Document ID: SEC-2010-0945-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2010-06-28T04:00Z

[Federal Register: June 28, 2010 (Volume 75, Number 123)]
[Notices]               
[Page 36737-36739]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28jn10-135]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62356; File No. SR-NYSE-2010-44]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Rule 1000 Regarding Order Size Eligible for Automatic 
Execution

June 22, 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 17, 2010, 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 
and II below, which Items have been prepared by the self-regulatory

[[Page 36738]]

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 Exchange Rule 1000 regarding order 
size eligible for automatic execution. The text of the proposed rule 
change is available at the Exchange, the Commission's Public Reference 
Room, the Commission's Web site at http://www.sec.gov, 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 1000 to state that the order 
size eligible for automatic execution is 1,000,000 shares and to 
provide that upon advance notice to market participants, the Exchange 
may increase the order size eligible for automatic executions up to 
5,000,000 shares on a security-by-security basis. In addition, the 
Exchange proposes to raise the maximum order size accepted by Exchange 
systems to 25,000,000 shares.
Background
    Currently, the maximum order size eligible for automatic execution 
is 1,000,000 shares. This limit is reflected in Exchange rule filings 
that have been approved by the Commission, but it is not specifically 
stated in Rule 1000. In 2006, as part of the approval of the NYSE 
Hybrid Model, the Exchange amended Rule 1000 to provide for a phased-in 
increase of order size eligibility for automatic execution to a maximum 
size of 3,000,000, but noted that the then-current order size 
eligibility for automatic execution was 1,000,000 shares.\4\ The 
Exchange determined not to raise the 1,000,000 share maximum in order 
to avoid any possible issues resulting from routing orders in excess of 
1,000,000 shares to another market as other markets also do not offer 
automatic execution in greater size than 1,000,000 shares.
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    \4\ See Securities Exchange Act Release No. 54820 (November 26 
[sic], 2006), 71 FR 70824 (December 6, 2006) (SR-NYSE-2006-65).
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    In 2008, the Exchange implemented on a pilot basis its New Model 
structure.\5\ Among other things, the Exchange's New Model filing 
included amendments to Rule 1000 to provide for a phased-in increase of 
order size eligibility for automatic execution from 3,000,000 shares to 
a maximum of 6,500,000 shares. At that time, the Exchange intended to 
raise the maximum order size accepted by Exchange systems to 6,500,000 
shares. While the rule text states that the order size eligibility is 
3,000,000 shares, the New Model filing indicates that the maximum order 
size eligible for automatic execution is 1,000,000 shares and states 
that the purpose of the amendment to Rule 1000 was to provide for a new 
potential maximum order ``size eligibility'' of 6,500,000 shares.
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    \5\ See Securities Exchange Act Release No. 58845 (October 24, 
2008), 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46); See also 
Securities Exchange Act Release Nos. 60756 (October 1, 2009), 74 FR 
51628 (October 7, 2009) (SR-NYSE-2009-100) (extending the operation 
of the New Model Pilot until the earlier of Securities and Exchange 
Commission approval to make such pilot permanent or November 30, 
2009); 61031 (November 19, 2009), 74 FR 62368 (November 27, 2009) 
(SR-NYSE-2009-113) (extending Pilot to March 30, 2010); and 61724 
(March 17, 2010), 75 FR 14221 (May [sic] 24, 2010) (SR-NYSE-2010-25) 
(extending the operation of the NMM Pilot until the earlier of 
Securities and Exchange Commission approval to make such pilot 
permanent or September 30, 2010).
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Proposed Amendment to NYSE Rule 1000
    The Exchange proposes three amendments to Rule 1000. First, the 
Exchange proposes to amend Rule 1000 to state specifically that orders 
up to 1,000,000 shares are eligible for automatic execution. Second, 
the Exchange proposes that upon at least 24 hours advance notice to 
market participants, the execution size of automatic executions may be 
increased up to 5,000,000 shares on a security-by-security basis. 
Determination of such securities will be based on factors including the 
basis of average daily volume and price over a calendar quarter. A list 
of such securities will be posted on the Exchange Web site. Third, the 
Exchange proposes to amend Rule 1000 to state that Exchange systems 
shall accept a maximum order size of 25,000,000 shares.
    The Exchange notes that parallel changes are proposed to be made to 
the rules of the NYSE Amex LLC.\6\
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    \6\ See SR-NYSEAmex-2010-54.
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2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'') 
\7\ for this proposed rule change is the requirement under section 
6(b)(5) \8\ 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 Exchange believes that the proposed rule change accomplishes these 
goals by providing transparency regarding the order size eligible for 
automatic execution, while providing for a mechanism to increase that 
execution size on a security-by-security basis.
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    \7\ 15 U.S.C. 78a.
    \8\ 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 proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) does not become 
operative for 30 days after the date of the 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) of the Act \9\ and 
Rule 19b-4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii) 
under the Act, the Exchange is required to give the Commission 
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 satisfied this requirement.

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[[Page 36739]]

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \11\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \12\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay.
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiver of the operative delay is 
consistent with the protection of investors and the public interest. 
The proposed rule change clarifies the maximum order size accepted by 
the Exchange's systems and the maximum order size eligible for 
automatic execution. The proposed rule change also specifies that any 
increases in the order size eligible for automatic execution will 
require advance notice to Exchange members. In addition, the Exchange 
represented that a list of such securities will be posted on its Web 
site. For these reasons, the Commission believes that the proposed rule 
change is consistent with the protection of investors and the public 
interest, and designates the proposed rule change to be operative upon 
filing with the Commission.\13\
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    \13\ 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. 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 the 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 No. SR-NYSE-2010-44 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 No. SR-NYSE-2010-44. 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,\14\ 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 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 a.m. and 3 p.m. Copies of such filing also will be 
available for inspection and copying at the principal office of NYSE. 
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 No. SR-NYSE-2010-44 and 
should be submitted on or before July 19, 2010.
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    \14\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov.
    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-15594 Filed 6-25-10; 8:45 am]
BILLING CODE 8010-01-P