[Federal Register Volume 77, Number 19 (Monday, January 30, 2012)]
[Notices]
[Pages 4604-4605]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-1941]



[[Page 4604]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66218; File No. SR-NYSE-2012-01]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Establish an NYBX 
Immediate-or-Cancel Order

January 24, 2012.
    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 January 11, 2012, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') 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. 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 NYSE Rule 1600 to establish an 
Immediate or Cancel (``IOC'') order that would execute exclusively 
against contra-side liquidity in the Exchange's Display Book [reg] 
(``DBK'') and/or in the New York Block Exchange \SM\ (``NYBX'' \SM\ or 
``Facility'') (``NYBX IOC order''). 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 1600 to establish an NYBX IOC 
order.\3\
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    \3\ The Exchange proposes to define the NYBX IOC order type in 
proposed Rule 1600(c)(2)(D).
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    As proposed, an NYBX IOC order would be a limit order to buy or 
sell that is designated as IOC and that would be cancelled back to the 
User if not immediately eligible to execute, in whole or in part, 
exclusively against contra-side liquidity in the DBK and/or NYBX 
Facility that is at or within the NBBO. Any unexecuted portion of an 
NYBX IOC would not be routed elsewhere for execution, would not be 
placed on the DBK, would not otherwise remain in the NYBX Facility, 
would not trade through protected quotations of another market, but 
instead would be cancelled back to the User. NYBX IOC orders, like all 
other NYBX orders, must be entered with a minimum size of at least one 
round lot. Subject to these conditions, the NYBX IOC order would be 
subject to order processing set forth in Rules 1600(d)(1) and 
1600(d)(1)(C)(i).
    As proposed, NYBX IOC orders would be entered in the same manner as 
other NYBX orders, as provided under Rule 1600(c)(1), and would be 
required to contain the order parameters listed in Rule 1600(c)(3)(A). 
However, the optional time in force order parameters of Rule 
1600(c)(3)(B)(i) would not be applicable because an NYBX IOC order 
would be cancelled if not executed immediately. Furthermore, Users 
would not be permitted to designate a Minimum Triggering Volume 
Quantity (``MTV'') for NYBX IOC orders entered into the NYBX Facility.
    The NYBX Facility would apply the order execution process that is 
set forth in Rule 1600(d)(1)(C)(i) to NYBX IOC orders, including that 
an NYBX IOC order may execute at multiple price points that may be 
available in the DBK and NYBX Facility that are within the limit price 
of the NYBX IOC order. Because by its terms, the proposed NYBX IOC 
order does not route to other markets, have an MTV, or leave a residual 
in the NYBX Facility, by their terms, the order execution processing 
rules set forth in Rule 1600(d)(1)(C)(ii)-(vi) and Rule 1600(d)(1)(D) 
are inapplicable to the order processing of an NYBX IOC order. In a 
situation in which the size of the NYBX IOC order is less than the 
total available contra side liquidity that is potentially executable 
within the limit price in the NYBX Facility and the DBK, the existing 
``tie breaker'' rules set forth in Rule 1600(d)(1)(C)(i) for routing 
decision purposes will provide that an execution in the DBK will have 
priority over an execution at the same price in the Facility.
    For example, if a buy NYBX IOC order for 1,000 shares arrives at 
the Facility with a limit of $10.05, the Facility will review the 
available contra-side liquidity in the DBK (both displayed and 
undisplayed) and the NYBX Facility. Assuming the contra-side liquidity 
in the DBK is 300 shares at $10.04 (undisplayed), 200 shares at $10.05 
(NBO displayed), and 200 shares at $10.05 (undisplayed) and in the NYBX 
Facility is 200 shares at $10.05, the NYBX IOC buy order would 
simultaneously be routed to DBK as 300 shares at $10.04 and 400 shares 
at $10.05, and 200 shares would execute in the Facility at $10.05 for a 
total execution of 900 shares. The remaining 100 shares of the buy NYBX 
IOC order would be cancelled. Assuming the buy NYBX IOC order is 
instead for 700 shares, pursuant to the tie-breaker rule in Rule 
1600(d)(1)(C)(i), the full volume of the order would route to the DBK, 
300 shares at $10.04 and 400 shares at $10.05, and the NYBX Facility's 
200 share contra-side liquidity at $10.05 would not be filled.
    Under no circumstances would an NYBX IOC order be routed to another 
market center. For example, if another automated trading center is 
displaying a better price than either the NYBX Facility or DBK, and an 
execution in the NYBX Facility or DBK would result in a trade through 
in violation of Regulation NMS, the NYBX IOC order will be immediately 
cancelled back to the User. Similarly, in a situation where another 
automated trading center is displaying prices that are the same or 
inferior to prices in the DBK or NYBX Facility, and routing is not 
required by Regulation NMS, the NYBX IOC order will execute within the 
DBK and/or the NYBX Facility without regard to such same or inferior-
priced orders in another automated trading center.
    The Exchange also proposes to make certain technical changes to 
NYSE Rule 1600. First, the Exchange proposes to amend Rule 1600(g) to 
add references to trading pauses in individual securities, as provided 
for under NYSE Rule 80C. Second, because the Exchange has eliminated 
the class of market participants formerly known as Registered 
Competitive Market Makers, the Exchange proposes to delete Rule 
1600(h)(3), which is no longer

[[Page 4605]]

applicable.\4\ Third, the Exchange proposes to clarify within Rule 
1600(b)(2)(D) that NYBX orders are defined within Rule 1600(c)(2), not 
only within Rule 1600(c)(2)(A) as is currently reflected.
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    \4\ See Securities Exchange Act Release No. 60356 (July 21, 
2009), 74 FR 37281 (July 28, 2009) (SR-NYSE-2009-08) (Rescinding 
Rules 110 and 107A, which established the roles of Competitive 
Traders and Registered Competitive Market Makers).
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    The Exchange proposes to announce via Trader Update the 
implementation date of this proposed rule change, which will be no 
later than 30 days after the publication of the approval order in the 
Federal Register.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\5\ in general, and 
furthers the objectives of Section 6(b)(5),\6\ 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 improve the quality of the 
market by providing NYBX Users with greater control over and 
flexibility with respect to their orders by allowing for the entry of 
IOC orders in the NYBX Facility that would execute exclusively against 
contra-side liquidity in the DBK and the NYBX Facility.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-NYSE-2012-01 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-NYSE-2012-01. 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 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-2012-01 and should be submitted on 
or before February 21, 2012.
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    \7\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
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pursuant to delegated authority.\7\

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-1941 Filed 1-27-12; 8:45 am]
BILLING CODE 8011-01-P