[Federal Register Volume 74, Number 187 (Tuesday, September 29, 2009)]
[Notices]
[Pages 49907-49909]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-23491]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60712; File No. SR-NYSE-2009-97]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC 
Extending Until October 4, 2009, the Operation of Interim NYSE Rule 128 
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

September 23, 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 September 22, 2009, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
NYSE has designated the proposed rule change as constituting a 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 extend until October 4, 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. The text of the proposed rule 
change is available at the Exchange, the Commission's Public Reference 
Room, and http://www.nyse.com.

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 extend until October 4, 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,\4\ 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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    \4\ 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.\5\ On July 28, 2008, 
the Exchange filed with the SEC a request to extend the operation of 
interim Rule 128 until October 1, 2008 \6\ 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. On 
October 1, 2008,\7\ the Exchange filed with the SEC a further request 
to extend the operation of interim Rule 128 until January 9, 2009 in 
order to consider integrating similar standards into the amendment to 
Rule 128. On January 9, 2009,\8\ the Exchange filed with the SEC a 
request to extend the operation of interim Rule 128 until March 9, 
2009, indicating that the Exchange was still in the process of 
reviewing the Nasdaq rule with a view towards incorporating certain 
provisions into the amendment of interim Rule 128.
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    \5\ See Securities Exchange Act Release No. 57826 (May 15, 
2008), 73 FR 29802 (May 22, 2008) (SR-NASDAQ-2007-001).
    \6\ See Securities Exchange Act Release No. 58328 (August 8, 
2008), 73 FR 47247 (August 13, 2008) (SR-NYSE-2008-63).
    \7\ See Securities Exchange Act Release No. 58732 (October 3, 
2008), 73 FR 61183 (October 15, 2008) (SR-NYSE-2008-99).
    \8\ See Securities Exchange Act Release No. 59255 (January 15, 
2009) 74 FR 4496 (January 26, 2009) (SR-NYSE-2009-02).
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    On February 10, 2009, NYSE Arca submitted a proposal to the SEC to 
amend its clearly erroneous rule. The NYSE Arca proposed rule differed 
in certain respects from the Nasdaq clearly erroneous rule. On March 9, 
2009, the Exchange filed with the SEC a request to extend the operation 
of interim Rule 128 until June 9, 2009 \9\ to finalize review of NYSE 
Arca's proposed amended CEE rule, which included market wide CEE 
initiatives, to determine if it was appropriate to incorporate such 
provisions into the Rule 128 amendment.
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    \9\ See Securities Exchange Act Release No. 59581 (March 9, 
2009) 74 FR 12431 (March 24, 2009) (SR-NYSE-2009-26).
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    Thereafter, on April 24, 2009, NYSE Arca filed a revised rule 
change with the Commission to amend its clearly erroneous rule (NYSE 
Arca Rule 7.10).\10\ The Exchange was in the process of finalizing its 
review of NYSE Arca's revised CEE rule change, which also included 
market wide CEE initiatives, to determine if it was appropriate to 
incorporate all such provisions into NYSE's interim Rule 128 amendment. 
On June 9, 2009, the Exchange filed with the SEC a request to extend 
the

[[Page 49908]]

operation of interim Rule 128 until July 15, 2009 \11\ to finalize 
review of NYSE Arca's proposed amended CEE rule. On July 15, 2009 \12\ 
the Exchange filed with the SEC a request to extend the operation of 
interim Rule 128 until August 1, 2009 to finalize review of NYSE Arca's 
proposed amended CEE rule. On July 31, 2009 the Exchange filed with the 
SEC a request to extend the operation of interim Rule 128 until August 
10, 2009 \13\ to finalize review of NYSE Arca's proposed amended CEE 
rule. On August 11, 2009 the Exchange filed with the SEC a request to 
extend the operation of interim Rule 128 until August 21, 2009 \14\ to 
finalize review of NYSE Arca's proposed amended CEE rule. On August 21, 
2009 the Exchange filed with the SEC a request to extend the operation 
of interim Rule 128 until August 31, 2009 \15\ to finalize review of 
NYSE Arca's proposed amended CEE rule. On August 31, 2009 the Exchange 
filed with the SEC a request to extend the operation of interim Rule 
128 until September 8, 2009 \16\ to finalize review of NYSE Arca's 
proposed amended CEE rule. On September 8, 2009 the Exchange filed with 
the SEC a request to extend the operation of interim Rule 128 until 
September 15, 2009 \17\ to finalize review of NYSE Arca's proposed 
amended CEE rule. On September 15, 2009 the Exchange filed with the SEC 
a request to extend the operation of interim Rule 128 until September 
22, 2009 \18\ to finalize review of NYSE Arca's proposed amended CEE 
rule.
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    \10\ See Securities Exchange Act Release No. 59838 (April 28, 
2009) 74 FR 20767 (May 5, 2009) (SR-NYSEArca-2009-36) (See NYSE Arca 
Rule 7.10).
    \11\ See Securities Exchange Act Release No. 60131 (June 17, 
2009) 74 FR 30196 (June 24, 2009) (SR-NYSE-2009-57).
    \12\ See Securities Exchange Act Release No. 60312 (July 15, 
2009) 74 FR 36298 (July 22, 2009) (SR-NYSE-2009-70).
    \13\ See Securities Exchange Act Release No. 60419 (August 7, 
2009) 74 FR 39987 (August 10, 2009) (SR-NYSE-2009-79).
    \14\ See Securities Exchange Act Release No. 60478 (August 11, 
2009) 74 FR 41769 (August 18, 2009) (SR-NYSE-2009-81).
    \15\ See Securities Exchange Act Release No. 60563 (August 21, 
2009) 74 FR 44423 (August 28, 2009) (SR-NYSE-2009-87).
    \16\ See Securities Exchange Act Release No. 60597 (August 31, 
2009) 74 FR 46281 (September 8, 2009) (SR-NYSE-2009-92).
    \17\ See Securities Exchange Act Release No. 60649 (September 
10, 2009) 74 FR 47846 (September 17, 2009) (SR-NYSE-2009-93).
    \18\ See Securities Exchange Act Release No. 60678 (September 
16, 2009) 74 FR 48330 (September 22, 2009) (SR-NYSE-2009-95).
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    The Exchange anticipates finalizing proposed rule text of its 
clearly erroneous execution rule shortly, and is, therefore, requesting 
to extend the operation of interim Rule 128 until October 4, 2009. 
Prior to October 4, 2009, the Exchange intends to formally file a 19b-4 
rule change amending interim Rule 128.
1. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'') 
\19\ for this proposed rule change is the requirement under Section 
6(b)(5) \20\ 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.
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    \19\ 15 U.S.C. 78f(a) [sic].
    \20\ 15 U.S.C. 78f(b)(5).
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    As articulated more fully in the ``Purpose'' Section 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 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.

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 \21\ and Rule 19b-
4(f)(6) thereunder.\22\
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 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. 
The Commission has determined to waive the five-day pre-filing 
period in this case.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \23\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6) \24\ permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. NYSE requests that the 
Commission waive the 30-day operative delay because the Exchange 
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. NYSE notes that immediate effectiveness of the 
proposed rule change will immediately and timely enable 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 
Commission believes that waiving the 30-day operative delay \25\ is 
consistent with the protection of investors and the public interest 
because such waiver will permit the Exchange to continue operation of 
interim NYSE Rule 128 on an uninterrupted basis, and therefore 
designates the proposal operative upon filing.
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    \23\ 17 CFR 240.19b-4(f)(6).
    \24\ 17 CFR 240.19b-4(f)(6).
    \25\ 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-NYSE-2009-97 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission,

[[Page 49909]]

100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2009-97. 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 filings 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-NYSE-2009-97 and should be 
submitted on or before October 20, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
Florence E. Harmon,
Deputy Secretary.
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    \26\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E9-23491 Filed 9-28-09; 8:45 am]
BILLING CODE 8010-01-P