Document ID: SEC-2009-1660-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Amending Rule 7.25
Posted Date: 2009-11-25T05:00Z

[Federal Register: November 25, 2009 (Volume 74, Number 226)]
[Notices]               
[Page 61726-61727]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25no09-112]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61025; File No. SR-NYSEArca-2009-102]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Amending Rule 
7.25

November 18, 2009.
    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 November 6, 2009, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III 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 amend Rule 7.25 to remove the requirement 
that for each security in which a Market Maker is registered as a Lead 
Market Maker, the Lead Market Maker also register as an Odd Lot Dealer 
in that security. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 7.25 to remove the requirement 
that for each security in which a Market Maker is registered as a Lead 
Market Maker (``LMM''), the LMM also register as an Odd Lot Dealer 
(``OLD'') in that security (the ``LMM-OLD requirement''). Going 
forward, LMMs may choose to register as an OLD, but will not be 
required to do so.
    The LMM-OLD requirement was originally established in order to 
ensure that a mechanism existed whereby the Exchange could facilitate 
odd lot executions for its primary listings that could not otherwise be 
routed away to another market center for execution.\4\ This historical 
concern no longer exists. All orders in primary listings, whether odd 
lot or round lot, are eligible for routing to away market centers. Any 
eligible unexecuted balance of odd lot orders, like round lot orders, 
shall be routed to away market centers for execution pursuant to NYSE 
Arca Equities Rule 7.37(d). Also, for purposes of ranking and 
execution, round lot, mixed lot and odd lot orders are treated in the 
same manner on the NYSE Arca Marketplace.\5\ As a result, it is no 
longer necessary to require LMMs to register as OLDs. Instead, as with 
all market makers, LMMs may choose to register as an OLD, but will not 
be required to do so.
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    \4\ See Securities Exchange Act Release No. 52827 (November 23, 
2005), 70 FR 72139 (December 1, 2005) (order approving SR-PCX-2005-
56).
    \5\ If there is an Odd Lot Dealer registered in the security, 
the order shall be matched in the Odd Lot Tracking Order Process 
pursuant to Rule 7.37(c). If there is no Odd Lot Dealer registered 
in that security, the odd lot will be routed away pursuant to NYSE 
Arca Equities Rule 7.37(d).
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    In addition, until recently, the Exchange paid a $0.02 per share 
credit to market makers that executed against an odd lot order. This 
rebate represented a higher than standard rebate, and acted as an 
incentive for market makers to register as OLDs. However, the Exchange 
notes that as of August 3, 2009, the Exchange eliminated all distinct 
odd lot pricing and now makes no distinction with respect to the rates 
applied to odd lot and round lot executions.\6\
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    \6\ See Securities Exchange Act Release No. 60495 (August 13, 
2009), 74 FR 41957 (August 19, 2009) (notice of filing and immediate 
effectiveness of SR-NYSEArca-2009-72).
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    The Exchange is not otherwise altering any other rights or 
obligations of LMMs.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
and furthers the objectives of Section 6(b)(5) of the Act,\7\ in that 
it is designed to promote just and equitable principles of

[[Page 61727]]

trade, remove impediments to and perfect the mechanisms of a free and 
open market and a national market system and, in general, to protect 
investors and the public interest. The Exchange is simply eliminating 
the requirement that LMMs register as an OLD in the security in which 
they are also registered as an LMM. The Exchange is not otherwise 
altering the rights and obligations of LMMs.
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    \7\ 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 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 prior to 
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 \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) of the Act \10\ 
normally does not become operative prior to 30 days after the date of 
the filing. However, Rule 19b-4(f)(6) \11\ permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ Id.
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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 Number SR-NYSEArca-2009-102 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-NYSEArca-2009-102. 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 Section, 100 F Street, 
NE., Washington, DC 20549-1090 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 NYSE Arca'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 available publicly. All submissions 
should refer to File Number SR-NYSEArca-2009-102 and should be 
submitted on or before December 16, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-28197 Filed 11-24-09; 8:45 am]

BILLING CODE 8011-01-P