Document ID: SEC-2011-1901-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2011-12-08T05:00Z

[Federal Register Volume 76, Number 236 (Thursday, December 8, 2011)]
[Notices]
[Pages 76775-76777]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31473]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65864; File No. SR-NYSEAMEX-2011-90]

Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend NYSE 
Rule 104(a)(1)(A) To Reflect That Designated Market Maker Unit Quoting 
Requirements Are Based on Consolidated Average Daily Volume

December 2, 2011.
    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 18, 2011, NYSE Amex LLC (``NYSE Amex'' 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 Exchange has designated the 
proposed rule change as constituting a non-controversial rule change 
under Rule 19b-4(f)(6) under the Act,\3\ which renders the proposal 
effective upon filing with the Commission. 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.
    \3\ 17 CFR 240.19b-4(f)(6).
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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 NYSE Amex Equities Rule 104(a)(1)(A) 
to reflect that, when determining the specific percentage quoting 
requirement applicable to a Designated Market Maker unit (``DMM 
unit''), volume for the particular security is based on consolidated 
average daily volume (``CADV''). The text of the proposed rule change 
is available at the Exchange, 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 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 NYSE Amex Equities Rule 104(a)(1)(A) 
\4\ to reflect that, when determining the specific percentage quoting 
requirement applicable to a DMM unit,\5\ volume for the particular 
security is based on CADV.\6\
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    \4\ NYSE Amex Equities Rule 104 is currently in effect during a 
pilot period (``New Market Model Pilot'' or ``NMM Pilot''). The 
Exchange adopted the NMM Pilot pursuant to its merger with the New 
York Stock Exchange LLC (``NYSE''). See Securities Exchange Act 
Release No. 59022 (November 26, 2008), 73 FR 73683 (December 3, 
2008) (SR-NYSEALTR-2008-10) (the ``NYSE Amex NMM Approval''). See 
also Securities Exchange Act Release No. 58845 (October 24, 2008), 
73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46) (the ``NYSE NMM 
Approval''). The Exchange has extended the operation of the NMM 
Pilot several times and it is currently set to expire on January 31, 
2012. See Securities Exchange Act Release No. 64773 (June 29, 2011), 
76 FR 39453 (July 6, 2011) (SR-NYSEAmex-2011-43).
    \5\ See NYSE Amex Equities Rule 98(b)(2). ``DMM unit'' means any 
member organization, aggregation unit within a member organization, 
or division or department within an integrated proprietary 
aggregation unit of a member organization that (i) Has been approved 
by NYSE Regulation pursuant to section (c) of NYSE Amex Equities 
Rule 98, (ii) is eligible for allocations under NYSE Amex Equities 
Rule 103B as a DMM unit in a security listed or traded on the 
Exchange, and (iii) has met all registration and qualification 
requirements for DMM units assigned to such unit.
    \6\ Given the multitude of venues where equity securities trade, 
CADV is more reflective of the trading characteristics of a security 
than the volume on any single market.
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    A DMM unit must maintain a bid or an offer at the National Best Bid 
and National Best Offer (``inside'') a minimum of either 5% or 10% of 
the trading day, depending on trading volume for the security. NYSE 
Amex Equities Rule 104(a)(1)(A) currently reflects for one of the 
calculations, but not the other, that, when determining the specific 
percentage quoting requirement applicable to a DMM unit, trading volume 
for the particular security is based on volume ``on the Exchange.'' The 
reference to ``on the Exchange'' was inadvertently included in the 
Exchange's proposal to implement the NMM Pilot, which was based on the 
same language that was approved by the Commission in the

[[Page 76776]]

NYSE NMM Approval.\7\ In this regard, and as reflected in the NYSE NMM 
Approval, the Exchange intended that trading volume for a particular 
security would be based on CADV when determining the specific 
percentage quoting requirement applicable to a DMM unit.\8\
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    \7\ NYSE has filed a similar proposal to similarly change the 
text of NYSE Rule 104(a)(1)(A) from volume ``on the Exchange'' to 
``consolidated'' volume.
    \8\ See NYSE NMM Approval at 64381, which states that ``[f]or 
securities that have a consolidated average daily volume of less 
than one million shares per calendar month, a DMM Unit must maintain 
a bid or an offer at the NBBO for at least 10% of the trading day 
(calculated as an average over the course of a calendar month). For 
securities that have a consolidated average daily volume of equal to 
or greater than one million shares per calendar month, a DMM Unit 
must maintain a bid or an offer at the NBBO for at least 5% or more 
of the trading day (calculated as an average over the courts (sic) 
of a calendar month.'' See also NYSE NMM Approval at n.71. A 
subsequent NYSE rule change similarly noted that, ``with respect to 
maintaining a continuous two-sided quote with reasonable size, DMMs 
must maintain a bid or offer at the NBBO * * * at a prescribed level 
based on the average daily volume of the security. Securities that 
have a consolidated average daily volume of less than one million 
shares per calendar month are defined as Less Active Securities and 
securities that have a consolidated average daily volume of equal to 
or greater than one million shares per calendar month are defined as 
More Active Securities. For Less Active Securities, a [DMM] unit 
must maintain a bid or an offer at the NBBO for at least 10% of the 
trading day during a calendar month. For More Active Securities, a 
[DMM] unit must maintain a bid or an offer at the NBBO for at least 
5% or more of the trading day during a calendar month.'' See 
Securities Exchange Act Release No. 58971 (November 17, 2008), 73 FR 
71070 (November 24, 2008) (SR-NYSE-2008-115) at n.5. CADV is 
similarly used to differentiate between ``more active'' and ``less 
active'' securities under NYSE Amex Equities Rule 103B.
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    As proposed, NYSE Amex Equities Rule 104(a)(1)(A) would reflect 
that, with respect to maintaining a continuous two-sided quote with 
reasonable size, DMM units must maintain a bid or an offer at the 
inside at least 10% of the trading day for securities in which the DMM 
unit is registered with a consolidated average daily volume of less 
than one million shares, and at least 5% for securities in which the 
DMM unit is registered with a consolidated average daily volume equal 
to or greater than one million shares.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\9\ in 
general, and furthers the objectives of Section 6(b)(5) of the Act,\10\ 
in particular, because it is designed to prevent fraudulent and 
manipulative acts and practices, 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. Specifically, 
the proposed change would align the text of NYSE Amex Equities Rule 
104(a)(1)(A) with the previously approved manner by which to measure 
trading volume of a particular security, as set forth in NYSE Amex 
Equities Rule 103B, and consistent with the NYSE NMM Approval order, 
which also discussed the use of CADV, and not just trading volume on 
the Exchange, for purposes of measuring the quoting requirement 
applicable to a DMM unit.
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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 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

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not become operative for 30 days from the date on which it was filed, 
or such shorter time as the Commission may designate, it 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). 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. Such waiver will allow the Exchange's Rules to immediately 
reflect the fact that DMM unit quoting requirements are calculated 
based on CADV rather than trading volume on the Exchange. Because CADV 
is more reflective of the trading characteristics of a security than 
the volume on any single market, investors will benefit from 
implementation of the proposed rule change without undue delay. 
Therefore, the Commission designates the proposal operative upon 
filing.\13\
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    \13\ 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 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-NYSEAMEX-2011-90 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-NYSEAMEX-2011-90. 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

[[Page 76777]]

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 the 
filing will also be available for inspection and copying at the NYSE's 
principal office and on its Internet Web site at http://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 publicly 
available. All submissions should refer to File Number SR-NYSEAMEX-
2011-90 and should be submitted on or before December 29, 2011.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-31473 Filed 12-7-11; 8:45 am]
BILLING CODE 8011-01-P