
[Federal Register Volume 77, Number 140 (Friday, July 20, 2012)]
[Notices]
[Pages 42786-42788]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17665]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67444; File No. SR-NYSEMKT-2012-20]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Rule 134--
Equities To Shorten the Time Frame for Assigning the Contra Party to 
Unresolved Account Balances in the Exchange's Online Comparison System

July 16, 2012.
    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 July 5, 2012, NYSE MKT LLC (``Exchange'' or ``NYSE MKT'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I and II 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 Rule 134--Equities to shorten the 
time frame for assigning the contra party to unresolved account 
balances in the Exchange's Online Comparison System. The text of the 
proposed rule change is available on the Exchange's Web site at 
www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

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 Exchange Rule 134(e)(iii)--Equities 
(Differences and Omissions-Cleared Transactions) to shorten the time 
frame for assigning a designated market maker (``DMM'') unit as the 
contra party for any unresolved omnibus account balances in the 
Exchange's Online Comparison System (``OCS'').
Background
    The Exchange operates its OCS to assist in trade settlement. OCS 
conducts comparison processing, which includes matching initial trade 
submissions, correction processing, omnibus processing and questioned 
trade (``QT'') resolution for trades that take place on the Exchange. 
The OCS system is used by Exchange members and member organizations in 
their roles as clearing firms, brokers and DMM units for Exchange trade 
executions. OCS is linked internally to Exchange trading systems and 
externally to The National Securities Clearing Corporation.\3\
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    \3\ National Securities Clearing Corporation (``NSCC'') is a 
clearing agency registered with the Commission under Section 17A of 
the Securities Exchange Act of 1934. NSCC provides centralized 
clearance and settlement services for equity security trades for 
U.S. broker-dealers.
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    To facilitate the comparison process, the Exchange utilizes omnibus 
account designations to record trade data.\4\ Using omnibus account 
designations allows for universal contras for one trade side, reducing 
the number of different data elements that have to be independently 
recorded into a broker's hand-held device or written on a Floor report 
for a trade.
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    \4\ An ``omnibus account'' is an account in which the 
transactions of multiple individual participants are combined.
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    In May 2009, the Exchange amended Rule 134--Equities to enable it 
to assign, on the second business day after the trade date (``T+2''), 
any open balance in any of the omnibus accounts it uses to compare 
trades to either a DMM Unit or the member organization that has been 
identified as the clearing firm for one side of an unresolved trade.\5\ 
Specifically, the Exchange added new subsection (e)(iii) to Rule 134--

[[Page 42787]]

Equities to enable the Exchange to assign a Floor broker's clearing 
firm or DMM Unit, at the close of business on T+2, as the contra side 
to an imbalance in any omnibus account that is used by OCS. In June 
2010, the Exchange amended Rule 134--Equities again to separate Rule 
134(e)(iii)--Equities into two subsections and clarify that DMM units 
are assigned as the contra party to an omnibus account imbalance and 
that clearing firms are the assigned contra party to an uncompared 
trade. The Exchange also shortened the time frame for the assignment of 
uncompared e-Quote transactions from T+2 to the first business day 
after the trade date (``T+1'').\6\
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    \5\ See Securities Exchange Act Release No. 59997 (May 28, 
2009), 74 FR 28086 (June 12, 2009) (SR-NYSEAmex-2009-20).
    \6\ See Securities Exchange Act Release No. 64277 (July 9, 
2010), 75 FR 41560 (July 16, 2010) (SR-NYSE-2010-48 and SR-NYSEAmex-
2010-61).
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Proposed Amendment of NYSE Rule 134
    The Exchange proposes to amend Rule 134(e)(iii)--Equities to 
shorten the time frame for when the DMM unit is assigned as the contra 
party to an unresolved omnibus account imbalance. The current rule 
provides that at the close of business on T+2 after the conclusion of 
the processes described in sections (e)(i) and (e)(ii) of the Rule, but 
no earlier than 7:00 p.m., the Exchange shall assign a DMM unit as the 
contra party to any unresolved omnibus account imbalance remaining in 
OCS.
    The Exchange proposes to amend Rule 134(e)(iii)--Equities to 
provide that a DMM unit would be assigned as the contra party to any 
unresolved omnibus account imbalances by the close of business on the 
trade date, but no earlier than 5:00 p.m. The Exchange believes that 
shortening this time period will result in speedier resolution of 
unresolved account balances. The Exchange will be able to implement the 
proposed change due to system developments in OCS, including the 
reduction in the use of omnibus accounts other than for manual 
executions and related ability for the DMM to identify post-trade the 
clearing member organization behind a manual execution. The Exchange 
notes that the proposed changes to Rule 134(e)(iii)--Equities will not 
impact the processes set forth in (e)(i) and (ii) of that Rule.
    Because this is a technology-based change, the Exchange proposes to 
announce the implementation date by Trader Update.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \7\ 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. The Exchange believes that this rule 
proposal accomplishes these goals by enhancing the comparison process 
at the Exchange thereby supporting the timely settlement of securities 
transactions. In particular, the Exchange believes that the speedier 
resolution of unresolved account balances support the mechanism of a 
free and open market as it assures that the contra party to a 
transaction will receive a cleared transaction in a timely and 
efficient manner.
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    \7\ 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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\ 
Because the 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 prior to 
30 days from the date on which it was filed, 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 and Rule 19b-
4(f)(6)(iii) thereunder.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of such 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 email to rule-comments@sec.gov. Please include 
File Number SR-NYSEMKT-2012-20 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-NYSEMKT-2012-20. This 
file number should be included on the subject line if email 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 Section, 100 F Street 
NE., Washington, DC 20549, on official business days between the hours 
of 10:00 a.m. and 3:00 p.m. Copies of such filings will also be 
available for inspection and copying at the principal office of NYSE 
and on NYSE's Web site at www.nyse.com.
    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. All submissions should refer to File Number SR-NYSEMKT-2012-
20 and should be submitted on or before August 10, 2012.


[[Page 42788]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17665 Filed 7-19-12; 8:45 am]
BILLING CODE 8011-01-P


