Document ID: SEC-2012-0277-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2012-02-16T05:00Z

[Federal Register Volume 77, Number 32 (Thursday, February 16, 2012)]
[Notices]
[Pages 9287-9288]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-3611]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66371; File No. SR-NYSEAmex-2011-101]

Self-Regulatory Organizations; NYSE Amex LLC.; Order Granting 
Approval of Proposed Rule Change Amending NYSE Amex Equities Rules 504 
and 509 To Modify the Quoting Requirements Applicable to Designated 
Market Maker Units Registered in Nasdaq Stock Market Securities Traded 
on the Exchange Subject to the Unlisted Trading Privileges Pilot 
Program

February 10, 2012.

I. Introduction

    On December 15, 2011, NYSE Amex LLC (``NYSE Amex'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
modify the quoting requirements applicable to Designated Market Maker 
(``DMM'') units registered in Nasdaq Stock Market securities traded on 
the Exchange pursuant to a grant of unlisted trading privileges 
(``UTP''). The proposed rule change was published for comment in the 
Federal Register on December 30, 2011.\3\ The Commission received no 
comment letters on the proposal. This order approves the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 66043 (December 23, 
2011), 76 FR 82329 (``Notice'').
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II. Description of the Proposal

    Certain securities listed on Nasdaq may be traded on NYSE Amex 
pursuant to a grant of unlisted trading privileges as part of a pilot 
program on the Exchange (``UTP Pilot Program'').\4\ NYSE Amex's 
proposal seeks to modify the UTP Pilot Program's obligations imposed on 
DMM units who quote in such securities.
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    \4\ The UTP Pilot Program is scheduled to expire on the earlier 
of Commission approval to make such pilot permanent or July 31, 
2012. See Securities Exchange Act Release No. 66040 (December 23, 
2011), 76 FR 82324 (December 30, 2011).
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    Currently, under NYSE Amex Equities Rule 509(a)(1), DMM units who 
are registered in securities subject to the UTP Pilot Program must 
maintain continuous two-sided quotes at the National Best Bid or Offer 
(``NBBO'') with reasonable size for each such security for at least 10% 
of the time during the regular business hours of the Exchange for each 
calendar month.\5\ The proposal would amend NYSE Amex Equities Rule 
509(a)(1) to lower a DMM unit's quoting obligations for ``more active'' 
\6\ securities in the UTP Pilot Program from at least 10% of the time 
during the regular trading day to at least 5% of the time during the 
regular trading day.\7\ The proposed quoting obligations would continue 
to apply on a security-by-security basis. The current quoting 
obligation for ``less active'' securities, i.e., those with a 
consolidated average daily volume of less than one million shares per 
calendar month, would remain unchanged at 10% of the time during the 
regular trading day.
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    \5\ These obligations are also included within current NYSE Amex 
Equities Rule 504.
    \6\ Under NYSE Amex Equities Rule 103B(II)(C), ``more active'' 
securities are those with a consolidated average daily volume equal 
to or greater than one million shares per calendar month.
    \7\ The Exchange proposed to make conforming changes to NYSE 
Amex Equities Rule 504(b)(1)(A), which contains a requirement 
similar to NYSE Amex Equities Rule 509(a)(1) requiring DMM Units to 
quote at the NBBO on average at least 10% of the trading day.
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    The Exchange also proposes to delete from NYSE Amex Equities Rule 
504(b)(1)(A) the text that references NYSE Amex Equities Rule 103B(II), 
which provides for security allocation eligibility. The Exchange 
represented that this reference is not necessary within Rule 
504(b)(1)(A), and that, despite the proposed deletion, DMM units would 
remain subject to NYSE Amex Equities Rule 103B(II) with respect to 
security allocation eligibility.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder that are applicable to a national securities 
exchange, and, in particular, with the requirements of Section 6(b) of 
the Act.\8\ In particular, the proposed change is consistent with 
Section 6(b)(5) of the Act,\9\ because it would promote just and 
equitable principles of trade, and, in general, protect investors and 
the public interest.\10\ The Commission also finds that the proposed 
rule change is consistent with Section 12(f) of the Act,\11\ because it 
furthers the goals of maintaining fair and orderly markets, and 
protecting investors and the public

[[Page 9288]]

interest, for securities traded pursuant to UTP.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ In approving the proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78l(f).
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    The Exchange proposes to reduce DMM units' quoting obligations 
applicable to ``more active'' securities traded in the UTP Pilot 
Program to quoting at the NBBO for 5% of the trading day. The 
Commission notes that this percentage would reflect the quoting 
requirement currently applicable to DMM units quoting non-UTP Pilot 
Program securities, i.e., those listed on the Exchange.\12\ There would 
be one significant difference between the proposed quoting obligation 
for the UTP Pilot Program and the current quoting obligation for non-
UTP Pilot Program securities--UTP Pilot Program quoting obligations are 
and would continue to be calculated on a security-by-security basis, 
rather than averaged across a portfolio of all of a DMM unit's assigned 
securities. The Commission believes that this security-by-security 
basis calculation is reasonably designed to maintain robust quotes for 
all UTP Pilot Program securities. In addition, the Exchange's proposal 
would reduce quoting obligations only for ``more active'' securities, 
which by definition are more liquid and may, therefore, be less reliant 
on quoting obligations for continued liquidity. Finally, based on the 
Exchange's experience during the UTP Pilot Program, the proposed 
quoting obligation is designed to ensure the continued active 
participation by DMM units in such securities.
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    \12\ See NYSE Amex Equities Rule 104(a)(1)(A).
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    The Commission also finds that the proposed deletion in NYSE Amex 
Equities Rule 504(b)(1)(A) to the reference to NYSE Amex Equities Rule 
103B(II) is consistent with the Act. The Exchange represented that this 
reference is not necessary within Rule 504(b)(1)(A), and that, despite 
the proposed deletion, DMM units would remain subject to NYSE Amex 
Equities Rule 103B(II) with respect to security allocation eligibility.
    For the foregoing reasons, the Commission finds that the proposal 
to amend the UTP Pilot Program is consistent with the requirements of 
the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\13\ that the proposed rule change (SR-NYSEAmex-2011-101) be, and 
it hereby is, approved.
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    \13\ 15 U.S.C. 78s(b)(2).

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-3611 Filed 2-15-12; 8:45 am]
BILLING CODE 8011-01-P