Document ID: SEC-2008-1489-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Alternext US LLC
Posted Date: 2008-10-30T04:00Z

[Federal Register: October 30, 2008 (Volume 73, Number 211)]
[Notices]               
[Page 64645-64647]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30oc08-81]                         

[[Page 64645]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58839; File No. SR-NYSEALTR-2008-03]

 
Self-Regulatory Organizations; NYSE Alternext US LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Regarding 
Relocation of the Trading of Certain Debt Securities Conducted on or 
Through the Exchange's Legacy Trading Systems and Facilities to an 
Automated Bond Trading Platform Based on NYSE Bonds\SM\

October 23, 2008.
    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 October 22, 2008, NYSE Alternext US LLC (``NYSE Alternext'' 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 by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 USC. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt NYSE Alternext Equities Rule 86 in 
order to implement the relocation (``Bonds Relocation'') of the trading 
of certain debt securities conducted on or through the Exchange's 
legacy trading systems and facilities to an automated bond trading 
platform based on NYSE Bonds\SM\ that will be operated by the New York 
Stock Exchange LLC (``NYSE'') on behalf of NYSE Alternext (``NYSE 
Alternext Bonds''). The Bonds Relocation is being implemented in 
connection with the recent acquisition of The Amex Membership 
Corporation (``AMC'') by NYSE Euronext. This proposal also includes 
non-substantive and technical changes to other NYSE Alternext Equities 
Rules that relate to bond trading at the Exchange. The text of the 
proposed rule change is available on the Exchange's Web site at http://
www.nyse.com/equities/nysealternextequities, at the Exchange's 
principal office, and at the Commission's Public Reference Room.

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. NYSE Alternext 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 purpose of the proposed rule change is to amend the NYSE 
Alternext Equities Rules as needed and to adopt, subject to such 
changes as are necessary to apply the rule to the Exchange, NYSE Rule 
86, which governs trading on the NYSE Bonds platform that NYSE 
Alternext Bonds is based on.
Background
    As described more fully in a related rule filing, NYSE Euronext 
acquired AMC pursuant to an Agreement and Plan of Merger, dated January 
17, 2008 (the ``Merger''). In connection with the Merger, the 
Exchange's predecessor, the American Stock Exchange LLC (``Amex''), a 
subsidiary of AMC, became a subsidiary of NYSE Euronext called NYSE 
Alternext US LLC \3\, and will continue to operate as a national 
securities exchange registered under Section 6 of the Securities 
Exchange Act of 1934, as amended (the ``Act'').\4\ The effective date 
of the Merger was October 1, 2008.
---------------------------------------------------------------------------

    \3\ 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). As noted, Amex was renamed NYSE 
Alternext US LLC and will be referred to as NYSE Alternext or the 
Exchange for all purposes throughout this rule filing. For the 
avoidance of doubt, NYSE Alternext US LLC will be a self regulatory 
organization distinct from NYSE Euronext's European-market 
subsidiary, NYSE Alternext.
    \4\ 15 USC. 78f.
---------------------------------------------------------------------------

    In connection with the Merger, the Exchange will relocate all 
equities trading conducted on the Exchange legacy trading systems and 
facilities located at 86 Trinity Place, New York, New York (the ``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'') will be operated by the NYSE 
on behalf of the Exchange. Similarly, the Exchange will relocate all 
options trading currently conducted on the 86 Trinity Trading Systems 
to new facilities of the Exchange to be located at 11 Wall Street, 
which will use a trading system based on the options trading system 
used by NYSE Arca, Inc. (``NYSE Arca'') (the ``Options 
Relocation'').\5\ After the Equities Relocation, the Exchange will 
trade all equities securities currently listed on the Exchange on the 
NYSE Alternext Trading Systems.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63) (approving 
the Equities Relocation). The Exchange will submit a separate rule 
filing to adopt a new rule set to govern NYSE Alternext options 
trading following the Options Relocation.
---------------------------------------------------------------------------

    Post-Merger, all Exchange members and member organizations that 
were authorized to trade on the Exchange before the Merger will receive 
trading permits (referred to as ``86 Trinity Permits'') that authorize 
continued trading on the 86 Trinity Trading Systems. Holders of the 86 
Trinity Permits are eligible to apply for an NYSE Alternext equities 
trading license or options trading permit upon the Equities or Options 
Relocation, as applicable.\6\ In addition, pursuant to the Merger, all 
NYSE Alternext members and member organizations that apply for an NYSE 
Alternext equities trading license are automatically waived in as NYSE 
members and member organizations.\7\ Similarly, all NYSE members and 
member organizations are automatically waived in as NYSE

[[Page 64646]]

Alternext members and member organizations.\8\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 58706 (October 1, 
2008), 73 FR 59019 (October 8, 2008) (SR-NYSE-2008-70) (describing 
and approving membership rule changes related to the Merger); 
Securities Exchange Act Release No. 58705 (October 1, 2008), 73 FR 
58995 (October 8, 2008) (SR-Amex 2008-63) (approving the Equities 
Relocation).
    \7\ See NYSE Rules 2.10 and 2.20. NYSE Alternext members and 
member organizations will have a six-month grace period within which 
to meet NYSE and NYSE Alternext Equities membership requirements. If 
a member organization fails to meet those requirements by the close 
of the grace period, both the NYSE and NYSE Alternext will revoke 
trading approvals on their respective exchanges. See NYSE Rule 
300.10T and NYSE Alternext Equities Rule 300.10T. See also 
Securities Exchange Act Release No. 58706 (October 1, 2008), 73 FR 
59019 (October 8, 2008) (SR-NYSE-2008-70) (describing and approving 
membership issues related to the Merger); Securities Exchange Act 
Release No. 58705 (October 1, 2008), 73 FR 58995 (October 8, 2008) 
(SR-Amex 2008-63) (including discussion of membership issues).
    \8\ See NYSE Alternext Equities Rules 2.10 and .20. See also 
Securities Exchange Act Release No. 58706 (October 1, 2008), 73 FR 
59019 (October 8, 2008) (SR-NYSE-2008-70); Securities Exchange Act 
Release No. 58705 (October 1, 2008), 73 FR 58995 (October 8, 2008) 
(SR-Amex 2008-63).
---------------------------------------------------------------------------

The Bonds Relocation
    As with the Equities and Options Relocations, the Exchange now 
proposes to relocate the trading of certain debt securities currently 
conducted on the 86 Trinity Trading Systems \9\ to NYSE Alternext 
Bonds.\10\ The Exchange believes that the NYSE Alternext Bonds platform 
is technologically superior to the 86 Trinity Trading Systems and the 
Exchange believes that the use and implementation of NYSE Alternext 
Bonds will promote increased market activity in debt securities trading 
at the Exchange.
---------------------------------------------------------------------------

    \9\ See Exhibit 3A for a list of the securities involved in the 
Bonds Relocation.
    \10\ In the filing governing the Equities Relocation, the 
Exchange noted that it expected to delist certain debt securities 
and that those securities would subsequently be listed and traded on 
NYSE Bonds. See Securities Exchange Act Release No. 58705 (October 
1, 2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63). In the 
interim period since that filing was submitted to the Commission, 
the Exchange has determined that it will retain the listing of these 
debt securities while adopting and using the advanced technology of 
NYSE Alternext Bonds to trade them.
---------------------------------------------------------------------------

    Although they will be traded on a new technological platform, the 
Exchange will maintain the listings of the securities involved in the 
Bond Relocation in accordance with its listing standards. The Exchange 
will not cross-list any NYSE-listed securities on the Exchange and will 
not cross-list any Exchange-listed securities on the NYSE. The Exchange 
understands that NYSE does not currently trade any debt securities on a 
UTP basis, and the Exchange does not intend to trade any securities on 
NYSE Alternext Bonds on a UTP basis. Moreover, neither the Exchange nor 
NYSE will trade debt securities listed on their respective exchanges on 
a UTP basis.
    The Exchange anticipates that the Bonds Relocation will occur as 
soon as reasonably practicable following the date of the Merger, 
concurrent with the Equities Relocation.
Proposed NYSE Alternext Bond Trading Rules
    The Exchange proposes to adopt NYSE Rule 86 as NYSE Alternext 
Equities Rule 86, and to make conforming amendments to other NYSE 
Alternext Equities Rules.\11\ The adoption of these rules is necessary 
in order to trade debt securities on NYSE Alternext Bonds. Following 
the Bonds Relocation, NYSE Alternext Equities Rule 86 and the related 
rules will govern all debt securities transactions conducted on NYSE 
Alternext Bonds.\12\
---------------------------------------------------------------------------

    \11\ The Commission approved NYSE Rule 86 in March 2007 after 
full notice and comment. See Securities Exchange Act Release No. 
55496 (March 20, 2007), 72 FR 14631 (March 28, 2007) (SR-NYSE-2006-
37) (approving NYSE Bonds).
    \12\ See Amex Rule 0 and NYSE Alternext Equities Rule 0. 
Together these rules prescribe that all trading conducted on the 
systems and facilities operated by NYSE on behalf of the Exchange, 
including the NYSE Alternext Bonds trading platform, shall be 
governed solely by the NYSE Alternext Equities Rules unless 
otherwise specifically designated.
---------------------------------------------------------------------------

    Because NYSE Alternext Bonds will be operated by the NYSE on behalf 
of the Exchange, NYSE Alternext Equities Rule 86 and the related rules 
will be substantially identical to the existing NYSE Rules, subject to 
certain minor changes necessary to apply these rules to the Exchange. 
The Exchange's bond market structure will be identical to the NYSE's 
and they will have the same rules governing, among other things, (i) 
the processing and trading of debt securities, including receipt, 
execution and reporting of transactions, (ii) the types of market 
participants, (iii) clearly erroneous executions, and (iv) trading 
halts.
Rule Modifications Relating to NYSE Alternext
    As noted above, the Exchange proposes to adopt NYSE Rule 86 as NYSE 
Alternext Equities Rule 86, subject to a few minor modifications. This 
filing conforms with amendments to NYSE Rule 86 that were recently 
filed by the NYSE.\13\
---------------------------------------------------------------------------

    \13\ See SR-NYSE-2008-106.
---------------------------------------------------------------------------

    In order to facilitate trading on NYSE Alternext Bonds, the 
Exchange proposes that NYSE Alternext Equities Rule 86 provide that all 
NYSE Alternext members and member organizations will be automatically 
eligible to access NYSE Alternext Bonds.\14\ By providing that all NYSE 
Alternext members and member organizations, which, as described above, 
includes by cross-designation all NYSE members and member 
organizations, are automatically eligible to access NYSE Alternext 
Bonds without any further requirements, both NYSE and NYSE Alternext 
members and member organizations will be able to trade on NYSE 
Alternext Bonds. The Exchange believes that these modifications will 
maximize participation, increase liquidity and improve pricing, which 
benefits all market participants.
---------------------------------------------------------------------------

    \14\ See proposed NYSE Alternext Equities Rule 86(o).
---------------------------------------------------------------------------

    Similar to the manner in which NYSE designates the securities it 
trades on NYSE Bonds, the Exchange will indicate on the NYSE Alternext 
Bonds website which securities are listed with the NYSE and which are 
listed with NYSE Alternext. Executions of NYSE Alternext-listed 
securities will be designated with an ``A'' indicator and executions of 
NYSE-listed securities will be designated with an ``N'' indicator.\15\
---------------------------------------------------------------------------

    \15\ Pursuant to an SEC Exemptive Order for NYSE Bonds, NYSE is 
permitted to trade certain unregistered and unlisted securities on 
NYSE Bonds. See Securities Exchange Act Release No. 54766 (November 
16, 2006), 71 FR 67657 (November 22, 2006) (S7-06-05). See also NYSE 
Rules 1400-1401. Executions of these securities on NYSE Bonds are 
designated with a ``U'' indicator. The securities included in the 
Bonds Relocation (listed in Exhibit 3A) are not subject to the SEC's 
Exemptive Order and thus the Exchange will not need the ``U'' 
indicator for any securities traded on NYSE Alternext Bonds.
---------------------------------------------------------------------------

Regulation of Trading on NYSE Alternext Bonds
    Trading on NYSE Alternext Bonds and maintenance of the applicable 
listing standards will be regulated by NYSE Regulation Inc. (``NYSER'') 
in accordance with the terms and conditions of the Regulatory Services 
Agreement the Exchange entered into with NYSER pursuant to the Merger, 
effective October 1, 2008.
Proposed Amendments to Related NYSE Alternext Equities Rules
    The Exchange proposes conforming amendments to NYSE Alternext 
Equities Rules 13, 51, 55, 61, 72, 76, 79A, 123D and 342 to accommodate 
the trading of debt securities on NYSE Alternext Bonds. The Exchange 
also proposes to adopt NYSE Rule 119 as NYSE Alternext Equities Rule 
119, which prescribes the procedures for canceling an order in NYSE 
Alternext Bonds when there is a change in the basis of bonds trading 
from ``and interest'' to ``flat'' as determined by the Exchange.
Operative Date
    The Exchange proposes that the operative date of the proposed rule 
changes be the date of the Equities and Bonds Relocations.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\16\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\17\ 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

[[Page 64647]]

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 supports the principles 
of Section 11A(a)(1) \18\ of the Act in that it seeks to ensure 
economically efficient execution of securities transactions and fair 
competition among brokers and dealers and among exchange markets.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

    The Exchange believes that the proposed adoption of NYSE Alternext 
Rule 86 and other rule amendments will enhance the efficient execution 
of transactions and fair competition among broker-dealers and markets 
and provide increased bond market activity for the benefit of all 
market participants

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

    The Exchange believes that this proposal qualifies for immediate 
effectiveness upon filing as a non-controversial rule change pursuant 
to Section 19(b)(3)(A) of the Act \19\ and Rule 19b-4(f)(6) \20\ 
thereunder. The Exchange asserts that the proposed rule change (i) will 
not significantly affect the protection of investors or the public 
interest, (ii) will not impose any significant burden on competition, 
and (iii) by its terms, will not become operative for 30 days after the 
date of this filing.\21\
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 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, 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. 
NYSE Alternext complied with this requirement.
---------------------------------------------------------------------------

    The Exchange believes that this filing is non-controversial because 
it raises no novel issues and is consistent with the Commission's prior 
approvals of the NYSE Bonds platform, the relocation of equities 
trading on NYSE Alternext, and recent amendments to NYSE Rule 86, upon 
which this filing is modeled.\22\ As described above, this proposal 
seeks only to implement NYSE Alternext Bonds, which is based on the 
existing NYSE Bonds platform, and to adopt the related rules (subject 
to minor modifications to apply them to the Exchange), to govern the 
trading of debt securities on NYSE Alternext.
---------------------------------------------------------------------------

    \22\ See Securities Exchange Act Release No. 55496 (March 20, 
2007), 72 FR 14631 (March 28, 2007) (SR-NYSE-2006-37); Securities 
Exchange Act Release No. 58705 (October 1, 2008), 73 FR 58995 
(October 8, 2008) (SR-Amex 2008-63); SR-NYSE-2008-106.
---------------------------------------------------------------------------

    The operative date of the proposed rule changes is the date of the 
Equities and Bonds Relocations.

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-NYSEALTR-2008-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEALTR-2008-03. 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 the 
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-NYSEALTR-2008-03 and should be submitted on or before 
November 20, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
---------------------------------------------------------------------------

    \23\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-25914 Filed 10-29-08; 8:45 am]

BILLING CODE 8011-01-P