Document ID: SEC-2008-1730-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Alternext US LLC
Posted Date: 2008-12-30T05:00Z

[Federal Register: December 30, 2008 (Volume 73, Number 250)]
[Notices]               
[Page 79962-79964]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30de08-148]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59120; File No. SR-NYSEALTR-2008-13]

 
Self-Regulatory Organizations; NYSE Alternext US LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Establish 
the Minimum Price Variation of $0.01 for Orders and Quotations in Bonds 
Admitted to Dealings on NYSE Alternext

December 18, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 16, 2008, NYSE Alternext US LLC (``NYSE Alternext'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``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 86--NYSE Alternext Equities to 
conform with amendments to NYSE Rule 86 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.

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 86--NYSE 
Alternext Equities to conform with amendments to NYSE Rule 86 recently 
filed by the NYSE that establish a

[[Page 79963]]

minimum price variation of $0.01 for orders and quotations in bonds 
admitted to dealings through the NYSE Bonds system.
Background
    As described more fully in a related rule filing,\3\ 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 
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, 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 Alternext Trading 
Systems'') are 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, on December 1, 2008, the Exchange relocated the trading 
of certain debt securities conducted on the 86 Trinity Trading Systems 
to an automated bond trading system (``NYSE Alternext Bonds'') that is 
operated by the NYSE on behalf of the Exchange (the ``Bonds 
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).
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    As part of the Equities and Bonds Relocations, NYSE Alternext 
adopted NYSE Rules 1-1004, subject to such changes as necessary to 
apply the rules to the Exchange, as the NYSE Alternext Equities Rules 
to govern trading on the NYSE Alternext Trading Systems and NYSE 
Alternext Bonds.\7\ The NYSE Alternext 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 
Alternext Equities Rules as necessary to conform with rule changes to 
corresponding NYSE Rules filed by the NYSE.
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    \7\ 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); 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 Alternext Bonds

    NYSE Alternext Bonds is the Exchange's electronic system for 
receiving, processing, executing and reporting bids, offers and 
executions in bonds. Rule 86--NYSE Alternext Equities prescribes how 
bonds are traded through the NYSE Alternext Bonds platform, including 
the receipt, execution and reporting of bond transactions. As noted 
above, and as described more fully in the filing adopting the platform 
for the Exchange, NYSE Alternext Bonds is based on NYSE Bonds and is 
operated by the NYSE on behalf of the Exchange.\8\
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    \8\ 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).
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Proposed Amendments to Rule 86--NYSE Alternext Equities
    The Exchange proposes to amend Rule 86--NYSE Alternext Equities to 
conform to amendments to NYSE Rule 86 recently filed by the NYSE that 
establish a minimum price variation to $0.01 for orders and quotations 
in bonds admitted to dealings through the NYSE Bonds system.\9\
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    \9\ See SR-NYSE-2008-129 (formally submitted on December 16, 
2008).
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    Rule 86(f)--NYSE Alternext Equities currently provides that NYSE 
Alternext Bonds will accept bids and offers in bonds priced to three 
decimal places ($0.001). The Exchange proposes to amend that paragraph 
to provide that, like NYSE Bonds, NYSE Alternext Bonds will accept bids 
and offers in bonds priced to two decimal places ($0.01).
    The Exchange believes that the proposed rule change is necessary 
and appropriate to update the NYSE Alternext Bonds platform in 
conformity with changes made to the NYSE Bonds platform on which it is 
based. In addition, the Exchange believes this change will place its 
bond trading on a more competitive basis with how bonds are traded on 
other systems. Since the implementation of NYSE Alternext Bonds, the 
Exchange has sought to increase liquidity on the platform. The Exchange 
believes that some of its potential liquidity providers, e.g., retail 
customers, have been reluctant to place orders representing such 
liquidity when there is a high possibility that their orders can be 
``stepped ahead'' by other orders that ``improve'' the price by a sub-
penny. To address this, the Exchange believes that a two decimal 
minimum price variation will act to level the playing field among its 
bond customers, and serve to make the Exchange bond market more 
attractive to a retail customer base.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\10\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\11\ 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) \12\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 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 Rule 86--NYSE Alternext Equities, governing 
the NYSE Alternext Bonds platform, to conform with changes made to the 
NYSE Bonds platform on which it is based. In addition, the Exchange 
believes the proposed rule change will place the NYSE Alternext Bonds 
platform on a more competitive basis with other markets trading bonds.

[[Page 79964]]

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 either 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 represented that the proposed rule change qualifies 
for immediate effectiveness pursuant to Section 19(b)(3)(A) of the Act 
\13\ and Rule 19b-4(f)(6) thereunder \14\ because it: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) by its terms, does not become operative for 30 days from the 
date on which it was filed, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest.\15\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ In addition, Rule 19b-4(f)(6)(iii) 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 notice requirement in 
this case.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay, so that the proposed rule change may become operative 
upon filing. The Commission hereby grants the Exchange's request and 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest.\16\ As a result of 
this action, the Exchange will be able to implement without undue delay 
a proposed rule change that reduces the likelihood of quotations or 
orders on NYSE Alternext Bonds from being stepped ahead of by an 
insignificant amount. Accordingly, the Commission designates the 
proposed rule change operative upon filing with the Commission.
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    \16\ For the 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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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

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-2008-13 on 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-2008-13. 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 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-2008-13 and should 
be submitted on or before January 20, 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,
Acting Secretary.
 [FR Doc. E8-30898 Filed 12-29-08; 8:45 am]

BILLING CODE 8011-01-P