Document ID: SEC-2010-0176-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by New York Stock Exchange LLC Amending the Rule Governing the Issuance of Trading Licenses
Posted Date: 2010-02-02T05:00Z

[Federal Register: February 2, 2010 (Volume 75, Number 21)]
[Notices]               
[Page 5367-5369]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02fe10-117]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61424; File No. SR-NYSE-2010-03]

 
Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by New York Stock Exchange LLC Amending the Rule Governing the 
Issuance of Trading Licenses

January 26, 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 January 13, 2010, New York Stock Exchange LLC (``NYSE'' 
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 Exchange Rule 300 (Trading Licenses) 
to provide that a member organization shall be ineligible to purchase a 
trading license, either in the annual offering or subsequently, if such 
member organization is three months in arrears in paying monthly 
installments of the trading license fee payable in respect of any 
previously purchased trading license. The Exchange also proposes to 
amend Rule 309 (Failure to Pay Exchange Fees) to provide that failure 
to pay trading license fee installments will be governed by proposed 
Rule 300(h).
    The text of the proposed rule change is available on the Exchange's 
Web site (http://www.nyse.com), at the Exchange's Office of the 
Secretary 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 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
    Exchange Rule 300 provides that member organizations may buy 
trading licenses in the annual offering and may buy licenses at any 
other time in the year, provided that the maximum number of 1366 
licenses has not been issued and subject to limitations on the number 
of licenses a single member organization may hold. Rule 300 provides 
that member organizations must pay for their trading licenses in 12 
monthly installments, with the first installment due prior to the 
commencement of the applicable year. The Exchange has experienced 
difficulty in collecting trading license fee installments promptly from 
a small number of member organizations. Consequently, the Exchange now 
proposes to amend Rule 300 by adding proposed new subparagraph (h), 
providing that a member organization shall be ineligible to purchase a 
trading license, either in the annual offering or subsequently, if, at 
the time of such proposed purchase, such member organization remains 
three months in arrears in paying monthly installments of the trading 
license fee payable in respect of any previously purchased trading 
license.
    Any trading license purchased by a member organization in the 
annual auction for the calendar year commencing January 1, 2010, will 
be subject to automatic revocation at the close of business on March 
31, 2010, if the member organization that holds such license remains 
three months in arrears in making such payments at that time. The 
Exchange believes that this transitional approach for 2010 is 
appropriate as it will enable it to give the affected member 
organizations adequate notice and a reasonable period in which to pay 
their overdue trading

[[Page 5368]]

license fee installments to avoid losing their floor trading 
privileges. Upon approval of this filing, the Exchange intends to 
distribute an Information Memorandum to its member organizations to 
inform them of the rule change.\4\ Member organizations receive monthly 
trading license bills, which reflect unpaid balances from previous 
periods, so member organizations that are three months in arrears are 
aware of that fact.
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    \4\ The first such notice will be sent to member organizations 
that are two months or more in arrears as of the end of February 
2010. This notice will state that the revocation of any trading 
licenses pursuant to proposed Rule 300(h) on April 1, 2010, will be 
contingent upon SEC approval of SR-NYSE-2010-03 prior to that date. 
See email from John Carey, Chief Counsel--U.S. Equities, NYSE 
Euronext LLC, to David Liu, Assistant Director, and Leigh W. Duffy, 
Attorney-Adviser, Commission, dated January 25, 2010.
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    The acceptability proceedings requirements of Rule 308 will not be 
applicable to any denial or revocation of a trading license under 
proposed Rule 300(h). Instead, Rule 300(h) will include its own appeal 
procedure. One calendar month prior to the effective date of any 
potential denial of renewal or revocation of a trading license (the 
``Expiration Date'') pursuant to Rule 300(h), the Exchange will notify 
each applicable member organization that is currently two months or 
more in arrears in paying monthly installments of the trading license 
fee payable in respect of any previously purchased trading license of 
the amount of then overdue trading license installment payments and the 
possibility of denial of renewal or revocation of the trading license 
on the Expiration Date. The notice referenced in the immediately 
preceding sentence must include a description of the appeal process 
described below. If the member organization believes the Exchange's 
records are incorrect, the member organization must submit a written 
appeal within five business days of receipt of the Exchange's notice to 
the officer of the Exchange identified for that purpose in such notice, 
providing an explanation as to why it believes the Exchange's records 
are incorrect, and providing copies of any relevant documentation. The 
Exchange must provide a final determination in writing in response to 
any such appeal no later than 15 calendar days prior to the effective 
date of the potential denial of renewal or revocation of the applicable 
trading license.\5\ This written determination shall be final and 
conclusive action by the Exchange. If the Exchange denies the appeal, 
its written final determination must specifically address the arguments 
made by the member organization in its submission. A written record 
shall be kept of any proceedings under Rule 300(h). As the appeal 
procedures under proposed Rule 300(h) will not include any provision 
for an oral hearing, the Exchange expects that the written record will 
generally consist of (i) the written appeal and supporting documents 
(if any) submitted by the member organization and (ii) the Exchange's 
written determination.
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    \5\ If the Exchange denies a member organization's appeal under 
Rule 300(h), the Exchange will notify the Commission in the manner 
required by Exchange Act Rule 19d-1.
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    Rule 309 (``Failure to Pay Exchange Fees'') will not apply to the 
nonpayment of trading license fee installments, which will be dealt 
with solely under proposed Rule 300(h). The adoption of proposed Rule 
300(h) will not in any way limit the application of Rule 309 in the 
event of the nonpayment by a member organization of any fee other than 
a trading license fee or any other sum due to the Exchange. The 
Exchange also proposes to amend Rule 309 to explicitly provide that 
failure to pay trading license fee installments will be governed by 
proposed Rule 300(h).
    The Exchange notes that it relies in part on the revenues from 
trading license fees to pay for the maintenance of the trading floor 
and to fund its trading floor regulatory activities. If some member 
organizations consistently fail to pay their trading license fee bills, 
the Exchange will be forced to impose higher fees on those member 
organizations which do pay their bills. The Exchange believes that the 
proposed rule change will cause member organizations to pay their bills 
more promptly and thereby enable the Exchange to avoid imposing the 
cost of the nonpayment by a small number of member organizations on the 
majority of other member organizations that routinely pay on time. It 
is neither the intention nor the expectation of the Exchange that a 
significant number of member organizations will lose their ability to 
conduct a trading floor business as a result of this amendment. Rather, 
the Exchange believes that most member organizations that are late in 
paying their bills will respond to the possibility of losing their 
access to the floor by paying off their outstanding balances. The 
Exchange notes that any member organization which forfeits its trading 
licenses as of March 31, 2010 will only owe the pro rata license fee 
for 2010 through that date. In addition, any member organization which 
forfeits its trading licenses in 2010 or is ineligible to purchase 
trading licenses thereafter may purchase trading licenses (to the 
extent there are available unsold licenses) at such time as it is no 
longer three months in arrears in its payments.
2. Statutory Basis
    The bases under the Act for this proposed rule change are the 
requirement under Section 6(b)(4) \6\ that an exchange have rules that 
provide for the equitable allocation of reasonable dues, fees and other 
charges among its members, listed companies and other persons using its 
facilities and the requirement under Section 6(b)(5) \7\ that an 
exchange have rules that are not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers. The 
Exchange believes that the proposed amendment provides for an equitable 
allocation of fees among member organizations, as it will deprive 
member organizations of floor access only if they do not pay the 
trading license fees applicable to all member organizations with a 
trading floor business.
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    \6\ 15 U.S.C. 78f(b)(4).
    \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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule

[[Page 5369]]

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-NYSE-2010-03 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 No. SR-NYSE-2010-03. 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,\8\ 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, 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 NYSE. 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 No. SR-NYSE-2010-03 and should be 
submitted on or before February 23, 2010.
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    \8\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-2090 Filed 2-1-10; 8:45 am]
BILLING CODE 8011-01-P