Document ID: SEC-2008-1550-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Alternext US LLC
Posted Date: 2008-11-19T05:00Z

[Federal Register: November 19, 2008 (Volume 73, Number 224)]
[Notices]               
[Page 69712-69714]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19no08-132]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58933; File No. SR-NYSEALTR-2008-05]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Alternext US LLC To 
Extend Its Temporary Program Relating to Section 31-Related Funds

November 12, 2008.
    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 November 7, 2008, NYSE Alternext US LLC (``NYSE 
Alternext'' or the ``Exchange'') filed with the Securities and Exchange 
Commission the proposed rule changes 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 
changes 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 NYSE Alternext, formerly known as the American Stock Exchange 
LLC (``Amex''), proposes to extend until January 13, 2009 a temporary 
program, which allows member firms to voluntarily submit funds 
previously accumulated by the member firms pursuant to Rule 393 and not 
forwarded to be subsequently used by the Exchange to satisfy its 
obligation to remit Section 31 fees to the Commission.
    The text of the proposed rule change is available on the Exchange's 
Web site at www.nyse.com, at the Exchange's principal office, and at 
the Commission's Public Reference Room.

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 these statements may be examined at 
the places specified in Item IV below. NYSE Alternext has prepared 
summaries, set forth in Sections A, B and C below, of the most 
significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Pursuant to Section 31 of the Act \4\ and Commission Rule 31,\5\ 
NYSE Alternext US and other national securities exchanges are required 
to pay a transaction fee to the Commission that is designed to recover 
the costs related to the government's supervision and regulation of the 
securities markets and securities professionals. To offset this 
obligation, NYSE Alternext US assesses its clearing and self-clearing 
members a regulatory fee in accordance with Rule 393, which mirrors 
Section 31 in both

[[Page 69713]]

scope and amount. Clearing members may in turn seek to charge a fee to 
their customers or correspondent firms. Any allocation of the fee 
between the clearing member and its correspondent firm or customer is 
the responsibility of the clearing member.
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    \4\ 15 U.S.C. 78ee.
    \5\ 17 CFR 240.31.
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    Reconciling the amounts reported to the Exchange and the amounts 
collected from the customers historically had been difficult for member 
firms, causing surpluses to accumulate at some member firms (referred 
to as ``accumulated funds''). These accumulated funds were not remitted 
to the Exchange by certain members, despite the fact that these charges 
may have been previously identified as ``Section 31 Fees'' or ``SEC 
Fee'' by the firms.\6\ In addition, since Amex used a ``self-
reporting'' methodology for its members to report and remit amounts 
payable pursuant to Rule 393 prior to the implementation of its billing 
system in December 2007, the Exchange accumulated amounts in excess of 
the amounts due and paid by the Exchange to the Commission pursuant to 
Section 31 and Rule 31 (``Exchange accumulated funds'').
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    \6\ The Commission stated in its release adopting new Rule 31 
and Rule 31T that ``it is misleading to suggest that a customer or 
[self-regulatory organization] member incurs an obligation to the 
Commission under Section 31.'' See Securities Exchange Act Release 
No. 49928 (June 28, 2004), 69 FR 41060 (July 7, 2004). In response 
to this statement, the Exchange issued a Notice to members regarding 
its Rule 393 Fee and the SEC's ``Section 31 Fee'', and provided 
guidance for members and member organizations that choose to charge 
their customers fees. See Amex Notice REG 2004-42 Finance (October 
29, 2004).
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    In May 2008, the Commission approved the adoption of Commentary.01 
to Rule 393 that allows firms, on a one-time-only basis, voluntarily to 
remit historically accumulated funds to the Exchange. These funds will 
be used to pay the Exchange's current Section 31 fees in conformity 
with prior representations made by member firms. In addition, a member 
or member organization may designate all or part of the Exchange 
accumulated excess held by the Exchange and allocated to such member be 
used by the Exchange in accordance with the new Commentary to Rule 393. 
Finally, to the extent the payment of these historically accumulated 
funds or Exchange accumulated funds is in excess of the Section 31 fees 
due the Commission from NYSE Alternext US, such surplus shall be used 
by the Exchange to offset regulatory costs.
    In accordance with Rule 393, Commentary.01 the effective dates of 
the temporary program were from May 23, 2008 through October 23, 
2008.\7\ In the interest of providing member firms with additional 
notice of the temporary program and providing additional opportunity 
for member firms to remit historically accumulated funds in accordance 
with such program, the Exchange now proposes to extend the program 
through January 13, 2009. The Exchange believes that an extension of 
its temporary program will permit the Exchange to provide additional 
notice of the program to members firms and will provide a transparent 
way of addressing the issue of accumulated funds held at the member 
firm level and by the Exchange.\8\
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    \7\ See Securities Exchange Act Release No. 57829 (May 16, 
2008), 73 FR 30173 (May 23, 2008) (SR-Amex-2007-107) (order 
approving procedures under Rule 393 regarding Section 31-related 
funds).
    \8\ The Exchange notes that the date of proposed termination of 
the program coincides with the termination date of a similar 
temporary program implemented by the New York Stock Exchange LLC. 
See Securities Exchange Act Release No. 58108 (July 7, 2008), 73 FR 
40413 (July 14, 2008) (SR-NYSE-2007-64).
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2. Statutory Basis
    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 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 an extension of its 
temporary program until January 13, 2009 will permit the Exchange to 
provide additional notice to member firms regarding the program and 
will provide a transparent way of addressing the issue of accumulated 
funds held at the member firm level and by the Exchange.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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 purpose of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
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 \11\ and 
Rule 19b-4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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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    The Exchange has requested that the Commission waive the 30-day 
operative delay in this case. The Commission hereby grants the 
Exchange's request and believes that doing so is consistent with the 
protection of investors and the public interest. The Commission 
previously found similar proposals from other SROs to be consistent 
with the Act.\13\ The Commission is not aware of any issue that should 
cause it to revisit those findings or preclude the immediate 
operativeness of the extension of the NYSE Alternext proposal. The 
Commission notes that, because the program is voluntary, it imposes no 
obligation on any NYSE Alternext member that believes that accumulated 
funds should be retained or disposed of in another manner. For these 
reasons, the Commission designates that the proposed rule change become 
operative immediately upon filing.\14\
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    \13\ See Securities Exchange Act Release No. 58108 (July 7, 
2008), 73 FR 40413 (July 14, 2008) (SR-NYSE-2007-64); Securities 
Exchange Act Release No. 55886 (June 8, 2007), 72 FR 32935 (June 14, 
2007) (SR-NASD-2007-027).
    \14\ 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. 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

[[Page 69714]]

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 Number SR-NYSEALTR-2008-05 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-2008-05. 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, 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-2008-05 and should be submitted on or before 
December 10, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 15 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-27426 Filed 11-18-08; 8:45 am]

BILLING CODE 8011-01-P