[Federal Register Volume 73, Number 200 (Wednesday, October 15, 2008)]
[Notices]
[Pages 61183-61184]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-24369]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58732; File No. SR-NYSE-2008-99]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC To 
Extend Until January 9, 2009, the Operation of Interim NYSE Rule 128 
(``Clearly Erroneous Executions for NYSE Equities'') Which Permits the 
Exchange To Cancel or Adjust Clearly Erroneous Executions if They Rise 
Out of the Use or Operation of Any Quotation, Execution or 
Communication System Owned or Operated by the Exchange, Including Those 
Executions That Occur in the Event of a System Disruption or System 
Malfunction

October 3, 2008.
    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 October 1, 2008, New York Stock Exchange LLC (``NYSE'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'' or ``SEC'') the proposed rule change as described 
in Items I and II below, which Items have been prepared by the self-
regulatory organization. NYSE designated the proposed rule change as 
``non-controversial'' under Section 19(b)(3)(A)(iii) 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)(iii).
    \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 extend until January 9, 2009, the 
operation of interim NYSE Rule 128 (``Clearly Erroneous Executions for 
NYSE Equities'') which permits the Exchange to cancel or adjust clearly 
erroneous executions if they arise out of the use or operation of any 
quotation, execution or communication system owned or operated by the 
Exchange, including those executions that occur in the event of a 
system disruption or system malfunction.

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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to extend until January 9, 2009, the 
operation of interim NYSE Rule 128 (``Clearly Erroneous Executions for 
NYSE Equities'') which permits the Exchange to cancel or adjust clearly 
erroneous executions if they arise out of the use or operation of any 
quotation, execution or communication system owned or operated by the 
Exchange, including those executions that occur in the event of a 
system disruption or system malfunction.
    Prior to the implementation of NYSE Rule 128 on January 28, 
2008,\6\ the NYSE did not have a rule providing the Exchange with the 
authority to cancel or adjust clearly erroneous trades of securities 
executed on or through the systems and facilities of the NYSE.
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    \6\ See Securities Exchange Act Release No. 57323 (February 13, 
2008), 73 FR 9371 (February 20, 2008) (SR-NYSE-2008-09).
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    In order for the NYSE to be consistent with other national 
securities exchanges which have some version of a clearly erroneous 
execution rule, the Exchange is drafting an amended clearly erroneous 
rule which will accommodate such other exchanges but will be 
appropriate for the NYSE market model.
    The NYSE notes that the Commission approved an amended clearly 
erroneous execution rule for Nasdaq in May 2008.\7\ On July 28, 2008, 
the Exchange filed with the SEC a request to extend the operation of 
interim Rule 128 until October 1, 2008 \8\ in order to review the 
provisions of Nasdaq's clearly erroneous rule and to consider 
integrating similar standards into its own amendment to Rule 128. The 
Exchange has not finalized its review of Nasdaq's amended rule and the 
possible proposed amendment of Rule 128 and is, therefore, requesting 
to extend the operation of interim Rule 128 until January 9, 2009. 
Prior to January 9, 2009, the Exchange intends to file a 19b-4 rule 
change amending interim Rule 128, which, if approved by the SEC, will 
be effective after January 9, 2009.
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    \7\ See Securities Exchange Act Release No. 57826 (May 15, 
2008), 73 FR 29802 (May 22, 2008) (SR-NASDAQ-2007-001).
    \8\ See Securities Exchange Act Release No. 58328 (August 8, 
2008), 73 FR 47247 (August 13, 2008) (SR-NYSE-2008-63).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
and furthers the objectives of Section 6(b)(5) of the Act,\9\ in that 
it is designed to prevent fraudulent and manipulative practices, to 
promote just and equitable principles of trade, to remove impediments 
to, and perfect the mechanisms of, a free and open market and a 
national market system, and, in general, to protect investors and the 
public interest.
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    \9\ 15 U.S.C. 78f(b)(5).
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    As articulated more fully above, the proposed rule would place the 
NYSE on equal footing with other national securities exchanges. This 
will promote the integrity of the market and protect the public 
interest, since it would permit all exchanges to cancel or adjust 
clearly erroneous or trades when such trades occur, rather than 
canceling them on all other markets, but leaving them standing on only 
one market.

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.

[[Page 61184]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) \10\ of the Act and Rule 19b-4(f)(6) \11\ thereunder. The 
proposed rule change effects a change that (A) Does not significantly 
affect the protection of investors or the public interest; (B) does not 
impose any significant burden on competition; and (C) by its terms, 
does not become operative for 30 days after the date of the filing, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest; provided that the 
self-regulatory organization has given 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    The Exchange believes that good cause, consistent with the 
provisions of Rule 19b-4(f)(6), exists to justify making the rule 
change immediately effective. Because the proposed rule is based on a 
rule that has been previously approved by the Commission, and because 
the proposed rule would in any event be operative only until a more 
robust and market-appropriate rule was implemented, the NYSE believes 
that the proposed rule is non-controversial. Moreover, the NYSE 
believes that the absence of such a rule in an automated and fast-paced 
trading environment poses a danger to the integrity of the markets and 
the public interest, and that this exigency justifies filing the rule 
for immediate effectiveness rather than using the regular Rule 19b-2 
process, which would require the Exchange to continue without the 
protection of the proposed rule until the expiration of the prescribed 
time periods for notice, comment and approval. In contrast, immediate 
effectiveness of the proposed rule will immediately and timely enable 
the NYSE to cancel or adjust clearly erroneous trades that may present 
a risk to the integrity of the equities markets and all related 
markets. The proposed rule will also allow the Exchange to protect 
customers and the public interest, and to continue to provide 
economically efficient execution of securities transactions.
    The NYSE also requests that the Commission waive the five-day 
period for notice of intent to file this proposed rule change, and the 
30-day period before the rule becomes operative, both of which are 
prescribed by Rule 19b-4(f)(6), but which may be waived pursuant to 
Rule 19b-4(f)(6)(iii) \12\ if such action is consistent with the 
protection of investors and public interest.\13\ The Exchange believes 
that waiver of these time periods so that the rule may be immediately 
operative are consistent with the protection of investors and the 
public interest for the reasons described above.
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    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ In fact, the Commission notes, under Rule 19b-4(f)(6)(iii), 
the ``consistent with the protection of investors and public 
interest'' standard applies only to the Commission's waiver of the 
30-day operative delay. Rule 19b-4(f)(6)(iii) requires a self-
regulatory organization to give the Commission written notice of its 
intent to file 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.
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    The Commission believes that waiving the 30-day operative delay 
will allow the Exchange to continue to immediately and timely cancel or 
adjust trades that it determines to be clearly erroneous under Rule 
128. The Commission believes that the extension of NYSE Rule 128 until 
January 9, 2009 will allow the Exchange to continue to apply the rule 
without interruption and is consistent with the protection of investors 
and the public interest. The Commission hereby designates the proposal 
as operative upon filing.\14\ The Commission has determined to waive 
the five-day prefiling period in this case.
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    \14\ 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 the 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 [email protected]. Please include 
File Number SR-NYSE-2008-99 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2008-99. 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 such filing also will be available for 
inspection and copying at the principal office of the NYSE. 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-2008-99 and should be 
submitted on or before November 5, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-24369 Filed 10-14-08; 8:45 am]
BILLING CODE 8011-01-P