Document ID: SEC-2012-1835-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2012-11-13T05:00Z

[Federal Register Volume 77, Number 219 (Tuesday, November 13, 2012)]
[Notices]
[Pages 67704-67707]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-27548]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68161; File No. SR-NYSE-2012-61]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Temporary Suspension of Those Aspects of Rules 36.20, 36.21, 
and 36.30 That Would Not Permit Designated Market Makers and Floor 
Brokers To Use Personal Portable Phone Devices on the Trading Floor 
Following the Aftermath of Hurricane Sandy From November 5, 2012 Until 
the Earlier of When Phone Service Is Fully Restored or Friday, November 
9, 2012

 November 5, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 5, 2012, 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\ 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 extend the temporary suspension of those 
aspects of Rules 36.20, 36.21, and 36.30 that would not permit 
Designated Market Makers (``DMMs'') and Floor brokers to use personal 
portable phone devices on the Trading Floor following the

[[Page 67705]]

aftermath of Hurricane Sandy from November 5, 2012 until the earlier of 
when phone service is fully restored or Friday, November 9, 2012. The 
text of the proposed rule change is available on the Exchange's Web 
site at www.nyse.com, at the principal office of the Exchange, 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
    On Thursday, November 1, 2012, the Exchange filed a rule proposal 
to temporarily suspend those aspects of Rules 36.20, 36.21, and 36.30 
that would not permit Floor brokers and Designated Market Makers 
(``DMMs'') to use personal portable phone devices on the Trading Floor 
\3\ following the aftermath of Hurricane Sandy and during the period 
that phone service was not fully functional.\4\ Pursuant to that 
filing, all other aspects of those rules remained applicable and the 
temporary suspensions of Rule 36 requirements were in effect beginning 
the first day trading resumed following Hurricane Sandy until Friday, 
November 2, 2012.
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    \3\ Pursuant to Rule 6A, the Trading Floor is defined as the 
restricted-access physical areas designated by the Exchange for the 
trading of securities, but does not include the physical locations 
where NYSE Amex Options are traded.
    \4\ See Securities Exchange Act Release No. 68137 (Nov. 1, 2012) 
(SR-NYSE-2012-58).
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    As of Monday, November 5, 2012, although power has been restored to 
the downtown Manhattan vicinity, other services are not yet fully 
operational. Among other things, the telephone services provided by 
third-party carriers to the Exchange are still not fully operational on 
the Trading Floor, which impacts the ability of Floor members to 
communicate from the Trading Floor as permitted by Rule 36.
    Because of intermittent cell phone service, many Exchange 
authorized and provided portable phones continue to not be functional 
and therefore Floor brokers still cannot use the Exchange authorized 
and provided portable phones, pursuant to Rules 36.20 and 36.21. In 
certain instances, however, the personal cell phones of Floor brokers 
are operational on the Trading Floor. The Exchange believes that 
because communications with customers is a vital part of a Floor 
broker's role as agent and therefore contributes to maintaining a fair 
and orderly market, during the period when phone service continues to 
be intermittent, Floor brokers should be permitted to use personal 
portable phone devices in lieu of the non-operational Exchange 
authorized and provided portable phones.
    Similarly, the Exchange continues to experience problems with the 
DMM unit wired telephone lines, which are permitted pursuant to Rule 
36.30. In some circumstances, the DMM unit location at the Trading 
Floor post may receive incoming calls, but the phones are not capable 
of making outgoing calls. The continued inability of a DMM unit to use 
its telephone lines could impact the ability of a DMM unit to comply 
with its obligations in securities registered to the DMM unit. For 
example, if a DMM unit experiences connectivity issues or problems with 
its algorithms and needs to speak with one of its back-office support 
teams, with the current phone limitations, the DMM would not be able to 
do so.
    Accordingly, the Exchange proposes to extend the temporary 
suspension of those aspects of Rules 36.20, 36.21, and 36.30 that would 
not permit Floor brokers and DMMs to use personal portable phone 
devices on the Trading Floor. The Exchange proposes that the extension 
of the temporary suspension of those aspects of Rules 36.20, 36.21, and 
36.30 to permit use of the personal portable phones on the Trading 
Floor be pursuant to the same terms and conditions of the temporary 
suspension filed for October 31, 2012 through November 2, 2012, 
including the record retention requirements related to any use of 
personal portable phones.\5\
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    \5\ See id. (notice that describes the terms and conditions of 
the temporary suspension).
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    In particular, as set forth in the prior filing, Floor brokers and 
DMMs that use a portable personal phone must provide the Exchange with 
the names of all Floor-based personnel who used personal portable 
phones during this temporary suspension period, together with the phone 
number and applicable carrier for each number. Floor broker and DMM 
member organizations must maintain in their books and records all cell 
phone records that show both incoming and outgoing calls that were made 
during the period that a personal portable phone was used on the 
Trading Floor. To the extent the records are unavailable from the 
third-party carrier, the Floor broker and DMM member organizations must 
maintain contemporaneous records of all calls made or received on a 
personal portable phone while on the Trading Floor. As with all member 
organization records, such cell phone records must be provided to 
Exchange regulatory staff, including without limitation staff of the 
Financial Industry Regulatory Authority (``FINRA''), on request.
    In addition, the Exchange further notes that DMM units and their 
Floor-based personnel would remain subject to both the Rule 36.30 and 
98 limitations of whom they may contact directly from the Trading 
Floor.\6\ However, because of the extensive, ongoing issues with power 
and phone lines in the New York City area and vicinity, the persons 
with whom a DMM may be permitted to communicate from the Trading Floor 
may not be at their regular physical location. Accordingly, the 
Exchange proposes to continue to temporarily permit DMMs to use their 
personal portable phones to contact the off-Floor persons that they are 
permitted to contact by rule, even if such off-Floor personnel are not 
located in their regular office locations. The Exchange believes that 
this relief is consistent with guidance issued by FINRA, which 
recognizes that in the aftermath of Hurricane Sandy, a FINRA member may 
relocate displaced office personnel to temporary locations.\7\
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    \6\ Rule 36.30 restricts a DMM unit from using the post 
telephone lines to transmit to the Floor orders for the purchase or 
sale of securities. In addition, Rule 98 sets forth restrictions on 
communications between the Floor-based personnel of a DMM unit and 
off-Floor personnel. See, e.g., Rules 98(c)(2)(A), (d)(2)(B)(iii), 
(f)(1)(A)(ii), and (f)(2)(A).
    \7\ See FINRA Regulatory Notice 12-45. The Exchange notes that 
all member organizations operating a DMM unit are also FINRA 
members, and therefore subject to the guidance set forth in FINRA 
Regulatory Notice 12-45.
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    As noted above, because the Exchange is dependent on third-party 
carriers for both wired and wireless phone service on the Trading 
Floor, the Exchange does not know how long the proposed temporary 
suspension will be required. However, based on current estimates, the 
Exchange understands that phone service may not be fully restored until 
at least Wednesday, November 7, 2012, and most likely later than that 
date. Accordingly, the Exchange proposes

[[Page 67706]]

that the extension of the temporary suspensions of those aspects of 
Rule 36 that do not permit DMMs or Floor brokers to use personal 
portable phones on the Trading Floor continue until the earlier of when 
phone service is fully restored or Friday, November 9, 2012.\8\
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    \8\ The Exchange will provide notice of this rule filing to the 
DMMs and Floor brokers, including the applicable recordkeeping and 
other requirements. If telephone service is fully restored prior to 
November 9, 2012, the Exchange will notify DMMs and Floor brokers 
that the temporary suspension of those aspects of Rule 36 that do 
not permit the use of personal portable phones on the Trading Floor 
has expired as of the time that phone service is fully restored.
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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, in that 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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    In particular, in the aftermath of Hurricane Sandy, while the 
Exchange was able to open for trading, many of the services that the 
Exchange depends on from third-party carriers, such as wired and 
wireless telephone connections, are not fully restored. The Exchange 
believes that the proposed extension of the temporary suspensions from 
those aspects of Rule 36 that restrict the use of personal portable 
phones on the Trading Floor removes impediments to and perfects the 
mechanism of a free and open market and national market system because 
the proposed relief will enable both Floor brokers and DMMs to conduct 
their regular business, notwithstanding the ongoing issues with 
telephone service. The Exchange further believes that without the 
requested relief, both Floor brokers and DMMs would be compromised in 
their ability to conduct their regular course of business on the 
Trading Floor, which could adversely impact the market generally and 
investor confidence during this time of unprecedented weather 
disruptions. In particular, for Floor brokers, because they operate as 
agents for customers, their inability to communicate with customers 
could compromise their ability to represent public orders on the 
Trading Floor. For DMM units, any inability to communicate with 
personnel from their off-Floor offices, clearing firms, or non-trading 
related support staff, regardless of where such off-Floor personnel may 
be located in the aftermath of Hurricane Sandy, could compromise the 
DMM unit's ability to meet their obligations, particularly if the DMM 
unit experiences issues with connectivity or its algorithms.

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 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, the proposed rule change 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) 
requires a self-regulatory organization to give 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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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \13\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6) \14\ permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay. The Commission 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest. The Commission notes 
that doing so will allow the Exchange to continue uninterrupted the 
emergency temporary relief necessitated by Hurricane Sandy's disruption 
of telephone service, as described herein and in the Exchange's prior 
filing seeking such relief, until the earlier of when phone service is 
fully restored or Friday, November 9, 2012. Therefore, the Commission 
hereby waives the 30-day operative delay and designates the proposal 
operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 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 summarily may temporarily suspend 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 email to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2012-61 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-2012-61. 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

[[Page 67707]]

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 10:00 a.m. and 3:00 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-NYSE-2012-61 and should be submitted on or before 
December 4, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27548 Filed 11-9-12; 8:45 am]
BILLING CODE 8011-01-P