
[Federal Register: August 18, 2009 (Volume 74, Number 158)]
[Notices]
[Page 41769-41770]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18au09-86]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60478; File No. SR-NYSE-2009-81]


Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC
Extending Until August 21, 2009, the Operation of Interim NYSE Rule 128
Which Permits the Exchange To Cancel or Adjust Clearly Erroneous
Executions If They Arise Out of the Use or Operation of Any Quotation,
Execution or Communication System Owned or Operated by the Exchange,
Including Those Executions That Occur in the Event of a System
Disruption or System Malfunction

August 11, 2009.
    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 August 10, 2009, New York Stock Exchange LLC (``NYSE''
or the ``Exchange'') filed with the Securities and Exchange Commission
(the ``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 until August 21, 2009, the
operation of interim NYSE Rule 128 (``Clearly Erroneous Executions for
NYSE Equities'') which permits the Exchange to cancel or adjust clearly
erroneous executions if they arise out of the use or operation of any
quotation, execution or communication system owned or operated by the
Exchange, including those executions that occur in the event of a
system disruption or system malfunction. The text of the proposed rule
change is available at the Exchange, the Commission's Public Reference
Room, and http://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
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to extend until August 21, 2009, the
operation of interim NYSE Rule 128 (``Clearly Erroneous Executions for
NYSE Equities'') which permits the Exchange to cancel or adjust clearly
erroneous executions if they arise out of the use or operation of any
quotation, execution or communication system owned or operated by the
Exchange, including those executions that occur in the event of a
system disruption or system malfunction.
    Prior to the implementation of NYSE Rule 128 on January 28,
2008,\4\ the NYSE did not have a rule providing the Exchange with the
authority to cancel or adjust clearly erroneous trades of securities
executed on or through the systems and facilities of the NYSE.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 57323 (February 13,
2008), 73 FR 9371 (February 20, 2008) (SR-NYSE-2008-09).
---------------------------------------------------------------------------

    In order for the NYSE to be consistent with other national
securities exchanges which have some version of a clearly erroneous
execution rule, the Exchange is drafting an amended clearly erroneous
rule which will accommodate such other exchanges but will be
appropriate for the NYSE market model.
    The NYSE notes that the Commission approved an amended clearly
erroneous execution rule for Nasdaq in May 2008.\5\ On July 28, 2008,
the Exchange filed with the SEC a request to extend the operation of
interim Rule 128 until October 1, 2008 \6\ in order to review the
provisions of Nasdaq's clearly erroneous rule and to consider
integrating similar standards into its own amendment to Rule 128. On
October 1, 2008,\7\ the Exchange filed with the SEC a further request
to extend the operation of interim Rule 128 until January 9, 2009 in
order to consider integrating similar standards into the amendment to
Rule 128. On January 9, 2009,\8\ the Exchange filed with the SEC a
request to extend the operation of interim Rule 128 until March 9,
2009, indicating that the Exchange was still in the process of
reviewing the Nasdaq rule with a view towards incorporating certain
provisions into the amendment of interim Rule 128.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 57826 (May 15,
2008), 73 FR 29802 (May 22, 2008) (SR-NASDAQ-2007-001).
    \6\ See Securities Exchange Act Release No. 58328 (August 8,
2008), 73 FR 47247 (August 13, 2008) (SR-NYSE-2008-63).
    \7\ See Securities Exchange Act Release No. 58732 (October 3,
2008), 73 FR 61183 (October 15, 2008) (SR-NYSE-2008-99).
    \8\ See Securities Exchange Act Release No. 59255 (January 15,
2009) 74 FR 4496 (January 26, 2009) (SR-NYSE-2009-02).
---------------------------------------------------------------------------

    On February 10, 2009, NYSE Arca submitted a proposal to the SEC to
amend its clearly erroneous rule. The NYSE Arca proposed rule differed
in certain respects from the Nasdaq clearly erroneous rule. On March 9,
2009, the Exchange filed with the SEC a request to extend the operation
of interim Rule 128 until June 9, 2009 \9\ to finalize review of NYSE
Arca's proposed amended CEE rule, which included market wide CEE
initiatives, to determine if it was appropriate to incorporate such
provisions into the Rule 128 amendment.
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 59581 (March 9,
2009) 74 FR 12431 (March 24, 2009) (SR-NYSE-2009-26).
---------------------------------------------------------------------------

    Thereafter, on April 24, 2009, NYSE Arca filed a revised rule
change with the Commission to amend its clearly erroneous rule (NYSE
Arca Rule 7.10).\10\ The Exchange was in the process of finalizing its
review of NYSE Arca's revised CEE rule change, which also included
market wide CEE initiatives, to determine if it was appropriate to
incorporate all such provisions into NYSE's interim Rule 128 amendment.
On June 9, 2009, the Exchange filed with the SEC a request to extend
the operation of interim Rule 128 until July 15, 2009 \11\ to finalize
review of NYSE Arca's proposed amended CEE rule. On July 15, 2009 \12\
the Exchange filed with the SEC a request to extend the operation of
interim Rule 128 until August 1, 2009 to finalize review of

[[Page 41770]]

NYSE Arca's proposed amended CEE rule. On July 31, 2009 the Exchange
filed with the SEC a request to extend the operation of interim Rule
128 until August 10, 2009 \13\ to finalize review of NYSE Arca's
proposed amended CEE rule.
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 59838 (April 28,
2009) 74 FR 20767 (May 5, 2009) (SR-NYSEArca-2009-36) (See NYSE Arca
Rule 7.10).
    \11\ See Securities Exchange Act Release No. 60131 (June 17,
2009) 74 FR 30196 (June 24, 2009) (SR-NYSEArca-2009-57). [sic]
    \12\ See Securities Exchange Act Release No. 60312 (July 15,
2009) 74 FR 36298 (July 22, 2009) (SR-NYSE-2009-70).
    \13\ See Securities Exchange Act Release No. 60419 (August 7,
2009) 74 FR 39987 (August 10, 2009) (SR-NYSE-2009-79).
---------------------------------------------------------------------------

    The Exchange anticipates finalizing proposed rule text of its
clearly erroneous execution rule shortly, and is, therefore, requesting
to extend the operation of interim Rule 128 until August 21, 2009.
Prior to August 21, 2009, the Exchange intends to formally file a 19b-4
rule change amending interim Rule 128.
2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'')
\14\ for this proposed rule change is the requirement under Section
6(b)(5) \15\ 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(a).
    \15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As articulated more fully in the ``Purpose'' Section above, the
proposed rule would place the NYSE on equal footing with other national
securities exchanges. This will promote the integrity of the market and
protect the public interest, since it would permit all exchanges to
cancel or adjust clearly erroneous trades when such trades occur,
rather than canceling them on all other markets, but leaving them
standing on only one market.

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

    Because the foregoing 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 for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) thereunder.\17\
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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 Commission has determined to waive the five-day pre-filing
period in this case.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \18\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6) \19\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. NYSE requests that the
Commission waive the 30-day operative delay because the Exchange
believes that the absence of such a rule in an automated and fast-paced
trading environment poses a danger to the integrity of the markets and
the public interest. NYSE notes that immediate effectiveness of the
proposed rule change will immediately and timely enable NYSE to cancel
or adjust clearly erroneous trades that may present a risk to the
integrity of the equities markets and all related markets. The
Commission believes that waiving the 30-day operative delay \20\ is
consistent with the protection of investors and the public interest
because such waiver will permit the Exchange to continue operation of
interim NYSE Rule 128 on an uninterrupted basis, and therefore
designates the proposal operative upon filing.
---------------------------------------------------------------------------

    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6).
    \20\ 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 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-2009-81 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-2009-81. 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-2009-81 and should be
submitted on or before September 8, 2009.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-19736 Filed 8-17-09; 8:45 am]

BILLING CODE 8010-01-P
