
[Federal Register: February 11, 2009 (Volume 74, Number 27)]
[Notices]
[Page 6935-6936]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11fe09-101]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59353; File No. SR-NYSEALTR-2008-12]


Self-Regulatory Organizations; NYSE Alternext US LLC; Order
Approving Proposed Rule Change To Establish the Risk Management Gateway
Service

 February 3, 2009.

I. Introduction

    On December 12, 2008, NYSE Alternext US LLC (``Exchange'' or ``NYSE
Alternext'') 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 establish the Risk Management Gateway (``RMG'')
service. The proposed rule change was published for comment in the
Federal Register on December 31, 2008.\3\ The Commission received no
comment letters on the proposed rule change. This order approves the
proposed rule change.
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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. 59144 (December 22,
2008), 73 FR 80502.
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II. Description of the Proposed Rule Change

    The Exchange proposes to offer, through its wholly-owned subsidiary
NYSE Euronext Advanced Trading Solutions, Inc., the RMG service to NYSE
Alternext members and member organizations pursuant to voluntary,
contractual arrangements.\4\ NYSE Transact Tools, Inc., a division of
the NYSE Euronext Advanced Trading Solutions Group (``NYXATS''), owns
RMG.\5\ NYSE Alternext Equities Rule 123B.30 permits NYSE Alternext
members and member organizations (a ``Sponsoring Member Organization'')
to provide sponsored access to non-member firms or customers
(``Sponsored Participants'') to Exchange trading systems. Pursuant to
this proposal, the Exchange would offer RMG to facilitate a Sponsoring
Member Organization's ability to monitor and supervise the trading
activity of its Sponsored Participants. RMG is a risk filter that
verifies orders entered by Sponsored Participants prior to the receipt
of the order by the Exchange's trading systems. Specifically, RMG
verifies whether a Sponsored Participant's order complies with order
criteria established by the Sponsoring Member Organization for the
Sponsored Participant, including, amongst other things, criteria
related to order size (per order or daily quantity limits), credit
limits (per order or daily value), specific symbols or end users. If
the order is consistent with the parameters set by the Sponsoring
Member Organization, after RMG's verification, the order would be
permitted to continue along its path to the Exchange's trading systems.
However, if the order did not meet the specified parameters, RMG would
return the order to the Sponsored Participant.
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    \4\ A similar service has been approved for NYSE. See Securities
Exchange Act Release No. 59354 (February 3, 2009) (SR-NYSE-2008-
101).
    \5\ NYXATS will host the RMG software on its infrastructure.
After passing through the RMG software, each order will enter the
NYSE Common Customer Gateway for connectivity to the Exchange's
matching engine. According to the Exchange, in the future, NYXATS
may integrate RMG into the NYSE CCG for more direct access to the
Exchange's matching engine.
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    RMG would only interact with a Sponsored Participant's order prior
to the order's receipt by the Exchange's trading system. In addition,
RMG would only return an order to the Sponsored Participant if the
order did not meet the criteria set by the Sponsoring Member
Organization. RMG would not provide order execution or trade reporting
capabilities, but RMG would maintain records of all messages related to

[[Page 6936]]

Sponsored Participants' transactions and provide the applicable
Sponsoring Member Organization copies of those records.
    The Sponsoring Member Organization, and not RMG, will have full
responsibility for ensuring that Sponsored Participants' sponsored
access to the Exchange complies with the Exchange's sponsored access
rules. The use of the RMG by a Member Organization does not
automatically constitute compliance with Exchange rules.
    The Exchange proposes to make RMG available to its members and
member organizations pursuant to contractual arrangements. The Exchange
states that it believes that RMG will offer its members and member
organizations another option in the efficient risk management of its
Sponsored Participant's access to the NYSE Alternext Trading Systems.

III. Discussion and Commission's Findings

    After careful review, the Commission finds that the Exchange's
proposal to establish its RMG service is consistent with the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\6\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(5) of the Act,\7\ which
requires 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
Commission believes that RMG should be a useful risk management tool
for NYSE Alternext member firms that provide sponsored access to the
Exchange.
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    \6\ 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).
    \7\ 15 U.S.C. 78f(b)(5).
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    For the foregoing reasons, the Commission believes that the
proposal to establish the RMG service is consistent with the Act.
    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that the proposed rule change (SR-NYSEALTR-2008-12) be, and it
hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
Florence E. Harmon,
Deputy Secretary.
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    \9\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E9-2852 Filed 2-10-09; 8:45 am]

BILLING CODE 8011-01-P
