Document ID: SEC-2011-1914-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2011-12-09T05:00Z

[Federal Register Volume 76, Number 237 (Friday, December 9, 2011)]
[Notices]
[Pages 77038-77040]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31602]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65887; File No. SR-NYSEAmex-2011-91]

Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Amex 
Equities Rule 72 Priority of Bids and Offers and Allocation of 
Executions

 December 5, 2011.
    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 November 21, 2011, NYSE Amex LLC (the ``Exchange'' or ``NYSE 
Amex'') filed with the Securities and Exchange Commission 
(``Commission'') the

[[Page 77039]]

proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Exchange filed the proposal as 
a ``non-controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 72 (Priority 
of Bids and Offers and Allocation of Executions). The text of the 
proposed rule change is available at the Exchange, at http://www.nyse.com, at the Commission's Public Reference Room, and at http://www.sec.gov.

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 Exchange proposes to amend NYSE Amex Equities Rule 72 (Priority 
of Bids and Offers and Allocation of Executions).\5\
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    \5\ The provisions of NYSE Amex Equities Rule 72 are in effect 
during a pilot (``New Market Model Pilot'') that is set to end on 
January 31, 2012. The Exchange adopted the New Market Model Pilot 
pursuant to its merger with the New York Stock Exchange LLC 
(``NYSE''). See Securities Exchange Act Release No. 59022 (November 
26, 2008), 73 FR 73683 (December 3, 2008) (SR-NYSEALTR-2008-10). See 
also Securities Exchange Act Release Nos. 60758 (October 1, 2009), 
74 FR 51639 (October 7, 2009) (SR-NYSEAmex-2009-65) (extending Pilot 
to November 30, 2009); 61030 (November 19, 2009), 74 FR 62365 
(November 27, 2009) (SR-NYSEAmex-2009-83) (extending Pilot to March 
30, 2010); 61725 (March 17, 2010), 75 FR 14223 (March 24, 2010) (SR-
NYSEAmex-2010-28) (extending Pilot to September 30, 2010); 62820 
(September 1, 2010), 75 FR 54935 (September 9, 2010) (SR-NYSEAmex-
2010-86) (extending Pilot to January 31, 2011); 63615 (December 29, 
2010), 76 FR 611 (January 5, 2011) (SR-NYSEAmex-2010-123) (extending 
Pilot to August 1, 2011); and 64773 (June 29, 2011), 76 FR 39453 
(July 6, 2011) (SR-NYSEAmex-2011-43) (extending Pilot to January 31, 
2012).
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    As provided under NYSE Amex Equities Rule 72(a)(ii), a bid or offer 
is considered the ``setting interest'' when it is established as the 
only displayable bid or offer made at a particular price and is the 
only displayable interest when such price is or becomes the Exchange 
best bid or offer (``BBO''). Setting interest is entitled to priority 
for allocation of executions at that price, as provided for under NYSE 
Amex Equities Rule 72. In this regard, and as currently provided for 
under NYSE Amex Equities Rule 72(a)(ii)(G), if non-pegging interest is 
the setting interest, it retains its priority even if joined at that 
price by a pegging e-Quote.\6\ If, however, at the time non-pegging 
interest becomes the Exchange BBO, an e-Quote is pegging to such non-
pegging interest, all such interest is considered to be entered 
simultaneously and, therefore, no interest is considered the setting 
interest.
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    \6\ See Rule 70.26--Pegging for d-Quotes and e-Quotes.
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    Since implementing this rule as part of the New Market Model Pilot, 
the Exchange has determined that NYSE Amex Equities Rule 72(a)(ii) may 
currently disincentivize aggressive displayed quoting by permitting 
pegging e-Quotes to eliminate the priority to which a non-pegging e-
Quote might otherwise be entitled. Specifically, because pegging 
interest is not displayed until it joins non-pegging interest, the 
participant entering the non-pegging interest is unaware that one or 
more pegging e-Quotes at that price may exist. Because the goal of the 
setting interest, and related priority given to such interest, is to 
create an incentive for participants to display aggressive prices, a 
participant may be reluctant to enter such displayed interest if a non-
displayed pegging e-Quote could impede such displayed interest from 
receiving priority. The Exchange therefore proposes to amend NYSE Amex 
Equities Rule 72(a)(ii)(G) to reflect that non-pegging interest that 
becomes the Exchange BBO will be considered the setting interest even 
if an e-Quote is pegging to such non-pegging interest.\7\ In this 
regard, the Exchange believes that this proposed change would enhance 
the New Market Model's positive impact on the Exchange's market, on the 
Exchange's members, and on investors generally.
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    \7\ Non-pegging interest that is the setting interest will 
continue to retain its priority even if joined at that price by a 
pegging e-Quote. See id.
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    Because of the related technology changes that this proposed rule 
change would require, the Exchange proposes to announce the initial 
implementation date and related roll-out schedule, if applicable, via 
Trader Update.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\8\ in general, and 
furthers the objectives of Section 6(b)(5),\9\ in particular, because 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in 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 rule change meets these requirements because 
it would permit non-pegging interest that sets a new BBO to be 
considered the setting interest and therefore retain priority, as 
provided for under NYSE Amex Equities Rule 72, over a pegging e-Quote 
that reacts and pegs to such non-pegging interest. Accordingly, the 
proposal is designed to incentivize and reward aggressive displayed 
quoting by market participants, which contributes to the market quality 
of the Exchange. In this regard, the Exchange believes that this 
proposed change would enhance the New Market Model's positive impact on 
the Exchange's market, on the Exchange's members, and on investors 
generally.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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.

[[Page 77040]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, 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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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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    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:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEAmex-2011-91 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-2011-91. This 
file number should be included on the subject line if email 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 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-NYSEAmex-2011-91 and should 
be submitted on or before December 30, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-31602 Filed 12-8-11; 8:45 am]
BILLING CODE 8011-01-P