[Federal Register Volume 73, Number 211 (Thursday, October 30, 2008)]
[Notices]
[Pages 64642-64644]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-25913]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58833; File No. SR-NYSE-2008-106]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Eliminate Subscribership to NYSE Bonds and Provide That All NYSE
Members and Member Organizations Are Eligible To Access NYSE Bonds
October 22, 2008.
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 October 17, 2008, NYSE Alternext U.S. LLC (``NYSE Alternext'' 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 Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend NYSE Rule 86 as part of the
relocation of the trading of certain debt securities (``Bonds
Relocation'') conducted on NYSE Alternext U.S. LLC's (``NYSE
Alternext'') legacy trading systems to an automated trading platform
based on NYSE BondsSM that will be operated by the Exchange
on behalf of NYSE Alternext (``NYSE Alternext Bonds''). The text of the
proposed rule change is available on the Exchange's Web site at http://www.nyse.com, at the Exchange's principal office, and at the Public
Reference Room of the Commission.
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 these statements may be examined at
the places specified in Item IV below. NYSE Alternext has prepared
summaries, set forth in Sections A, B and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
This proposal is to amend NYSE Rule 86 as part of the Bonds
Relocation.
Background
As described more fully in a related rule filing, the Exchange's
parent company, NYSE Euronext, acquired The Amex Membership Corporation
(``AMC'') pursuant to an Agreement and Plan of Merger, dated January
17, 2008 (the ``Merger''). In connection with the Merger, the American
Stock Exchange LLC (``Amex''), a subsidiary of AMC, became a subsidiary
of NYSE Euronext called NYSE Alternext U.S. LLC,\3\ and will continue
to operate as a national securities exchange registered under Section 6
of the Act.\4\ The effective date of the Merger was October 1, 2008.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 58673 (September 29,
2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-2008-60 and SR-Amex
2008-62) (approving the Merger). As noted, Amex was renamed NYSE
Alternext U.S. LLC and will be referred to as NYSE Alternext for all
purposes throughout this filing. For the avoidance of doubt, NYSE
Alternext U.S. LLC is a self regulatory organization distinct from
NYSE Euronext's European-market subsidiary, NYSE Alternext.
\4\ 15 U.S.C. 78f.
---------------------------------------------------------------------------
In connection with the Merger, NYSE Alternext will relocate all
equities trading conducted on the NYSE Alternext legacy trading systems
and facilities located at 86 Trinity Place, New York, New York (the
``86 Trinity Trading Systems''), to trading systems and facilities
located at 11 Wall Street, New York, New York (the ``Equities
Relocation''). The NYSE Alternext equity trading systems and facilities
at 11 Wall Street (the ``NYSE Alternext Trading Systems'') will be
operated by the Exchange on behalf of NYSE Alternext. Similarly, NYSE
Alternext will relocate all options trading currently conducted on the
86 Trinity Trading Systems to new facilities to be located at 11 Wall
Street, which will use a trading system based on the options trading
system used by NYSE Arca, Inc. (``NYSE Arca'') (the ``Options
Relocation'').\5\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63) (approving
the Equities Relocation).
---------------------------------------------------------------------------
Post-Merger, all NYSE Alternext members and member organizations
that were authorized to trade on NYSE Alternext before the Merger will
receive trading permits (referred to as ``86 Trinity Permits'') that
authorize continued trading on the 86 Trinity Trading Systems. Holders
of the 86
[[Page 64643]]
Trinity Permits are eligible to apply for an NYSE Alternext equities
trading license or options trading permit upon the Equities or Options
Relocation, as applicable.\6\ In addition, pursuant to the Merger, all
NYSE Alternext members and member organizations that apply for an NYSE
Alternext equities trading license are automatically waived in as NYSE
members and member organizations.\7\ Similarly, all NYSE members and
member organizations are automatically waived in as NYSE Alternext
members and member organizations.\8\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 58706 (October 1,
2008), 73 FR 59019 (October 8, 2008) (SR-NYSE-2008-70) (describing
and approving membership rule changes related to the Merger);
Securities Exchange Act Release No. 58705 (October 1, 2008), 73 FR
58995 (October 8, 2008) (SR-Amex 2008-63) (approving the Equities
Relocation).
\7\ See NYSE Rules 2.10 and 2.20. NYSE Alternext members and
member organizations will have a six-month grace period within which
to meet NYSE and NYSE Alternext Equities membership requirements. If
a member or member organization fails to meet those requirements by
the close of the grace period, both NYSE and NYSE Alternext will
revoke trading approvals on their respective exchanges. See NYSE
Rule 300.10T and NYSE Alternext Equities Rule 300.10T. See also
Securities Exchange Act Release No. 58706 (October 1, 2008), 73 FR
59019 (October 8, 2008) (SR-NYSE-2008-70); Securities Exchange Act
Release No. 58705 (October 1, 2008), 73 FR 58995 (October 8, 2008)
(SR-Amex 2008-63).
\8\ See NYSE Alternext Equities Rules 2.10 and .20. See also
Securities Exchange Act Release No. 58706 (October 1, 2008), 73 FR
59019 (October 8, 2008) (SR-NYSE-2008-70); Securities Exchange Act
Release No. 58705 (October 1, 2008), 73 FR 58995 (October 8, 2008)
(SR-Amex 2008-63).
---------------------------------------------------------------------------
Current NYSE Rule 86 and NYSE Bonds Trading Platform
The NYSE Bonds trading platform processes all bonds trading
(including convertible bonds and certain structured products) at the
Exchange, including receipt, execution and reporting of
transactions.\9\
---------------------------------------------------------------------------
\9\ See NYSE Rules 86(a) and (g).
---------------------------------------------------------------------------
NYSE Rule 86 prescribes how NYSE Bonds operates, who may use the
platform, and how it is regulated.\10\ In relevant part, NYSE Rule
86(b)(2)(I) provides that all NYSE member organizations are eligible to
subscribe to trade on NYSE Bonds. A member organization becomes a
``Subscriber'' to NYSE Bonds upon entering into a subscription and
service and access agreement with the Exchange. A Subscriber to NYSE
Bonds may enter orders for themselves or their customer.
---------------------------------------------------------------------------
\10\ See NYSE Rules 86(b)--(l), (p).
---------------------------------------------------------------------------
In addition, NYSE Rule 86 provides a mechanism for handling clearly
erroneous executions and for when trading may be halted or suspended,
and has provisions governing sponsored access.\11\ In particular, NYSE
Rule 86(o) provides, subject to certain requirements and restrictions,
that non-members may be granted sponsored access to NYSE Bonds as
``Sponsored Participants.'' A non-member may become a Sponsored
Participant so long as the non-member is authorized to do so by the
Exchange and enters into a written agreement with both the Exchange and
its Sponsoring Member Organization.
---------------------------------------------------------------------------
\11\ See NYSE Rules 86(m)--(o).
---------------------------------------------------------------------------
All securities traded on NYSE Bonds are designated upon execution
with an ``N'' indicator for ``listed'' debt securities or a ``U''
indicator for ``traded'' debt securities. In addition, all bond
directory pages on the NYSE Bonds Web site identify securities as
either ``listed'' or ``traded.'' \12\
---------------------------------------------------------------------------
\12\ On NYSE Bonds, ``listed'' refers to registered (or exempt)
debt securities that have been listed with the Exchange by the
issuer, subject to the applicable initial and continued listing
approvals and criteria. ``Traded'' refers to unregistered debt
securities that are admitted to trading on NYSE Bonds without
requiring the issuer to have listed those securities on the
Exchange. See Securities Exchange Act Release No. 54766 (November
16, 2006), 71 FR 67657 (November 22, 2006) (S7-06-05) (SEC exemption
for the trading of certain unregistered and unlisted securities).
See also NYSE Rules 1400-1401.
---------------------------------------------------------------------------
The Bonds Relocation
Similar to the Equities and Options Relocations, NYSE Alternext is
now proposing the Bonds Relocation.\13\
---------------------------------------------------------------------------
\13\ In the filing governing the Equities Relocation, NYSE
Alternext noted that it expected to delist certain debt securities
and that those securities would subsequently be listed and traded on
NYSE Bonds. See Securities Exchange Act Release No. 58705 (October
1, 2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63). In the
interim period since that filing was submitted to the Commission,
NYSE Alternext determined that it will retain the listing of these
debt securities while adopting and using the advanced technology of
NYSE Alternext Bonds to trade them. See SR-NYSEALTR-2008-03.
---------------------------------------------------------------------------
The debt securities involved in the Bonds Relocation will be traded
on NYSE Alternext Bonds and NYSE Alternext will maintain the listings
of these securities in accordance with its listing standards. The
Exchange will not cross-list any NYSE Alternext-listed securities on
the Exchange and will not cross-list any Exchange-listed securities on
NYSE Alternext. The Exchange does not currently trade any debt
securities listed on other exchanges on a UTP basis, and neither the
Exchange nor NYSE Alternext will trade debt securities listed on their
respective exchanges on a UTP basis.
The Exchange understands that the Bonds Relocation will occur as
soon as reasonably practicable following the date of the Merger,
concurrent with the Equities Relocation.\14\
---------------------------------------------------------------------------
\14\ In order to implement the Bonds Relocation, NYSE Alternext
is proposing to adopt NYSE Rule 86 as NYSE Alternext Equities Rule
86, and to adopt or make conforming amendments to other NYSE
Alternext Equities Rules. See SR-NYSEALTR-2008-03.
---------------------------------------------------------------------------
Proposed Amendments to NYSE Rule 86
The Exchange proposes the following amendments to NYSE Rule 86 in
order to facilitate the Bonds Relocation and to permit both NYSE and
NYSE Alternext members and member organizations to access NYSE
Bonds.\15\
---------------------------------------------------------------------------
\15\ The Commission approved NYSE Rule 86 in March 2007 after
full notice and comment. See Securities Exchange Act Release No.
55496 (March 20, 2007), 72 FR 14631 (March 28, 2007) (SR-NYSE-2006-
37) (approving NYSE Bonds).
---------------------------------------------------------------------------
The Exchange proposes to modify subparagraph (b)(2)(I) to remove
the subscription requirement from Rule 86. At the time the Exchange
first adopted Rule 86 and implemented the NYSE Bonds platform, it
required NYSE members and member organizations to complete a
subscription and service and access agreement. The Exchange now
believes that continuing to require members and member organizations to
separately ``subscribe'' to NYSE Bonds and complete the related
documentation is inefficient, impractical, and does not provide any
additional benefit to the Exchange or to investors. All of the
requirements contained in the subscription and service and access
agreement relating to compliance with legal and regulatory obligations
are governed by the rules of the Exchange. By eliminating the
subscription requirement, the Exchange believes it will help to
streamline the process for members and member organizations to access
NYSE Bonds without compromising the integrity of the regulatory
process.
Correspondingly, the Exchange also proposes to substitute the
references to ``Subscribers'' in subparagraphs (b)(2)(J), (b)(2)(M),
(m)(4) and (o) of NYSE Rule 86 with ``Members and Member
Organizations'', which would permit all NYSE members and member
organizations to be automatically eligible to access NYSE Bonds without
any additional requirements.\16\ Also, as described above, post-Merger
all NYSE Alternext members and member organizations that apply for an
NYSE Alternext equities trading permit will be automatically waived in
as members and member organizations of the Exchange. Thus, by providing
in subparagraph (o) that all Exchange members and member organizations
will be eligible to access NYSE Bonds, both NYSE and NYSE Alternext
[[Page 64644]]
members and member organizations will be able to trade on NYSE Bonds.
---------------------------------------------------------------------------
\16\ See proposed NYSE Rule 86(o) in Exhibit 5. The Exchange
also proposes to substitute the reference to ``Subscriber'' in
subparagraph (b)(2)(L) with ``Sponsoring Member Organization''.
---------------------------------------------------------------------------
By removing the subscription requirement and providing that all
NYSE members and member organizations are eligible to access NYSE Bonds
without any additional requirements, the Exchange hopes to maximize
participation, increase liquidity and improve pricing, which benefits
all market participants.
In addition, the Exchange will modify the NYSE Bonds website to
reflect which securities are listed with NYSE and which securities are
listed with NYSE Alternext. Executions of NYSE Alternext-listed
securities will be designated with an ``A'' indicator.
Operative Date
The Exchange proposes that the operative date of the proposed rule
changes be the date of the Equities and Bonds Relocations.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\17\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\18\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, 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. The
proposed rule change also supports the principles of Section 11A(a)(1)
\19\ of the Act in that it seeks to ensure economically efficient
execution of securities transactions and fair competition among brokers
and dealers and among exchange markets.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(5).
\19\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------
The Exchange believes that the proposed amendments to NYSE Rule 86
will enhance the efficient execution of transactions and fair
competition among broker-dealers and markets and provide increased bond
market activity for the benefit of all market participants.
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
The Exchange believes that this proposal qualifies for immediate
effectiveness upon filing as a non-controversial rule change pursuant
to Section 19(b)(3)(A) of the Act \20\ and Rule 19b-4(f)(6) \21\
thereunder. The Exchange asserts that the proposed rule change (i) will
not significantly affect the protection of investors or the public
interest, (ii) will not impose any significant burden on competition,
and (iii) by its terms, will not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate, if consistent with the protection of investors and the
public interest.\22\ This filing is non-controversial because it raises
no novel issues and is simply streamlining members' and member
organizations' access to NYSE Bonds, as all of the requirements
contained in the subscription and service and access agreement relating
to compliance with legal and regulatory obligations are already and
will continue to be governed by the rules of the Exchange. The proposed
rule change will not become operative until the date of the Equities
and Bonds Relocations.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78s(b)(3)(A).
\21\ 17 CFR 240.19b-4(f)(6).
\22\ 7 CFR 240.19b-4(f)(6). In addition, 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, 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.
NYSE complied with this requirement.
---------------------------------------------------------------------------
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-2008-106 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-2008-106. 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 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-2008-106 and should be submitted on or before
November 20, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
---------------------------------------------------------------------------
\23\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-25913 Filed 10-29-08; 8:45 am]
BILLING CODE 8011-01-P