
[Federal Register Volume 76, Number 18 (Thursday, January 27, 2011)]
[Notices]
[Pages 4961-4963]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-1725]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63746; File No. SR-NYSEAmex-2011-05]


Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Adopting Standards 
for Market Maker Electronic Quotes That Are Present During an Opening 
Auction

January 20, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on January 14, 2011, NYSE Amex LLC (the ``Exchange'' or ``NYSE 
Amex'') 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\ 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 adopt standards for Market Maker 
electronic quotes that are present during an opening auction. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to adopt rules governing quote widths 
for Market

[[Page 4962]]

Maker electronic quotes that are present during an opening auction, 
based on a provision of the Rules of NASDAQ OMX PHLX (``Phlx''), by 
revising the Obligations of Market Makers in Rule 925NY.
    Currently, the only restriction on quote widths for NYSE Amex 
Market Maker electronic quotes is that they be no more than $5 wide. 
The Exchange has found that the absence of more narrow quotes during an 
opening auction has prevented series from opening promptly and is 
unnecessarily delaying the execution of orders.
    The Exchange proposes to adopt a provision based on Phlx Rule 
1014(c)(i)(A)(2)(a). The Phlx rule sets the maximum bid/ask 
differential for electronic quotes at $5, but also requires electronic 
quotes that are submitted during an opening rotation to have a bid/ask 
differential that is consistent with the quote width requirements for 
open outcry trading. NYSE Amex intends to modify the requirements of 
NYSE Amex Rule 925NY(b) \3\ to also apply them to quotes submitted for 
possible participation in a Trading Auction as defined in Rule 952NY.
---------------------------------------------------------------------------

    \3\ While our proposed rule text is not exactly identical to 
Phlx Rule 1014(c)(i)(A)(2)(a), the intent and impact of the rule is 
the same--namely, to provide for narrower quotes during an opening 
auction, which in turn helps facilitate a prompt and efficient 
opening. As discussed below, we believe that this proposed rule 
change qualifies for immediate effectiveness as a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4. 17 
CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    Specifically, the Exchange proposes that an electronic quote that 
is submitted for possible participation in an opening auction must have 
a bid/ask differential of no more than:
    (A) .25 between the bid and the offer for each option contract for 
which the bid is less than $2,
    (B) No more than .40 where the bid is $2 or more but does not 
exceed $5,
    (C) No more than .50 where the bid is more than $5 but does not 
exceed $10,
    (D) No more than .80 where the bid is more than $10 but does not 
exceed $20, and
    (E) No more than $1 when the last bid is $20.10 or more.
    These differentials are common in the options industry,\4\ and are 
often referred to as ``legal width''.
---------------------------------------------------------------------------

    \4\ See, e.g., Boston Options Exchange Rule Chapter VI 
Sec.5(a)(vii), International Securities Exchange Rule 803(b)(4), 
NASDAQ OMX PHLX Rule 1014(c)(i)(A)(1)(a).
---------------------------------------------------------------------------

    As is currently the case, different bid/ask differentials would be 
permitted to be established, but only with the approval of at least two 
Trading Officials.
    The Exchange believes that setting a narrower differential for 
opening auction quotes will expedite the opening of all options series 
on the Exchange promptly after the opening of the underlying security.
    NYSE Arca [sic] will implement this rule change upon notification 
to OTP Holders through the issuance of a Regulatory Bulletin.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) \5\ of the Securities Exchange Act of 1934 (the ``Act''), 
in general, and furthers the objectives of Section 6(b)(5) \6\ in 
particular in that it is designed to promote just and equitable 
principles of trade, to prevent fraudulent and manipulative acts, to 
remove impediments to and to perfect the mechanism for a free and open 
market and a national market system and, in general, to protect 
investors and the public interest, by expediting the opening auction 
process and the execution of Customer orders submitted for the opening.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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: (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 this filing, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, the proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written 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. The Exchange has fulfilled this requirement.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend 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-NYSEAmex-2011-05 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-NYSEAmex-2011-05. 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 Web site 
viewing and printing 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 the filing also will be 
available for inspection and copying at the principal office of the

[[Page 4963]]

Exchange.\9\ 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 
available publicly.
---------------------------------------------------------------------------

    \9\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov.
---------------------------------------------------------------------------

    All submissions should refer to File Number SR-NYSEAmex-2011-05 and 
should be submitted on or before February 17, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-1725 Filed 1-26-11; 8:45 am]
BILLING CODE 8011-01-P


