Document ID: SEC-2009-1292-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by New York Stock Exchange LLC Adding Language to Several NYSE Rules To Clarify That Transactions That Occur Solely Within NYSE MatchPointSM
Posted Date: 2009-09-09T04:00Z

[Federal Register: September 9, 2009 (Volume 74, Number 173)]
[Notices]               
[Page 46472-46474]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09se09-103]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60608; File No. SR-NYSE-2009-85]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC 
Adding Language to Several NYSE Rules To Clarify That Transactions That 
Occur Solely Within NYSE MatchPointSM Will Be Treated 
Differently Than Executions That Occur in the NYSE Display Book[supreg] 
for Certain Order Processing Purposes

September 1, 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 August 18, 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 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 add language to several NYSE rules to 
clarify that transactions that occur solely within NYSE 
MatchPointSM (``MatchPoint'' or the ``facility'') will be 
treated differently than executions that occur in the NYSE Display 
Book[supreg] (``NYSE Display Book'' or ``DBK'')for certain order 
processing purposes. The Exchange is seeking to amend NYSE Rules 13, 
15, 79A, 100, 104, 116, 123B, 123C, 123D, 124 and 1000. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule filing is to add language to 
several NYSE rules to clarify that transactions that occur solely 
within the MatchPoint facility will be treated differently than 
executions that occur in the DBK for certain order processing purposes. 
The proposed additional text will not change the core purpose of the 
subject rules or the functionality of MatchPoint or other NYSE trading 
systems and facilities. Specifically, the Exchange is seeking to amend 
NYSE Rules 13, 15, 79A, 100, 104, 116, 123B, 123C, 123D, 124 and 1000.
    The Exchange launched MatchPoint in January 2008 following approval 
of its rule filing by the Securities and Exchange Commission (the 
``SEC'' or the ``Commission''). MatchPoint is an anonymous point-in-
time electronic trading facility of the NYSE that matches aggregated 
orders at predetermined sessions throughout regular hours and after 
hours of the Exchange. MatchPoint trades securities listed on all major 
and regional U.S. stock exchanges.
    MatchPoint is a ``stand alone'' facility of the Exchange in that 
orders entered into MatchPoint do not interact with any other Exchange 
facilities or other automated trading centers. Rather, it matches 
aggregated buy and sell orders within the facility during predetermined

[[Page 46473]]

one-minute matching sessions during regular hours of the Exchange (at 
9:45 a.m., 10 a.m., 11 a.m., 12 noon, 1 p.m., 2 p.m., and 3 p.m.) as 
well as an after hours match (at 4:45 p.m.) at a Reference Price 
determined pursuant to NYSE Rule 1500.
    The MatchPoint system reports trade execution information to the 
applicable Securities Information Processors (``SIPs'') for each 
MatchPoint eligible security. Trades are reported as one print for each 
security irrespective of the number of individual buyers and sellers 
with the total volume of the transaction reported with the price. 
Trades that occur in MatchPoint are distinguished from other Tape A 
prints by a print modifier that is appended to the trades reported.
    Trades that occur on MatchPoint have always been designated with a 
print modifier of ``N.X.'' Since January 2009, this same print modifier 
has also been used to designate trades that occur solely within the New 
York Block Exchange facility (``NYBX'') (see Rule 1600). However, all 
trades that occur in the DBK are identified with an ``N'' print 
modifier, including NYBX orders that match with DBK liquidity.
    NYBX is an anonymous electronic facility of the Exchange that is 
not connected to MatchPoint. As more fully described in Rule 1600 and 
related rule filings \4\ NYBX provides for the continuous matching and 
execution of orders in the NYBX facility (all of which are non-
displayed) with the aggregate of all displayed and non-displayed orders 
in the NYSE DBK (subject to routing to away markets in compliance with 
Regulation NMS). Therefore, NYBX orders can execute with marketable 
non-displayed contra side liquidity in the NYBX facility, with 
marketable contra side liquidity (displayed and/or non-displayed) in 
the DBK and with any available marketable contra side liquidity in the 
Capital Commitment Schedule (``CCS'') of the Designated Market Makers 
(``DMMs'') (see Rule 1000(d)).
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    \4\ See Securities Exchange Act Release No. 59282 (January 22, 
2009) 74 FR 5009 (January 28, 2009) (SR-NYSE-2008-119) (Rule 1600. 
NewYork Block Exchange). See also SR-NYSE-2009-82, which was filed 
with the Commission on August 12, 2009.
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    Executions that occur within the NYBX facility (i.e., that execute 
solely with orders within NYBX) or on MatchPoint are treated 
differently than executions that occur in the DBK (including executions 
resulting from NYBX orders matching with DBK liquidity and CCS 
interest) for certain order processing purposes. Specifically, Exchange 
systems do not include either MatchPoint or NYBX-only executions when 
calculating the triggers applicable to the following DBK executions 
and/or requirements: (1) Pre-opening indications; (2) last sale trades; 
(3) odd lot trades; (4) Designated Market Maker (``DMMs'') obligations 
to re-enter the market; and (5) stop orders. These triggers are 
referenced in the following NYSE Rules: 13, 15, 79A, 100, 104, 116, 
123B, 123C, 123D, 124 and 1000.
    Applicable NYSE rules were previously amended to clarify that NYBX-
only executions are not included in the above described 
calculations.\5\ The Exchange is seeking to amend many of the same NYSE 
Rules in this filing in order to provide appropriate consistency and 
clarity to the related NYSE Rules. Therefore, with this rule filing, 
the Exchange proposes to amend the following NYSE Rules: 13, 15, 79A, 
100, 104, 116, 123B, 123C, 123D, 124 and 1000. The proposed amendments 
will clarify that MatchPoint executions are also excluded from the 
aforementioned calculations. Therefore, the Exchange seeks to amend the 
following rules:
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    \5\ See Securities Exchange Act Release No. 59282 (January 22, 
2009) 74 FR 5009 (January 28, 2009) (SR-NYSE-2008-119).
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    (1) Rule 13 (Definitions) ``Sell ``Plus''--Buy ``Minus'' Order'' 
and ``Stop Order''
    The Exchange is proposing to amend these definitions to indicate 
that a transaction that occurs in NYSE MatchPoint shall not be 
considered in the operation of these orders.
    (2) Rule 15. ``Pre-Opening Indications''
    The Exchange is proposing to add to section (d) of the rule that an 
execution that occurs in NYSE MatchPoint shall not be considered in the 
operation of this rule.
    (3) Rule 79A. ``Miscellaneous Requirements on Stock Market 
Procedures''
    The Exchange is proposing to add to subsection (C)(7) of .15 of the 
Supplementary Material section of the Miscellaneous Requirements on 
Stock Market Procedures section of the rule that the term ``last sale'' 
shall not include any transaction that occurs in NYSE MatchPoint. 
Additionally, the Exchange is proposing to add to section .20(c) of the 
Supplementary Material that a transaction that occurs in NYSE 
MatchPoint shall not be considered the ``last sale,'' the ``current 
sale,'' or the ``last previous sale.''
    (4) Rule 100. ``Round-Lot Transactions of Odd-Lot Dealer or Broker 
Affecting Odd-Lot Orders''
    The Exchange is proposing to add to subsection (d) that the ``last 
different round lot price'' shall not include prices of transactions 
that occur in NYSE MatchPoint.
    (5) Rule 104. ``Dealings and Responsibilities of DMMs''
    The Exchange is proposing to add to the Supplementary Material 
section of Rule 104, under section .10 that the terms ``price,'' ``high 
price,'' ``low price'' and ``last differently-priced trade'' shall not 
include the price of any transaction that occurs in NYSE MatchPoint.
    (6) Rule 116. `` `Stop' Constitutes Guarantee''
    The Exchange is proposing to add to the Supplementary Material 
section of Rule 116, under subsection .40 (``Stopping'' stock on 
market-at-the-close orders'') subparagraph (C) that for purposes of 
this section .40, the ``price of the last sale'' shall not include any 
transaction that occurs in NYSE MatchPoint.
    (7) Rule 123B. ``Exchange Automated Order Routing System''
    The Exchange is proposing to add to Rule 123B in subsection 
(b)(3)(``Booth Support System'') that for purposes of this section (3), 
the term ``last sale'' shall not include any transaction that occurs in 
NYSE MatchPoint.
    (8) Rule 123C. ``Market On The Close Policy And Expiration 
Procedures''
    The Exchange is proposing to add to Supplementary Material .10 that 
for purposes of Rule 123C, the terms ``last sale'' and ``last sales'' 
shall not include any transaction that occurs in NYSE MatchPoint.
    (9) Rule 123D. ``Openings and Halts in Trading''
    The Exchange is proposing to add to Rule 123D in the Supplementary 
Material Section .25 that for purposes of this rule, a transaction that 
occurs in NYSE MatchPoint shall not affect the calculation of the 
``last sale,'' ``prior close,'' ``previous close'' or any similar term.
    (10) Rule 124. ``Odd-Lot Orders''
    The Exchange is proposing to add to Rule 124.70 in the 
Supplementary Material section that references to ``round-lot 
transaction,'' ``round-lot Exchange transaction,'' ``opening 
transaction,'' ``closing transaction,'' ``reopening price,'' ``re-
opening transaction,'' ``price'' and ``sale'' shall not include any 
transaction that occurs in NYSE MatchPoint.
    (11) Rule 1000. ``Automatic Execution of Limit Orders Against Order 
Reflected in NYSE Published Quotation''
    The Exchange is proposing to add to Rule 1000.11 in the 
Supplementary Material section that with respect to ``sale,'' ``sale 
price,'' ``last sale price,'' ``closing price'' and similar terms shall

[[Page 46474]]

not include any transaction that occurs in NYSE MatchPoint.
    In each of the rule changes described above, the Exchange also 
proposes to add a reference to Rule 1500 (``NYSE 
MatchPointSM'').
    Market data for NYSE-listed securities that trade on MatchPoint is 
disseminated via the consolidated tape pursuant to the Consolidated 
Tape Association Plan (``CTA Plan''). Trade reports of securities that 
are governed by the Unlisted Trade Privileges Plan (``UTP Plan'') are 
disseminated pursuant to the UTP Plan. Because MatchPoint and NYBX are 
facilities of the Exchange, and not withstanding the exclusions 
described above, all trades executed in either MatchPoint or NYBX 
indicate the market of execution as the NYSE for CTA and UTP purposes.
2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'') 
for this proposed rule change is the requirement under Section 6(b)(5) 
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. The Exchange 
believes the proposed rule changes support these principles in that 
they will clarify that certain NYSE rules do not apply to executions 
that occur on MatchPoint.

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: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) by its terms, does not 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 \6\ and Rule 19b-4(f)(6) thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 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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    The Exchange has requested that the Commission waive the 30-day 
operative delay and designate the proposed rule change immediately 
operative. The Exchange believes that waiving the operative delay, by 
immediately clarifying how trades executed in NYSE MatchPoint will be 
treated for purposes of the application of certain other Exchange 
rules, will eliminate potential confusion by granting market 
participants a better understanding of the effect that MatchPoint 
trades have on the market. The Commission believes such waiver is 
consistent with the protection of investors and the public interest.\8\ 
Accordingly, the Commission designates the proposed rule change 
operative upon filing with the Commission.
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    \8\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78c(f).
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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-NYSE-2009-85 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-2009-85. 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 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-
NYSE-2009-85 and should be submitted on or before September 30, 2009.

    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. E9-21645 Filed 9-8-09; 8:45 am]

BILLING CODE 8010-01-P