[Federal Register Volume 74, Number 233 (Monday, December 7, 2009)]
[Notices]
[Pages 64112-64114]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-29040]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61075; File No. SR-NYSE-2009-119]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC 
Extending the Operation of its Supplemental Liquidity Providers Pilot, 
Until the Earlier of the Securities and Exchange Commission's Approval 
To Make Such Pilot Permanent or March 30, 2010

November 30, 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 November 25, 2009, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II 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 extend the operation of its Supplemental 
Liquidity Providers Pilot (``SLP Pilot'' or ``Pilot'') (see Rule 107B), 
until the earlier of the Securities and Exchange Commission's approval 
to make such pilot permanent or March 30, 2010. 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, 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 the operation of its Supplemental 
Liquidity Providers Pilot \4\ approved by the Securities and Exchange 
Commission (``SEC'' or ``Commission'') to operate until November 30, 
2009, until the earlier of the SEC's approval to make such pilot 
permanent or March 30, 2010.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 58877 (October 29, 
2008), 73 FR 65904 (November 5, 2008) (SR-NYSE-2008-108) 
(establishing the SLP Pilot). See also Securities Exchange Act 
Release No. 59869 (May 6, 2009), 74 FR 22796 (May 14, 2009) (SR-
NYSE-2009-46) (extending the operation of the SLP Pilot to October 
1, 2009). See also Securities Exchange Act Release No. 60756 
(October 1, 2009), 74 FR 51628 (October 7, 2009) (SR-NYSE-2009-100) 
(extending the operation of the New Market Model and the SLP Pilots 
to November 30, 2009).
---------------------------------------------------------------------------

Background \5\
---------------------------------------------------------------------------

    \5\ The information contained herein is a summary of the NMM 
Pilot and the SLP Pilot, for a fuller description of those pilots 
see supra notes 1 and 2 [sic].
---------------------------------------------------------------------------

    In October 2008, the NYSE implemented significant changes to its 
market rules, execution technology and the rights and obligations of 
its market

[[Page 64113]]

participants all of which were designed to improve execution quality on 
the Exchange. These changes are all elements of the Exchange's enhanced 
market model referred to as the ``New Market Model'' (``NMM 
Pilot'').\6\ The SLP Pilot was launched in coordination with the NMM 
Pilot (see Rule 107B).
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 58845 (October 24, 
2008) 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46).
---------------------------------------------------------------------------

    As part of the NMM Pilot, NYSE eliminated the function of 
specialists on the Exchange creating a new category of market 
participant, the Designated Market Maker or DMM.\7\ Separately, the 
NYSE established the SLP Pilot, which established SLPs as a new class 
of market participants to supplement the liquidity provided by DMMs.\8\
---------------------------------------------------------------------------

    \7\ See NYSE Rule 103.
    \8\ See NYSE Rules 107B.
---------------------------------------------------------------------------

    The SLP Pilot is scheduled to end operation on November 30, 2009 or 
such earlier time as the Commission may determine to make the rules 
permanent. The Exchange is currently preparing a rule filing seeking 
permission to make the SLP Pilot permanent, but does not expect that 
filing to be completed and approved by the Commission before November 
30, 2009.\9\
---------------------------------------------------------------------------

    \9\ The NMM Pilot was scheduled to expire on November 30, 2009 
as well. On November 16, 2009 the Exchange filed to extend the NMM 
Pilot until March 30, 2010 (see Securities Exchange Act Release No. 
61031 (November 19, 2009) (SR-NYSE-2009-113) (extending the 
operation of the New Market Model Pilot to March 30, 2010).
---------------------------------------------------------------------------

Proposal To Extend the Operation of the SLP Pilot
    The NYSE established the SLP Pilot to provide incentives for 
quoting, to enhance competition among the existing group of liquidity 
providers, including the DMMs, and add new competitive market 
participants. The Exchange believes that the SLP Pilot, in coordination 
with the NMM Pilot, allows the Exchange to provide its market 
participants with a trading venue that utilizes an enhanced market 
structure to encourage the addition of liquidity, facilitate the 
trading of larger orders more efficiently and operates to reward 
aggressive liquidity providers. As such, the Exchange believes that the 
rules governing the SLP Pilot (Rule 107B) should be made permanent. 
Through this filing the Exchange seeks to extend the current operation 
of the SLP Pilot until March 30, 2010, in order to allow the Exchange 
to formally submit a filing to the Commission to convert the pilot rule 
to a permanent rule.
2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'') 
for this proposed rule change is the requirement under Section 6(b)(5) 
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. The Exchange 
believes that the instant filing is consistent with these principles 
because the SLP Pilot provides its market participants with a trading 
venue that utilizes an enhanced market structure to encourage the 
addition of liquidity and operates to reward aggressive liquidity 
providers. Moreover, the instant filing requesting an extension of the 
SLP Pilot will permit adequate time for: (i) The Exchange to prepare 
and submit a filing to make the rules governing the SLP Pilot 
permanent; (ii) public notice and comment; and (iii) completion of the 
19b-4 approval process.

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: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) by its terms, does not become operative for 30 days from the 
date on which it was filed, or such shorter time as the Commission may 
designate, if consistent with the protection of investors and the 
public interest, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the self-regulatory organization to submit to the 
Commission written notice of its intent to file the proposed rule 
change, along with a brief description and text of 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6)\12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing.
---------------------------------------------------------------------------

    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
The Commission notes that because the pilot program will expire on 
November 30, 2009, waiver of the operative delay is necessary so that 
no interruption of the pilot program will occur. In addition, the 
Commission notes that the Exchange has requested extensions of the 
pilot to allow the Exchange time to formally request permanent approval 
for the pilot. Therefore, the Commission designates the proposal 
operative upon filing.\14\
---------------------------------------------------------------------------

    \14\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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-2009-119 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary,

[[Page 64114]]

Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549-1090.

All submissions should refer to File Number SR-NYSE-2009-119. 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 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 
available publicly. All submissions should refer to File Number SR-
NYSE-2009-119 and should be submitted on or before December 28, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-29040 Filed 12-4-09; 8:45 am]
BILLING CODE 8011-01-P