
[Federal Register: October 6, 2009 (Volume 74, Number 192)]
[Notices]               
[Page 51350-51351]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06oc09-114]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60741; File No. SR-NYSEAmex-2009-45]

 
Self-Regulatory Organizations; NYSE Amex LLC; Order Approving 
Proposed Rule Change Amending Rule 476A (Imposition of Fines for Minor 
Violation(s) of Rules)

September 29, 2009.
    On July 29, 2009, NYSE Amex LLC (``NYSE Amex'' or ``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 
amending its Minor Rule Plan (``MRP'') to incorporate additional 
violations into the MRP and to increase the fine levels for certain MRP 
violations. The proposed rule change was published for comment in the 
Federal Register on August 26, 2009.\3\ The Commission received no 
comments regarding the proposal. 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. 60520 (August 18, 
2009), 74 FR 43176 (``Notice'').
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    The Exchange proposes to amend its MRP to incorporate violations 
for opening transactions in restricted classes, failure to report 
position and account information, and failure to complete mandatory 
annual training. The Exchange proposes to implement a fine schedule for 
Amex Options Trading Permit (``ATP'') Holders that effect opening 
transactions in restricted series of options, inconsistent with the 
terms of any such restriction, in violation of Rule 916 or 916C. This 
fine will consist of $1,000 for the first violation during a rolling 
24-month period, $2,500 for a second violation within the same period, 
and $5,000 for a third violation during the same period. The Exchange 
also proposes to incorporate violations for failing to accurately 
report position and account information to the Exchange on a Large 
Option Position Report (``LOPR'') pursuant to Rules 906(a) and 906C(a). 
This fine will consist of $1,000 for the first violation in a rolling 
24-month period, $2,500 for a second violation within the same period, 
and $5,000 for a third violation within the same period. The Exchange 
believes that, in most cases, violations of trading in restricted 
classes and violations of LOPR reporting may be handled efficiently 
through the MRP. However, any egregious activity or activity that is 
believed to be manipulative will continue to be subject to formal 
disciplinary proceedings.\4\ The Exchange also proposes to implement a 
fine schedule for individuals who fail to complete a mandatory 
regulatory training program in violation of Rule 50, Commentary 
.03-.04. This fine will consist of $1,000 for the first violation in a 
rolling 24-month period, $2,500 for a second violation within the same 
period, and $5,000 for a third violation within the same period.
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    \4\ See Notice, supra note 3, 74 FR at 43177.
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    The Exchange also proposes to increase fines for violations of NYSE 
Amex Rules 933NY(a),\5\ 935NY,\6\ and 963NY \7\ to $1,000 for the first 
violation in a rolling 24-month period, $2,500 for

[[Page 51351]]

a second violation within the same period, and $5,000 for a third 
violation within the same period. The MRP currently provides for fines 
of $1,000 for the first violation of Rule 933NY(a) in a rolling 24-
month period, $2,500 for a second violation within the same period, and 
$3,500 for a third violation within the same period. The MRP currently 
provides for fines of $500 for the first violation of Rule 935NY in a 
rolling 24-month period, $1,000 for a second violation within the same 
period, and $2,500 for a third violation within the same period. The 
MRP currently provides for a fine of $500 for the first violation of 
Rule 963NY in a rolling 24-month period, $1,000 for a second violation 
within the same period, and $2,000 for a third violation within the 
same period. The Exchange believes that, given the nature of these 
violations, the current fine levels are inadequate, and that increased 
fines for these violations are needed to deter future violations.\8\
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    \5\ NYSE Amex Rule 933NY(a) requires that a Floor Broker 
handling an order use due diligence to execute the order at the best 
price or prices available to him, in accordance with the Rules of 
the Exchange.
    \6\ NYSE Amex Rule 935NY states that users may not execute as 
principal orders they represent as agent unless (i) agency orders 
are first exposed on the Exchange for at least one second or (ii) 
the User has been bidding or offering on the Exchange for at least 
one second prior to receiving an agency order that is executable 
against such bid or offer.
    \7\ NYSE Amex Rule 963NY states that the highest bid/lowest 
offer shall have priority over all other orders. In the event there 
are two or more bids/offers for the same option contract 
representing the best price and one such bid/offer is displayed in 
the Consolidated Book, such bid shall have priority over any other 
bid at the post. In addition, if two or more bids/offers represent 
the best price and a bid/offer displayed in the Consolidated Book is 
not involved, priority shall be afforded to such bids in the 
sequence in which they are made. Rule 963NY also contains certain 
provisions related to split-price priority and priority of complex 
orders.
    \8\ See Notice, supra note 3, 74 FR at 43178.
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    The Commission finds that the proposal is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\9\ In particular, the 
Commission believes that the proposal is consistent with Section 
6(b)(5) of the Act,\10\ which requires that the rules of an exchange be 
designed to, among other things, protect investors and the public 
interest. The Commission also believes that the proposal is consistent 
with Sections 6(b)(1) and 6(b)(6) of the Act,\11\ which require that 
the rules of an exchange enforce compliance with, and provide 
appropriate discipline for, violations of Commission and exchange 
rules. Furthermore, the Commission believes that the proposed changes 
to the MRP should strengthen the Exchange's ability to carry out its 
oversight and enforcement responsibilities as a self-regulatory 
organization in cases where full disciplinary proceedings are 
unsuitable in view of the minor nature of the particular violation. 
Therefore, the Commission finds that the proposal is consistent with 
the public interest, the protection of investors, or otherwise in 
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2) 
under the Act,\12\ which governs minor rule violation plans.
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    \9\ 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).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \12\ 17 CFR 240.19d-1(c)(2).
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    In approving this proposed rule change, the Commission in no way 
minimizes the importance of compliance with NYSE Amex rules and all 
other rules subject to the imposition of fines under the MRP. The 
Commission believes that the violation of any self-regulatory 
organization's rules, as well as Commission rules, is a serious matter. 
However, the MRP provides a reasonable means of addressing rule 
violations that do not rise to the level of requiring formal 
disciplinary proceedings, while providing greater flexibility in 
handling certain violations. The Commission expects that NYSE Amex will 
continue to conduct surveillance with due diligence and make a 
determination based on its findings, on a case-by-case basis, whether a 
fine of more or less than the recommended amount is appropriate for a 
violation under the MRP or whether a violation requires formal 
disciplinary action under NYSE Amex Rule 476.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\13\ and Rule 19d-1(c)(2) under the Act,\14\ that the proposed rule 
change (SR-NYSEAmex-2009-45) be, and it hereby is, approved and 
declared effective.
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    \13\ 15 U.S.C. 78s(b)(2).
    \14\ 17 CFR 240.19d-1(c)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(44).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-23991 Filed 10-5-09; 8:45 am]

BILLING CODE 8011-01-P
