[Federal Register Volume 75, Number 109 (Tuesday, June 8, 2010)]
[Notices]
[Pages 32529-32531]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13765]



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SECURITIES AND EXCHANGE COMMISSION



[Release No. 34-62209; File No. SR-NYSEArca-2010-42]




Self-Regulatory Organizations; Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Amending Rule 

6.82



June 2, 2010.

    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 May 18, 2010, NYSE Arca, Inc. (``NYSE Arca'' or the 

``Exchange'') filed 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.

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    \1\ 15 U.S.C.78s(b)(1).

    \2\ 15 U.S.C. 78a.

    \3\ 17 CFR 240.19b-4.

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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 6.82 by revising the minimum 

financial requirements of Lead Market Makers. The text of the proposed 

rule change is below. Proposed new language is italicized; proposed 

deletions are in brackets:



Rules of NYSE Arca, Inc.



* * * * *

Rule 6.82. Lead Market Makers

    (a)-(b) No Change

    (c) Obligations of Lead Market Makers:

    Each LMM must meet the following obligations:

    (1)-(11) No Change

    (12) Maintain a cash or liquid asset position of at least 

$1,000,000. [$350,000, plus $25,000 for each issue over 8 issues that 

has been allocated to the LMM.] In the event that two or more LMMs are 

associated with each other and deal for the same LMM account, this 

requirement will apply to such LMMs collectively, rather than to each 

LMM individually;

    (13)-(14) No Change

    (d)-(h) No Change

* * * * *



[[Page 32530]]



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 Exchange 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 these 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 aspects of such 

statements.



A. Self-Regulatory Organization's Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule Change



1. Purpose

    The purpose of this filing is to revise Rule 6.82. Specifically, 

NYSE Arca proposes to revise the minimum financial requirements of a 

Lead Market Maker (``LMM'') contained in Rule 6.82(c)(12).

Minimum Financial Requirement for LMMs

    LMMs on NYSE Arca are required to maintain a cash or net liquid 

asset position of at least $350,000. In addition, LMMs that have more 

than eight allocated issues are required to have an additional $25,000 

in cash or net liquid assets for each additional allocated issue. The 

Exchange now proposes that instead of the base minimum financial 

requirement of $350,000 plus an additional $25,000 for each issue over 

eight, all LMMs will now be required to maintain cash or net 

liquidating balance of at least $1,000,000 (``$1 million''). The $1 

million requirement will apply regardless of the number of issues an 

LMM is allocated.

    Establishing a $1 million minimum financial requirement, applicable 

to LMMs regardless of the number of issues they may be allocated, is 

consistent with the financial obligations rules for Options Specialists 

on NYSE Amex LLC.\4\ The rights and obligations of LMMs pursuant to the 

rules of NYSE Arca \5\ are substantially similar to the rights and 

obligations of Specialists contained in the rules of NYSE Amex.\6\ 

Accordingly, establishing a $1 million minimum financial requirement 

for Arca would further harmonize the rules of the two exchanges.

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    \4\ See NYSE Amex Rule 927NY(c)(10).

    \5\ See NYSE Arca Rules 6.82(c)-(d).

    \6\ See NYSE Amex Rules 927NY(c)-(d).

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    The Exchange notes that the proposed requirement to maintain at 

least $1 million in cash or liquid assets represents only the minimum 

financial obligation of an LMM. When allocating options issues to LMMs, 

the Exchange takes into consideration the ``adequacy of capital'' \7\ 

of each LMM and could require an LMM to have a cash or liquid assets 

balance in excess of the $1 million, as a condition of being allocated 

a given options issue(s). Also, the Exchange may reallocate an options 

issue(s) if an LMM is to incur a material change to its financial 

situation.\8\ Financial requirements established by the Exchange as a 

condition of issue allocation are separate from the $1 million minimum 

financial requirement of Rule 6.8(c)(12).

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    \7\ See NYSE Arca Rule 6.82(e)(1).

    \8\ See NYSE Arca Rule 6.82(f)(1)(B).

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    In addition to any LMM-specific financial obligation or requirement 

established by NYSE Arca, LMMs must maintain net capital sufficient to 

comply with the requirements of Exchange Act Rule 15c3-1.

    The Exchange has conducted an analysis of financial positions for 

all OTP Holders presently registered as an LMM. Based on this analysis, 

the Exchange has determined that certain LMMs will realize a decrease 

in their present minimum financial requirement, while others may 

realize an increase. However, due to the fact that LMMs are represented 

by highly capitalized OTP Holders, the Exchange has concluded that any 

increase in the minimum financial requirement will not impose undue 

hardships on any OTP Holders at this time. In addition, the Exchange 

does not believe that the change to the minimum financial requirement 

creates an unnecessary burden, or onerous barrier to entry, for OTP 

Holders who in the future may seek approval to operate as an LMM.

2. Statutory Basis

    The Exchange believes that its proposal is consistent with Section 

6(b) of the Securities Exchange Act of 1934 (the ``Act''),\9\ in 

general, and furthers the objectives of Section 6(b)(5) of the Act,\10\ 

in particular, in that it 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. This rule change 

is designed to make the minimum financial requirement for LMMs 

consistent with similar requirements at NYSE Amex while still 

maintaining a standard designed to ensure that OTP Holders on NYSE Arca 

are adequately capitalized to fulfill their obligations as LMMs.

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    \9\ 15 U.S.C. 78f(b).

    \10\ 15 U.S.C. 78f(b)(5).

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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 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



    Written comments were neither solicited nor 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 \11\ and Rule 19b-

4(f)(6) thereunder.\12\

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    \11\ 15 U.S.C. 78s(b)(3)(A).

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

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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-NyseArca-2010-42.



[[Page 32531]]



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-NYSEArca-2010-42. 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 Web site 

viewing and printing 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 

available publicly. All submissions should refer to File Number SR-

NYSEArca-2010-42 and should be submitted on or before June 29, 2010.



    For the Commission, by the Division of Market Regulation, 

pursuant to delegated authority.\13\

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    \13\ 17 CFR 200.30-3(a)(12).

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Florence E. Harmon,

Deputy Secretary.

[FR Doc. 2010-13765 Filed 6-7-10; 8:45 am]

BILLING CODE 8010-01-P