[Federal Register Volume 74, Number 215 (Monday, November 9, 2009)]
[Notices]
[Pages 57722-57724]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-26882]


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SECURITIES AND EXCHANGE COMMISSION

Release No. 34-60916; File No. SR-NYSEAmex-2009-78]


 Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Amex LLC Amending 
Exchange Rule 62 to Support Quoting and Trading in a Minimum Price 
Variation Below $.01 for Securities Traded on the Exchange for Orders 
or Interest Priced Below $1.00 Per Share

November 3, 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 October 27, 2009, NYSE Amex LLC (``Exchange'' or ``NYSE Amex'') 
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 Amex 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 amend Exchange Rule 62 (Variations) to 
support quoting and trading in a minimum price variation below $.01 for 
securities traded on the Exchange for orders or interest priced below a 
[sic] $1.00 per share. The text of the proposed rule change is 
available at the Exchange, the Commission's Public Reference Room, and 
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,

[[Page 57723]]

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 proposing to amend NYSE Amex Equities Rule 62 
(Variations) to support quoting and trading in a minimum price 
variation below $.01 for securities traded on the Exchange for orders 
or interest (``orders/interest'') priced below a [sic] $1.00 per share. 
The proposed amendment to NYSE Amex Equities Rule 62 will enable the 
Exchange to quote and execute orders/interest in sub-penny increments 
of $0.0001 for those securities that are priced below $1.00 per share.
    The Exchange notes that parallel changes are proposed to be made to 
the rules of New York Stock Exchange LLC.\4\
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    \4\ See SR-NYSE-2009-107.
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Background
    NYSE Amex Equities Rules establish minimum price variations for 
quoting and entry of orders in equity securities depending on the price 
of the orders/interest. Currently, the minimum price variations range 
from ten cents (.10) for orders/interest priced $100,000 or greater, to 
one cent for orders/interest priced between $1.00 and $99,999 and one 
one-thousandth of a cent (.0001) for orders/interest priced less than 
$1.00.\5\ Significantly for this rule filing, although Exchange systems 
accept orders/interest priced below $1.00 in sub-penny increments, the 
Exchange does not quote or execute orders/interest in these 
increments.\6\ Instead, the second paragraph of the Supplementary 
Material of NYSE Amex Equities Rule 62 sets forth the procedures for 
orders/interest that contains a sub-penny component.
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    \5\ See NYSE Amex Equities Rule 62 Supplementary Material first 
paragraph which provides in pertinent part:
    \6\ See Securities Exchange Act Release No. 59025 (November 26, 
2008), 73 FR 73769 (December 3, 2008) (SR-NYSE-2008-123) [sic].

------------------------------------------------------------------------
                                                           Minimum price
               Price of order or interest                    variation
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Less Than $1.00.........................................          $.0001
$1.00 to 99,999.99......................................            $.01
$100,000 or greater.....................................            $.10
------------------------------------------------------------------------

    Specifically, when an order/interest is received on NYSE Amex that 
contains a sub-penny component, the Exchange rounds the incoming order/
interest either up or down to the nearest whole cent increment.\7\ 
Thus, the price of an incoming bid is rounded down to the next round 
penny and the price of an incoming offer is rounded up to the next 
round penny. This rounding is completed before the order is quoted, 
traded, or routed to another market center, and the rounded price is 
used for all routing and execution decisions. In fact, the rounded 
price assigned to the order or quotation is used for all order handling 
purposes including when the order is sent to Exchange trading systems 
and the Consolidated Quotation System.
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    \7\ See NYSE [sic] Rule 62 Supplementary Material second 
paragraph.
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Proposed Amendment to NYSE Amex Equities Rule 62
    Through this filing, the Exchange seeks to eliminate the above 
described order handling procedures for orders/interest submitted to 
the Exchange that contain a sub-penny component. Instead, the Exchange 
proposes to quote, trade or route to another market center orders/
interest that contain a sub-penny component without first rounding the 
orders/interest. The Exchange therefore proposes to delete 
Supplementary Material .20 from NYSE Rule 62 because Exchange 
technology can [sic] is capable of quoting and executing orders/
interest in sub-penny increments of $0.0001 for those securities that 
are priced below $1.00 per share. The Exchange further proposes to 
delete the duplicate captioning of ``NYSE Amex Equities'' in Rule 62.
    The Exchange will commence implementation of the systemic changes 
to allow Exchange systems to quote, trade or route to another market 
center orders/interest that contain a sub-penny component on or about 
November 27, 2009. The Exchange intends to progressively implement 
these systemic changes on a security by security basis as it gains 
experience with the new technology until it is operative in all 
securities traded on the Floor. During the implementation, the Exchange 
will identify on its website which securities have been transitioned to 
the new system.
2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'') 
\8\ for this proposed rule change is the requirement under Section 
6(b)(5) \9\ that an Exchange have rules that are designed to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, 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) \10\ in 
that it seeks to assure economically efficient execution of securities 
transactions, make it practicable for brokers to execute investors' 
orders in the best market and provide an opportunity for investors' 
orders to be executed without the participation of a dealer. The 
Exchange believes that the instant proposal is in keeping with these 
principles in that it seeks to amend NYSE Amex Equities Rule 62 to 
provide for executions of interest entered on the Exchange in 
increments below $.01, consistent with the provisions of Rule 612 of 
Regulation NMS \11\ which permits markets to accept, rank and display 
orders priced less than $1.00 per share in a minimum pricing increment 
of $0.0001.
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    \8\ 15 U.S.C. 78a.
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ 15 U.S.C. 78k-1(a)(1).
    \11\ 17 CFR 242.612.
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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 \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. 
The Exchange has satisfied this requirement.

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[[Page 57724]]

    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. The Exchange requests 
that the Commission waive the 30-day operative delay so that it may 
immediately provide another competitive venue for market participants 
to submit orders priced less than $1.00 per share in a minimum pricing 
increment of $0.0001 for execution. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest because it will provide another 
competitive venue for execution of orders priced in sub-penny 
increments of $0.0001 for securities priced below $1.00 per share.\16\ 
For these reasons, the Commission designates that the proposed rule 
change become 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 proposal's impact on efficiency, 
competition, and capital formation. 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-NYSEAmex-2009-78 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-NYSEAmex-2009-78. 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 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-NYSEAmex-2009-78 and should 
be submitted on or before November 30, 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. E9-26882 Filed 11-6-09; 8:45 am]
BILLING CODE 8011-01-P