Document ID: SEC-2009-0417-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2009-03-27T04:00Z

[Federal Register: March 27, 2009 (Volume 74, Number 58)]
[Notices]               
[Page 13505-13506]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27mr09-103]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59617; File No. SR-NYSEArca-2009-19]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change Amending Rule 
6.37A--Obligations of Market Makers-OX

March 20, 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 March 16, 2009, NYSE Arca, Inc. (``NYSE Arca'' or the 
``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. NYSE Arca filed the proposed rule change as a ``non-
controversial'' proposal pursuant to Section 19(b)(3)(A) of the Act \4\ 
and Rule 19b-4(f)(6) thereunder,\5\ which renders the proposal 
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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 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 6.37A--Obligations of 
Market Makers-OX. 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 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 6.37A(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'').\6\
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    \6\ See CBOE Rule 8.7(b)(iv)(C)(ii).
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    Pursuant to Rule 6.37A(b), Market Makers on NYSE Arca 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 Arca may be quoted with a difference not to exceed $5 
between the bid and offer. NYSE Arca 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 
6.37A(b)(5) is overly restrictive; this has shown to be the case when 
extreme market fluctuations, coupled with increased volatility in an 
underlying security makes it extremely difficult to accurately 
calculate the price of 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).\7\ This proposed rule 
change seeks only to allow the Exchange to offer NYSE Arca Market 
Makers the same quote relief that is offered to Market Makers on the 
CBOE.
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    \7\ 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 it is ``the Exchange'' that may establish 
bid/ask differences other than what is provided for in their rules. 
NYSE Arca proposes that the decision to establish different quote 
differentials will be made by two Trading Officials.\8\ In the case of 
NYSE Arca, 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 Arca.
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    \8\ 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 6.1(b)(34).
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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.

[[Page 13506]]

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
Because the 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 prior to 
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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6)(iii) thereunder.\14\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 the pre-filing requirement.
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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-NYSEArca-2009-19 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-2009-19. 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 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-2009-19 and should 
be submitted on or before April 17, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Florence E. Harmon,
Deputy Secretary.
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    \15\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E9-6831 Filed 3-26-09; 8:45 am]

BILLING CODE 8010-01-P