Document ID: SEC-2009-0291-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2009-03-05T05:00Z

[Federal Register: March 5, 2009 (Volume 74, Number 42)]
[Notices]               
[Page 9648-9651]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05mr09-87]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59469; File No. SR-NYSE-2009-19]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Rule 300.10T To Provide a Grace Period Under That Rule for 
NYSE Alternext U.S. LLC Member Organizations That Have Applied for a 
Trading License to Comply With Certain Exchange Rules

February 27, 2009.
    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 February 24, 2009, the 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 NYSE. NYSE 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 Rule 300.10T to provide a grace 
period under that rule for NYSE Alternext US LLC member organizations 
that have applied for a trading license to comply with certain Exchange 
rules.

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. The self-regulatory organization 
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
    The Exchange proposes to amend NYSE Rule 300.10T to provide for a 
six-month grace period for NYSE Alternext US LLC (``NYSE Alternext'') 
member organizations that have applied for, but not received a trading 
license, to comply with certain Exchange rules. The Exchange adopted 
Rule 300.10T to provide a grace period for certain NYSE Alternext 
member organizations seeking to trade equities at the Exchange to 
comply with the Exchange membership requirements. The proposed 
amendment seeks to clarify the rule to reflect the original purpose of 
the provision. The Exchange is submitting this proposed filing to 
conform NYSE Rule 300.10T to corresponding changes to Rule 300.10T--
NYSE Alternext Equities, as proposed by NYSE Alternext.\4\
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    \4\ See SR-NYSEALTR-2009-16 (formally submitted on February 24, 
2009). Because NYSE Alternext's perspective of its member 
organizations differs from those of the NYSE, the rule text proposed 
by the NYSE is not identical to that proposed by NYSE Alternext, but 
is the same in substance.
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Background of Merger

    As described more fully in a filing submitted by the American Stock 
Exchange LLC (``Amex'') (the ``Merger filing''),\5\ NYSE Euronext 
acquired The Amex Membership Corporation (``AMC'') pursuant to an 
Agreement and Plan of Merger, dated January 17, 2008 (the ``Merger''). 
In connection with the Merger, Amex, a subsidiary of AMC, became a 
subsidiary of NYSE Euronext and was renamed NYSE Alternext U.S. LLC, 
and continues to operate as a national securities exchange registered 
under Section 6 of the Securities Exchange Act of 1934, as amended (the 
``Act'').\6\ The effective date of the Merger was October 1, 2008.
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    \5\ See Securities Exchange Act Release No. 58673 (September 29, 
2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-2008-60 and SR-Amex 
2008-62) (approving the Merger).
    \6\ 15 U.S.C. 78f.
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    As described more fully in the Merger filing, in connection with 
the Mergers, Amex demutualized by separating all trading rights from 
equity ownership in Amex. As part of the demutualization, all trading 
rights appurtenant to the Amex Regular Members' memberships or Options 
Principal Members' (``OPM'') memberships were cancelled. Immediately 
following the closing of the Mergers, those persons and entities that 
were authorized to trade on the Amex before the closing of the Mergers 
were deemed to have satisfied applicable qualification requirements 
necessary to trade in NYSE Alternext's demutualized marketplace and 
were issued a permit at no cost to trade on NYSE Alternext (``86 
Trinity Permit''). The 86 Trinity Permit authorizes owners, lessees or 
nominees of Amex Regular Members or OPMs, Amex limited trading permit 
holders, and Amex associate members who were

[[Page 9649]]

authorized to trade on the Amex immediately before the Mergers to 
continue to trade at NYSE Alternext's systems and facilities at 86 
Trinity Place, New York, New York (the ``86 Trinity Trading Systems''). 
NYSE Alternext recognizes the former Amex (i) owners, lessees, or 
nominees of Regular Members or OPMs, (ii) limited trading permit 
holders, and (iii) associate members as either NYSE Alternext member 
organizations or members, as applicable.
    In connection with the Merger, on December 1, 2008, NYSE Alternext 
relocated all equities trading conducted on its 86 Trinity Trading 
Systems to trading systems and facilities located at 11 Wall Street, 
New York, New York (the ``Equities Relocation''). The Exchange's equity 
trading systems and facilities at 11 Wall Street (the ``NYSE Alternext 
Trading Systems'') are operated by the NYSE on behalf of NYSE 
Alternext.\7\
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    \7\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63) (approving 
the Equities Relocation).
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    As part of the Equities Relocation, NYSE Alternext adopted NYSE 
Rules 1-1004, subject to such changes as necessary to apply the Rules 
to NYSE Alternext, as the NYSE Alternext Equities Rules to govern 
trading on the NYSE Alternext Trading Systems (the ``Equities Rule 
filing'').\8\ The NYSE Alternext Equities Rules, which became operative 
on December 1, 2008, are substantially identical to the current NYSE 
Rules 1-1004 and NYSE Alternext continues to update the NYSE Alternext 
Equities Rules as necessary to conform with rule changes to 
corresponding NYSE Rules filed by the NYSE.
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    \8\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63); Securities 
Exchange Act Release No. 58833 (October 22, 2008), 73 FR 64642 
(October 30, 2008) (SR-NYSE-2008-106); Securities Exchange Act 
Release No. 58839 (October 23, 2008), 73 FR 64645 (October 30, 2008) 
(SR-NYSEALTR-2008-03); Securities Exchange Act Release No. 59022 
(November 26, 2008), 73 FR 73683 (December 3, 2008) (SR-NYSEALTR-
2008-10); and Securities Exchange Act Release No. 59027 (November 
28, 2008), 73 FR 73681 (December 3, 2008) (SR-NYSEALTR-2008-11).
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    Similarly, NYSE Alternext will relocate all options trading 
conducted on the 86 Trinity Trading Systems to new facilities of NYSE 
Alternext to be located at 11 Wall Street, which facilities will 
utilize a trading system based on the options trading system used by 
NYSE Arca, Inc. (``NYSE Arca'') (``Options Relocation,'' and, together 
with the Equities Relocation, the ``Relocations''). After the Options 
Relocation, no products will trade on 86 Trinity Trading Systems.
    As set forth in more detail in the Merger filing, an 86 Trinity 
Permit holder is eligible to obtain an NYSE Alternext equities trading 
license or options trading permit (``ATP'') pursuant to an expedited 
``waive in'' process up to the Options Relocation date. After the 
Equities Relocation, an 86 Trinity Permit entitles holders only to 
trade products other than those that have relocated to NYSE Alternext 
Trading Systems. As a result of the Equities Relocation, as well as the 
discontinuation of Exchange Traded Fund (``ETF'') and bond trading at 
86 Trinity Place, 86 Trinity Permits currently only entitle holders to 
trade listed options on NYSE Alternext. After the Options Relocation, 
the 86 Trinity Permits will be cancelled.\9\ Stated otherwise, an 86 
Trinity Permit may not be used to trade equities on NYSE Alternext 
Trading Systems and a trading license under Rule 300--NYSE Alternext 
Equities must be obtained. Upon the Options Relocation, a former 86 
Trinity Permit holder will need an ATP to trade options on NYSE 
Alternext Trading Systems and the 86 Trinity Permit will no longer 
entitle the holder to trade any products at NYSE Alternext.
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    \9\ See Securities Exchange Act Release No. 58673 (September 29, 
2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-2008-60 and SR-Amex 
2008-62) (approving the Merger).
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NYSE Trading License Requirements

    To trade at the Exchange, a broker dealer must be an NYSE member 
organization and obtain a trading license pursuant to NYSE Rule 300. 
Because the rules governing membership for NYSE Alternext Equities are 
identical to Exchange rules, pursuant to NYSE Rule 2.10, an NYSE 
Alternext member organization approved under Rule 2(b)--NYSE Alternext 
Equities is deemed approved as an Exchange member organization. If an 
86 Trinity Permit holder seeks an equities trading license under Rule 
300--NYSE Alternext Equities, such 86 Trinity Permit holder is deemed 
approved under Rule 2(b)--NYSE Alternext Equities, and thus under NYSE 
Rule 2.10, is deemed approved as an NYSE member organization. If an 86 
Trinity Permit holder does not apply for an equities trading license 
under Rule 300--NYSE Alternext Equities, neither the NYSE or NYSE 
Alternext Equities member organization requirements are triggered.
    Pursuant to Rule 300.10T--NYSE Alternext Equities, an NYSE 
Alternext member organization that applies for an equities trading 
license under Rule 300--NYSE Alternext Equities has a six-month grace 
period within which to comply with NYSE Alternext Equities membership 
requirements. Similarly, NYSE Rule 300.10T provides a six-month grace 
period for those NYSE Alternext member organizations that are deemed 
approved as an NYSE member organization under NYSE Rule 2.10 and were a 
valid 86 Trinity Permit holder to comply with Exchange membership 
requirements.
    As described in more detail in the rule filing adopting Rule 
300.10T,\10\ the six-month grace period provides time for NYSE 
Alternext member organizations to comply with NYSE Rules 2 (defining 
the terms members and member organizations), 300-308 (governing the 
admission of members and member organizations), 311 (the formation and 
approval of member organizations), 312 (changes within member 
organizations), and 313 (submission of partnership articles and 
corporate documents) (collectively, the ``NYSE Member Organization 
Rules'').
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    \10\ See Securities Exchange Act Release No. 58706 (Oct. 1, 
2008), 73 FR 59019 (Oct. 8, 2008) (SR-NYSE-2008-70).
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    Among the differing requirements of the NYSE Member Organization 
Rules as compared to the Amex rules that governed membership at the 
Amex before the Merger, an Exchange member organization must be a 
member of the Financial Industry Regulatory Authority, Inc. 
(``FINRA''). In addition, unlike the Amex rules, NYSE Rule 313.20 
requires member organizations to submit to the Exchange an opinion of 
counsel that a member corporation's stock is validly issued and 
outstanding and that the restrictions and provisions required by the 
Exchange on the transfer, issuance, conversion and redemption of its 
stock have been made legally effective.
    The current six-month grace period under Rule 300.10T begins to run 
from the date that an NYSE Alternext member organization receives its 
equities trading license in exchange for the equities portion of a 
valid 86 Trinity Permit. However, a subset of NYSE Alternext member 
organizations that have applied for a trading license are not FINRA 
members. As a result, such NYSE Alternext member organizations were not 
issued a trading license. Because these NYSE Alternext member 
organizations have not been issued a trading license, the grace period 
within which to comply with the NYSE Member Organization Rules has not 
been triggered.

[[Page 9650]]

Proposed Amendment to Rule 300.10T

    To reflect the intent of the original adoption of Rule 300.10T, 
i.e., to provide a grace period for NYSE Alternext member organizations 
seeking to obtain a trading license to trade securities listed on the 
Exchange to comply with the NYSE Member Organization Rules, the 
Exchange proposes to amend Rule 300.10T to also provide for a six-month 
grace period for those NYSE Alternext member organizations that have 
applied for, but have not been issued a trading license.
    As proposed, to be eligible for the grace period, an NYSE Alternext 
member organization must be a holder of a valid 86 Trinity Permit as of 
the date that it applied for an equities trading license. In other 
words, once the 86 Trinity Permits are cancelled, i.e., the Options 
Relocation date, an NYSE Alternext member organization would not be 
eligible for a Rule 300.10T grace period. The current rule requires 
that the NYSE Alternext member organization has been approved as an 
Exchange member organization. Because the trigger for Exchange 
membership is obtaining an NYSE Alternext equities trading license, the 
Exchange proposes to add that an NYSE Alternext member organization 
that seeks to become an Exchange member organization by applying for a 
trading license would also be eligible, so long as such NYSE Alternext 
member organization held a valid 86 Trinity Permit at the time it 
applied for an equities trading license.
    As proposed, if a member organization meets the amended eligibility 
threshold, it has six months from the earlier of either receiving the 
equity trading license (which is the current standard) or the 
cancellation of the 86 Trinity Permits (the Options Relocation date) 
within which to comply with the NYSE Membership Rules, including the 
FINRA requirement. By adding the cancellation of the 86 Trinity Permits 
as a trigger for the six-month grace period, the proposed rule provides 
those NYSE Alternext member organizations that applied for a trading 
license, but were not issued a trading license because they are not 
currently FINRA members, time to meet the NYSE Member Organization Rule 
requirements. This proposed amended rule conforms to the rule 
amendments proposed by NYSE Alternext in its companion filing.
    As is currently part of the rule, if an NYSE Alternext member 
organization that has been issued a trading license, or which applied 
for a trading license, fails to meet the requirements of the NYSE 
Member Organization Rules by the close of the grace period applicable 
to that member organization, the Exchange would either revoke the 
member organization's approval to trade, if a trading license has 
already been issued, or not issue a trading license.
2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Act \11\ which requires the rules of an exchange 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 
proposed rule change also is designed to support the principles of 
Section 11A(a)(1) \12\ of the Act in that it seeks to assure fair 
competition among brokers and dealers and among exchange markets and 
the practicability of brokers executing investor's orders in the best 
market.
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    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 15 U.S.C. 78k-1(a)(1).
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    Specifically, the Exchange already permits an NYSE Alternext member 
organization to be automatically deemed approved as an NYSE member 
organization. Moreover, the Exchange permitted NYSE Alternext member 
organizations with a valid 86 Trinity Permit to exchange such permit 
for both an NYSE Alternext and NYSE equity trading license. This filing 
would simply provide those eligible NYSE Alternext member organizations 
with a valid 86 Trinity Permit additional time to exchange their 86 
Trinity Permit for an NYSE equity trading license and to comply with 
Exchange membership requirements without first having to apply as a new 
member organization.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in 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: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
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 \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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. 
NYSE has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \15\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6) \16\ permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. NYSE requests that the 
Commission waive the 30-day operative delay because the Options 
Relocation date is imminent and is currently scheduled for March 2, 
2009, and the Exchange needs to immediately implement this rule change 
so that NYSE Alternext member organizations can meet the new rule 
requirements. For these reasons, the Commission believes that waiving 
the 30-day operative delay \17\ is consistent with the protection of 
investors and the public interest and designates the proposal operative 
upon filing.
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 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 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

[[Page 9651]]

     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2009-19 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-2009-19. 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, 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-NYSE-2009-19 and should be 
submitted on or before March 26, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-4677 Filed 3-4-09; 8:45 am]

BILLING CODE 8011-01-P