[Federal Register Volume 74, Number 191 (Monday, October 5, 2009)]
[Notices]
[Pages 51203-51205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-23850]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60739; File No. SR-NYSEAMEX-2009-63]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by NYSE Amex LLC Permitting Affiliation With NYFIX Millennium 
L.L.C. and NYFIX Securities Corporation

September 29, 2009.

    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on September 22, 2009, NYSE Amex LLC (``NYSE Amex'' or the 
``Exchange'') filed

[[Page 51204]]

with the Securities and Exchange Commission (the ``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the self-regulatory organization. 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\ 15 U.S.C. 78a.
    \3\ 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 be affiliated with two registered broker-
dealer subsidiaries of NYFIX, Inc. (``NYFIX''), NYFIX Millennium L.L.C. 
(``NYFIX Millennium'') and NYFIX Securities Corporation (``NYFIX 
Securities''), for a period not to exceed six months and subject to 
certain limitations and obligations relating to the relationship.

II. Self-Regulatory Organization's Statement of the Purpose of, and the 
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 is making this submission in connection with the 
proposed acquisition of NYFIX by NYSE Technologies. On August 26, 2009, 
NYSE Technologies entered into an Agreement and Plan of Merger (as it 
may be amended from time to time, the ``Merger Agreement'') with NYFIX 
and CBR Acquisition Corp., a Delaware corporation and a wholly owned 
subsidiary of NYSE Technologies. Under the terms of the Merger 
Agreement, CBR Acquisition Corp. will merge with and into NYFIX, with 
NYFIX surviving the merger as a direct wholly owned subsidiary of NYSE 
Technologies (the ``Merger''). Following the Merger, both the Exchange 
and NYFIX will be indirect wholly owned subsidiaries of NYSE Euronext 
and affiliates.
    As a result of the Merger, NYSE Technologies will acquire, among 
other things, NYFIX's Transaction Services Division. In the U.S., the 
Transaction Services Division is currently comprised of two U.S. 
registered broker-dealer subsidiaries, NYFIX Millennium, which is also 
an alternative trading system registered under SEC Regulation ATS, and 
NYFIX Securities.\4\ Each has the Financial Industry Regulatory 
Authority (``FINRA''), an unaffiliated self-regulatory organization 
(``SRO''), as its designated examining authority. Neither broker-dealer 
is a member of the Exchange. The Exchange notes that there is 
competition in the market to provide introducing broker services to the 
Exchange and the Exchange believes that there will continue to be 
effective competition after the Merger.
---------------------------------------------------------------------------

    \4\ Outside of the U.S., the NYFIX Transaction Services Division 
also operates the desk agency execution business of NYFIX 
International in the U.K. and Euro Millennium, a multi-lateral 
trading facility for non-displayed liquidity in pan-European listed 
equities housed within NYFIX International. These services are not 
within the scope of the Exchange's Proposed Rule Change.
---------------------------------------------------------------------------

    For purposes of this proposed rule change, Routing Services shall 
mean any of the activities of NYFIX Millennium and NYFIX Securities 
which relate to routing to marketplaces that are not operated by NYFIX, 
orders (including NYFIX Millennium ``pass through'' orders) which flow 
through the matching facility on their way to an exchange, electronic 
communications network, or ATS,\5\ and NYFIX Securities' direct 
electronic market access and algorithmic trading products.
---------------------------------------------------------------------------

    \5\ These orders are only executed if they find a match at or 
within the national best bid and offer by guaranteeing customers the 
best available ask price when buying securities, and the best 
available bid price when selling securities. If there is not a 
match, these orders are immediately routed to their ultimate 
destination.
---------------------------------------------------------------------------

    The Exchange is currently exploring various alternatives for the 
Transaction Services Division. Because of the manner in which the 
Transaction Services Division may interact with the Exchange and its 
affiliates, which gives rise to concerns regarding (1) the potential 
for conflicts of interest in instances where an exchange is affiliated 
with a broker-dealer conducting an order routing business that may 
interact with the exchange itself, and (2) the potential for 
informational advantages that could place such an affiliated broker-
dealer at a competitive advantage vis-[agrave]-vis other non-affiliated 
broker-dealers, the Exchange proposes to be affiliated with NYFIX 
Millennium and NYFIX Securities for a period not to exceed six months 
and subject to the terms and conditions set out below.
a. Conditions
    Accordingly, the Exchange represents as follows, in each case for 
so long as the Exchange is affiliated with NYFIX Millennium and NYFIX 
Securities, with respect to the Routing Services:
    (1) Neither NYFIX Millennium nor NYFIX Securities are members of 
the Exchange nor will they become members of the Exchange.
    (2) NYFIX does not offer order routing services other than the 
Routing Services, and none of the Routing Services will be modified 
unless such modification is approved by the Commission.
    (3) NYFIX will not engage in proprietary trading.
    (4) NYFIX will not accept any new clients for its Routing Services 
after the Merger.
    (5) There will continue to be independent functionality of, and 
full public access to, NYSE facilities.
    (6) There will be a complete separation between NYFIX, on the one 
hand, and the Exchange and its affiliates, on the other (e.g., no 
shared office space, no shared employees, no shared systems).
    The Exchange may furnish to NYFIX the same information on the same 
terms that the Exchange makes available in the normal course of 
business to any other person. Specifically:
    (a) NYFIX must not be provided an information advantage concerning 
the operation of the Exchange or any of its facilities, particularly 
regarding changes and improvements to the trading systems, that are not 
available to the industry generally.
    (b) NYFIX will be prevented from having any advance knowledge of 
proposed changes or modifications to the operations of the Exchange or 
their facilities, including but not limited to advance knowledge of 
related filings by the Exchange pursuant to Rule 19b-4 of the 
Securities Exchange Act of 1934.\6\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78a.
---------------------------------------------------------------------------

    (c) NYFIX will not share employees or databases with the Exchange, 
any facility of the Exchange, or any other affiliate of the Exchange or 
their facilities, and will be housed in a separate office.
    (d) NYFIX will only be notified of any changes or improvements to 
any of the Exchange's operations or trading facilities in the same 
manner that other persons are notified of such changes or improvements;
    (e) NYFIX will not disclose any system or design specifications, or 
any other information, to any employees of the Exchange, any facility 
of the Exchange, or any other affiliate of the

[[Page 51205]]

Exchange or their facilities that would give NYFIX an unfair advantage 
over its competitors.
    (f) None of the Exchange, any facility of the Exchange, or any 
other affiliate of the Exchange or their facilities will disclose any 
system or design specifications, or any other information, to any 
employees of NYFIX or any affiliate of NYFIX that would give the 
Exchange, any other facility of the Exchange, any other affiliate of 
the Exchange, or NYFIX an unfair advantage over its competitors.
    The Exchange believes these measures effectively address the 
concerns noted above regarding the potential for conflicts of interest 
and informational advantages favoring NYFIX Millennium and NYFIX 
Securities vis-[agrave]-vis other non-affiliated market participants.
2. Statutory Basis
    The Exchange believes that this filing is consistent with Section 
6(b) \7\ of the Exchange Act,\8\ in general, and furthers the 
objectives of Section 6(b)(1),\9\ in particular, in that it enables the 
Exchange to be so organized as to have the capacity to be able to carry 
out the purposes of the Exchange Act and to comply, and to enforce 
compliance by its exchange members and persons associated with its 
exchange members, with the provisions of the Exchange Act, the rules 
and regulations thereunder, and the rules of the Exchange. The Exchange 
also believes that this filing furthers the objectives of Section 
6(b)(5) \10\ of the Exchange Act because the rules summarized herein 
would create a governance and regulatory structure that 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. 
In particular, the Proposed Rule Change sets forth certain conditions 
under which the Routing Services will be provided so as to assure that 
the potential for conflicts of interests and informational advantages 
are adequately addressed. The conditions under which the Exchange is 
permitted to be affiliated with the entities conducting the Routing 
Services will also be limited to no more than 6 months.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78a, et seq.
    \9\ 15 U.S.C. 78f(b)(1).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 No. SR-NYSEAMEX-2009-63 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 No. SR-NYSEAMEX-2009-63. 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 filing also will be available for 
inspection and copying at the principal office of NYSE Amex. 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 No. SR-NYSEAMEX-2009-63 and should be 
submitted on or before October 26, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-23850 Filed 10-2-09; 8:45 am]
BILLING CODE 8011-01-P