Document ID: SEC-2010-1251-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2010-08-17T04:00Z

[Federal Register: August 17, 2010 (Volume 75, Number 158)]
[Notices]               
[Page 50785-50787]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17au10-85]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62668; File No. SR-NYSEAMEX-2010-82]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Amex LLC Amending Rule 
15--NYSE Amex Equities To Clarify Use of the Last Sale on the Exchange 
as the Reference Price and To Define the Reference Price of a Security 
in the Event That There Is No Last Sale in That Security on the 
Exchange

August 9, 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 August 5, 2010, 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 Rule 15--NYSE Amex Equities to 
clarify use of the last sale on the Exchange as the reference price and 
to define the reference price of a security in the event that there is 
no last sale in that security on the Exchange. The text of the proposed 
rule change is available at the Exchange, the Commission's Public 
Reference Room, 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 15--NYSE Amex Equities (Pre-
Opening Indications) to clarify use of the last sale on the Exchange as 
the reference price and to define the reference price of a security in 
the event that there is no last sale in that security on the 
Exchange.\4\
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    \4\ The Exchange's corporate affiliate, New York Stock Exchange 
LLC (``NYSE''), submitted a companion rule filing proposing 
corresponding amendments to NYSE Rule 15. See SR-NYSE-2010-57.
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Current Rule 15--NYSE Amex Equities

    Pursuant to Rule 15(a)--NYSE Amex Equities, a DMM must issue a pre-
opening indication if the DMM anticipates that the opening transaction 
will be at a price that represents a change from the security's 
previous day's closing price on the Exchange of more than the 
``applicable price change.'' \5\ In the case of an American Depositary 
Receipt (``ADR''), Rule 15(b)--NYSE Amex Equities sets forth provisions 
to take into account the closing price of the underlying security on 
the primary foreign market or a change from parity (as appropriate) in 
determining the applicable price change.
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    \5\ The applicable price change is $0.50 if the closing price of 
a security on the Exchange is under $20, $1.00 if the closing price 
of a security on the Exchange is $20-$49.99, $2.00 if the closing 
price of a security on the Exchange is $50-$99.99, $5.00 if the 
closing price of a security on the Exchange is $100-$500 and 1.5% if 
the closing price of a security on the Exchange is above $500.
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    In addition to the mandatory DMM pre-opening indications, pursuant 
to Rule 15(c)--NYSE Amex Equities, Exchange systems disseminate a data 
feed of real-time order imbalances that accumulate prior to the opening 
transaction on the Exchange and the price at which interest eligible to 
participate in the opening transaction may be executed in full (``Order 
Imbalance Information'').\6\ The Order Imbalance Information data feed 
includes all interest eligible for execution in the opening transaction 
of the security in Exchange systems and uses the previous trading day's 
closing price in the security on the Exchange as the reference price to 
indicate the number of shares required to open the

[[Page 50786]]

security with an equal number of shares on the buy side and the sell 
side. If, however, a mandatory pre-opening indication is published for 
a security pursuant to the provisions of Rule 15(a)-- or (b)-- NYSE 
Amex Equities, the Order Imbalance Information data feed determines the 
reference price based on a comparison of the bid and offer price of the 
mandatory pre-opening indication to the last sale on the Exchange.
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    \6\ The Order Imbalance Information is disseminated in 
accordance with Rule 15(c)(3)--NYSE Amex Equities. If the Exchange 
decides to change the frequency of the dissemination of the Order 
Imbalance Information, it will notify the Commission and the market 
as part of the required rule amendment process.
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    Rule 15--NYSE Amex Equities does not address determination of the 
reference price in an IPO or transferred security, and none of the 
alternatives specified in Rule 15(c)(2)(ii) are applicable as there 
would be no last sale on the Exchange the previous day.\7\
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    \7\ The Exchange notes that Rule 123D(1)--NYSE Amex Equities 
currently provides for mandatory pre-opening indications for IPOs if 
the price change as measured from the offering price meets the 
requirements for a mandatory indication as defined under the Rule. 
However, Rule 123D(1) generally pertains to situations involving 
unusual market activity and indications under that rule are sent to 
the Consolidated Tape. Rule 15--NYSE Amex Equities is intended to be 
a standardized process for the issuance of pre-opening indications 
under more normal market conditions and are available as part of the 
Exchange's proprietary datafeeds.
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Proposed Amendments to Rule 15--NYSE Amex Equities

    The Exchange believes that publication of mandatory pre-opening 
indications and dissemination of Order Imbalance Information with 
respect to IPOs and transferred securities would be beneficial to the 
market and in the public interest by providing additional information 
and transparency. Accordingly, the Exchange proposes to amend Rules 
15(a)- and (c)- NYSE Amex Equities to include parameters to establish a 
reference price for IPOs and transferred securities for both the 
mandatory pre-opening indication and the Order Imbalance Information 
data feed. Specifically, the Exchange proposes that the reference price 
be the offering price (i.e., ``deal price'') in the case of an IPO, or 
the last reported sale price on the securities market from which the 
security is being transferred. The Exchange Floor Official who is 
supervising the opening of the IPO or transferred security shall 
confirm that the DMM inputs the appropriate reference price for that 
listing in the Exchange system.
    The Exchange also proposes to amend parts (a)(1) and (c)(2) of Rule 
15--NYSE Amex Equities to provide that the reference price for pre-
opening indications is the last reported sale on the Exchange. The 
current text of Rule 15--NYSE Amex Equities provides that the 
``previous day's closing price on the Exchange'' will serve as the 
reference price. Typically, the last reported sale price is the price 
of the previous day's closing transaction on the Exchange. However, in 
some instances, there may not be a previous day's closing transaction 
in a security and, therefore, the last reported sale price prior to the 
close is the last execution on the Exchange. For example, if the 
Exchange halted trading in a security prior to 4 p.m. and did not 
reopen until the following trading day, there would not be any closing 
transaction in that security. Or, in the case of a thinly traded stock, 
the stock may not have traded at all on the previous day or the last 
transaction could have occurred prior to the close of trading at 4 p.m. 
and, absent any additional interest in the security being sent to the 
Exchange, there would not be a closing transaction in that security. 
Therefore, the Exchange proposes to amend Rule 15--NYSE Amex Equities 
to more accurately describe the reference price. In addition, the last 
reported sale price on the Exchange would not include any after-hours 
executions of a security on the Exchange.\8\
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    \8\ Currently, the only after-hours trading permitted on the 
Exchange is the entry of basket trades in Crossing Session II. The 
price of an individual security executed as part of a basket trade 
is not sent to the Consolidated Tape and therefore would not be 
reported as a last sale on the Exchange.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\10\ in particular, in that it 
is 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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change supports the 
objectives of the Act and will provide a benefit to the market while 
also protecting investors and the public interest by (i) filling a 
current gap in Exchange systems and by disseminating pre-opening 
indication and pre-opening Order Imbalance Information for IPOs and 
transferred securities, and (ii) more accurately describing the 
reference price, thereby providing greater transparency to customers 
prior to the opening transaction.

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 has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\13\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to 
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 Commission notes that the Exchange has satisfied 
this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend 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:

[[Page 50787]]

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-2010-82 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-2010-82. 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 Web site 
viewing and printing in the Commission's Public Reference Section, 100 
F Street, NE., Washington, DC 20549-1090, on official business days 
between 10 a.m. and 3 p.m. Copies of the filing will also be available 
for inspection and copying at the NYSE's principal office and on its 
Internet Web site at http://www.nyse.com. 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-2010-82 and should be submitted 
on or before September 7, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-20239 Filed 8-16-10; 8:45 am]
BILLING CODE 8010-01-P