Document ID: SEC-2011-1020-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2011-07-18T04:00Z

[Federal Register Volume 76, Number 137 (Monday, July 18, 2011)]
[Notices]
[Pages 42147-42149]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-17958]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64859; File No. SR-NYSEAmex-2011-47)

Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Extending the 
Operative Date of NYSE Amex Equities Rule 92(c)(3) From August 1, 2011 
to September 12, 2011

July 12, 2011.
    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 July 1, 2011, 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 extend the operative date of NYSE Amex 
Equities Rule 92(c)(3) from August 1, 2011 to September 12, 2011. The 
text of the proposed rule change is available at the Exchange, the 
Commission's Public Reference Room, on the Commission's Web site at 
http://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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to extend the delayed operative date of 
NYSE Amex Equities Rule 92(c)(3) from August 1, 2011 to September 12, 
2011. The Exchange believes that this extension will provide the time 
necessary for the Exchange and the Financial Industry Regulatory 
Authority, Inc. (``FINRA'') to harmonize their respective rules 
concerning customer order protection to achieve a standardized industry 
practice.
Background
    On July 5, 2007, the Commission approved amendments to NYSE Rule 92 
to permit riskless principal trading at the Exchange.\4\ These 
amendments were filed in part to begin the harmonization process 
between NYSE Rule 92 and FINRA's Manning Rule.\5\ In connection with 
those amendments, the Exchange implemented for an operative date of 
January 16, 2008, NYSE Rule 92(c)(3), which permits Exchange member 
organizations to submit riskless principal orders to the Exchange, but 
requires them to submit to a designated Exchange database a report of 
the execution of the facilitated order. That rule also requires members 
to submit to that same database sufficient information to provide an 
electronic link of the execution of the facilitated order to all of the 
underlying orders.
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    \4\ See Securities Exchange Act Release No. 56017 (July 5, 
2007), 72 FR 38110 (July 12, 2007) (SR-NYSE-2007-21).
    \5\ See NASD Rule 2111 and IM-2110-2.
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    For purposes of NYSE Rule 92(c)(3), the Exchange informed member 
organizations that when executing riskless principal transactions, 
firms must submit order execution reports to the Exchange's Front End 
Systemic Capture (``FESC'') database linking the execution of the 
riskless principal order on the Exchange to the specific underlying 
orders. The information provided must be sufficient for both member 
firms and the Exchange to reconstruct in a time-sequenced manner all 
orders, including allocations to the underlying orders, with respect to 
which a member organization is claiming the riskless principal 
exception.
    Because the rule change required both the Exchange and member 
organizations to make certain changes to their trading and order 
management systems, the NYSE filed to delay to May 14, 2008 the

[[Page 42148]]

operative date of the NYSE Rule 92(c)(3) requirements, including 
submitting end-of-day allocation reports for riskless principal 
transactions and using the riskless principal account type 
indicator.\6\ The NYSE filed for additional extensions of the operative 
date of NYSE Rule 92(c)(3) to August 1, 2011.\7\ Because NYSE Amex 
adopted NYSE Rule 92 in its then current form,\8\ the delayed operative 
date for the NYSE Rule 92(c)(3) reporting requirements also applied for 
NYSE Amex Equities Rule 92(c)(3) reporting requirements and the 
Exchange filed for additional extensions of the operative date, the 
most recent of which was an extension to August 1, 2011.\9\
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    \6\ See Securities Exchange Act Release No. 56968 (Dec. 14, 
2007), 72 FR 72432 (Dec. 20, 2007) (SR-NYSE-2007-114).
    \7\ See Securities Exchange Act Release Nos. 57682 (Apr. 17, 
2008), 73 FR 22193 (Apr. 24, 2008) (SR-NYSE-2008-29); 59621 (Mar. 
23, 2009), 74 FR 14179 (Mar. 30, 2009) (SR-NYSE-2009-30); 60396 
(July 30, 2009), 74 FR 39126 (Aug. 5, 2009) (SR-NYSE-2009-73); 61251 
(Dec. 29, 2009), 75 FR 482 (Jan. 5, 2010) (SR-NYSE-2009-129); 62541 
(July 21, 2010), 75 FR 44042 (July 27, 2010) (SR-NYSE-2010-52); and 
63455 (Dec. 7. 2010), 75 FR 77687 (Dec. 13, 2010) (SR-NYSE-2010-76).
    \8\ The NYSE Amex Equities Rules, which became operative on 
December 1, 2008, are substantially identical to the current NYSE 
Rules 1-1004 and the Exchange continues to update the NYSE Amex 
Equities Rules as necessary to conform with rule changes to 
corresponding NYSE Rules filed by the NYSE. See Securities Exchange 
Act Release Nos. 58705 (Oct. 1, 2008), 73 FR 58995 (Oct. 8, 2008) 
(SR-Amex-2008-63); 58833 (Oct. 22, 2008), 73 FR 64642 (Oct. 30, 
2008) (SR-NYSE-2008-106); 58839 (Oct. 23, 2008), 73 FR 64645 
(October 30, 2008) (SR-NYSEALTR-2008-03); 59022 (Nov. 26, 2008), 73 
FR 73683 (Dec. 3, 2008) (SR-NYSEALTR-2008-10); and 59027 (Nov. 28, 
2008), 73 FR 73681 (Dec. 3, 2008) (SR-NYSEALTR-2008-11).
    \9\ See Securities Exchange Act Release Nos. 59620 (Mar. 23, 
2009), 74 FR 14176 (Mar. 30, 2009) (SR-NYSEALTR-2009-29); 60397 
(July 30, 2009), 74 FR 39128 (Aug. 5, 2009) (SR-NYSEAmex-2009-48); 
61250 (Dec. 29, 2009), 75 FR 477 (Jan. 5, 2010) (SR-NYSEAmex-2009-
92); and 62540 (July 21, 2010), 75 FR 44040 (July 27, 2010) (SR-
NYSEAmex-2010-70), 75 FR 77685 (Dec. 13, 2010) (SR-NYSEAmex-2010-
111).
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Request for Extension \10\
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    \10\ NYSE has filed a companion rule filing to conform its Rules 
to the changes proposed in this filing. See SR-NYSE-2011-32, 
formally submitted July 1, 2011.
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    FINRA and the Exchange have been working diligently on fully 
harmonizing their respective rules. On December 10, 2009, FINRA filed 
with the Commission its rule proposal to adopt a new industry standard 
for customer order protection as proposed FINRA Rule 5320.\11\ On 
February 11, 2011, the Commission approved FINRA Rule 5320.\12\ In 
order to provide time to implement programming changes associated with 
the proposed new rule, FINRA Rule 5320 becomes effective on September 
12, 2011.\13\ The Exchange intends to file a proposed rule change to 
adopt rule text that is substantially similar to FINRA Rule 5320 and 
implement it on the same date as FINRA.
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    \11\ See Securities Exchange Act Release No. 61168 (Dec. 15, 
2009), 74 FR 68084 (Dec. 22, 2009) (SR-FINRA-2009-90).
    \12\ See Securities Exchange Act Release No. 63895 (Feb. 11, 
2011), 76 FR 9386 (Feb. 17, 2011) (SR-FINRA-2009-90).
    \13\ See FINRA Regulatory Notice 11-24.
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    The Exchange continues to believe that pending full harmonization 
of the respective customer order protection rules, it would be 
premature to require firms to meet the current NYSE Amex Equities Rule 
92(c)(3) FESC reporting requirements.\14\ Indeed, having differing 
reporting standards for riskless principal orders would be inconsistent 
with the overall goal of the harmonization process. Accordingly, the 
Exchange is proposing to delay the operative date for NYSE Amex 
Equities Rule 92(c)(3) from August 1, 2011 to September 12, 2011.
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    \14\ The Exchange notes that it would also need to make 
technological changes to implement the proposed FESC reporting 
solution for Rule 92(c)(3).
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    During that period, the Exchange will continue to require that, as 
of the date each member organization implements riskless principal 
routing, the member organization have in place systems and controls 
that allow them to easily match and tie riskless principal execution on 
the Exchange to the underlying orders and that they be able to provide 
this information to the Exchange upon request. To make clear that this 
requirement continues, the Exchange proposes to amend supplementary 
material .95 to NYSE Amex Equities Rule 92 to specifically provide that 
the NYSE Amex Equities Rule 92(c)(3) reporting requirements are 
suspended until September 12, 2011 and that member organizations are 
required to have in place such systems and controls relating to their 
riskless principal executions on the Exchange. Moreover, the Exchange 
will coordinate with FINRA to examine for compliance with the rule 
requirements for those firms that engage in riskless principal trading 
under NYSE Amex Equities Rule 92(c).
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\15\ in 
general, and furthers the objectives of Section 6(b)(5) of the Act,\16\ 
in particular, in that 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. The Exchange 
believes the proposed extension provides the Exchange, the NYSE, and 
FINRA the time necessary to develop a harmonized rule concerning 
customer order protection that will enable member organizations to 
participate in the national market system without unnecessary 
impediments.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 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, if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \17\ and Rule 19b-
4(f)(6) thereunder.\18\
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the self-regulatory organization to 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 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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    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

[[Page 42149]]

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-2011-47 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-2011-47. 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 Web site 
viewing and printing 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 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-NYSEAmex-2011-47 and should be submitted on or before 
August 8, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-17958 Filed 7-15-11; 8:45 am]
BILLING CODE 8011-01-P