
[Federal Register Volume 76, Number 166 (Friday, August 26, 2011)]
[Notices]
[Pages 53511-53513]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-21873]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65184; File No. SR-NYSEAmex-2011-63]


Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of 
Proposed Rule Change Amending NYSE Amex Equities Rule 17(c)(2)(B) To 
Make Permanent the Pilot Program that Permits the Exchange To Accept 
Inbound Orders Routed by Archipelago Securities LLC in Its Capacity as 
a Facility of Affiliated Exchanges and To Clarify the NYSE Amex 
Equities Rule 17(c)(2)(A)(ii) To More Accurately Reflect the Regulatory 
Services Agreement Between the Exchange and the Financial Industry 
Regulatory Authority

August 22, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 18, 2011, NYSE Amex LLC (``NYSE Amex'' or the ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend NYSE Amex Equities Rule 17(c)(2)(B) 
to make permanent the pilot program that permits the Exchange to accept 
inbound orders routed by Archipelago Securities LLC (``Arca 
Securities'') in its capacity as a facility of affiliated exchanges 
(with the attendant obligations and conditions) and to clarify the text 
of NYSE Amex Equities Rule 17(c)(2)(A)(ii) to more accurately reflect 
the regulatory services agreement (``RSA'') between the Exchange and 
the Financial Industry Regulatory Authority (``FINRA''). The text of 
the proposed rule change is available at the Exchange, at the 
Exchange's Web site at http://www.nyse.com, at the Commission's Public 
Reference Room, and at the Commission's Web site at http://www.sec.gov.

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 amend NYSE Amex Equities Rule 17(c)(2)(B) 
to make permanent the pilot program that permits the Exchange to accept 
inbound orders routed by Arca Securities in its capacity as a facility 
of affiliated exchanges (with the attendant obligations and conditions) 
and to clarify the text of NYSE Amex Equities Rule 17(c)(2)(A)(ii) to 
more accurately reflect the RSA between the Exchange and FINRA.\3\
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    \3\ The change to the rule text to more accurately reflect the 
RSA between the Exchange and FINRA is similar to language that 
NASDAQ OMX BX, Inc. uses to describe its relationship with FINRA. 
See Securities Exchange Act Release No. 64896 (July 15, 2011), 76 FR 
43740 (July 21, 2011) (SR-BX-2011-045).
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    Currently, Arca Securities is an approved outbound routing facility 
of the Exchange, providing outbound routing from the Exchange to other 
market centers.\4\ The Exchange also has been previously approved to 
receive inbound routes of orders by Arca Securities in its capacity as 
an order routing facility of affiliated exchanges on a pilot basis 
until September 30, 2011.\5\ On February 24, 2011, the Exchange filed 
an immediately effective proposal to extend the current pilot program 
until September 30, 2011.\6\ On June 16, 2011, the Exchange filed an 
immediate effective proposal that codified the inbound routing 
authority

[[Page 53512]]

in NYSE Amex Equities Rule 17(c)(2).\7\ The Exchange hereby seeks 
permanent approval to permit the Exchange to accept inbound orders that 
Arca Securities routes in its capacity as a facility of affiliated 
exchanges.
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    \4\ See NYSE Amex Equities Rules 13 and 17(c)(1).
    \5\ See NYSE Amex Equities Rule 17(c)(2); see also Securities 
Exchange Act Release No. 64728 (June 23, 2011) 76 FR 38223 nn. 4-7 
(June 29, 2011) (SR-NYSEAmex-2011-39) (listing prior approval orders 
for outbound and inbound pilots).
    \6\ See Securities Exchange Act Release No. 64014 (March 2, 
2011), 76 FR 12773 (March 8, 2011) (SR-NYSEAmex-2011-10) (extending 
pilot from March 31, 2011 to September 30, 2011).
    \7\ See SR-NYSEAmex-2011-39, supra note 5.
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    Under the pilot, the Exchange is committed to the following 
obligations and conditions:
     The Exchange will maintain an agreement pursuant to Rule 
17d-2 under the Exchange Act with FINRA to relieve the Exchange of 
regulatory responsibilities for Arca Securities with respect to rules 
that are common rules between the Exchange and FINRA, and maintain an 
RSA with FINRA to perform regulatory responsibilities for Arca 
Securities for unique Exchange rules.
     The RSA will require the Exchange to provide FINRA with 
information, in an easily accessible manner, regarding all exception 
reports, alerts, complaints, trading errors, cancellations, 
investigations, and enforcement matters (collectively ``Exceptions'') 
in which Arca Securities is identified as a participant that has 
potentially violated Exchange or SEC Rules and of which the Exchange 
becomes aware, and shall require that FINRA provide a report, at least 
quarterly, to the Exchange quantifying all Exceptions in which Arca 
Securities is identified as a participant that has potentially violated 
Exchange or SEC Rules.\8\
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    \8\ As noted below, the Exchange proposes to change this 
provision to more accurately reflect the RSA with FINRA.
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     The Exchange, on behalf of its parent, NYSE Euronext, will 
establish and maintain procedures and internal controls reasonably 
designed to prevent Arca Securities from receiving any benefit, taking 
any action or engaging in any activity based on non-public information 
regarding planned changes to Exchange systems, obtained as a result of 
its affiliation with the Exchange, until such information is available 
generally to similarly situated member organizations of the Exchange in 
connection with the provision of inbound order routing to the Exchange.
     The Exchange may furnish to Arca Securities the same 
information on the same terms that the Exchange makes available in the 
normal course of business to any other member organization.\9\
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    \9\ See SR-NYSEAmex-2011-39, supra note 5, and NYSE Amex 
Equities Rule 17(c)(2)(A)(iv).
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    The Exchange is in compliance with the above-listed obligations and 
conditions. In meeting them, the Exchange has set up mechanisms that 
protect the independence of the Exchange's regulatory responsibility 
with respect to Arca Securities, as well as demonstrate that Arca 
Securities cannot use any information it may have because of its 
affiliation with the Exchange to its advantage. Since the Exchange has 
met all the above-listed obligations and conditions, it now seeks 
permanent approval of the Exchange and Arca Securities' inbound routing 
relationship. The Exchange also proposes to clarify the text of NYSE 
Amex Equities Rule 17(c)(2)(A)(ii) to more accurately reflect the RSA 
between the Exchange and FINRA and specify that the quarterly report of 
Exceptions shall be provided to the Exchange's Chief Regulatory 
Officer. Upon approval of the proposed rule change, the Exchange will 
continue to comply with the obligations and conditions as set forth in 
proposed NYSE Amex Equities Rule 17(c)(2)(A).
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \10\ of 
the Act, in general, and furthers the objectives of Section 
6(b)(5),\11\ in particular, in that the proposal is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating 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. Specifically, the proposed 
rule change will allow the Exchange to continue receiving inbound 
routes of orders from Arca Securities, acting in its capacity as a 
facility of affiliated exchanges, in a manner consistent with prior 
approvals and established protections. The Exchange believes that 
meeting the commitments established during the pilot program 
demonstrates that the Exchange has mechanisms that protect the 
independence of the Exchange's regulatory responsibility with respect 
to Arca Securities, as well as demonstrate that Arca Securities cannot 
use any information it may have because of its affiliation with the 
Exchange to its advantage.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2011-63 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-2011-63. 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

[[Page 53513]]

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 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-NYSEAmex-2011-63 and should be submitted 
on or before September 16, 2011.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-21873 Filed 8-25-11; 8:45 am]
BILLING CODE 8011-01-P


