[Federal Register Volume 76, Number 83 (Friday, April 29, 2011)]
[Notices]
[Pages 24074-24076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-10413]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64335; File No. SR-NYSEAmex-2011-25]


Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 72(d) 
Regarding Agency Cross Transactions

April 25, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\, and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on April 19, 2011, NYSE Amex LLC (``NYSE Amex'' 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 Exchange. 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.
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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 72(d)--NYSE Amex Equities with 
respect to agency cross transactions. The text of the proposed rule 
change is available at the Exchange, at http://www.nyse.com, at the 
Commission's Public Reference Room, and at http://www.sec.gov.

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 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

[[Page 24075]]

the most significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 72(d)--NYSE Amex Equities with 
respect to agency cross transactions.\3\
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    \3\ The provisions of Rule 72 are in effect during a pilot set 
to end on August 1, 2011. See Securities Exchange Act Release Nos. 
58673 (September 29, 2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-
2008-60 and SR-Amex-2008-62) (approving the Exchange's merger with 
the New York Stock Exchange LLC (``NYSE'')) and 59022 (November 26, 
2008), 73 FR 73683 (December 3, 2008) (SR-NYSEALTR-2008-10) 
(conforming the Exchange's rules with those of NYSE, including 
establishing the ``New Market Model Pilot'' or ``Pilot''). See also 
Securities Exchange Act Release Nos. 60758 (October 1, 2009), 74 FR 
51639 (October 7, 2009) (SR-NYSEAmex-2009-65) (extending Pilot to 
November 30, 2009); 61030 (November 19, 2009), 74 FR 62365 (November 
27, 2009) (SR-NYSEAmex-2009-83) (extending Pilot to March 30, 2010); 
61725 (March 17, 2010), 75 FR 14223 (March 24, 2010) (SR-NYSEAmex-
2010-28) (extending Pilot to September 30, 2010); 62820 (September 
1, 2010), 75 FR 54935 (September 9, 2010) (SR-NYSEAmex-2010-86) 
(extending Pilot to January 31, 2011); and 63620 (December 29, 
2010), 76 FR 598 (January 5, 2011) (SR-NYSEAmex-2010-122) (extending 
Pilot to August 1, 2011).
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    Under Rule 72(d)--NYSE Amex Equities, when a member \4\ has an 
order to buy and an order to sell an equivalent amount of the same 
security, and both orders are for 25,000 shares or more, the member may 
``cross'' those orders at a price at or within the Exchange best bid or 
offer and does not have to break up the cross transaction to trade with 
any bids or offers previously displayed at the Exchange best bid or 
offer, including any interest with priority (a ``72(d) crossing 
transaction'').\5\ Rule 72(d)--NYSE Amex Equities further provides that 
a member can effect a 72(d) crossing transaction only for the accounts 
of persons who are not members or member organizations. Accordingly, a 
Floor broker cannot use this provision for customers who are 
unaffiliated NYSE Amex members or member organizations.
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    \4\ The reference to ``member'' in Rule 72(d)--NYSE Amex 
Equities and this rule proposal means only Floor broker members. 
Designated Market Makers (``DMMs''), while members of the Exchange, 
do not have any agency relationships, and are therefore not able to 
effect this type of cross.
    \5\ A transaction effected at the cross price in reliance on 
Rule 72(d)--NYSE Amex Equities is printed as a ``stopped stock'' to 
denote that the transaction was outside of normal market procedures. 
See Rule 128A.16--NYSE Amex Equities. The Exchange notes that block-
sized crosses outside of the Exchange best bid or offer are 
addressed under Rule 127--NYSE Amex Equities.
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    The Exchange proposes to amend Rule 72(d)--NYSE Amex Equities to 
change the required minimum share size from 25,000 and instead require 
that both the order to buy and the order to sell be ``block'' orders, 
which the Exchange proposes to define for purposes of Rule 72 as at 
least 10,000 shares or a quantity of stock having a market value of 
$200,000 or more, whichever is less.\6\ This proposed change would more 
closely align agency cross transactions with other ``block'' orders 
with respect to the minimum applicable order size.\7\
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    \6\ The Exchange proposes to include the ``block'' definition as 
new Supplementary Material .10 to Rule 72(d)--NYSE Amex Equities.
    \7\ See, e.g., Rule 104--NYSE Amex Equities and Rule 127--NYSE 
Amex Equities, which provide that a ``block'' shall be at least 
10,000 shares or a quantity of stock having a market value of 
$200,000 or more, whichever is less.
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    The Exchange further proposes to amend Rule 72(d)--NYSE Amex 
Equities to modify the current restriction that a member may not effect 
a 72(d) crossing transaction for the account of a member or member 
organization. The Exchange instead proposes to conform Rule 72(d)--NYSE 
Amex Equities to Rule 90--NYSE Amex Equities, and restrict a member 
from effecting a 72(d) crossing transaction for the account of such 
member or member organization, an account of an associated person, or 
an account with respect to which the member, member organization or 
associated person thereof exercises investment discretion. This 
proposed change would enable Floor brokers to effect 72(d) crossing 
transactions on behalf of unaffiliated members or member organizations.
    The Exchange also proposes to update a reference to the term 
``priority'' within Rule 72(d)--NYSE Amex Equities, which currently 
provides that a member who is providing a better price to one side of 
the cross transaction must trade with all other market interest having 
priority at that price before trading with any part of the cross 
transaction. The Exchange proposes to modify this requirement so that 
the member seeking to provide price improvement must instead trade with 
all other displayed market interest on the Exchange at that price 
before trading with the cross transaction. The proposed change would 
expand protection for interest on the Display Book[supreg] \8\ by 
requiring the member who is providing price improvement to trade not 
only with priority interest, but with all displayed interest in the 
Display Book.\9\ The Exchange proposes to similarly incorporate this 
change in Example 1 within Rule 72(d)--NYSE Amex Equities by deleting 
the clause related to ``priority'' and replacing it with a reference to 
``displayed.''
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    \8\ The Display Book system is an order management and execution 
facility. The Display Book receives and displays orders to the DMMs, 
contains order information and provides a mechanism to execute and 
report transactions and publish the results to the Consolidated 
Tape. The Display Book is connected to a number of other Exchange 
systems for the purposes of comparison, surveillance and reporting 
information to customers and other market data and national market 
systems.
    \9\ The Exchange notes that displayed interest does not include 
the reserve portion of any orders on the Display Book. This proposed 
amendment to Rule 72(d) does not change the obligation of the member 
providing price improvement to comply with Rule 90.
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    Finally, the Exchange proposes to remove the reference to 
``prevailing quotation'' within Rule 72(d)--NYSE Amex Equities and 
replace it with a reference to the ``Exchange best bid or offer.'' This 
change would provide clarity regarding the price at which a member 
could effect a 72(d) crossing transaction, but does not alter the 
meaning of the current rule or the mechanics of a 72(d) crossing 
transaction.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\10\ in general, and 
furthers the objectives of Section 6(b)(5),\11\ in particular, in that 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanism of a free and open market and a national market system. 
Specifically, the proposed rule change would more closely align Rule 
72(d)--NYSE Amex Equities with other Exchange rules concerning block-
sized orders and the accounts for which agency orders may be crossed 
while also expanding protection for interest on the Display Book by 
requiring that such interest must be executed before a member could 
break up an agency cross.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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 that is not necessary or appropriate 
in furtherance of the purposes of the Act.

[[Page 24076]]

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\ 
Because the 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 prior to 
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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend 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-2011-25 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-2011-25. 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 the 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-
NYSEAmex-2011-25 and should be submitted on or before May 20, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-10413 Filed 4-28-11; 8:45 am]
BILLING CODE 8011-01-P