Document ID: SEC-2008-0832-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2008-06-18T04:00Z

[Federal Register: June 18, 2008 (Volume 73, Number 118)]
[Notices]               
[Page 34819-34822]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18jn08-136]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57954; File No. SR-NYSEArca-2008-59]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to the 
Elimination of Obsolete Rules Related to the PCX Plus System

June 11, 2008.
    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 2, 2008, NYSE Arca, Inc. (``NYSE Arca'' 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 substantially by NYSE Arca. NYSE Arca filed the 
proposed rule change as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders it 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\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 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

    NYSE Arca proposes to amend or to eliminate several of its rules in 
order to remove obsolete and unnecessary rule text relating to terms or 
systems that are now obsolete. These changes are being made for 
administrative purposes only. The Exchange represents that by 
abolishing these out-dated references, the Exchange is not changing or 
altering any obligations, rights, policies or practices enumerated 
within its rules. The text of the proposed rule change is available at 
the Exchange, the Commission's Public Reference Room, and http://
www.nyse.com.

[[Page 34820]]

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

    In its filing with the Commission, NYSE Arca 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. NYSE Arca 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
    NYSE Arca proposes to eliminate several of its rules relating to 
the PCX Plus system in order to remove confusing and unnecessary 
references to terms or systems that are now obsolete. By abolishing 
these out-dated references, the Exchange is not changing or altering 
any obligations, rights, policies or practices enumerated within its 
rules.
    In August 2006, the Exchange implemented a new electronic order 
delivery, execution and reporting system known as the OX system.\5\ At 
that time, there was a transitional period where the retired system, 
PCX Plus, and the new system, OX, were both in operation. This 
transition period allowed an orderly transition of options issues from 
the old to the new system. Due to the substantial differences between 
the systems the Exchange implemented, with the Commission's approval, 
several new rules defining the operation and use of the OX system. At 
the same time, since the change required a transition period, certain 
rules that specifically referenced the retired PCX Plus system were 
retained. These two sets of rules, one for each system, were at times 
redundant, but yet it was necessary, for the purposes of the 
transition, to retain these rules with their specific references to 
each system.
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    \5\ See Securities Exchange Act Release No. 54238 (July 28, 
2006), 71 FR 44758 (August 7, 2006) (SR-NYSEArca-2006-13) (relating 
to the establishment of the OX trading rules).
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    At the conclusion of the transition period, the PCX Plus system was 
decommissioned and is no longer a part of the NYSE Arca Options.\6\ As 
a result, there are several rules pertaining specifically to the PCX 
Plus system, which are obsolete or irrelevant. Retaining these rules 
fosters unnecessary confusion. The Exchange now proposes eliminating 
these rules in their entirety.
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    \6\ The OX system was rolled-out during a phase-in period in 
August and September 2006. The PCX Plus system was decommissioned in 
October 2006, after the OX system was fully operational.
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    In addition to the OX system in use at NYSE Arca, the Exchange also 
operates an options trading floor, for the purpose of conducting open 
out-cry trading. Rules related to options trading at NYSE Arca, both 
open-outcry trading and electronic trading, are contained in one rule 
set. While some rules are specific to the open-outcry floor based 
trading, and some are specific to electronic trading, there are others 
that are not necessarily platform specific and apply to Exchange 
options trading in general. In conjunction with the introduction of the 
OX system and the approval of the new rules for OX, some of these 
generic trading rules were labeled as ``PCX Plus'' rules. Even though 
certain rules did not necessarily deal specifically with the PCX Plus 
electronic trading system, the PCX Plus label was applied to 
differentiate them from the new OX specific rules. Some of these 
generic rules remain in effect today, although they may contain the 
out-dated reference to PCX Plus. The Exchange proposes amending those 
rules by eliminating the confusing and unnecessary reference.
    The specific proposed changes are discussed in further detail 
below.
     Rule 6.1: This rule presently sets forth certain 
definitions and references that are in effect at NYSE Arca. By this 
proposal, the Exchange is eliminating obsolete terms and references 
associated with the PCX Plus system through Rule 6.1, as shown below.
     Rule 6.1(a): The Exchange is deleting the reference to PCX 
Plus. Rules related to PCX Plus are either being eliminated or amended.
     Rule 6.1(b)(33): The Exchange proposes to eliminate the 
reference to the PCX Plus system and replacing it with the OX 
electronic trading system.
     Rule 6.1(c), References: The Exchange no longer defines 
the terms Remote Market Makers, Supplemental Market Makers, or Floor 
Market Makers, as these were specific users of the PCX Plus system. As 
a result, the Exchange proposes eliminating references to these terms 
within this section.
     Rule 6.2(c)(2)(F): The Exchange is eliminating the 
obsolete reference to ``stools used by the market Quote Terminal 
Operator.'' A Quote Terminal was an Exchange owned and operated system 
associated with the PCX Plus system, that is no longer in use today.
     Rule 6.32, Market Maker Defined--PCX Plus: This rule 
defines Market Makers and other associated terms as they apply to 
transacting business either on the PCX Plus system, or in some cases, 
on the floor of the Exchange. By this proposal, the Exchange is 
deleting any obsolete references to PCX Plus, and any rules that are 
specific to trading on the PCX Plus system, while retaining still 
relevant rule text.
     Rule 6.32(a): The Exchange is replacing the outdated 
definition of Market Maker relating to PCX Plus with the current 
definition of Market Maker, as it relates to trading either on the 
floor of the Exchange or on the NYSE Arca OX electronic trading 
platform. The terms Remote Market Makers, Supplemental Market Maker, 
and Floor Market Maker were used to define certain users of the PCX 
Plus trading system. These classifications have been rendered obsolete 
as a result of the decommissioning of the PCX Plus system; therefore 
the Exchange proposes eliminating them.
     Rule 6.32(c): This rule contains a provision related to 
Remote Marker Makers. The term Remote Marker Maker, which was specific 
to the PCX Plus system, is no longer applicable to trading on NYSE 
Arca. Therefore, language regarding a Remote Market Maker, entering 
orders from off the floor, will be deleted.
     Rule 6.36(a): The terms Remote Marker Maker and Lead 
Market Maker are being deleted. Remote Market Maker was specific to the 
PCX Plus system, and Lead Market Markers are included as a subset of 
Market Makers under Rule 6.32(a).
     Rule 6.37, Obligations of Market Makers--PCX Plus: This 
rule defined the obligations and rights of Market Makers with respect 
to either the PCX Plus system or open out-cry trading. The Exchange 
proposes to remove the reference to PCX Plus in the rule title, and 
subsection (b)(1)(G). The Exchange also proposes to eliminate 
paragraphs (g) and (h) of Rule 6.37, as they are specific to trading on 
the PCX Plus system.
     Commentary .03 to Rule 6.37: The Exchange proposes 
eliminating text as it pertains to Remote Market Makers--a class of 
Market Makers that was specific to the PCX Plus system--and Lead Market 
Makers, as they are already included in the definition of Market Maker.
     Commentary .07 to Rule 6.37: The Exchange proposes to 
eliminate the reference to the PCX Plus system and replace it with a 
reference to the NYSE Arca OX electronic trading system.

[[Page 34821]]

     Rule 6.40, Market Maker Risk Limitation Mechanism--PCX 
Plus, and Rule 6.40A, Market Maker Risk Limitation Mechanism--OX: The 
Exchange is hereby eliminating the obsolete Rule 6.40, which pertains 
to the decommissioned PCX Plus system.
     Rule 6.40A: The Exchange is renumbering this as Rule 6.40.
     Rule 6.41, Market Maker Marketing Reports: The Exchange is 
eliminating the obsolete reference to PCX Plus.
     Rule 6.64, Trading Rotations--PCX Plus: The Exchange is 
eliminating this Rule, which pertains solely to trading on the 
decommissioned PCX Plus system.
     Rule 6.64A, OX Trading Auctions: The Exchange is 
renumbering this as new Rule 6.64.
     Rule 6.67, Order Format and System Entry Requirements: 
Presently, this rule refers to orders sent through the Exchange's 
Member Firm Interface. The Member Firm interface was also the gateway 
for orders sent to the PCX Plus system. The Exchange no longer uses a 
Member Firm Interface as a gateway. As a result, the Exchange is 
eliminating that reference. Instead, in recognition of the many ways 
Users can reach the Exchange, the Exchange will replace that outdated 
term by referencing ``orders submitted electronically through the 
Exchange's OX electronic trading system.'' The Exchange is also 
eliminating paragraphs (d)(1)(B) and (e) as they contain obsolete 
references to certain operative dates in 2005.
     Rule 6.76, Priority and Order Allocation Procedures--PCX 
Plus: The Exchange is eliminating this rule in its entirety, as it 
relates solely to the decommissioned PCX Plus system.
     Rule 6.76A: The Exchange is renumbering this as Rule 6.76.
     Rule 6.76B: The Exchange is renumbering this as Rule 
6.76A.
     Rule 6.82(c)(4): The Exchange proposes changing a rule 
reference due to the renumbering of certain rules.
     Rule 6.82(c)(8): Lead Market Makers or ``LMMs'' were 
responsible for establishing the variables in the formula used to 
generate quotations that were then disseminated by the PCX Plus system. 
These quotations represented not only the market for the LMM, but also 
the market for the Market Makers in the Trading Crowd. All Market 
Makers on NYSE Arca now have the ability to send their own quotations 
to the Exchange's electronic trading system, via an electronic 
interface, and no longer rely on the LMM to set the variables used to 
establish quotations. The Exchange proposes deleting this rule in its 
entirety and reserving Rule number 6.82(c)(8) for possible future use.
     Rule 6.82(d)(2): The Exchange proposes to eliminate the 
outdated reference to the PCX Plus system and replace it with a 
reference to the OX electronic trading system.
     Rule 6.89, Floor Broker Hand-Held Terminals: The Exchange 
proposes to eliminate this rule in its entirety, as it is no longer 
descriptive of equipment in use, and it is not applicable to the manner 
in which the Exchange Floor operates. With the elimination of the PCX 
Plus system, the Floor Broker Hand-Held system was decommissioned. 
Neither Exchange Sponsored Hand-Held Terminals nor Proprietary 
Brokerage Routing Terminals are in use today at NYSE Arca. As part of 
the requirements for systematization of all orders received over the 
phone, and the requirement in Rule 6.67, proprietary brokerage order 
routing terminals no longer have an interface with the Exchange 
reporting or clearing systems, nor do they meet the Exchange's 
recordkeeping requirements under Rule 6.68. The Exchange proposes 
deleting this rule in its entirety and reserving rule number 6.89 for 
possible future use.
     Rule 6.90, PCX Plus: The Exchange proposes deleting this 
rule in its entirety, as it relates solely to the decommissioned PCX 
Plus system, and reserve rule number 6.90 for possible future use.
     Rule 6.92(a)(7)(ii): The Exchange is eliminating the 
specific reference to the PCX Plus system.
     Rule 6.92, paragraphs (a) and (a)(7)(iii): The Exchange 
proposes to change an incorrect rule reference. Both rules contain a 
reference to Rule 6.96, but due to a typographical error, they 
presently read as Rule 6.95. The rule reference cited in Rule 6.92(a) 
refers to all rules related to the Intermarket Linkage System, which 
includes Rule 6.96. Furthermore, Rule 6.92(a)(7)(iii) refers to 
limitations on principal order access, which is contained in Rule 6.96, 
not Rule 6.95. This change simply serves to correct these typographical 
errors.
     Rule 7.1, Trading Sessions: The Exchange is removing the 
references to Remote Market Makers, a class of Market Makers that was 
specific to the PCX Plus, and Lead Market Makers, as they are included 
as a subset of Market Makers in rule 6.32(a). The Exchange also 
proposes making one grammatical correction to the rule text.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\8\ in particular, in that the 
proposal 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. 
The Exchange believes the proposed changes will serve to clarify the 
rules of NYSE Arca by removing outdated and obsolete rule references.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    The Exchange has neither solicited nor received written comments on 
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 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 
\9\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing.\11\ 
However, Rule 19b-4(f)(6)(iii) \12\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of

[[Page 34822]]

investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay and designate the proposed 
rule change operative upon filing. The Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. Waiving the 30-day operative delay 
ensures that the Exchange's rules will be updated without delay. The 
Commission believes that the proposed rule change will provide clarity 
and consistency to all market participants who may reference the 
Exchange's rules. Therefore, the Commission designates the proposal 
operative upon filing.\13\
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    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
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. 
The Exchange has complied with this pre-filing requirement.
    \12\ Id.
    \13\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 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
     Send an e-mail to rule-comments@sec.gov. Please include 
File No. SR-NYSEArca-2008-59 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, Station Place, 100 F Street, NE., Washington, 
DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2008-59. 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, 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 NYSE Arca. 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-NYSEArca-2008-59 and should be submitted on or before 
July 9, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-13710 Filed 6-17-08; 8:45 am]

BILLING CODE 8010-01-P