Document ID: SEC-2011-0014-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2011-01-05T05:00Z

[Federal Register Volume 76, Number 3 (Wednesday, January 5, 2011)]
[Notices]
[Pages 609-610]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-33253]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63613; File No. SR-NYSEAmex-2010-121]

Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Making Permanent 
NYSE Amex Equities Rule 123C(9)(a)(1) and Amending Rule 
123C(9)(a)(1)(iii)

December 29, 2010.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on December 20, 2010, NYSE Amex LLC (the ``Exchange'' or 
``NYSE Amex'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. 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\ 15 U.S.C. 78a.
    \3\ 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 make permanent NYSE Amex Equities Rule 
123C(9)(a)(1), which currently operates on a pilot basis. The Exchange 
also proposes to amend Rule 123C(9)(a)(1)(iii) to eliminate the 
requirement that only Floor brokers can represent interest after 4 p.m. 
The text of the proposed rule change is available at the Exchange, the 
Commission's Public Reference Room, www.sec.gov, 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to make permanent NYSE Amex Equities Rule 
123C(9)(a)(1),\4\ which has operated on a pilot basis and allows the 
Exchange to temporarily suspend certain rule requirements at the close 
when extreme order imbalances may cause significant dislocation to the 
closing price (``Extreme Order Imbalances Pilot'' or ``Pilot'').\5\ The 
Pilot has recently been extended to June 1, 2011. In addition, in 
connection with proposing to make the rule permanent, the Exchange 
proposes to amend Rule 123C(9)(a)(1)(iii) to eliminate the requirement 
that only Floor brokers can represent interest after 4:00 p.m. and to 
make technical amendments related to the obligations of member firms 
entering interest pursuant to Rule 123C(9)(a)(1).\6\
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    \4\ The Exchange notes that parallel changes are proposed to be 
made to the rules of New York Stock Exchange LLC. See SR-NYSE-2010-
84.
    \5\ See Securities Exchange Act Release Nos. 59755 (April 13, 
2009), 74 FR 18009 (April 20, 2009) (SR-NYSEAltr-2009-15) (order 
granting approval of the Pilot); 60808 (October 9, 2009), 74 FR 
53539 (October 19, 2009) (SR-NYSEAmex-2009-70) (extending the 
operation of the Pilot to December 31, 2009); 61265 (December 31, 
2009), 75 FR 1094 (January 8, 2010) (SR-NYSEAmex-2009-96) (extending 
the operation of the Pilot from December 31, 2009 to March 1, 2010); 
61611 (March 1, 2010), 75 FR 10530 (March 8, 2010) (SR-NYSEAmex-
2010-15) (extending the operation of the Pilot from March 1, 2010 to 
June 1, 2010); 62293 (June 15, 2010), 75 FR 35862 (June 23, 2010) 
(SR-NYSEAmex-2010-50) (extending the operation of the Pilot from 
June 1, 2010 to December 1, 2010); and SR-NYSEAmex-2010-113 (filed 
November 30, 2010) (extending the operation of the Pilot from 
December 1, 2010 to June 1, 2011).
    \6\ In addition, the Exchange proposes to make a technical 
change to the text of Rule 123C(9)(a)(1)(v).
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Background
    Pursuant to NYSE Amex Equities Rule 123C(9)(a)(1), the Exchange may 
suspend NYSE Amex Equities Rule 52 (Hours of Operation) to resolve an 
extreme order imbalance that may result in a price dislocation at the 
close as a result of an order entered into Exchange systems, or 
represented to a Designated Market Maker (``DMM'') orally at or near 
the close. NYSE Amex Equities Rule 123C(9)(a)(1) was intended to be and 
has been invoked to attract offsetting interest in rare circumstances 
where there exists an extreme imbalance at the close such that a DMM is 
unable to close the security without significantly dislocating the 
price.
    As a condition of the approval to operate the Pilot, the Exchange 
committed to provide the Commission with information regarding: (i) How 
often an NYSE Amex Equities Rule 52 temporary suspension pursuant to 
the Pilot was invoked during the six months following its approval; and 
(ii) the Exchange's determination as to how to proceed with technical 
modifications to reconfigure Exchange systems to accept orders 
electronically after 4 p.m. As the Exchange has previously noted in 
filings with the Commission, the Pilot has been invoked only twice in 
NYSE Amex-listed securities.\7\
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    \7\ See SR-NYSEAmex-2010-113 (filed November 30, 2010) 
(extending the operation of the Pilot from December 1, 2010 to June 
1, 2011).
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Proposal To Make Permanent the Operation of the Extreme Order Imbalance 
Rule
    The Exchange has completed and tested the system modifications 
necessary to accept orders electronically after 4 p.m. The Exchange 
therefore proposes to make Rule 123C(9)(a)(1), as amended, permanent 
beginning on January 3, 2011.
    Because the Exchange can now accept orders electronically after 4 
p.m., the Exchange proposes to amend Rule 123C(9)(a)(iii) to eliminate 
the restriction that only Floor brokers can represent offsetting 
interest in response to a solicitation of interest pursuant to the 
Rule. The Exchange further proposes to make technical changes to Rule 
123C(9)(a)(1)(iii) to identify what interest may be entered in response 
to a solicitation, i.e., it must be offsetting interest, a limit order 
priced no worse than the last sale, and irrevocable. Market 
participants sending in interest electronically in response to a 
solicitation after 4 p.m. are responsible for assuring compliance with 
all provisions of subsection (iii), including that such interest must 
be on the opposite side of the imbalance, must be limit priced no worse 
than the last sale, and must be irrevocable. Failure to abide by these 
requirements could subject a market participant to regulatory review 
and possible disciplinary action.\8\
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    \8\ Prior to implementation of this rule change, the Exchange 
will issue guidance in the form of an Information Memo that member 
organizations entering interest will be responsible for complying 
with Rule 123C(9)(a)(1)(iii).
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    The Exchange also proposes to amend Rule 123C(9)(a)(iv) to make 
clear that all

[[Page 610]]

offsetting interest solicited pursuant to the Rule will be executed 
consistent with Rule 72(c), which governs the allocation of executions 
among market participants.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \9\ that an Exchange 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 
filing is consistent with these principles because the proposed rule 
change will increase the ability of market participants to enter 
trading interest designed to prevent significant dislocation to closing 
prices that could result from extreme order imbalances. The Exchange 
further believes that this filing is consistent with these principles 
in that it expands the field of market participants that can directly 
enter interest in response to a solicitation of offsetting interest 
after 4 p.m. pursuant to Rule 123C(9)(a)(1).
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    \9\ 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: (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 \10\ and Rule 19b-
4(f)(6)(iii) thereunder.\11\ The Exchange has asked the Commission to 
waive the 30-day operative delay so that the proposal may become 
operative immediately upon filing.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to 
the Commission written notice of its 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 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 reports in connection with this proposal to make 
permanent Rule 123C(9)(a)(1) that it has completed testing of a 
functionality that would enable the electronic submission of orders 
after 4 p.m., and thus now proposes to remove the requirement that all 
interest entered after 4 p.m. in response to a DMM's solicitation of 
interest to offset an extreme order imbalance must be represented by 
Floor brokers. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest because doing so would allow the benefits of the new 
systems modifications allowing all market participants to enter orders 
electronically (rather than solely through a Floor broker) during a 
Rule 123C(9)(a)(1) suspended close to be realized immediately.\12\ 
Accordingly, the Commission waives the 30-day operative delay 
requirement and designates the proposed rule change operative upon 
filing with the Commission.
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    \12\ 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEAmex-2010-121 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-2010-121. 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 website 
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 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-
NYSEAmex-2010-121 and should be submitted on or before January 26, 
2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-33253 Filed 1-4-11; 8:45 am]
BILLING CODE 8011-01-P