
[Federal Register: January 9, 2009 (Volume 74, Number 6)]
[Notices]               
[Page 976-977]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09ja09-74]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59194; File No. SR-NYSEArca-2008-135]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Accelerated Approval of Proposed Rule Change Amending Rule 6.47A To 
Reduce the Order Exposure Period From Three Seconds to One Second

January 5, 2009.

I. Introduction

    On December 9, 2008, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange''), filed with the Securities and Exchange Commission 
(``Commission'') pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to reduce certain order exposure periods from 
three seconds to one second. The proposed rule change was published for 
comment in the Federal Register on December 18, 2008.\3\ The Commission 
received no comments on the proposal. This order approves the proposed 
rule change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59082 (December 11, 
2008), 73 FR 77091 (``Notice'').
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II. Description of the Proposal

    The purpose of the proposed rule change is to reduce the exposure 
time during which order entry firms may not execute as principal 
against orders they represent as agent from three seconds to one 
second. Under the current NYSE Arca Rule 6.47A, Order Exposure 
Requirements-OX, order entry firms may not execute as principal, orders 
they represent as agent unless (i) the agency orders are first exposed 
on the NYSE Arca OX trading system for at least three seconds or (ii) 
the order entry firm has been bidding or offering for at least three 
seconds prior to receiving the agency order that is executable against 
such bid or offer. During this three-second exposure period, other 
market participants may enter orders to trade against the exposed 
order. Under this proposal, the exposure period contained in Rule 6.47A 
would be reduced to one second.

III. Discussion and Commission Findings

    After carefully reviewing the proposed rule change, the Commission 
finds that the proposal is consistent with the requirements of the Act 
and the rules and regulations thereunder

[[Page 977]]

applicable to a national securities exchange.\4\ In particular, the 
Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act,\5\ which, among other things, requires that 
the rules of a national securities exchange be designed to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating transactions in 
securities, 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 Commission also finds 
that the proposed rule change is consistent with Section 6(b)(8) of the 
Act,\6\ which requires that the rules of an exchange not impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.
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    \4\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78f(b)(8).
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    The Commission believes that, given the electronic environment of 
NYSE Arca OX, reducing the exposure period from three seconds to one 
second could facilitate the prompt execution of orders, while 
continuing to provide market participants with an opportunity to 
compete for exposed bids and offers. To substantiate that NYSE Arca 
members could receive, process, and communicate a response back to the 
Exchange within one second, the Exchange stated that it distributed a 
survey to its members that regularly access the Exchange on an 
electronic basis. NYSE Arca stated that all but one responding firm 
indicated that their approximate turnaround time for responding to 
trading interest was equal to, or less than, 100 milliseconds, while 
the other responding firm simply stated that their turnaround time was 
``less than one second.'' \7\ NYSE Arca also stated that none of the 
responding firms anticipated any problems related to order processing, 
if the Exchange was to reduce the exposure period to one second.\8\ 
Based on NYSE Arca's statements regarding the survey results, the 
Commission believes that market participants should continue to have 
opportunities to compete for exposed bids and offers within a one 
second exposure period. Accordingly, the Commission believes that it is 
consistent with the Act for NYSE Arca to reduce the exposure time 
discussed herein from three seconds to one second.
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    \7\ See Notice.
    \8\ Id.
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    The Commission finds good cause to approve the proposed rule change 
prior to the thirtieth day after publication for comment in the Federal 
Register. The Commission notes that the proposed rule change was 
noticed for a fifteen-day comment period, and no comments were 
received. The Commission believes that the Exchange has provided 
reasonable support for its belief that the Exchange's market 
participants would continue to have an opportunity to compete for 
exposed bids and offers if the exposure period was reduced to one 
second as proposed. Finally, the Commission also notes that the 
proposed rule change is similar to recently approved proposals 
submitted by the Chicago Board Options Exchange, Incorporated, the 
International Securities Exchange, LLC, and NASDAQ OMX PHLX, Inc.\9\ 
Therefore, the Commission finds good cause, consistent with Section 
19(b)(2) of the Act,\10\ to approve the proposed rule change on an 
accelerated basis.
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    \9\ See Securities Exchange Act Release Nos. 58088 (July 2, 
2008), 73 FR 39747 (July 10, 2008)(SR-CBOE-2008-16); 58224 (July 25, 
2008), 73 FR 44303 (July 30, 2008) (SR-ISE-2007-94); and 59081 
(December 11, 2008), 73 FR 76432 (December 16, 2008) (SR-Phlx-2008-
79).
    \10\ 15 U.S.C. 78s(b)(2).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-NYSEArca-2008-135), be, and 
hereby is, approved on an accelerated basis.
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    \11\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-137 Filed 1-8-09; 8:45 am]

BILLING CODE 8011-01-P
