[Federal Register Volume 74, Number 27 (Wednesday, February 11, 2009)]
[Notices]
[Pages 6935-6936]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-2852]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59353; File No. SR-NYSEALTR-2008-12]


Self-Regulatory Organizations; NYSE Alternext US LLC; Order 
Approving Proposed Rule Change To Establish the Risk Management Gateway 
Service

 February 3, 2009.

I. Introduction

    On December 12, 2008, NYSE Alternext US LLC (``Exchange'' or ``NYSE 
Alternext'') 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59144 (December 22, 
2008), 73 FR 80502.
---------------------------------------------------------------------------

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 
Alternext 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 Alternext Equities Rule 123B.30 permits NYSE Alternext 
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.
---------------------------------------------------------------------------

    \4\ A similar service has been approved for NYSE. See Securities 
Exchange Act Release No. 59354 (February 3, 2009) (SR-NYSE-2008-
101).
    \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.
---------------------------------------------------------------------------

    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

[[Page 6936]]

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 Alternext Trading Systems.

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 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 Alternext member firms that provide sponsored access to the 
Exchange.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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-NYSEALTR-2008-12) be, and it 
hereby is, approved.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Florence E. Harmon,
Deputy Secretary.
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

 [FR Doc. E9-2852 Filed 2-10-09; 8:45 am]
BILLING CODE 8011-01-P