[Federal Register Volume 76, Number 251 (Friday, December 30, 2011)]
[Notices]
[Pages 82326-82327]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-33580]
[[Page 82326]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66042; File No. SR-NYSEAmex-2011-102]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change Extending the
Operation of Its New Market Model Pilot Until the Earlier of Securities
and Exchange Commission Approval To Make Such Pilot Permanent or July
31, 2012
December 23, 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 December 16, 2011, NYSE Amex LLC (the ``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 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\ 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 extend the operation of its New Market
Model Pilot, currently scheduled to expire on January 31, 2012, until
the earlier of Securities and Exchange Commission (``Commission'')
approval to make such pilot permanent or July 31, 2012. 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 New Market
Model Pilot (``NMM Pilot'') that was adopted pursuant to its merger
with the New York Stock Exchange LLC (``NYSE'').\3\ The NMM Pilot was
approved to operate until October 1, 2009. The Exchange filed to extend
the operation of the Pilot to November 30, 2009, March 30, 2010,
September 30, 2010, January 31, 2011, August 1, 2011, and January 31,
2012, respectively.\4\ The Exchange now seeks to extend the operation
of the NMM Pilot, currently scheduled to expire on January 31, 2012,
until the earlier of Commission approval to make such pilot permanent
or July 31, 2012.
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\3\ NYSE Euronext acquired The Amex Membership Corporation
(``AMC'') pursuant to an Agreement and Plan of Merger, dated January
17, 2008 (the ``Merger''). In connection with the Merger, the
Exchange's predecessor, the American Stock Exchange LLC (``Amex''),
a subsidiary of AMC, became a subsidiary of NYSE Euronext called
NYSE Alternext US LLC. See Securities Exchange Act Release No. 58673
(September 29, 2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-2008-60
and SR-Amex-2008-62) (approving the Merger). Subsequently NYSE
Alternext US LLC was renamed NYSE Amex LLC and continues to operate
as a national securities exchange registered under Section 6 of the
Securities Exchange Act of 1934, as amended (the ``Act''). See
Securities Exchange Act Release No. 59575 (March 13, 2009), 74 FR
11803 (March 19, 2009) (SR-NYSEALTR-2009-24).
\4\ See Securities Exchange Act Release No. 60758 (October 1,
2009), 74 FR 51639 (October 7, 2009) (SR-NYSEAmex-2009-65). See also
Securities Exchange Act Release Nos. 61030 (November 19, 2009), 74
FR 62365 (November 27, 2009) (SR-NYSEAmex-2009-83); 61725 (March 17,
2010), 75 FR 14223 (March 24, 2010) (SR-NYSEAmex-2010-28); 62820
(September 1, 2010), 75 FR 54935 (September 9, 2010) (SR-NYSEAmex-
2010-86); 63615 (December 29, 2010), 76 FR 611 (January 5, 2011)
(SR-NYSEAmex-2010-123) and 64773 (June 29, 2011), 76 FR 39453 (July
6, 2011) (SR-NYSEAmex-2011-43).
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The Exchange notes that parallel changes are proposed to be made to
the rules of NYSE.\5\
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\5\ See SR-NYSE-2011-65.
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Background \6\
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\6\ The information contained herein is a summary of the NMM
Pilot. See Securities Exchange Act Release No. 58845 (October 24,
2008), 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46) for a fuller
description.
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In December 2008, NYSE Amex implemented significant changes to its
equities market rules, execution technology and the rights and
obligations of its equities market 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 that it
implemented through the NMM Pilot.
As part of the NMM Pilot, NYSE Amex eliminated the function of
equity specialists on the Exchange creating a new category of market
participant, the Designated Market Maker or DMM.\7\ The DMMs, like
specialists, have affirmative obligations to make an orderly market,
including continuous quoting requirements and obligations to re-enter
the market when reaching across to execute against trading interest.
Unlike specialists, DMMs have a minimum quoting requirement \8\ in
their assigned securities and no longer have a negative obligation.
DMMs are also no longer agents for public customer orders.\9\
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\7\ See NYSE Amex Equities Rule 103.
\8\ See NYSE Amex Equities Rule 104.
\9\ See NYSE Amex Equities Rule 60; see also NYSE Amex Equities
Rules 104 and 1000.
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In addition, the Exchange implemented a system change that allowed
DMMs to create a schedule of additional non-displayed liquidity at
various price points where the DMM is willing to interact with interest
and provide price improvement to orders in the Exchange's system. This
schedule is known as the DMM Capital Commitment Schedule (``CCS'').\10\
CCS provides the Display Book[supreg] \11\ with the amount of shares
that the DMM is willing to trade at price points outside, at and inside
the Exchange Best Bid or Best Offer (``BBO''). CCS interest is separate
and distinct from other DMM interest in that it serves as the interest
of last resort.
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\10\ See NYSE Amex Equities Rule 1000.
\11\ The Display Book system is an order management and
execution facility. The Display Book system receives and displays
orders to the DMMs, contains the order information, and provides a
mechanism to execute and report transactions and publish the results
to the Consolidated Tape. The Display Book system 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.
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The NMM Pilot further modified the logic for allocating executed
shares among market participants having trading interest at a price
point upon execution of incoming orders. The modified logic rewards
displayed orders that establish the Exchange's BBO. During the
operation of the NMM Pilot orders, or portions thereof, that establish
priority \12\ retain that priority until the portion of the order that
established priority is exhausted. Where no one order has established
priority, shares are distributed among all market participants on
parity.
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\12\ See NYSE Amex Equities Rule 72(a)(ii).
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The NMM Pilot was originally scheduled to end operation on October
[[Page 82327]]
1, 2009, or such earlier time as the Commission may determine to make
the rules permanent. The Exchange filed to extend the operation of the
Pilot on several occasions \13\ in order to prepare a rule filing
seeking permission to make the above described changes permanent. The
Exchange is currently still preparing such formal submission but does
not expect that filing to be completed and approved by the Commission
before January 31, 2012.
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\13\ See supra note [4].
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Proposal To Extend the Operation of the NMM Pilot
NYSE Amex established the NMM Pilot to provide incentives for
quoting, to enhance competition among the existing group of liquidity
providers and to add a new competitive market participant. The Exchange
believes that 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 NMM Pilot should be made permanent. Through this
filing the Exchange seeks to extend the current operation of the NMM
Pilot until July 31, 2012, in order to allow the Exchange time to
formally submit a filing to the Commission to convert the pilot rules
to permanent rules.
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 this filing is consistent with these principles because
the NMM Pilot provides 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. Moreover, requesting
an extension of the NMM Pilot will permit adequate time for: (i) the
Exchange to prepare and submit a filing to make the rules governing the
NMM 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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\
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, 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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\14\ 15 U.S.C. 78s(b)(3)(A)(iii).
\15\ 17 CFR 240.19b-4(f)(6).
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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 email to [email protected]. Please include
File Number SR-NYSEAmex-2011-102 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-2011-102. This
file number should be included on the subject line if email 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 will also be available for
inspection and copying at the NYSE's principal office and on its
Internet Web site at www.nyse.com. 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-2011-102 and should be submitted on or before
January 20, 2012.
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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-33580 Filed 12-29-11; 8:45 a.m.]
BILLING CODE 8011-01-P