Document ID: SEC-2012-1108-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2012-07-10T04:00Z

[Federal Register Volume 77, Number 132 (Tuesday, July 10, 2012)]
[Notices]
[Pages 40671-40673]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-16768]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67346; File No. SR-NYSEMKT-2012-15]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Certain 
Exchange Rules Related to Floor Official Duties and Responsibilities in 
the Exchange's Marketplace

July 3, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on June 21, 2012, NYSE MKT LLC (``NYSE MKT'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``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\ 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 certain Exchange Rules related to 
Floor Official duties and responsibilities in the Exchange's 
marketplace. The text of the proposed rule change is available on the 
Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, 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 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 certain Exchange Rules pertaining to 
the

[[Page 40672]]

duties and responsibilities of Floor Officials in the Exchange 
marketplace.
    The role of the Floor Official evolved out of the self-regulatory 
scheme of the Securities Exchange Act of 1934, as amended (the 
``Act'').\3\ A number of Exchange Rules specify involvement in the 
marketplace by Floor Officials, senior-level Floor Officials (i.e., 
Floor Governors, Executive Floor Officials, Senior Floor Officials and 
Executive Floor Governors), or both.\4\
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    \3\ 15 U.S.C. 78f.
    \4\ See NYSE MKT Rules 46--Equities and 46A--Equities (defining 
Floor Official, Floor Governor, Executive Floor Official, Senior 
Floor Official and Executive Floor Governors).
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    Typically, the Floor Official's role on the Floor of the Exchange 
involves the consideration of requests to execute a particular kind of 
transaction or the supervision of specified trading situations. In 
addition to their formal role prescribed by the Exchange rules, Floor 
Officials also provide a more general level of oversight to the 
marketplace on a day-to-day basis.
    Given the evolution of the equities markets away from manual 
executions and manual enforcement of rules toward an electronic market 
that automates executions and in many cases hard codes the rule 
requirements into the execution logic, many of the trading procedures 
and situations originally requiring Floor Officials involvement have 
been automated; in other cases, the Floor Official approval has become 
pro forma rather than substantive. In light of this, the Exchange 
determined that several Exchange Rules should be amended with respect 
to the duties and responsibilities once assigned to Floor Officials to 
better comport with today's Exchange market structure.
Proposed Amendments
    NYSE MKT Rule 122--Equities provides that, to avoid unfair 
allocation of securities traded, no member or member organization shall 
maintain with more than one broker on the Exchange market orders or 
orders at the same price for the purchase or sale of the same security 
for the account of the same principal unless permission has been 
obtained from a Floor Official. The Exchange proposes to amend the rule 
to remove this approval as a Floor Official function and therefore ban 
this practice outright.
    The Exchange also proposes amending NYSE MKT Rule 128B--Equities, 
which prescribes the procedures for the publication of changes, 
cancellations or other errors on the consolidated tape (the ``Tape''). 
Specifically, Rule 128B.10--Equities requires Floor Official approval 
to change or correct a transaction that previously appeared on the 
Tape, cancel a transaction that previously appeared on the Tape and 
that has been agreed to by all buyers and sellers, and publish a 
transaction omitted from the Tape (i.e., a sold or sold last sale). In 
addition, Rule 128B.13--Equities requires Floor Official approval for 
the publication of a correction to a transaction erroneously reported 
to ``a reporter'' by a party to the transaction. In the interests of 
maintaining the integrity of the Tape, the Exchange proposes to elevate 
the level of approval required under Rules 128B.10--Equities and .13--
Equities from Floor Official to senior-level Floor Official (i.e., 
Floor Governors, Executive Floor Officials, Senior Floor Officials and 
Executive Floor Governors). In addition, the Exchange proposes to 
delete ``to a reporter'' in NYSE MKT Rule 128B.13--Equities. 
Historically, Floor reporters were Exchange employees responsible for 
collecting and inputting transaction data into the ticker system. The 
position was eliminated many years ago.
    Finally, NYSE MKT Rule 128B.10--Equities provides that, in addition 
to (proposed senior-level) Floor Official approval, both ``buying and 
selling members'' must agree to the publication of (1) A change or a 
correction in a transaction that previously appeared on the Tape, (2) 
the cancellation of a transaction which previously appeared on the Tape 
and which was properly rescinded, or (3) a transaction omitted from the 
Tape made on the Tape on the day of the transaction. The Exchange 
proposes to add ``or member organizations'' after ``buying and selling 
members.'' NYSE MKT Rule 2--Equities defines a ``member'' as a natural 
person. A significant number of Exchange member organizations, however, 
no longer have Floor-based members, and nearly all transactions printed 
to the Tape are executed by automated systems. The proposed change to 
NYSE MKT Rule 128B.10--Equities reflects the changes in the NYSE MKT 
marketplace away from Floor-based members manually executing the 
majority of trades printed to the Tape to more automated trading by an 
increasing number of non-Floor based member organizations.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\5\ in general, and Section 
6(b)(4) of the Act,\6\ 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, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. Specifically, the Exchange 
believes that the proposed rule changes support the objectives of the 
Act by amending and/or delegating duties and responsibilities once 
assigned to Floor Officials to better comport with the Exchange's 
current market structure and to reflect rapidly changing market 
technology and the development of automated systems.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
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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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\ 
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 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.\9\
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 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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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiver of the operative 
delay is consistent with the protection of investors and the public 
interest because the proposal will assist the

[[Page 40673]]

Exchange in maintaining a fair and orderly market by allowing market 
participants who agree to cancel a transaction to do so more 
efficiently, thereby potentially reducing the likelihood that 
transactions will be printed to the Tape incorrectly. Therefore, the 
Commission designates the proposal operative upon filing.\10\
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    \10\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rules 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 such 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-NYSEMKT-2012-15 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-NYSEMKT-2012-15. 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 such 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 publicly available. All 
submissions should refer to File Number SR-NYSEMKT-2012-15 and should 
be submitted on or before July 31, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-16768 Filed 7-9-12; 8:45 am]
BILLING CODE 8011-01-P