
[Federal Register Volume 77, Number 91 (Thursday, May 10, 2012)]
[Notices]
[Pages 27508-27509]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-11247]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66928; File Nos. SR-NYSE-2011-55; SR-NYSEAmex-2011-84]


Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE 
Amex LLC; Notice of Designation of Longer Period for Commission Action 
on Proceedings To Determine Whether To Disapprove Proposed Rule 
Changes, as Modified by Amendments Nos. 1 and 2, Adopting NYSE Rule 
107C To Establish a Retail Liquidity Program for NYSE-Listed Securities 
on a Pilot Basis Until 12 Months From Implementation Date, and Adopting 
NYSE Amex Rule 107C To Establish a Retail Liquidity Program for NYSE 
Amex Equities Traded Securities on a Pilot Basis Until 12 Months From 
Implementation Date

May 4, 2012.
    On October 19, 2011, New York Stock Exchange LLC (``NYSE'') and 
NYSE Amex LLC (``NYSE Amex'' and together with NYSE, the ``Exchanges'') 
each 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 a Retail Liquidity Program (``Program'') on a pilot basis for 
a period of one year from the date of implementation, if approved. The 
proposed rule changes were published for comment in the Federal 
Register on November 9, 2011.\3\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release Nos. 65671 (November 2, 
2011), 76 FR 69774 (SR-NYSE Amex-2011-84); and 65672 (November 2, 
2011), 76 FR 69788 (SR-NYSE-2011-55).
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    The Commission received 28 comments on the NYSE proposal \4\ and 
four comments on the NYSE Amex proposal.\5\ On December 19, 2011, the 
Commission extended the time for Commission action on the proposed rule 
changes until February 7, 2012.\6\ In connection with the proposals, 
the Exchanges requested exemptive relief from Rule 612(c) of Regulation 
NMS,\7\ which prohibits a national securities exchange from accepting 
or ranking certain orders based on an increment smaller than the 
minimum pricing increment.\8\ The Exchanges submitted a consolidated 
response letter on January 3, 2012.\9\ On January 17, 2012, the 
Exchanges each filed Partial Amendment No. 1 to their proposals.\10\
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    \4\ See Letters to the Commission from Sal Arnuk, Joe Saluzzi 
and Paul Zajac, Themis Trading LLC, dated October 17, 2011 (``Themis 
Letter''); Garret Cook, dated November 4, 2011 (``Cook Letter''); 
James Johannes, dated November 27, 2011 (``Johannes Letter''); Ken 
Voorhies, dated November 28, 2011 (``Voorhies Letter''); William 
Wuepper, dated November 28, 2011 (``Wuepper Letter''); A. Joseph, 
dated November 28, 2011 (``Joseph Letter''); Leonard Amoruso, 
General Counsel, Knight Capital, Inc., dated November 28, 2011 
(``Knight Letter I''); Kevin Basic, dated November 28, 2011 (``Basic 
Letter''); J. Fournier, dated November 28, 2011 (``Fournier 
Letter''); Ullrich Fischer, CTO, PairCo, dated November 28, 2011 
(``PairCo Letter''); James Angel, Associate Professor of Finance, 
McDonough School of Business, Georgetown University, dated November 
28, 2011 (``Angel Letter''); Jordan Wollin, dated November 29, 2011 
(``Wollin Letter''); Aaron Schafter, President, Great Mountain 
Capital Management LLC, dated November 29, 2011 (``Great Mountain 
Capital Letter''); Wayne Koch, Trader, Bright Trading, dated 
November 29, 2011 (``Koch Letter''); Kurt Schact, CFA, Managing 
Director, and James Allen, CFA, Head, Capital Markets Policy, CFA 
Institute, dated November 30, 2011 (``CFA Letter I''); David Green, 
Bright Trading, dated November 30, 2011 (``Green Letter''); Robert 
Bright, Chief Executive Officer, and Dennis Dick, CFA, Market 
Structure Consultant, Bright Trading LLC, dated November 30, 2011 
(``Bright Trading Letter''); Bodil Jelsness, dated November 30, 2011 
(``Jelsness Letter''); Christopher Nagy, Managing Director, Order 
Routing and Market Data Strategy, TD Ameritrade, dated November 30, 
2011 (``TD Ameritrade Letter''); Laura Kenney, dated November 30, 
2011 (``Kenney Letter''); Suhas Daftuar, Hudson River Trading LLC, 
dated November 30, 2011 (``Hudson River Trading Letter''); Bosier 
Parsons, Bright Trading LLC, dated November 30, 2011 (``Parsons 
Letter''); Mike Stewart, Head of Global Equities, UBS, dated 
November 30, 2011 (``UBS Letter''); Dr. Larry Paden, Bright Trading, 
dated December 1, 2011 (``Paden Letter''); Thomas Dercks, dated 
December 1, 2011 (``Dercks Letter''); Eric Swanson, Secretary, BATS 
Global Markets, Inc., dated December 6, 2011 (``BATS Letter''); Ann 
Vlcek, Director and Associate General Counsel, Securities Industry 
and Financial Markets Association, dated December 7, 2011 (``SIFMA 
Letter I''); and Al Patten, dated December 29, 2011 (``Patten 
Letter'').
    \5\ See Knight Letter I; CFA Letter I; TD Ameritrade Letter; and 
letter to the Commission from Shannon Jennewein, dated November 30, 
2011 (``Jennewein Letter'').
    \6\ See Securities Exchange Act Release No. 66003, 76 FR 80445 
(December 23, 2011).
    \7\ 17 CFR 242.612(c).
    \8\ See Letter from Janet M. McGinness, Senior Vice President-
Legal and Corporate Secretary, Office of the General Counsel, NYSE 
Euronext to Elizabeth M. Murphy, Secretary, Commission, dated 
October 19, 2011. The Exchanges amended the exemptive relief request 
on January 13, 2012. See Letter from Janet M. McGinness, Senior Vice 
President-Legal and Corporate Secretary, Office of the General 
Counsel, NYSE Euronext to Elizabeth M. Murphy, Secretary, 
Commission, dated January 13, 2012.
    \9\ See Letter to the Commission from Janet McGinnis, Senior 
Vice President, Legal & Corporate Secretary, Legal & Government 
Affairs, NYSE Euronext, dated January 3, 2012 (``Exchanges' Response 
Letter I'').
    \10\ In Amendment No. 1, the Exchanges propose to modify the 
proposals as follows: (1) To state that Retail Member Organizations 
may receive free executions for their retail orders and the fees and 
credits for liquidity providers and Retail Member Organizations 
would be determined based on experience with the Retail Liquidity 
Program in the first several months; (2) to correct a typographical 
error referring to the amount of minimum price improvement on a 500 
share order; (3) to indicate the Retail Liquidity Identifier would 
be initially available on each Exchange's proprietary data feeds, 
and would be later available on the public market data stream; and 
(4) to limit the Retail Liquidity Program to securities that trade 
at prices equal to or greater than $1 per share.

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[[Page 27509]]

    On February 7, 2012, the Commission instituted proceedings to 
determine whether to disapprove the proposed rule changes, as modified 
by Amendments No. 1.\11\ On February 16, 2012, the Exchanges each filed 
Partial Amendment No. 2 to their proposals, which the Commission 
published for comment in the Federal Register on March 1, 2012 
(``Notice of Partial Amendment No. 2'').\12\ In response to the Order 
Instituting Proceedings and the Notice of Partial Amendment No. 2, the 
Commission received four additional comment letters on the 
proposals.\13\ On March 20, 2012, the Exchanges submitted a 
consolidated rebuttal letter in response to the Order Instituting 
Proceedings.\14\ Additionally, on April 10, 2012, the Exchanges 
submitted a consolidated response to the comments concerning Partial 
Amendments No. 2.\15\
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    \11\ See Securities Exchange Act Release No. 66346, 77 FR 7628 
(February 13, 2012) (``Order Instituting Proceedings'').
    \12\ See Securities Exchange Act Release No. 66464 (February 24, 
2012), 77 FR 12629.
    \13\ See Letters to the Commission from Leonard Amoruso, General 
Counsel, Knight Capital, Inc., dated March 7, 2012 (``Knight Letter 
II''); Kurt Schact, CFA, Managing Director, Rhodri Preece, CFA, 
Director, Capital Markets Policy, and James Allen, CFA, Head, 
Capital Markets Policy, CFA Institute, dated March 21, 2012 (``CFA 
Letter II''); Ann Vlcek, Director and Associate General Counsel, 
Securities Industry and Financial Markets Association, dated March 
23, 2012 (``SIFMA Letter II''); and Jim Toes, President and CEO, and 
Jennifer Green Setzenfand, Chairman, Security Traders Association, 
dated April 26, 2012.
    \14\ See Letter to the Commission from Janet McGinnis, Senior 
Vice President, Legal & Corporate Secretary, Legal & Government 
Affairs, NYSE Euronext, dated March 20, 2012 (``Exchanges' Response 
Letter II'').
    \15\ See Letter to the Commission from Janet McGinnis, Senior 
Vice President, Legal & Corporate Secretary, Legal & Government 
Affairs, NYSE Euronext, dated April 10, 2012 (``Exchanges' Response 
Letter III'').
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    Section 19(b)(2) of the Act \16\ provides that, after initiating 
disapproval proceedings, the Commission shall issue an order approving 
or disapproving the proposed rule changes not later than 180 days after 
the date of publication of notice of their filing. The Commission may 
extend the period for issuing an order approving or disapproving the 
proposed rule changes, however, by up to 60 days if the Commission 
determines that a longer period is appropriate and publishes the 
reasons for such determination. In this case, the proposed rule changes 
were published for notice and comment in the Federal Register on 
November 9, 2011; May 7, 2012, is 180 days from that date, and July 6, 
2012, is 240 days from that date.
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    \16\ 15 U.S.C. 78s(b)(2).
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    The Commission finds it appropriate to designate a longer period 
within which to issue an order approving or disapproving the proposed 
rule changes so that it has sufficient time to consider the Program and 
the issues that commenters have raised concerning the Program. 
Specifically, as the Commission noted in the Order Instituting 
Proceedings, the Program raises several notable issues, including 
whether the Program is consistent with the Sub-Penny Rule and with the 
Quote Rule. The Commission's resolution of these issues could have an 
impact on overall market structure. As a result, the Commission 
continues to consider whether the proposed rule changes are consistent 
with these particular Regulation NMS Rules and with the Act.
    Accordingly, the Commission, pursuant to Section 19(b)(2) of the 
Act,\17\ designates July 6, 2012, as the date by which the Commission 
shall either approve or disapprove the proposed rule changes (File Nos. 
SR-NYSE-2011-55 and SR-NYSEAmex-2011-84).
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    \17\ 15 U.S.C. 78s(b)(2).
    \18\ 17 CFR 200.30-3(a)(57).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-11247 Filed 5-9-12; 8:45 am]
BILLING CODE 8011-01-P


