
[Federal Register: October 8, 2008 (Volume 73, Number 196)]
[Notices]               
[Page 59017-59019]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08oc08-115]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58708; File No. SR-NYSE-2008-92]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Extend the Operation of Reserve Orders on the Exchange to the 
Earlier of December 31, 2008 or the Date on Which the Commission 
Approves the Exchange's Filing Pursuant to SR-NYSE-2008-46

October 1, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule19b-4 thereunder,\2\ notice is hereby given that 
on September 29, 2008, New York Stock Exchange LLC (``NYSE'' or the 
``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 extend the operation of Reserve Orders on 
the Exchange to the earlier of December 31, 2008 or the date on which 
the Commission approves the Exchange's filing pursuant to SR-NYSE-2008-
46. The text of the proposed rule change is available at NYSE, http://
www.nyse.com, and 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 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.

[[Page 59018]]

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

1. Purpose
    The New York Stock Exchange LLC (``NYSE'' or the ``Exchange'') 
proposes to amend NYSE Rule 13 to extend the operation of its Reserve 
Order pilot to the earlier of December 31, 2008 or the approval date of 
the Exchange's New Market Model \3\ pilot.
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    \3\ See Securities Exchange Act Release No. 58184 (July 17, 
2008), 73 FR 42853 (July 23, 2008) (SR-NYSE-2008-46) (``New Market 
Model filing'').
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Background
    Reserve Orders were approved by the Commission on April 18, 2008 
\4\ and instituted on the Exchange on April 23, 2008. Reserve Orders 
are limit orders available to all market participants that enable them 
to maintain non-displayed liquidity on the Exchange's Display Book 
system[reg] (``Display Book'') for execution.\5\ A portion of the 
interest represented by a Reserve Order is published (displayed) when 
it is or becomes the Exchange best bid or offer, while the remaining 
interest is not displayed, i.e., is held in ``reserve.'' This reserved 
portion is used to replenish the displayed amount (which is required to 
be at least one round lot) when trades reduce or exhaust such displayed 
interest. Both displayed and reserve interest is available for 
automatic execution on the Exchange. With respect to the portion of 
Reserve Orders that is not displayed, this interest is available for 
execution only after all displayed interest at the Exchange bid or 
offer has been executed.
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    \4\ See Securities Exchange Act Release No. 57688 (April 18, 
2008), 73 FR 22194 (April 24, 2008) (SR-NYSE-2008-30). The pilot 
initially operated in 100 NYSE-traded securities. The Exchange 
subsequently filed with the Commission to expand the operation of 
the pilot to all NYSE-traded securities. See Securities Exchange Act 
Release No. 57792 (May 7, 2008), 73 FR 27601 (May 13, 2008) (SR-
NYSE-2008-36).
    \5\ The Display Book[reg] system is an order management and 
execution facility. The Display Book system receives and displays 
orders to the specialists, contains the Book, 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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    Reserve Orders are also available for manual execution. While the 
majority of transactions on the Exchange are executed electronically, 
there are times when manual execution is required. In these situations, 
specialists seek information on the available interest at various price 
points to determine the appropriate price at which to complete the 
manual execution. As with reserve interest in a Floor broker's agency 
interest file, information on reserve interest entered directly into 
Exchange systems through Reserve Orders will be made available to the 
specialist only in the aggregate at each price point for the express 
purpose of the specialist effecting a manual execution. The reserve 
interest is not distinguished from other interest available to be 
executed at a specific price point. Rather, Exchange systems display to 
the specialist the total number of shares available for execution at 
the price point and include reserve interest in the total number. In 
this manner such reserve interest will be available for trades that 
take place on the Floor of the Exchange that will not be conducted 
automatically.
Extension of the Reserve Order Pilot
    The Exchange has proposed in the New Market Model filing to expand 
Reserve Orders to include a Minimum Display Reserve Order and a Non-
Displayed Reserve Order. The latter type of reserve interest for all 
market participants would not have any of the order designated for 
display. The Exchange proposed to create the Non-Displayed Reserve 
Order for Off-Floor participants and provide Floor brokers and 
specialists \6\ with equivalent functionality.\7\
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    \6\ In the New Market Model, specialists will be replaced by 
``designated market makers'' or ``DMMs''.
    \7\ See New Market Model filing, Securities Exchange Act Release 
No. 58184 (July 17, 2008), 73 FR 42853 (July 23, 2008) (SR-NYSE-
2008-46).
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    The Reserve Order type currently operating on the Exchange has been 
accepted by the Exchange's customer base and is currently being used 
actively. The Exchange believes that by providing all market 
participants with the ability to maintain non-displayed liquidity on 
the Display Book encourages market participants to post liquidity and 
thus offers Exchange customers additional opportunities for price 
improvement by expanding the interest available to execute against 
incoming orders at a single price. The Exchange therefore seeks to 
continue the pilot for Reserve Orders with a minimum display 
requirement until the earlier of December 31, 2008 or such time as the 
New Market Model filing is approved.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
and furthers the objectives of Section 6(b)(5) \8\ of the Act, in that 
it is designed to prevent fraudulent and manipulative practices, to 
promote just and equitable principles of trade, to remove impediments 
to, and perfect the mechanisms of, a free and open market and a 
national market system, and, in general, to protect investors and the 
public interest.
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    \8\ 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

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act\9\ and Rule 19b-4(f)(6) thereunder\10\ because 
the foregoing proposed rule change: (1) Does not significantly affect 
the protection of investors or the public interest; (2) does not impose 
any significant burden on competition; and (3) by its terms, does not 
become operative for 30 days after the date of filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing.\11\ 
However, Rule 19b-4(f)(6)(iii) permits the Commission to 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, as specified in Rule 
19b-4(f)(6)(iii),\12\ which would make the rule change effective and 
operative upon filing. The Commission believes that waiving the

[[Page 59019]]

30-day operative delay is consistent with the protection of investors 
and the public interest because the proposal is designed to extend the 
operation of the existing Reserve Order pilot without interruption. 
Extending the Reserve Order pilot would continue to enable off-Floor 
market participants to compete through their ability to maintain non-
displayed liquidity on the Exchange's Display Book system. Accordingly, 
the Commission designates the proposed rule change effective and 
operative upon filing with the Commission.\13\
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    \11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the self-regulatory organization to give the 
Commission notice of its 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. NYSE has satisfied this requirement.
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ 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).
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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 rule-comments@sec.gov. Please include 
File Number SR-NYSE-2008-92 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, Station Place, 100 F Street, NE., Washington, 
DC 20549-1090.
    All submissions should refer to File Number SR-NYSE-2008-92. 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 inspection 
and copying 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 publicly available. All 
submissions should refer to File Number SR-NYSE-2008-92 and should be 
submitted on or before October 29, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-23756 Filed 10-7-08; 8:45 am]

BILLING CODE 8011-01-P
