Document ID: SEC-2009-0336-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Alternext US LLC
Posted Date: 2009-03-13T04:00Z

[Federal Register: March 13, 2009 (Volume 74, Number 48)]
[Notices]               
[Page 10981-10983]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13mr09-115]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59517; File No. SR-NYSEALTR-2009-23]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Alternext U.S. LLC To 
Permit Two Trading Officials To Modify the Required Bid/Ask 
Differentials

March 5, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on March 3, 2009, NYSE Alternext U.S. LLC (``NYSE Amex'' or the 
``Exchange'') 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 Exchange. The Exchange 
filed the proposed rule change pursuant to Section 19(b)(3)(A) of the 
Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders it effective 
upon filing with the Commission. 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\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 925NY--Obligations of 
Market Makers. The text of the proposed rule change is attached as 
Exhibit 5. A copy of this filing is available on the Exchange's Web 
site at http://www.nyse.com, 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

[[Page 10982]]

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 change is to adopt a provision 
which will allow the Exchange to establish different quote 
differentials other than what is provided for in Rule 925NY(b)(5). The 
proposed rule language is substantially similar to what has been 
approved for, and is presently in place at, the Chicago Board Options 
Exchange (``CBOE'').\5\
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    \5\ See CBOE Rule 8.7(b)(iv)(C)(ii).
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    Pursuant to Rule 925NY(b), Market Makers on NYSE Amex are required 
to submit electronic quotations within certain bid/ask differentials. 
Subsection (5) of this rule states that following an Auction, options 
traded on NYSE Amex may be quoted with a difference not to exceed $5 
between the bid and offer. NYSE Amex now proposes to add a provision 
that will allow the Exchange to establish different bid/ask 
differentials for certain series.
    Situations may arise where the $5 differential provided for in Rule 
925NY(b)(5) is overly restrictive; this has shown to be the case when 
extreme price fluctuations coupled with increased volatility in an 
underlying security makes it extremely difficult to accurately 
calculate the price of a given options series. To address these 
concerns, the CBOE has established modified bid/ask differentials in 
certain options series, pursuant to CBOE Rule 8.7(b)(iv).\6\ This 
proposed rule change seeks only to allow the Exchange to offer NYSE 
Amex Market Makers the same quote relief that is offered to Market 
Makers on the CBOE.
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    \6\ See CBOE Bid/Ask Circular 09-02 (January 7, 2009) 
establishing modified bid/ask differentials pursuant to CBOE Rule 
8.7(b)(iv).
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    The Exchange envisions establishing quote differentials wider than 
$5 in very limited situations. In addition, if the Exchange were to 
establish modified bid/ask differentials it would do so with the 
contingency that the disseminated markets in affected series would 
remain competitive and remain narrower than the relief granted, 
whenever possible.
    The CBOE rule states that ``the Exchange'' may establish bid/ask 
differences other than what is provided for in their rules. NYSE Amex 
proposes that the decision to establish different quote differentials 
will be made by two Trading Officials.\7\ In the case of NYSE Amex, two 
Trading Officials will collectively make the determination on behalf of 
the Exchange. This is the only difference between the CBOE rule text 
and the proposed rule text for NYSE Amex.
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    \7\ A Trading Official is an Exchange Employee that has been 
designated as such by the Chief Executive Officer, or the Chief 
Regulatory Officer, pursuant to Rule 900.2NY(82).
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    The Exchange notes than Rule 925NY(b) was adopted when the 
Commission approved SR-NYSEALTR-2008-14, on February 27, 2009.\8\ This 
rule change was filed in conjunction with the NYSE Amex move to a new 
trading facility and the implementation of a new electronic trading 
system. Prior to the rule change, NYSE Amex Rule 958-ANTE governed the 
bid-ask differentials for eleconic quoting on NYSE Amex. Rule 958-
ANTE(c)(i) contained a similar provision to what is proposed in this 
filing, which authorized the Exchange to establish differences other 
than what was prescribed in the rule. So, while this proposal does 
amend the rules presently in effect for NYSE Amex, the concept of 
allowing the Exchange to establish quote differentials, other than what 
is prescribed in the rules, in not without precedent.
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    \8\ See Securities and Exchange Act Release No. 34-59472, 
February 27, 2009. This Approval Order had not yet been published in 
the Federal Register at the time this proposal was filed.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \10\ in particular, because it 
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 facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanism of a free and open market and a national market system. 
The Exchange believes that the proposed rule change is appropriate in 
that it creates a mechanism whereas Market Makers will be able to 
provide two side quotations even in situations where it is difficult to 
accurately calculate the price of given options series.
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    \9\ 15 U.S.C. 78f (b).
    \10\ 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

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) Impose any significant burden on competition; and
    (iii) 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 \11\ 
and Rule 19b-4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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 Commission is waiving the five-day pre-filing 
requirement in this case.
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    The Exchange has asked the Commission to waive the 30-day operative 
delay. The Commission hereby grants the Exchange's request.\13\ The 
proposed rule change is substantially similar to a rule of the CBOE and 
does not raise any novel or significant issues. Therefore, the 
Commission believes that waiving the 30-day period to allow the 
proposed rule change to become operative upon filing is consistent with 
the protection of investors and the public interest and designates the 
proposal as operative upon filing.
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    \13\ For purposes only of waiving the 30-day operative delay, 
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

[[Page 10983]]

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-NYSEALTR-2009-23 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-NYSEALTR-2009-23. 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-NYSEALTR-2009-23 and should be submitted on or before 
April 3, 2009.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-5386 Filed 3-12-09; 8:45 am]

BILLING CODE 8011-01-P