Document ID: SEC-2012-0493-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2012-03-28T04:00Z

[Federal Register Volume 77, Number 60 (Wednesday, March 28, 2012)]
[Notices]
[Pages 18875-18876]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-7382]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66642; File No. SR-NYSEArca-2012-19]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change To Amend Commentary .01 to NYSE Arca Rule 6.35

March 22, 2012.
    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 March 9, 2012, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``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 proposes to [sic] amend Commentary .01 to 
NYSE Arca Rule 6.35. The text of the proposed rule change is available 
at the Exchange, the Commission's Public Reference Room, and 
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 Exchange proposes to amend Commentary .01 to NYSE Arca Rule 
6.35 to allow certain cross trades effected on the Trading Floor to 
count toward the Market Maker's appointment trading requirement and to 
make non-substantive changes to NYSE Arca Rules 6.35, 6.37, 6.84, and 
10.12.
    Under NYSE Arca Rule 6.35, a Market maker is required to effect at 
least 75% of its trading activity (measured in terms of contract volume 
per quarter) in classes within the Market Maker's appointment. 
Commentary .01 to NYSE Arca Rule 6.35 clarifies that a Market Maker's 
trades effected on the Trading Floor to accommodate cross trades 
executed pursuant to NYSE Arca Rule 6.47 do not count for or against 
the Market Maker's 75% requirement, regardless of whether the trades 
are in issues within or without the Market Maker's appointment.
    The Exchange is proposing to amend Commentary .01 to NYSE Arca Rule 
6.35 to allow a Market Maker's trades effected on the Trading Floor to 
accommodate cross trades executed pursuant to NYSE Arca Rule 6.47 to 
count toward the Market Maker's 75% requirement, regardless of whether 
the trades are in issues within or without the Market Maker's 
appointment.
    Transactions of a Market Maker should constitute a course of 
dealings reasonably calculated to contribute to the maintenance of a 
fair and orderly market.\4\ Market Makers located on the Trading Floor, 
when trading in option classes other than those to which they are 
appointed, must continue to fulfill Market Maker obligations for that 
class as if they were appointed to such class. In addition, when 
present anywhere on the Options Trading Floor, with regard to all 
securities traded on the Trading Floor, not just those to which they 
are appointed, Market Makers may be required to undertake the general 
obligations of a Market Maker at any time in response to a demand from 
a Trading Official.\5\ The Exchange believes that a Market Maker 
engaging in such trading is fulfilling Market Maker obligations in 
addition to providing liquidity to the market and the opportunity for 
price improvement, and it is appropriate to encourage such activity by 
counting it toward the 75% requirement.
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    \4\ See e.g., NYSE Arca Rule 6.37(a).
    \5\ See e.g., NYSE Arca Rule 6.37(c).
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    In addition, the Exchange notes that the proposed rule change is 
similar to NYSE Amex LLC Options Rule 923NY(i), which permits all floor 
trades executed by Floor Market Makers [sic] a designated Trading Zone, 
not just those to which they hold an appointment, to count toward the 
Market Maker's 75% requirement. While NYSE Arca Market Makers are not 
appointed to a designated Trading Zone, they are subject to certain 
Market Maker obligations in all classes of options while located on the 
Trading Floor. As such, NYSE Arca believes that counting all floor 
trades, executed to accommodate cross transactions, is consistent with 
the application of NYSE Amex Rule 923NY(i) when calculating compliance 
with the 75% ``in appointment'' requirement.
    NYSE Arca is also proposing non-substantive changes to NYSE Arca 
Rules 6.35, 6.37, 6.84, and 10.12. The Exchange proposes to replace the 
term ``Primary Appointment'' which is not a defined term with the word 
``appointment'' as it is used elsewhere in NYSE Arca Rule 6.35.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \6\ of the 
Act, in general, and furthers the objectives of Section 6(b)(5),\7\ in 
particular, in that the proposal is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, 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. Specifically, the proposed 
rule change will remove impediments to and perfect the mechanism of a 
free and open market by providing an appropriate incentive for Market 
Makers to provide greater liquidity and the opportunity for price 
improvement on the Trading Floor, thereby benefiting all market 
participants.
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    \6\ 15 U.S.C. 78f(b).
    \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

[[Page 18876]]

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 45 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 or disapprove 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 email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2012-19 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2012-19. This 
file number should be included on the subject line if email 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 Web site viewing and 
printing 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 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-NYSEArca-2012-19 and should 
be submitted on or before April 18, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
Kevin M. O'Neill,
Deputy Secretary.
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    \8\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2012-7382 Filed 3-27-12; 8:45 am]
BILLING CODE 8011-01-P