Document ID: SEC-2009-0319-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2009-03-10T04:00Z

[Federal Register: March 10, 2009 (Volume 74, Number 45)]
[Notices]               
[Page 10330-10334]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10mr09-115]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59489; File No. SR-NYSE-2009-18]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 
1, Amending Rule 123C To Provide the Exchange With the Ability To 
Temporarily Suspend Certain NYSE Requirements Relating to the Closing 
of Securities at the Exchange

March 3, 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 February 19, 2009, New York Stock Exchange LLC (``NYSE'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. On March 2, 2009, the Exchange filed Amendment No. 1. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, 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 123C to provide the Exchange 
with the ability to temporarily suspend certain NYSE requirements 
relating to the closing of securities at the Exchange.
    The text of the proposed rule change is available at http://
www.nyse.com, NYSE, and 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to amend NYSE Rule 123C to provide the 
Exchange with the ability to temporarily suspend certain rule 
requirements at the close when extreme order imbalances may cause 
significant dislocation to the closing price. The amendments proposed 
for NYSE Rule 123C are similar in substance to recent amendments to 
Rule 48 that added an extreme market volatility condition at the close. 
With this rule filing, the Exchange proposes to delete those provisions 
from Rule 48 and add them in modified form to Rule 123C. The Exchange 
also proposes to amend Rule 48(c)(2) to conform the rule to the actual 
practice of how the Exchange notifies the Commission staff when a Rule 
48 condition has been declared.\4\
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    \4\ NYSE Alternext US LLC has submitted a companion rule filing 
to conform Rules 48 and 123C-NYSE Alternext Equities to the changes 
proposed in this filing. See SR-NYSEALTR-2009-15, formally submitted 
February 20, 2009.
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Background

    On October 2, 2008, the Exchange filed for immediate effectiveness 
to amend NYSE Rule 48 to provide the Exchange with the ability to 
suspend certain rules at the close when extremely high market 
volatility could negatively affect the ability to ensure a fair and 
orderly close.\5\ The Exchange amended Rule 48 in order to respond 
swiftly to market conditions at that time. Those amendments are 
temporary and will end on March 27, 2009.\6\
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    \5\ See SEC Release No. 58743 (Oct. 7, 2008), 73 FR 60742 (Oct. 
14, 2008) (SR-NYSE-2008-102).
    \6\ See NYSE Rule 48.10.
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    In that filing, the Exchange amended Rule 48 to include the close 
of trading as a time when a qualified Exchange officer would be 
permitted to declare an extreme market volatility condition. In such 
event, the Exchange could temporarily suspend NYSE Rules 52 (Hours of 
Operation) and 123C(1) and (2) (Market on the Close Policy and 
Expiration Policy), provided that certain requirements are met.
    To enable a qualified Exchange officer to declare a Rule 48 
condition at the close, the Exchange amended Rule 48(c) to include that 
a qualified Exchange officer may consider the volatility during that 
day's trading session and evidence of significant order imbalances 
across the market at the close for purposes of determining whether to 
declare an extreme market volatility condition at the close. Under 
amended Rule 48, an extreme market volatility condition at the close is 
a separate event and must be considered in light of the facts and 
circumstances leading to the close. A Rule 48 condition at the open of 
trading does not extend to the close; a qualified Exchange officer 
needs to make an independent determination to invoke Rule 48 at the 
close regardless of whether Rule 48 was invoked at the open. Such a 
Rule 48 condition at the close must be declared by a qualified Exchange 
officer before the scheduled close of trading.
    Once an extreme market volatility condition at the close has been 
declared Floor wide, under NYSE Rule 48(b)(2)(A), the Exchange may 
temporarily suspend Rule 52 on a security-by-security basis so that 
interest can be solicited and entered into Exchange systems to offset 
an imbalance in a security that may be present after the scheduled 
close of trading. During an extreme market volatility condition, 
interest may be solicited--including interest that may not have been 
present prior to 4 p.m.--to offset any imbalance that may exist as of 4 
p.m. (or earlier, in the case of an earlier scheduled close).\7\ If 
offsetting interest is received in response to such solicitation, 
rather than have the DMM represent such offsetting interest in the 
close pursuant to Rule 902, such interest could be entered by the DMM 
directly into Exchange systems on behalf of the member or member 
organization representing such interest. Because Exchange systems do 
not allow for the electronic entry of orders after 4 p.m., such 
interest must be represented manually by a Floor broker in the closing 
auction process and entered into Exchange systems by the DMM by no 
later than 4:30 p.m.\8\ The entry of any orders after 4 p.m. pursuant 
to the rule must be under the supervision and approval of a Floor 
Governor.\9\
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    \7\ See NYSE Rule 48(b)(2)(A)(i).
    \8\ See NYSE Rule 48(b)(2)(A)(ii).
    \9\ See NYSE Rule 48(b)(2)(A)(iv).
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    To ensure a complete audit trail, any offsetting interest entered 
after 4 p.m. during an extreme market volatility condition must also be 
entered into the Front End Systemic Capture database (``FESC''), as 
required by NYSE Rule

[[Page 10331]]

123. Because such interest may not have been known until after 4 p.m., 
under NYSE Rule 48(b)(2)(A)(iii), a Floor broker may represent such 
offsetting interest after 4 p.m. without first entering the details of 
the order into FESC, as required by NYSE Rule 123, so long as such 
orders are entered into FESC on an ``as of'' basis immediately 
following execution of the order.
    During an extreme market volatility condition at the close, the 
Exchange also has the ability to temporarily suspend, on a security-by-
security basis, the NYSE Rule 123C(1) and (2) requirements that MOC and 
LOC orders that are legitimate errors cannot be cancelled or reduced 
after 3:50 p.m. Under NYSE Rule 48(b)(2)(B), only an erroneous MOC or 
LOC that would cause significant closing price dislocation for a 
particular security could be considered for cancellation. In other 
words, an MOC or LOC order that is as a result of a legitimate error 
that would have no impact on the closing price could not take advantage 
of the proposed temporary suspension, even in an extreme market 
volatility condition. If it is determined that such an MOC/LOC 
legitimate error would significantly dislocate the close, such order 
can be cancelled or reduced at any time up until that particular 
security has closed. To further ensure that the ability to cancel an 
MOC or LOC order after 3:50 is not abused, under NYSE Rule 
48(b)(2)(B)(iii), such an order can be cancelled or reduced only with 
the supervision and approval of both an Executive Floor Governor and a 
qualified Exchange officer. In the event an Executive Floor Governor is 
not available, a Floor Governor's approval must be obtained.

Proposed Amendments to Rule 123C

    The Exchange believes that the temporary amendments to Rule 48 
provide the Exchange with invaluable tools to ensure a fair and orderly 
close during extreme situations. However, the Exchange does not believe 
that a Floor-wide condition needs to be present in order to warrant the 
use of these tools. The Exchange therefore proposes to adopt the 
amendments to Rule 48 on a permanent basis by deleting those provisions 
from Rule 48 and moving them to NYSE Rule 123C. As part of the 
amendments to Rule 123C, the Exchange further proposes modifying the 
terms of the temporary suspensions by permitting the Exchange to invoke 
such relief on a security-by-security basis without first declaring a 
Floor-wide extreme market volatility condition and codifying certain 
practices for the entry of orders after 4 p.m.

A. Relocating Temporary Suspensions to Rule 123C

    As noted above, the amendments to Rule 48 were adopted as an 
emergency measure to respond to the extreme market volatility that the 
markets experienced in September and October 2008. Under current Rule 
48, the Exchange must first declare a Floor-wide extreme market 
volatility condition before it can consider, on a security-by-security 
basis, whether to temporarily suspend either Rule 52 or Rule 123C(1) or 
(2). Because the temporary suspensions are already granted on a 
security-by-security basis, the Exchange does not believe that going 
forward it needs to first declare a Floor-wide event in order to 
provide relief on an individual security basis. Indeed, the need for 
declaring a Floor-wide extreme market volatility condition before 4 
p.m. could hamper the ability of the Exchange to invoke the temporary 
suspensions when they are needed most.
    For example, during normal market conditions that would not 
otherwise warrant a Rule 48 condition at the close, Exchange systems 
may receive a large market order in a security at 3:59:59 p.m. Such a 
large order entered so near to the close could cause the type of 
extreme imbalance that would merit a temporary suspension of Rule 52, 
yet such relief would be unavailable because overall market conditions 
did not require a Rule 48 condition. The Exchange therefore believes 
that the ability to temporarily suspend rules at the close should be 
part of Rule 123C, which governs the closing process at the Exchange, 
and be available on a security-by-security basis, even after 4 p.m.\10\ 
The Exchange therefore proposes deleting the extreme market volatility 
at the close condition and returning Rule 48 to a form substantively 
identical to its form prior to the October 2, 2008 amendments to that 
rule.
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    \10\ See proposed Rule 123C(8)(c).
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    In deleting the provisions of Rule 48 condition at the close and 
moving those temporary suspensions to Rule 123C, the Exchange proposes 
certain modifications to the application of the temporary suspensions. 
These modifications are designed to provide clarity of how this tool 
should be used. Namely, the ability to temporarily suspend NYSE rules 
at the close should be used sparingly and only in extreme situations.
    The Exchange therefore proposes to qualify that temporary 
suspensions under proposed Rule 123C(8) are intended to be used to 
prevent a closing price dislocation that may result from an order 
entered into Exchange systems, or represented to a DMM orally at or 
near the close, that may result in an extreme order imbalance at or 
near the close.\11\ In such case, as with Rule 48, the rules that may 
be suspended are Rules 52 (Hours of Operation) and Rules 123C(1) and 
(2) (Market on the Close Policy and Expiration Policy).
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    \11\ See proposed Rule 123C(8)(a).
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B. Temporary Suspension of Rule 52

    As with Rule 48, the Exchange proposes to provide for the ability 
to temporarily suspend Rule 52 for the sole purpose of allowing the 
entry of orders after 4 p.m. to offset an extreme order imbalance at 
the close. As proposed, the process replaces the more cumbersome Rule 
902 process, whereby the DMM represents interest on behalf of a Floor 
broker in the close on a riskless basis and then enters a coupled order 
in Crossing Session I to liquidate the DMM position taken on behalf of 
the Floor broker.\12\
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    \12\ See NYSE Rules 902(a)(ii)(B) and 903(d)(ii).
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    With respect to the temporary suspension of Rule 52, the Exchange 
proposes to adopt without change the language of Rule 48(b)(2)(A)(i) 
and (iii) (proposed as NYSE Rule 123C(8)(a)(1)(i) and (v)). These 
provisions concern, respectively, the purpose of soliciting orders 
after 4 p.m. and the use of the FESC system on an ``as of'' basis 
following execution of an order.
    The Exchange proposes to codify as NYSE Rule 123C(8)(a)(1)(ii) that 
when soliciting orders to offset an imbalance in a security that may 
exist after 4 p.m., such interest will be solicited from off-Floor 
participants directly and via their Floor broker representatives.\13\ 
Such solicitation requests shall be transmitted electronically both 
off-Floor and on-Floor and shall include, at a minimum, information 
about the security symbol, the imbalance amount and side, the last sale 
price, and an order acceptance cut-off time.
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    \13\ Interest is solicited from off-Floor participants via NYSE 
Trader Update Messages, which is an NYSE product with over 2,000 
subscribers that provides a wide range of up-to-the minute notices 
of particular interest to the professional trading community. NYSE 
Trader Updates provide messages both via e-mail and on an RSS 
subscription basis.
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    As proposed, the order acceptance cut-off time included in the 
solicitation request would be a time period designated by the Exchange. 
Because the goal is to close NYSE-listed securities as close to the 
closing bell as possible, such time period will

[[Page 10332]]

generally be no longer than five minutes. As in Rule 48(b)(2)(A)(ii), 
in no event shall the order acceptance cut-off time be later than 4:30 
p.m. (or 30 minutes after the scheduled close in the case of an earlier 
scheduled close). The Exchange includes this 4:30 p.m. time period as 
an outside limit and it is not intended to provide a 30-minute window 
within which to receive offsetting interest, or that the Exchange seeks 
to close securities at 4:30 p.m. Rather, as proposed, if a solicitation 
request is transmitted at 4:02 p.m., the Exchange generally would 
include an order acceptance cut-off time of five minutes, requiring all 
offsetting interest to be received by 4:07 p.m. so that the DMM can 
close the security on or about 4:07 p.m. In the rare circumstance that 
a solicitation request is not transmitted until 4:27 p.m., the order 
acceptance cut-off time would be 4:30 p.m., and not a five-minute 
period. The 4:30 p.m. end time is therefore included to ensure that 
this proposed temporary suspension of Rule 52 would not be used to 
extend the close indefinitely.
     The Exchange also proposes adding conditions on the type of order 
that may be entered in response to such a solicitation request. As 
proposed in Rule 123C(8)(a)(1)(iii), any offsetting interest received 
in response to a solicitation request must be a limit order priced no 
worse than the last sale and irrevocable. Therefore, if there is a buy 
imbalance, the offsetting interest must be sell orders priced no lower 
than the last sale price, or if there is a sell imbalance, the 
offsetting interest must be buy orders priced no higher than the last 
sale price. The Exchange believes that these conditions are necessary 
to ensure that the offsetting interest received is simply that: 
Interest that is intended to offset the existing imbalance to ensure 
that the closing price is not too far dislocated from the last sale. 
The Exchange does not believe that this process should be used to re-
open the auction market or to permit the imbalance to swing in the 
opposite direction.
    The Exchange also proposes to add to the rule certain parameters 
regarding the timing of the closing of a security when such offsetting 
interest is solicited. As proposed in Rule 123C(8)(a)(1)(iv), in such 
circumstances, the DMM should close the security the earlier of the 
order acceptance cut-off time or if the imbalance is paired off at or 
reasonably contiguous to the last sale price. The Exchange believes 
that this provision will enable the DMM to arrange for a fair and 
orderly close that is as close to 4 p.m. as possible. For example, if 
the Exchange receives a limited response to the solicitation request, 
the DMM would have up to the order acceptance cut-off time for orders 
to be entered. If, however, the DMM receives sufficient interest before 
the order acceptance cut-off time to close the security either at the 
last sale price, or at a reasonably contiguous price to the last sale 
price, the DMM could close the security earlier. As proposed, a 
reasonably contiguous price refers to a price point that is within 
cents of the last sale price, and would be a price point that during a 
regular closing auction would not be considered a dislocating closing 
price as compared to the last sale price. As discussed in more detail 
below in subsection D, such closings would be subject to approval of 
either an Executive Floor Governor or qualified NYSE Euronext staff 
employee and supervision of a qualified Exchange Officer, as defined in 
Rule 48(d).
    The Exchange believes that the parameters on when to close the 
security are necessary to ensure that securities trading at the 
Exchange close as near to 4 p.m. as possible, notwithstanding the fact 
that the Exchange seeks additional offsetting interest after 4 p.m. In 
either case, the Exchange proposes that any offsetting interest entered 
after 4 p.m., but before the DMM closes the security, would trade on 
parity.\14\ As discussed in greater detail in the Exchange's proposal 
to adopt the Next Generation Market Model,\15\ under the Exchange's 
parity model, Exchange systems will divide the size of the executing 
order by the number of participants. The DMM and each Floor broker are 
each considered a single participant. A Floor broker that represents 
multiple orders gets parity for the aggregate of orders. With parity, 
the total number of shares to be allocated to each participant will be 
distributed equally among the participants where possible and 
executions will be allocated in round-lots. In the event the number of 
shares to be executed at the price point is insufficient to allocate 
round lots to all the participants eligible to receive an execution at 
the price point, the Exchange systems will create an allocation wheel 
of the eligible participants at the price point and the available 
shares will be distributed to the participants in turn. If the DMM 
closes the security before the order acceptance cut-off time, any 
interest received before closing the security would trade on parity 
with other interest, including the DMM's interest at the close.
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    \14\ The Exchange notes that all MOC and marketable LOC orders 
entered before 4 p.m. that otherwise would have participated in the 
close will continue to participate in the close. Because the MOC/LOC 
imbalance dictates the closing price (see Rule 123C(3)), any 
additional interest solicited after 4 p.m. under proposed Rule 
123C(8)(a)(1) is simply to ensure that the existing imbalance of MOC 
and marketable LOC orders can be filled at a price that does not 
cause a significant price dislocation from the last sale price.
    \15\ See SEC Release No. 58845 (Oct. 24, 2008), 73 FR 64379 
(Oct. 29, 2008) (SR-NYSE-2008-46).
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    The Exchange also proposes to maintain, as in Rule 48(b)(2)(A)(ii), 
that any offsetting interest must be represented by a Floor broker. As 
noted in the Exchange's filing to amend Rule 48, Exchange systems do 
not have the capability to receive electronic interest after 4 p.m. As 
with any technology, it would be possible to reconfigure Exchange 
systems to accept orders electronically after 4 p.m. However, such 
technology changes would be costly and would divert resources away from 
other necessary technology changes that are already scheduled. 
Therefore, even if the Exchange could make such technology changes, 
they likely could not be implemented until mid to late 2009, and at 
great cost.
    The benefit, however, to implementing such a technology change 
would be limited. The temporary suspension of Rule 52 to attract 
offsetting interest is intended to be used for extreme, and likely rare 
circumstances where there exists such a large imbalance at the close 
that the DMM could not close the security without significantly 
dislocating the price of the security. For example, since October 2, 
2008, when the Exchange adopted the amendments to Rule 48, the Exchange 
has invoked Rule 48 at the close eight times. However, because the DMM 
does not know what the actual imbalance will be until 4 p.m., the 
Exchange has solicited offsetting interest for only one security on one 
such trading day pursuant to these procedures. The Exchange notes that 
this has been a period of historic market volatility; the Exchange 
therefore expects that in times of calmer markets, the relief requested 
would be used in even rarer circumstances.
    The Exchange further notes that requiring Floor brokers to 
represent such offsetting interest does not unfairly discriminate 
against any market participants. The requirement to use a Floor broker, 
who would be acting only as an agent, does not deny anyone access to 
trading at the Exchange. It simply requires an agent as intermediary. 
Indeed, during the inherently manual process of closing a security, 
using a Floor broker to represent offsetting interest will provide 
customers with the most up-to-date

[[Page 10333]]

information about the closing process in such a scenario.
    Moreover, the imbalance that would warrant such a temporary 
suspension would likely be of such a size that the type of customers 
that would be able to meaningfully and timely respond to such a 
solicitation request are sophisticated market participants who likely 
already have, or could easily arrange for, a relationship with a Floor 
broker to represent orders on their behalf. Such sophisticated 
participants have the wherewithal to enter into arrangements with Floor 
brokers that are financially competitive with entering orders directly 
into Exchange systems, e.g., via reduced commissions or pass through of 
Floor broker rebates.
    The Exchange therefore believes that the time and cost that would 
be necessary to reconfigure Exchange systems to electronically accept 
orders after 4 p.m. for this limited purpose far outweighs any benefit 
that may accrue from such technology changes. In any event, the 
Exchange believes that more information is necessary before the 
Exchange undertakes to implement any such technology change. The 
Exchange therefore proposes that six months after the approval of this 
proposed rule change, the Exchange will provide the Commission with 
information regarding how many times a Rule 52 temporary suspension 
under proposed Rule 123C(8)(a)(1) has been invoked. At that time, both 
the Exchange and the Commission can make a more informed decision of 
whether the benefit in accepting orders electronically after 4 p.m. 
outweighs the costs associated with making such changes. To provide 
both the Exchange and the Commission with time to evaluate the proposed 
rule, the Exchange proposes that Rule 123C(8)(a)(1) be approved on a 
Pilot basis to end six months after the approval date of this filing.

C. Temporary Suspension of Rule 123C(1) and (2)

    The Exchange proposes to adopt permanently the provisions of Rule 
48(b)(2)(B) as proposed Rule 123C(8)(a)(2), without any change. 
Therefore, as with Rule 48, the Exchange would have the ability to 
temporarily suspend, on a security-by-security basis, the NYSE Rule 
123C(1) and (2) requirements that MOC and LOC orders that are 
legitimate errors cannot be cancelled or reduced after 3:50 p.m. The 
same conditions that were adopted as part of Rule 48 would apply here 
as well, i.e., that only an erroneous MOC or LOC that would cause 
significant closing price dislocation for a particular security could 
be considered for cancellation and that if it is determined that such 
an MOC/LOC legitimate error would dislocate the close, such order can 
be cancelled or reduced at any time up until that particular security 
has closed. As discussed below, the Exchange proposes to move Rule 
48(b)(2)(B)(iii) to proposed Rule 123C(8)(b).

D. Parameters for Obtaining Temporary Rule Suspensions

    The Exchange further proposes codifying the practices concerning 
how a temporary suspension under proposed Rule 123C(8)(a) would be 
invoked and who should be involved. As proposed in Rule 123C(8)(b), 
only the DMM assigned to a particular security may request a temporary 
suspension under proposed section 8(a) of the Rule. The Exchange 
believes that because the DMM is responsible for facilitating the close 
of trading of securities registered to that DMM, including supplying 
liquidity if needed, the DMM is in the unique position to know whether 
he or she would need additional interest to ensure a fair or orderly 
close.
    To ensure that such temporary suspensions are not invoked 
indiscriminately, the Exchange further proposes that any such 
determination, as well as any entry or cancellation of orders or 
closing of a security under proposed Rule 123C(8)(a), must be approved 
by either an Executive Floor Governor or a qualified NYSE Euronext 
employee, as defined in NYSE Rule 46(b)(v). The Exchange also proposes 
requiring that any temporary suspensions under proposed NYSE Rule 
123C(8)(a) should be under the supervision of a qualified Exchange 
Officer, as defined in NYSE Rule 48(d).
    These requirements are identical to the requirement under Rule 
48(b)(2)(B)(iii), but more stringent than the current requirement under 
Rule 48(b)(2)(A)(iv), which requires only the supervision of a Floor 
Governor. The Exchange believes that these heightened approval and 
supervision requirements will ensure that, as contemplated by the 
proposed rule, only extreme situations such as when a late-arriving 
order would cause significant price dislocation at the close would 
result in a temporary suspension of Exchange rules at the close. To 
assist the DMM and officials, proposed Rule 123C(8)(b) identifies a 
number of factors that may be considered when making such a 
determination. Such factors include, but are not limited to, when the 
order(s) that impacted the imbalance were entered into Exchange systems 
or orally represented to the DMM, the impact of such order(s) on the 
closing price of the security, the volatility of the security during 
the trading session, and the ability of the DMM to commit capital to 
dampen the price dislocation.

Proposed Amendment to Rule 48(c)(2)

    In addition to the above-described amendments, the Exchange also 
proposes to amend Rule 48(c)(2), which concerns the method by which the 
Exchange notifies Commission staff when it declares a Rule 48 extreme 
market volatility condition.
    The current rule provides that the qualified Exchange officer will 
make a reasonable effort to consult with Commission staff before 
declaring an extreme market volatility condition and granting a 
suspension of the NYSE rules or procedures. In the event that the 
qualified Exchange officer cannot reach the Commission staff, the 
qualified Exchange officer will, as promptly as practicable in the 
circumstances, inform the Commission staff of such declaration.
    Given the limited relief that can be granted during a Rule 48 
condition--certain Floor Official approvals are suspended and mandatory 
indications can be suspended--the Exchange believes that the 
requirement to consult with Commission staff before declaring an 
extreme market volatility condition imposes an undue burden on 
regulatory resources. Accordingly, the Exchange proposes to amend Rule 
48(c)(2) to delete the requirement that the qualified Exchange officer 
undertake reasonable efforts to consult with Commission staff before 
declaring an extreme market volatility condition. As required by the 
rule, the Exchange will continue to inform the Commission staff, as 
promptly as practicable under the circumstances, when it has declared a 
Rule 48 extreme market volatility condition.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \16\ 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. As noted above, the proposed rule is 
intended to be used in extreme circumstances when a large order 
imbalance or order entered in error could cause a closing price to be 
far dislocated from the last sale price. The rule is therefore intended 
to protect

[[Page 10334]]

investors and the public interest to ensure that the closing price at 
the Exchange is not significantly dislocated from the last sale price 
by virtue of an extreme order imbalance at or near the close.
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    \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

    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 NYSE consents, the Commission will:
    (A) By order approve such 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 
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-NYSE-2009-18 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-NYSE-2009-18. 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, 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 offices 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-NYSE-2009-18 and should be submitted on 
or before March 31, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-4964 Filed 3-9-09; 8:45 am]

BILLING CODE 8011-01-P