[Federal Register Volume 74, Number 42 (Thursday, March 5, 2009)]
[Notices]
[Pages 9651-9654]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-4678]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59468; File No. SR-NYSEALTR-2009-16]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Alternext US LLC Amending 
Rule 300.10T--NYSE Alternext Equities To Provide a Grace Period Under 
That Rule for Member Organizations That Have Applied for a Trading 
License To Comply With Certain Exchange Rules

February 27, 2009.
    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 February 24, 2009, NYSE Alternext US, LLC (``NYSE Alternext'' or the 
``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. NYSE 
Alternext has designated the proposed rule change as constituting a 
non-controversial rule change under Rule 19b-4(f)(6) under the Act,\3\ 
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\ 17 CFR 240.19b-4.
    \3\ 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 amend Rule 300.10T--NYSE Alternext 
Equities to provide a grace period under that rule for member 
organizations that have applied for a trading license to comply with 
certain Exchange rules.

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
    The Exchange proposes to amend Rule 300.10T--NYSE Alternext 
Equities (``Rule 300.10T'') to provide for a six-month grace period for 
member organizations that have applied for, but not received a trading 
license, to comply with certain Exchange rules. The Exchange intended 
Rule 300.10T to provide holders of a valid permit to trade on the NYSE 
Alternext systems and facilities located at 86 Trinity Place (``86 
Trinity Permit'') seeking to trade equities at the Exchange with a 
grace period to comply with the Exchange membership requirements under 
the NYSE Alternext Equities rules. The proposed amendment seeks to 
clarify the rule to reflect the original purpose of the provision.\4\
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    \4\ The New York Stock Exchange LLC (``NYSE'') is proposing 
conforming amendments to its Rule 300.10T. Because NYSE Alternext's 
perspective of its member organizations differs from those of the 
NYSE, the rule text proposed by the NYSE is not identical to that 
proposed by NYSE Alternext, but is the same in substance. See SR-
NYSE-2009-19 (formally submitted on February 24, 2009).
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Background of Merger
    As described more fully in a related rule filing (the ``Merger 
filing''),\5\ 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 
Exchange's predecessor, the American Stock Exchange LLC (``Amex''), a 
subsidiary of AMC, became a subsidiary of NYSE Euronext and was renamed 
NYSE Alternext US LLC (``NYSE Alternext'' or the ``Exchange''), and 
continues to operate as a national securities exchange registered under 
Section 6 of the Securities Exchange Act of 1934, as amended (the 
``Act'').\6\ The effective date of the Merger was October 1, 2008.
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    \5\ 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).
    \6\ 15 U.S.C. 78f.
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    As described more fully in the Merger filing, in connection with 
the Mergers, Amex demutualized by separating all trading rights from 
equity ownership in Amex. As part of the demutualization, all trading 
rights appurtenant to the Amex Regular Members' memberships or Options 
Principal Members' (``OPM'') memberships were cancelled. Immediately 
following the closing of the Mergers, those persons and entities that

[[Page 9652]]

were authorized to trade on the Amex before the closing of the Mergers 
were deemed to have satisfied applicable qualification requirements 
necessary to trade in NYSE Alternext's demutualized marketplace and 
were issued 86 Trinity Permits at no cost. The 86 Trinity Permit 
authorizes owners, lessees or nominees of Amex Regular Members or OPMs, 
Amex limited trading permit holders, and Amex associate members who 
were authorized to trade on the Amex immediately before the Mergers to 
continue to trade at NYSE Alternext's systems and facilities at 86 
Trinity Place, New York, New York (the ``86 Trinity Trading Systems''). 
NYSE Alternext recognizes the former Amex (i) owners, lessees, or 
nominees of Regular Members or OPMs, (ii) limited trading permit 
holders, and (iii) associate members as either NYSE Alternext member 
organizations or members, as applicable.
    In connection with the Merger, on December 1, 2008, NYSE Alternext 
relocated all equities trading conducted on its 86 Trinity Trading 
Systems to trading systems and facilities located at 11 Wall Street, 
New York, New York (the ``Equities Relocation''). The Exchange's equity 
trading systems and facilities at 11 Wall Street (the ``NYSE Alternext 
Trading Systems'') are operated by the NYSE on behalf of NYSE 
Alternext.\7\
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    \7\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63) (approving 
the Equities Relocation).
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    As part of the Equities Relocation, NYSE Alternext adopted NYSE 
Rules 1-1004, subject to such changes as necessary to apply the Rules 
to the Exchange, as the NYSE Alternext Equities Rules to govern trading 
on the NYSE Alternext Trading Systems (the ``Equities Rule 
filing'').\8\ The NYSE Alternext Equities Rules, which became operative 
on December 1, 2008, are substantially identical to the current NYSE 
Rules 1-1004 and the Exchange continues to update the NYSE Alternext 
Equities Rules as necessary to conform with rule changes to 
corresponding NYSE Rules filed by the NYSE.
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    \8\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63); Securities 
Exchange Act Release No. 58833 (October 22, 2008), 73 FR 64642 
(October 30, 2008) (SR-NYSE-2008-106); Securities Exchange Act 
Release No. 58839 (October 23, 2008), 73 FR 64645 (October 30, 2008) 
(SR-NYSEALTR-2008-03); Securities Exchange Act Release No. 59022 
(November 26, 2008), 73 FR 73683 (December 3, 2008) (SR-NYSEALTR-
2008-10); and Securities Exchange Act Release No. 59027 (November 
28, 2008), 73 FR 73681 (December 3, 2008) (SR-NYSEALTR-2008-11).
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    Similarly, NYSE Alternext will relocate all options trading 
conducted on the 86 Trinity Trading Systems to new facilities of NYSE 
Alternext to be located at 11 Wall Street, which facilities will 
utilize a trading system based on the options trading system used by 
NYSE Arca, Inc. (``NYSE Arca'') (``Options Relocation,'' and, together 
with the Equities Relocation, the ``Relocations'').
NYSE Alternext Equities Trading License Requirements
    To trade equities on NYSE Alternext Trading Systems, a member 
organization must meet NYSE Alternext membership qualifications and 
obtain a trading license pursuant to Rule 300--NYSE Alternext Equities. 
As set forth in more detail in the Merger filing, an 86 Trinity Permit 
holder is eligible to obtain an NYSE Alternext equities trading license 
or options trading permit (``ATP'') pursuant to an expedited ``waive 
in'' process up to the Options Relocation date. After the Equities 
Relocation, an 86 Trinity Permit entitles holders only to trade 
products other than those that have relocated to NYSE Alternext Trading 
Systems. As a result of the Equities Relocation, as well as the 
discontinuation of Exchange Traded Fund (``ETF'') and bond trading at 
86 Trinity Place, 86 Trinity Permits currently only entitle holders to 
trade listed options on NYSE Alternext. After the Options Relocation, 
the 86 Trinity Permits will be cancelled.\9\ Stated otherwise, an 86 
Trinity Permit may not be used to trade equities on NYSE Alternext 
Trading Systems and a trading license under Rule 300--NYSE Alternext 
Equities must be obtained. Upon the Options Relocation, a former 86 
Trinity Permit holder will need an ATP to trade options on NYSE 
Alternext Trading Systems and the 86 Trinity Permit will no longer 
entitle the holder to trade any products at NYSE Alternext.
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    \9\ 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).
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    In recognition of the fact that NYSE Alternext member organizations 
would be subject to different or additional requirements than were 
previously required under Amex rules, the Exchange adopted Rule 
300.10T. As described in the Equities Rule filing, Rule 300.10T 
provides NYSE Alternext member organizations that exchanged the 
equities portion of a valid 86 Trinity Permit for an equities trading 
license under Rule 300--NYSE Alternext Equities with a six-month grace 
period within which to comply with NYSE Alternext Equities Rules 2 
(defining the terms members and member organizations), 300-308 
(governing the admission of members and member organizations), 311 (the 
formation and approval of member organizations), 312 (changes within 
member organizations), and 313 (submission of partnership articles and 
corporate documents) (collectively, the ``NYSE Alternext Equities 
Member Organization Rules'').
    Among the differing requirements of the NYSE Alternext Equities 
Member Organization Rules as compared to the Amex rules that governed 
trading at 86 Trinity Trading Systems, a member organization must be a 
member of the Financial Industry Regulatory Authority, Inc. 
(``FINRA''). In addition, unlike the Amex rules, Rule 313.20--NYSE 
Alternext Equities requires member organizations to submit to the 
Exchange an opinion of counsel that a member corporation's stock is 
validly issued and outstanding and that the restrictions and provisions 
required by the Exchange on the transfer, issuance, conversion and 
redemption of its stock have been made legally effective.
    The current six-month grace period under Rule 300.10T begins to run 
from the date that the member organization receives its NYSE Alternext 
equities trading license in exchange for the equities portion of a 
valid 86 Trinity Permit. However, a subset of member organizations that 
have applied for a trading license are not FINRA members. As a result, 
the Exchange determined that it cannot issue an equities trading 
license to such member organizations at this time. Because these member 
organizations have not been issued a trading license in exchange for 
the equities portion of an 86 Trinity Permit, the grace period within 
which to comply with the NYSE Alternext Equities Member Organization 
Rules has not been triggered.
Proposed Amendment to Rule 300.10T
    To reflect the intent of the original adoption of Rule 300.10T, 
i.e., to provide member organizations with a grace period to comply 
with the NYSE Alternext Equities Member Organization Rules, the 
Exchange proposes to amend Rule 300.10T to provide for a six-month 
grace period for those member organizations that have applied for, but 
have not been issued a trading license.
    As proposed, to be eligible for the grace period, a member 
organization must be a holder of a valid 86 Trinity Permit as of the 
date that it applied for an equities trading license. In other words, 
once the 86 Trinity Permits are cancelled, i.e., the Options Relocation 
date, an Exchange member organization would not be eligible to apply 
for an

[[Page 9653]]

equities trading license and also benefit from the Rule 300.10T grace 
period. As proposed, if a member organization meets the amended 
eligibility threshold, it has six months from the earlier of either 
receiving the equity trading license (which is the current standard) or 
the cancellation of the 86 Trinity Permits (the Options Relocation 
date) within which to comply with the NYSE Alternext Equities 
Membership Rules, including the FINRA requirement. By adding the 
cancellation of the 86 Trinity Permits as a trigger for the six-month 
grace period, the proposed rule provides those member organizations 
that applied for a trading license, but were not issued a trading 
license because they are not currently FINRA members, time to meet the 
NYSE Alternext Equities Member Organization Rule requirements.
    In addition, the Exchange proposes deleting subsection (i) of the 
rule, as that language is not applicable for NYSE Alternext. The 
intention of Rule 300.10T was to provide a grace period for 86 Trinity 
Permit holders. This rule was added at the same time that the NYSE 
added its version of Rule 300.10T, which needed the Rule 2.10 
reference. Rule 2.10 provides that NYSE member organizations are deemed 
approved as NYSE Alternext member organizations. Because NYSE member 
organizations that were not previously Amex member organizations never 
received an 86 Trinity Permit, this prerequisite is inapplicable for 
the purpose of Rule 300.10T.
    As is currently part of the rule, if an NYSE Alternext member 
organization fails to meet the requirements of the NYSE Alternext 
Equities Member Organization Rules by the close of the grace period 
applicable to that member organization, the Exchange would either 
revoke the member organization's approval to trade, if a trading 
license has already been issued, or not issue a trading license. The 
Exchange may also commence proceedings to revoke the membership of such 
member organization.
2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Act \10\ which requires the rules of an exchange 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 is designed to support the principles of 
Section 11A(a)(1) \11\ of the Act in that it seeks to assure fair 
competition among brokers and dealers and among exchange markets and 
the practicability of brokers executing investor's orders in the best 
market.
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    \10\ 15 U.S.C. 78f(b)(5).
    \11\ 15 U.S.C. 78k-1(a)(1).
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    Specifically, the Exchange already permits a holder of a valid 86 
Trinity Permit to apply for and receive an equities trading license 
under Rule 300--NYSE Alternext Equities. This filing would simply 
provide those eligible NYSE Alternext member organizations with a valid 
86 Trinity Permit additional time to exchange their 86 Trinity Permit 
for an NYSE equity trading license and to comply with Exchange 
membership requirements without first without having to apply as a new 
member organization.

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 either solicited or received.

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

    Because the foregoing 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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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 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 Alternext has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \14\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6) \15\ permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. NYSE Alternext 
requests that the Commission waive the 30-day operative delay. The 
Exchange requests the 30-day operative delay because the Options 
Relocation date is imminent and is currently scheduled for March 2, 
2009, and the Exchange needs to immediately implement this rule change 
so that NYSE Alternext member organizations can meet the new rule 
requirements. For these reasons, the Commission believes that waiving 
the 30-day operative delay \16\ is consistent with the protection of 
investors and the public interest and designates the proposal operative 
upon filing.
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 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 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 e-mail to [email protected]. Please include 
File Number SR-NYSEALTR-2009-16 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-NYSEALTR-2009-16. 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

[[Page 9654]]

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 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 publicly available. All submissions 
should refer to File Number SR-NYSEALTR-2009-16 and should be submitted 
on or before March 25, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-4678 Filed 3-4-09; 8:45 am]
BILLING CODE 8011-01-P