[Federal Register Volume 74, Number 26 (Tuesday, February 10, 2009)]
[Notices]
[Page 6683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-2700]



[[Page 6683]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59354; File No. SR-NYSE-2008-101]


Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving Proposed Rule Change To Establish the Risk Management Gateway 
Service

February 3, 2009.

I. Introduction

    On December 12, 2008, New York Stock Exchange LLC (``Exchange'' or 
``NYSE'') filed with the Securities and Exchange Commission 
(``Commission'') pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to establish the Risk Management Gateway (``RMG'') 
service. The proposed rule change was published for comment in the 
Federal Register on December 31, 2008.\3\ The Commission received no 
comment letters on the proposed rule change. This order approves the 
proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59145 (December 22, 
2008), 73 FR 80492.
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II. Description of the Proposed Rule Change

    The Exchange proposes to offer, through its wholly-owned subsidiary 
NYSE Euronext Advanced Trading Solutions, Inc., the RMG service to NYSE 
members and member organizations pursuant to voluntary, contractual 
arrangements.\4\ NYSE Transact Tools, Inc, a division of the NYSE 
Euronext Advanced Trading Solutions Group (``NYXATS''), owns RMG.\5\ 
NYSE Rule 123B.30 permits NYSE members and member organizations (a 
``Sponsoring Member Organization'') to provide sponsored access to non-
member firms or customers (``Sponsored Participants'') to Exchange 
trading systems. Pursuant to this proposal, the Exchange would offer 
RMG to facilitate a Sponsoring Member Organization's ability to monitor 
and supervise the trading activity of its Sponsored Participants. RMG 
is a risk filter that verifies orders entered by Sponsored Participants 
prior to the receipt of the order by the Exchange's trading systems. 
Specifically, RMG verifies whether a Sponsored Participant's order 
complies with order criteria established by the Sponsoring Member 
Organization for the Sponsored Participant, including, amongst other 
things, criteria related to order size (per order or daily quantity 
limits), credit limits (per order or daily value), specific symbols or 
end users. If the order is consistent with the parameters set by the 
Sponsoring Member Organization, after RMG's verification, the order 
would be permitted to continue along its path to the Exchange's trading 
systems. However, if the order did not meet the specified parameters, 
RMG would return the order to the Sponsored Participant.
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    \4\ A similar service has been approved for NYSE Alternext. See 
Securities Exchange Act Release No. 59353 (February 3, 2009) (SR-
NYSEAlternext-2008-12).
    \5\ NYXATS will host the RMG software on its infrastructure. 
After passing through the RMG software, each order will enter the 
NYSE Common Customer Gateway for connectivity to the Exchange's 
matching engine. According to the Exchange, in the future, NYXATS 
may integrate RMG into the NYSE CCG for more direct access to the 
Exchange's matching engine.
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    RMG would only interact with a Sponsored Participant's order prior 
to the order's receipt by the Exchange's trading system. In addition, 
RMG would only return an order to the Sponsored Participant if the 
order did not meet the criteria set by the Sponsoring Member 
Organization. RMG would not provide order execution or trade reporting 
capabilities, but RMG would maintain records of all messages related to 
Sponsored Participants' transactions and provide the applicable 
Sponsoring Member Organization copies of those records.
    The Sponsoring Member Organization, and not RMG, will have full 
responsibility for ensuring that Sponsored Participants' sponsored 
access to the Exchange complies with the Exchange's sponsored access 
rules. The use of the RMG by a Member Organization does not 
automatically constitute compliance with Exchange rules.
    The Exchange proposes to make RMG available to its members and 
member organizations pursuant to contractual arrangements. The Exchange 
states that it believes that RMG will offer its members and member 
organizations another option in the efficient risk management of its 
Sponsored Participant's access to the NYSE.

III. Discussion and Commission's Findings

    After careful review, the Commission finds that the Exchange's 
proposal to establish its RMG service is consistent with the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\6\ In particular, the Commission finds that the 
proposal is consistent with Section 6(b)(5) of the Act,\7\ which 
requires that an Exchange have rules that are designed 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 
Commission believes that RMG should be a useful risk management tool 
for NYSE member firms that provide sponsored access to the Exchange.
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    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
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    For the foregoing reasons, the Commission believes that the 
proposal to establish the RMG service is consistent with the Act.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-NYSE-2008-101) be, and it 
hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-2700 Filed 2-9-09; 8:45 am]
BILLING CODE 8011-01-P