Document ID: SEC-2008-1652-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Alternext US LLC
Posted Date: 2008-12-08T05:00Z

[Federal Register: December 8, 2008 (Volume 73, Number 236)]
[Notices]               
[Page 74552-74554]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08de08-100]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59020; File No. SR-NYSEALTR-2008-06]

 
Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval to a Proposed Rule Change by NYSE 
Alternext US LLC for Retroactive Application of a Previously Adopted 
Revenue Sharing Program for ETF Quoting Participants on the Exchange

November 26, 2008.
    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 17, 2008, NYSE Alternext US LLC (the ``Exchange'' or ``NYSE 
Alternext'') 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 and to grant approval of 
the proposal on an accelerated basis.
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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 retroactive application of a previously 
adopted revenue sharing program for ETF quoting participants on the 
Exchange. The text of the proposed rule change is available at NYSE 
Alternext, the Commission's Public Reference Room, and http://
www.nyse.com.

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 Exchange 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. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

[[Page 74553]]

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

1. Purpose
    The Exchange proposes to retroactively apply a previously adopted 
revenue sharing program (RSP) for ETF quoting participants on the 
Exchange. The RSP was first put in place by the Exchange for ETF 
specialists and registered traders effective July 1, 2007, and was to 
last through December 31, 2007 unless otherwise extended.\3\ The RSP 
was subsequently extended through the end of September 2008.\4\ The RSP 
was inadvertently allowed to lapse on September 30, 2008, but was 
subsequently reinstated by filing effective November 14, 2008.\5\ The 
purpose of the instant filing is to seek approval to retroactively 
apply the now-reinstated RSP for the time period October 1, 2008 
through November 13, 2008 (the ``Retroactive Period'') in order to 
effectively assure continuity of the RSP from its inception for all ETF 
quoting participants on the Exchange, who have continued to quote 
aggressively in the expectation of receiving RSP payments flowing 
therefrom. To date, the Exchange believes that the current RSP has been 
beneficial in creating incentives for ETF quoting participants and does 
not believe it fair to withhold RSP payments from ETF quoting 
participants attributable to the Retroactive Period solely because of 
the Exchange's inadvertent error. Retroactive application of the RSP 
will preserve all ETF quoting participants' expectations.
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    \3\ Securities Exchange Act Release No. 55983 (June 29, 2007), 
72 FR 37059 (July 6, 2007) (SR-Amex-2007-68). The RSP was 
subsequently extended to Designated Amex Remote Traders, now known 
as Designated NYSE Alternext Remote Traders (DARTs). Securities 
Exchange Act Release No. 57540 (March 20, 2008), 73 FR 16399 (March 
27, 2008) (SR-Amex-2008-23).
    \4\ Securities Exchange Act Release No. 57541 (March 20, 2008), 
73 FR 16400 (March 27, 2008) (SR-Amex-2008-25)(prospectively 
extending RSP from March 18, 2008 through end of September 2008). 
See also Securities Exchange Act Release No. 57794 (May 7, 2008), 73 
FR 27582 (May 13, 2008) (SR-Amex-2008-34) (retroactively extending 
RSP from January 1, 2008 through March 17, 2008).
    \5\ See SR-NYSEALTR-2008-04 (reinstating RSP effective November 
14, 2008 to last through November 30, 2008, by which point the 
trading of ETFs currently listed on the Exchange is expected to 
terminate in favor of having willing issuers list and trade such 
products on NYSE Alternext's sister exchange NYSE Arca, Inc).
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    For the Retroactive Period, the Exchange will apply the RSP in the 
same way the RSP was described in SR-NYSEALTR-2008-04 (see note 6 
supra), to wit, that:
     RSP payments will be made from the Exchange's general 
revenues and will not be limited to a particular revenue source.
     ETF specialists may receive an aggregate RSP payment 
(calculated monthly) of as much as $0.0024 per share (or 24 cents per 
100 shares) whenever the specialist either buys or sells his specialty 
ETF on the Exchange and is a provider of liquidity in that transaction 
(e.g., whose quote is traded against or who offsets an order imbalance 
as part of an opening or closing transaction). The RSP payment is 
comprised of $0.0004 per share (or 4 cents per 100 shares) for all 
shares executed on the Exchange in their specialty ETF (irrespective of 
whether the specialist is the provider of liquidity), plus another 
$0.0020 (or 20 cents per 100 shares) if the specialist is the provider 
of liquidity in the transaction. If the specialist is not the liquidity 
provider, then the RSP payment is limited to $0.0004 per share executed 
on the Exchange in their specialty ETF.
     Registered traders in ETFs will receive an RSP payment of 
$0.0010 per share (or 10 cents per 100 shares) whenever the registered 
trader either buys or sells an ETF on the Exchange and is a provider of 
liquidity in that transaction.
     DARTS will receive an RSP payment of $0.0015 per share (or 
15 cents per 100 shares) whenever the DART either buys or sells an ETF 
on the Exchange and is a provider of liquidity in that transaction.
     No ETF quoting participant will receive an RSP payment 
when they are contra-parties to the same transaction.
     RSP payments will only be made on transactions in 
securities trading at less than $1.00 in amounts proportionate to the 
amount on which the Exchange collects revenue.
    As customer transaction charges are capped at $100 per transaction, 
meaning that transaction charges are assessed on only the first 43,478 
shares executed, ETF quoting participants will only receive RSP 
payments based on the first 43,478 shares executed.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
\6\ in general and furthers the objectives of Section 6(b)(4) of the 
Act \7\ in particular in that it is intended to assure the equitable 
allocation of reasonable dues, fees and other charges among its members 
and issuers and other persons using its facilities. Specifically, the 
Exchange proposes to retroactively apply the RSP to assure continuity 
of the program from its inception and to assure fairness for the ETF 
quoting participants.
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    \6\ 15 U.S.C. 78f(b)
    \7\ 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. 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-2008-06 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-2008-06. 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

[[Page 74554]]

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-2008-06 and should be submitted 
on or before December 29, 2008.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\8\ In particular, the Commission believes that the proposal 
is consistent with Section 6(b)(4) of the Act \9\ in that it is 
intended to assure the equitable allocation of reasonable dues, fees, 
and other charges among its members and issuers and other persons using 
its facilities. The Commission notes that the proposal would 
retroactively apply the RSP to cure a lapse that occurred in the 
program from October 1, 2008 to November 13, 2008, but would not 
introduce any changes to the RSP program.
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    \8\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(4).
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    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice of filing thereof in the Federal Register. The Commission notes 
that it previously approved a similar proposal by the Exchange to 
retroactively cure an earlier lapse in the Exchange's RSP program.\10\ 
The previous retroactive proposal was subject to the full comment 
period and did not generate any comments. Since this proposal is 
substantively the same as the previous retroactive proposal and in 
light of the hardship that the Exchange states members may face on 
account of the lapse of the RSP, the Commission believes that there is 
good cause to approve the proposal on an accelerated basis.
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    \10\ See Securities Exchange Act Release No. 57794 (May 7, 
2008), 73 FR 27582 (May 13, 2008) (SR-Amex-2008-34) (retroactively 
extending RSP from January 1, 2008 through March 17, 2008).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-NYSEALTR-2008-06) is hereby 
approved on an accelerated basis.
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    \11\ 15 U.S.C. 78s(b)(2).

    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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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-28955 Filed 12-5-08; 8:45 am]

BILLING CODE 8011-01-P