Document ID: SEC-2012-1187-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2012-07-20T04:00Z

[Federal Register Volume 77, Number 140 (Friday, July 20, 2012)]
[Notices]
[Pages 42788-42789]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17666]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67445; File No. SR-NYSE-2012-25]

 Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Exchange Rule 134 To Shorten the Time Frame for Assigning the 
Contra Party to Unresolved Account Balances in the Exchange's Online 
Comparison System

July 16, 2012.
    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 July 5, 2012, New York Stock Exchange LLC (``NYSE'' or the 
``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 Exchange. 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 Exchange Rule 134 to shorten the 
time frame for assigning the contra party to unresolved account 
balances in the Exchange's Online Comparison System. 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 Exchange Rule 134(e)(iii) 
(Differences and Omissions-Cleared Transactions) to shorten the time 
frame for assigning a designated market maker (``DMM'') unit as the 
contra party for any unresolved omnibus account balances in the 
Exchange's Online Comparison System (``OCS'').
Background
    The Exchange operates its OCS to assist in trade settlement. OCS 
conducts comparison processing, which includes matching initial trade 
submissions, correction processing, omnibus processing and questioned 
trade (``QT'') resolution for trades that take place on the Exchange. 
The OCS system is used by Exchange members and member organizations in 
their roles as clearing firms, brokers and DMM units for Exchange trade 
executions. OCS is linked internally to NYSE trading systems and 
externally to The National Securities Clearing Corporation.\3\
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    \3\ National Securities Clearing Corporation (``NSCC'') is a 
clearing agency registered with the Commission under Section 17A of 
the Securities Exchange Act of 1934. NSCC provides centralized 
clearance and settlement services for equity security trades for 
U.S. broker-dealers.
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    To facilitate the comparison process, the Exchange utilizes omnibus 
account designations to record trade data.\4\ Using omnibus account 
designations allows for universal contras for one trade side, reducing 
the number of different data elements that have to be independently 
recorded into a broker's hand-held device or written on a Floor report 
for a trade.
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    \4\ An ``omnibus account'' is an account in which the 
transactions of multiple individual participants are combined.
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    In May 2009, the Exchange amended Rule 134 to enable it to assign, 
on the second business day after the trade date (``T+2''), any open 
balance in any of the omnibus accounts it uses to compare trades to 
either a DMM Unit or the member organization that has been identified 
as the clearing firm for one side of an unresolved trade.\5\ 
Specifically, the Exchange added new subsection (e)(iii) to Rule 134 to 
enable the Exchange to assign a Floor broker's clearing firm or DMM 
Unit, at the close of business on T+2, as the contra side to an 
imbalance in any omnibus account that is used by OCS. In June 2010, the 
Exchange amended Rule 134 again to separate Rule 134(e)(iii) into two 
subsections and clarify that DMM units are assigned as the contra party 
to an omnibus account imbalance and that clearing firms are the 
assigned contra party to an uncompared trade. The Exchange also 
shortened the time frame for the assignment of uncompared e-Quote 
transactions from T+2 to the first business day after the trade date 
(``T+1'').\6\
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    \5\ See Securities Exchange Act Release No. 59997 (May 28, 
2009), 74 FR 28086 (June 12, 2009) (SR-NYSE-2009-50).
    \6\ See Securities Exchange Act Release No. 64277 (July 9, 
2010), 75 FR 41560 (July 16, 2010) (SR-NYSE-2010-48 and SR-NYSEAmex-
2010-61).
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Proposed Amendment of NYSE Rule 134
    The Exchange proposes to amend Rule 134(e)(iii) to shorten the time 
frame for when the DMM unit is assigned as the contra party to an 
unresolved omnibus account imbalance. The current rule provides that at 
the close of business on T+2 after the conclusion of the processes 
described in sections (e)(i) and (e)(ii) of the Rule, but no earlier 
than 7:00 p.m., the Exchange shall assign a DMM unit as the contra 
party to any unresolved omnibus account imbalance remaining in OCS.
    The Exchange proposes to amend Rule 134(e)(iii) to provide that a 
DMM unit would be assigned as the contra party to any unresolved 
omnibus account imbalances by the close of business on the trade date, 
but no earlier than 5:00 p.m. The Exchange believes that shortening 
this time period will result in speedier resolution of unresolved 
account balances. The Exchange will be able to implement the proposed 
change due to system developments in OCS, including the reduction in 
the use of omnibus accounts other than for manual executions and 
related ability for the DMM to identify post-trade the clearing member 
organization behind a manual execution. The Exchange notes that the 
proposed changes to Rule 134(e)(iii) will not impact the processes set 
forth in Rule 134(e)(i) and (ii).
    Because this is a technology-based change, the Exchange proposes to 
announce the implementation date by Trader Update.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \7\ that an exchange

[[Page 42789]]

have rules that are designed 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. The Exchange believes that 
this rule proposal accomplishes these goals by enhancing the comparison 
process at the Exchange thereby supporting the timely settlement of 
securities transactions. In particular, the Exchange believes that the 
speedier resolution of unresolved account balances support the 
mechanism of a free and open market as it assures that the contra party 
to a transaction will receive a cleared transaction in a timely and 
efficient manner.
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    \7\ 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.

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 \8\ and Rule 19b-4(f)(6) thereunder.\9\ 
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.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
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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-NYSE-2012-25 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-NYSE-2012-25. 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 Section, 100 F Street 
NE., Washington, DC 20549, on official business days between the hours 
of 10:00 a.m. and 3:00 p.m. Copies of such filings will also be 
available for inspection and copying at the principal office of NYSE 
and on NYSE's Web site at 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-NYSE-2012-25 and should be submitted on 
or before August 10, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17666 Filed 7-19-12; 8:45 am]
BILLING CODE 8011-01-P