[Federal Register Volume 77, Number 147 (Tuesday, July 31, 2012)]
[Notices]
[Pages 45388-45390]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-18548]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67493; File No. SR-NYSE-2012-27]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
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 January 31, 2013

July 25, 2012.
    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 July 12, 2012, 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 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), 
currently scheduled to expire on July 31, 2012, until the earlier of 
the Securities and Exchange Commission's (``Commission'') approval to 
make such Pilot permanent or January 31, 2013. The text of the proposed 
rule change is available on the Exchange's Web site at www.nyse.com, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

[[Page 45389]]

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 SLP Pilot,\4\ 
currently scheduled to expire on July 31, 2012, until the earlier of 
Commission approval to make such Pilot permanent or January 31, 2013.
---------------------------------------------------------------------------

    \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 Nos. 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); 60756 (October 1, 2009), 74 FR 51628 (October 7, 2009) 
(SR-NYSE-2009-100) (extending the operation of the NMM and the SLP 
Pilots to November 30, 2009); 61075 (November 30, 2009), 74 FR 64112 
(December 7, 2009) (SR-NYSE-2009-119) (extending the operation of 
the SLP Pilot to March 30, 2010); 61840 (April 5, 2010), 75 FR 18563 
(April 12, 2010) (SR-NYSE-2010-28) (extending the operation of the 
SLP Pilot to September 30, 2010); 62813 (September 1, 2010), 75 FR 
54686 (September 8, 2010) (SR-NYSE-2010-62) (extending the operation 
of the SLP Pilot to January 31, 2011); 63616 (December 29, 2010), 76 
FR 612 (January 5, 2011) (SR-NYSE-2010-86) (extending the operation 
of the SLP Pilot to August 1, 2011); 64762 (June 28, 2011), 76 FR 
39145 (July 5, 2011) (SR-NYSE-2011-30) (extending the operation of 
the SLP Pilot to January 31, 2012); and 66045 (December 23, 2011), 
76 FR 82342 (December 30, 2011) (SR-NYSE-2011-66) (extending the 
operation of the SLP Pilot to July 31, 2012).
---------------------------------------------------------------------------

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

    \5\ The information contained herein is a summary of the NMM 
Pilot and the SLP Pilot. See supra note 4 for a fuller description 
of those pilots.
---------------------------------------------------------------------------

    In October 2008, the NYSE implemented significant changes to its 
market rules, execution technology and the rights and obligations of 
its 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 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 Rule 107B.
---------------------------------------------------------------------------

    The SLP Pilot is scheduled to end operation on July 31, 2012 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 July 31, 
2012.\9\
---------------------------------------------------------------------------

    \9\ The NMM Pilot was scheduled to expire on July 31, 2012. On 
July 12, 2012 the Exchange filed to extend the NMM Pilot until 
January 31, 2013 (See SR-NYSE-2012-26) (See also Securities Exchange 
Act Release Nos. 66046 (December 23, 2011), 76 FR 82340 (December 
30, 2011) (SR-NYSE-2011-65) (extending the operation of the NMM 
Pilot to July 31, 2012); 64761 (June 28, 2011) 76 FR 39147 (July 5, 
2011) (SR-NYSE-2011-29) (extending the operation of the NMM Pilot to 
January 31, 2012); 63618 (December 29, 2010) 76 FR 617 (January 5, 
2011) (SR-NYSE-2010-85) (extending the operation of the NMM Pilot to 
August 1, 2011); 62819 (September 1, 2010), 75 FR 54937 (September 
9, 2010) (SR-NYSE-2010-61) (extending the operation of the NMM Pilot 
to January 31, 2011); 61724 (March 17, 2010), 75 FR 14221 (SR-NYSE-
2010-25) (extending the operation of the NMM Pilot to September 30, 
2010); and 61031 (November 19, 2009), 74 FR 62368 (SR-NYSE-2009-113) 
(extending the operation of the NMM 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 January 31, 2013, in order to allow the Exchange 
to formally submit a filing to the Commission to convert the Pilot rule 
to a permanent rule.\10\
---------------------------------------------------------------------------

    \10\ The NYSE MKT SLP Pilot (NYSE MKT Rule 107B--Equities) is 
also being extended until January 31, 2013 or until the Commission 
approves it as permanent (See SR-NYSEMKT-2012-22).
---------------------------------------------------------------------------

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
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.\13\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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.

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

[[Page 45390]]

    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. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because such waiver 
would allow the pilot program to continue uninterrupted. Accordingly, 
the Commission hereby grants the Exchange's request and designates the 
proposal operative upon filing.\16\
---------------------------------------------------------------------------

    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For purposes only of waiving the 30-day operative delay, 
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 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-NYSE-2012-27 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-2012-27. 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 
10:00 a.m. and 3:00 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 publicly available. All 
submissions should refer to File Number SR-NYSE-2012-27 and should be 
submitted on or before August 21, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

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

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-18548 Filed 7-30-12; 8:45 am]
BILLING CODE 8011-01-P