel and the DMM units preserves the integrity and impartiality of 
the allocation process and therefore protects the public interest.
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    \10\ 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

    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 this 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) \11\ of the Act and Rule 19b-4(f)(6) 
thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written 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. The Exchange has fulfilled this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
may not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \14\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange requests that the 
Commission waive the 30-day operative delay, as specified in Rule 19b-
4(f)(6)(iii),\15\ which would make the rule change operative upon 
filing. The Commission believes that waiving the 30-day operative delay 
is consistent with the protection of investors and the public interest 
because such waiver will allow the Exchange to immediately streamline 
the process of allocating securities to

[[Page 40273]]

DMM units. In addition, by prohibiting communications regarding the 
selection process between members of the Panel and DMM units, the 
Exchange will be able to immediately reinforce impartiality and 
fairness during the selection process.\16\ Accordingly, the Commission 
designates the proposed rule change operative upon filing with the 
Commission.
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    \13\ Id.
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ Id.
    \16\ 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).
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    At any time within 60 days of the filing of such 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.

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-NYSEAMEX-2009-49 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-2009-49. 
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, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of the filing will also be available for 
inspection and copying at the principal office of the self-regulatory 
organization. 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-2009-49 and should be submitted on or before September 1, 
2009.

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-19120 Filed 8-10-09; 8:45 am]

BILLING CODE 8010-01-P