
[Federal Register Volume 77, Number 165 (Friday, August 24, 2012)]
[Notices]
[Pages 51596-51599]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-20839]



[[Page 51596]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67686; File Nos. SR-NYSE-2012-19; SR-NYSEMKT-2012-13]


Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE 
MKT LLC; Order Granting Approval to Proposed Rule Changes, as Modified 
by Amendment No. 1, (1) Amending NYSE Rule 13 and NYSE MKT Rule 13--
Equities to Establish New Order Types, (2) Amending NYSE Rule 115A and 
NYSE MKT Rule 115A--Equities to Delete Obsolete Text and to Clarify and 
Update the Description of The Allocation of Market and Limit Interest 
in Opening and Reopening Transactions, (3) Amending NYSE Rule 123C and 
NYSE MKT Rule 123C--Equities to Include Better-Priced G Orders in The 
Allocation of Orders in Closing Transactions, and (4) Making Other 
Technical and Conforming Changes

August 17, 2012.

I. Introduction

    On June 15, 2012, New York Stock Exchange LLC (``NYSE'') and NYSE 
MKT LLC (``NYSE MKT'' and together with NYSE, the ``Exchanges'') 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\ proposed rule changes to (1) amend 
NYSE Rule 13 and NYSE MKT Rule 13--Equities (hereinafter referred to 
collectively as ``Rule 13'') to establish new order types, (2) amend 
NYSE Rule 115A and NYSE MKT Rule 115A--Equities (hereinafter referred 
to collectively as ``Rule 115A'') to delete obsolete text and to 
clarify and update the description of the allocation of market and 
limit interest in opening and reopening transactions, (3) amend NYSE 
Rule 123C and NYSE MKT Rule 123C--Equities (hereinafter referred to 
collectively as ``Rule 123C'') to include better-priced G orders in the 
allocation of orders in closing transactions, and (4) make other 
technical and conforming changes. On June 27, 2012, the Exchanges filed 
Amendment No. 1 to their proposals. The proposed rule changes, as 
modified by Amendment No. 1, were published for comment in the Federal 
Register on July 6, 2012.\3\ The Commission received no comments on the 
proposals. This order approves the proposed rule changes as modified by 
Amendment No. 1.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release Nos. 67317 (June 29, 
2012), 77 FR 40133 (SR-NYSE-2012-19) and 67318 (June 29, 2012), 77 
FR 40129 (SR-NYSEMKT-2012-13) (hereinafter referred to collectively 
as ``Notices'').
---------------------------------------------------------------------------

II. Description of the Proposals

    The Exchanges propose to (1) amend Rule 13 to establish new order 
types, (2) amend Rule 115A to delete obsolete text and to clarify and 
update the description of the allocation of market and limit interest 
in opening and reopening transactions, (3) amend Rule 123C to include 
better-priced G orders in the allocation of orders in closing 
transactions, and (4) make other technical and conforming changes.

Amendments to Order Type Definitions Under Rule 13

    The Exchanges propose deleting and replacing two types of opening 
orders currently defined in Rule 13 to stop opening orders from 
executing when a security opens on a quote or routing to an away 
market.
    The orders the Exchanges propose to delete are ``At the Opening or 
At the Opening Only'' orders. These order types currently are defined 
in Rule 13 as market or limit orders which are to be executed on the 
opening trade of the stock on one of the Exchanges, or if one of the 
Exchanges opens the stock on a quote, the opening trade in the stock on 
another market center to which such order or part thereof has been 
routed in compliance with Regulation NMS. Under the current definition, 
any such order or portion thereof not so executed is to be treated as 
cancelled. Furthermore, all or part of such orders that seek the 
possibility of an NYSE- or NYSE MKT-only opening execution, and that 
are marked as a Regulation NMS-compliant Immediate or Cancel (``IOC'') 
order, are immediately and automatically cancelled if they are not 
executed on the opening trade of the stock on one of the Exchanges or 
if compliance with Regulation NMS would require all or part of such 
order to be routed to another market center.
    The Exchanges propose to replace ``At the Opening or At the Opening 
Only'' orders with two new order types: Market ``On-the-Open'' 
(``MOO'') and Limit ``On-the-Open'' (``LOO'') orders. A MOO order would 
be defined as a market order in a security that is to be executed in 
its entirety on the opening or reopening trade of the security on the 
Exchange; it would be immediately and automatically cancelled if the 
security opened on a quote or not executed due to tick restrictions. A 
LOO order would be defined as a limit order in a security that is to be 
executed on the opening or reopening trade of the security on the 
Exchange. A LOO order, or a part thereof, would immediately and 
automatically cancel if by its terms it were not marketable at the 
opening price, if it were not executed on the opening trade of the 
security on the Exchange, or if the security opened on a quote. Both 
MOO and LOO orders could be entered before the open to participate on 
the opening trade or during a trading halt or pause to participate on a 
reopening trade.
    The Exchanges also propose to add new order type to IOC Orders in 
Rule 13, the ``Immediate or Cancel Minimum Trade Size'' order (``IOC 
MTS order''). As proposed, any IOC order, including an intermarket 
sweep order, may include a minimum trade size (``MTS'') instruction.\4\ 
For each incoming IOC-MTS order, Exchange systems will evaluate whether 
contra-side displayable and non-displayable interest on Exchange 
systems can meet the MTS instruction and will reject such incoming IOC-
MTS order if Exchange contra-side volume cannot satisfy the MTS 
instruction. An IOC MTS order could result in an execution in an away 
market. The Exchanges would reject any IOC-MTS orders if the security 
is not open for trading or when auto-execution is suspended.
---------------------------------------------------------------------------

    \4\ A minimum trade size instruction currently is available to 
Floor brokers for d-quotes under NYSE Rule 70.25(d) and NYSE MKT 
Rule 70.25(d)--Equities.
---------------------------------------------------------------------------

    In conjunction with the substantive amendments described above, the 
Exchanges propose to make technical and conforming changes to the 
Immediate or Cancel order definition in Rule 13. The Exchanges would 
make conforming changes throughout the definition to provide that only 
an IOC order without an MTS instruction could be entered before the 
Exchange opening for participation in the opening trade or when auto 
execution is suspended, which includes during a trading pause or halt. 
In addition, NYSE proposes to delete existing paragraph (e) from its 
Immediate or Cancel order definition because the paragraph's references 
to commitments to trade received on the Floor through the Intermarket 
Trading System are no longer relevant, as the Intermarket Trading 
System was decommissioned in 2007.
    Lastly, the Exchanges propose to delete several obsolete provisions 
of Rule 13. They propose to delete the definition of Time Order because 
this order typically related to a Floor broker order that historically 
would have been held by the specialist on behalf of the Floor broker 
and converted to a market or limit order at a specified time. The 
Exchange notes that this order can no

[[Page 51597]]

longer be used by Floor brokers. Also, NYSE proposes to delete the 
definition of Auction Market Order \5\ because this order type was 
never implemented, and to amend the definition of Auto Ex Order to 
remove a reference to the Automated Bond System, which is no longer 
operational.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 53539 (March 22, 
2006), 71 FR 16353 (March 31, 2006) (SR-NYSE-2004-05) (Order 
Approving Proposed Rule Change to Establish a Hybrid Market) 
(describing the addition of the proposed Auction Market Order type).
---------------------------------------------------------------------------

Rule 115A--Opening Allocation

    The Exchanges propose to amend Rule 115A, which addresses orders at 
the opening or in unusual situations. In its existing form, the Rule 
has no main text but has Supplementary Material .10, which addresses 
queries to the Display Book before an opening; Supplementary Material 
.20, which addresses the arranging of an opening or price by a 
Designated Market Maker (``DMM''); and Supplementary Material .30, 
which addresses certain functions of Exchange systems with respect to 
orders at the opening.
    The Exchanges propose to re-designate what is now Supplementary 
Material .10 as paragraph (a) as the main text of Rule 115A. The 
Exchanges further propose to add new paragraph (b) to Rule 115A to 
address the process of arranging a price and the allocation of orders 
on opening and reopening trades. Proposed Rule 115A(b) would provide 
that when arranging an opening or reopening price, except as provided 
for in proposed Rule 115A(b)(2), which concerns opening a security on a 
quote and is described below, market interest \6\ would be guaranteed 
to participate in the opening or reopening transaction and have 
precedence over (i) limit interest \7\ that is priced equal to the 
opening or reopening price of a security and (ii) DMM interest.\8\ In 
addition, G orders that are priced equal to the opening or reopening 
price of a security would yield to all other limit interest priced 
equal to the opening or reopening price of a security except DMM 
interest.
---------------------------------------------------------------------------

    \6\ For purposes of the opening or reopening transaction, market 
interest would include (i) market and MOO orders, (ii) tick-
sensitive market and MOO orders to buy (sell) that are priced higher 
(lower) than the opening or reopening price, (iii) limit interest to 
buy (sell) that is priced higher (lower) than the opening or 
reopening price, and (iv) Floor broker interest entered manually by 
the DMM. See proposed Rule 115A(b)(1)(A).
    \7\ For purposes of the opening or reopening transaction, limit 
interest would include (i) limited-priced interest, including e-
Quotes, LOO orders, and G orders; and (ii) tick-sensitive market and 
MOO orders that are priced equal to the opening or reopening price 
of a security. See proposed Rule 115A(b)(1)(B).
    \8\ Limit interest that is priced equal to the opening or 
reopening price of a security and DMM interest would not be 
guaranteed to participate in the opening or reopening transaction. 
See proposed Rule 115A(b)(1)(C).
---------------------------------------------------------------------------

    Proposed Rule 115A(b)(2) would clarify the circumstances 
surrounding when a security could open on a quote. As proposed, Rule 
115A(b)(2) would provide that if the aggregate quantity of MOO and 
market orders on at least one side of the market equals one round lot 
or more, the security must open on a trade. If the aggregate quantity 
of MOO and market orders on each side of the market equals less than 
one round lot or is zero, the security could open on a quote. If a 
security opens on a quote, odd-lot market orders would automatically 
execute in a trade immediately following the open on a quote and odd-
lot MOOs would immediately and automatically cancel. MOO and market 
orders subject to tick restrictions that either cannot participate at 
an opening or reopening price or are priced equal to the opening or 
reopening price would not be included in the aggregate quantity of MOO 
and market orders.
    Finally, the Exchanges propose to delete Supplementary Material .20 
and .30. The Exchanges state that much of the content of these 
provisions has been obsolete since the second phase of the New Market 
Model was launched in 2008.\9\ For instance, the Exchanges note that 
some of the language in these provisions relates to DMMs holding 
orders, but DMMs no longer hold orders. Similarly, the Exchanges note 
that some of the language in Supplementary Material .30 describes 
systems of the Exchanges that are either outdated or otherwise covered 
by Rule 15, which deals with Pre-Opening Indications.
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release Nos. 58845 (Oct. 24, 
2008), 73 FR 73683) (Oct. 29, 2008) (SR-NYSE-2008-46); 59022 (Nov. 
26, 2008), 73 FR 73683 (Dec. 3, 2008) (SR-NYSEALTR-2008-10).
---------------------------------------------------------------------------

    The Exchanges point out that to the extent certain concepts in 
Supplementary Material .20 are still relevant or applicable, they are 
incorporated into proposed new paragraph 115A(b), described above. For 
instance, current paragraphs 2(a), (b), and (c) of Supplementary 
Material .20 address the allocation and precedence of certain orders in 
openings and reopenings. Paragraph 2(a) provides that a limited price 
order to buy (sell) that is at a higher (lower) price than the security 
is to be opened or reopened is treated as a market order, and market 
orders have precedence over limited orders. Substantially similar 
language appears in proposed paragraph 115A(b)(1)(A)(iii). Paragraph 
2(b) provides that when the price on a limited price order is the same 
as the price at which the stock is to be opened or reopened, it may not 
be possible to execute a limited price order at such price, and 
substantially similar language appears in proposed paragraph 
115A(b)(1)(C). Paragraph 2(c) requires a DMM to see that each market 
order the DMM holds participates in the opening transaction, and if the 
order is for an amount larger than one round lot, the size of the bid 
that is accepted or the offer that is taken establishing the opening or 
reopening price is the amount that a market order is entitled to 
participate in at the opening or reopening. This concept is contained 
in proposed paragraph 115A(b).

Rule 123C--Closing Allocation and ``G Orders''

    The Exchanges propose to amend Rules 13 and 123C as those rules 
relate to G orders. First, the Exchanges propose to add the phrase ``G 
orders'' as a formal definitional term to an existing order type found 
in Rule 13. Paragraph (g) of the Auto Ex Order definition in Rule 13 
currently describes ``an order entered pursuant to Subsection (G) of 
Section 11(a)(1) of the Securities Exchange Act of 1934.'' The 
Exchanges explain in their Notices that this definition is meant to 
include proprietary orders of members of the Exchanges when those 
orders are executed by one of the members' floor brokers.\10\ While the 
Auto Ex order type described in paragraph (g) was commonly referred to 
by the Exchanges as a ``G order'' and referred to as such elsewhere in 
the Exchanges' rules, it was not officially defined as such in the 
Exchanges' order type rules. The Exchanges now propose to add to the 
end of paragraph (g) of the Auto Ex Order definition a parenthetical 
phrase noting that such orders will be officially defined as ``G 
orders.''
---------------------------------------------------------------------------

    \10\ In a previous filing, NYSE MKT's predecessor described G 
orders as ``orders for an Exchange member's own account where the 
member meets a business mix test that requires it to be primarily 
engaged in the business of underwriting and distributing securities, 
selling securities to customers, and/or acting as a broker and 
provided more than 50% of its gross revenues is derived from such 
businesses and related activities.'' See Securities Exchange Act 
Release No. 63972 (Feb. 25, 2011), 76 FR 12202 (Mar. 4, 2011) (SR-
NYSEAMEX-2011-09).
---------------------------------------------------------------------------

    The Exchanges also propose to amend Rule 123C to include better-
priced G orders in the list of orders that must be allocated in whole 
or part in closing transactions. Currently, Rule 123C(7)(a) sets forth 
six order types that must be included in the closing transaction in

[[Page 51598]]

the following order: (1) MOC orders that do not have tick restrictions, 
(2) MOC orders that have tick restrictions that limit the execution of 
the MOC to a price better than the price of the closing transaction, 
(3) Floor broker interest entered manually by the DMM, (4) limit orders 
better priced than the closing price, (5) LOC orders that do not have 
tick restrictions better priced than the closing transaction, and (6) 
LOC orders better priced than the closing transaction that have tick 
restrictions that are capable of being executed based on the closing 
price (``must execute'' list). Once all of the ``must execute'' 
interest listed in Rule 123C(7)(a) has been satisfied, Rule 123C(7)(b) 
provides that the following interest may be used to offset a closing 
imbalance in the following order: (1) Limit orders represented in the 
Display Book with a price equal to the closing price, (2) LOC orders 
with a price equal to the closing price, (3) MOC orders that have tick 
restrictions that limit the execution of the MOC to the price of the 
closing transaction, (4) LOC orders that have tick restrictions that 
are capable of being executed based on the closing price and the price 
of such limit order is equal to the price of the closing transaction, 
(5) G orders, and (6) Closing Only orders (``may execute'' list).
    The Exchanges propose to amend Rule 123C(7)(a) to add G orders that 
are priced better than the closing price as the last type of order that 
must be included in the closing transaction. In conjunction with this 
change, the Exchanges also propose to make a conforming change to the 
reference to G orders in paragraph 5 of Rule 123(C)(7)(b) (the ``may 
execute'' list of interest). Under the proposals, language would be 
added to paragraph 5 of Rule 123(C)(7)(b) to make clear that the G 
orders included in the ``may execute'' list of interest are those G 
orders with a price equal to the closing price--to be distinguished 
from the G orders priced better than the closing price that are being 
added to the list of ``must execute'' interest in 123(C)(7)(a).
    Finally, the Exchanges propose one more change to the ``may 
execute'' list of interest. The Exchanges propose to amend Rule 
123C(7)(b)(i) to add that DMM interest, as well as limit orders 
represented in the Display Book with a price equal to the closing 
price, are the first types of interest that may be used to offset a 
closing imbalance. According to the Exchanges, this is intended to be a 
clarifying change because they have noted before in prior rule filings 
that DMM interest would be treated in such a manner.\11\
---------------------------------------------------------------------------

    \11\ See, e.g., Securities Exchange Act Release No. 60974 (Nov. 
9, 2009) 74 FR 59299 (Nov. 17, 2009) (SR-NYSE-2009-111) (``After the 
`must execute interest' is satisfied, then any limit orders 
represented in Display Book at the closing price may be used to 
offset the remaining imbalance. It should be noted that DMM 
interest, including better-priced DMM interest entered into the 
Display Book prior to the closing transaction, eligible to 
participate in the closing transaction is always included in the 
hierarchy of execution as if it were interest equal to the price of 
the closing transaction.'').
---------------------------------------------------------------------------

III. Discussion and Commission's Findings

    After carefully considering the proposed rule changes, as modified 
by Amendment No.1, the Commission finds that they are consistent with 
the requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\12\ In particular, the 
Commission finds that the proposals are consistent with Section 6(b) of 
the Act.\13\ Specifically, the Commission believes that the proposed 
rule changes do not impose any burden on competition not necessary or 
appropriate in furtherance of the Act and are designed to promote just 
and equitable principles of trade, to prevent fraudulent and 
manipulative acts, and, in general, to protect investors and the public 
interest.\14\
---------------------------------------------------------------------------

    \12\ In approving the proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \13\ 15 U.S.C. 78(f)(b).
    \14\ 15 U.S.C. 78(f)(b)(5).
---------------------------------------------------------------------------

    The Exchanges' proposals to delete ``At the Opening or At the 
Opening Only'' orders, and to replace them with MOO and LOO orders, are 
intended to make clear that such opening orders will not execute when a 
security opens on a quote, and that they will not be routed to away 
markets. The Commission finds that the proposed MOO and LOO order type 
definitions are clear and transparent as to when such orders will be 
immediately and automatically cancelled; in the case of a MOO order, if 
the security opens on a quote or if it is not executed due to tick 
restrictions, and in the case of a LOO order, if it is not marketable 
at the opening price, it is not executed on the opening trade of a 
security, or if the security opens on a quote. The Commission notes 
that the MOO and LOO order types proposed by the Exchanges are 
variations of Market ``At-The-Close'' (``MOC'') and Limit ``At-The-
Close'' (``LOC'') orders already offered by the Exchanges.\15\ In 
addition, the proposed MOO and LOO order types are similar in concept 
and terminology to orders offered by other exchanges.\16\
---------------------------------------------------------------------------

    \15\ See Rule 13.
    \16\ See, e.g., NYSE Arca Equities Rule 7.31(t)(1) and (2); 
NASDAQ Rule 4752(a)(3) and (4); and BATS Exchange Rule 11.23(a)(14) 
and (16).
---------------------------------------------------------------------------

    The Commission finds that the other proposed amendments to Rule 13 
are also consistent with the requirements of the Act. The Exchanges' 
proposed new IOC MTS order type will offer market participants added 
functionality and additional trading opportunities similar to what is 
offered in other trading venues.\17\ The Exchanges' proposed non-
substantive and technical conforming changes are consistent with the 
requirements of the Act because they clarify the rule text for ease of 
reference and delete obsolete language.
---------------------------------------------------------------------------

    \17\ See, e.g., Nasdaq Stock Market Rule 4751(e)(5) (defining 
``Minimum Quantity Orders'').
---------------------------------------------------------------------------

    In addition, the Commission finds that the Exchanges' proposed 
revision of Rule 115A is consistent with the requirements of the Act. 
The proposals would specify how market interest would participate in 
the opening or reopening transaction and how market interest would have 
precedence over limit interest priced equal to the opening price or 
reopening price of a security and DMM interest. The Commission believes 
that the proposal should ensure that market interest, except as 
provided in Rule 115A(b)(2), would be guaranteed to participate in 
openings or reopenings.
    The Commission also finds that the proposals would delete 
duplicative and obsolete language in Rule 115A, which should bring 
clarity to the Exchanges' rules. Similarly, the Commission finds that 
amending Rule 123C(7)(b)(i) to expressly provide for the treatment of 
DMM interest in offsetting a closing imbalance will add transparency 
and clarity to the Exchange's rules, thereby promoting just and 
equitable principles of trade.
    Lastly, the Commission believes that the Exchanges' proposed 
changes to Rule 123C are consistent with the requirements of the Act, 
and in particular Section 11(a) of the Act. Section 11(a)(1) of the Act 
prohibits a member of a national securities exchange from effecting 
transactions on that exchange for its own account, the account of an 
associated person, or any account over which it or an associated person 
exercises discretion, unless an exception applies. Subsection (G) of 
Section 11(a)(1) provides an exemption from the general prohibition set 
forth in Section 11(a)(1) for any transaction for a member's own 
account, provided that: (i) Such member is primarily engaged in certain 
underwriting, distribution, and

[[Page 51599]]

other activities; and (ii) the transaction is effected in compliance 
with the rules of the Commission, which, at a minimum, assure that the 
transaction is not inconsistent with the maintenance of fair and 
orderly markets and yields priority, parity and precedence in execution 
to orders for the account of persons who are not members or associated 
with members of the exchange.\18\ In addition, Rule 11a1-1(T) under the 
Act specifies that a transaction effected on a national securities 
exchange for the account of a member which meets the requirements of 
Section 11(a)(1)(G)(i) of the Act is deemed, in accordance with the 
requirements of Section 11(a)(1)(G)(ii), to be not inconsistent with 
the maintenance of fair and orderly markets and to yield priority, 
parity, and precedence in execution to orders for the account of non-
members or persons associated with non-members of the exchange, if such 
transaction is effected in compliance with certain requirements.\19\
---------------------------------------------------------------------------

    \18\ See 15 U.S.C. 78k(a)(1)(G).
    \19\ Rule 11a1-1(T)(a)(1)-(3) provides that each of the 
following requirements must be met: (1) A member must disclose that 
a bid or offer for its account is for its account to any member with 
whom such bid or offer is placed or to whom it is communicated, and 
any member through whom that bid or offer is communicated must 
disclose to others participating in effecting the order that it is 
for the account of a member; (2) immediately before executing the 
order, a member (other than the specialist in such security) 
presenting any order for the account of a member on the exchange 
must clearly announce or otherwise indicate to the specialist and to 
other members then present for the trading in such security on the 
exchange that he is presenting an order for the account of a member; 
and (3) notwithstanding rules of priority, parity, and precedence 
otherwise applicable, any member presenting for execution a bid or 
offer for its own account or for the account of another member must 
grant priority to any bid or offer at the same price for the account 
of a person who is not, or is not associated with, a member, 
irrespective of the size of any such bid or offer or the time when 
entered. See 17 CFR 240.11a1-1(T)(a)(1)-(3).
---------------------------------------------------------------------------

    Under the proposals, the Exchanges would add G orders priced better 
than the closing price to the list of ``must execute'' interest to be 
allocated in whole or part at the close. Only G orders priced better 
than the closing price would be eligible to execute as part of the 
``must execute'' interest, and then only after execution of all other 
``must execute'' interest.\20\
---------------------------------------------------------------------------

    \20\ In its proposal, the Exchanges note that Section 
11(a)(1)(G) of the Act does not require better-priced G orders to 
yield. See Notices, 77 FR at 40135 and 40131. See also 17 CFR 
240.11a1-1(T)(a)(3), which requires that a ``member presenting for 
execution a bid or offer for its own account or for the account of 
another member shall grant priority to any bid or offer at the same 
price for the account of a person who is not, or is not associated 
with, a member irrespective of the size of any such bid or offer or 
the time when entered.'' The priority of G orders with a price equal 
to the closing price in relation to other ``may execute'' interest 
will remain unchanged under the proposal.
---------------------------------------------------------------------------

    The Commission believes that it is consistent with the requirements 
of the Act for G orders priced better than the closing price to execute 
before ``may execute'' interest priced equal to the closing price. Such 
G orders could offer contra-side interest a chance at price improvement 
if executed prior to the close. Further, because the rules will require 
G orders priced better than the closing price to yield to all other 
eligible orders priced better than the closing price, the Commission 
believes that the proposal, with respect to such priority, is 
consistent with Section 11(a)(1)(G) of the Act\21\ and Rule 11a1-
1(T)(a)(3) thereunder.\22\
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78k(a)(1)(G).
    \22\ 17 CFR 240.11a1-1(T). The Commission notes that this 
exemption is available only for orders for the account of Exchange 
members. The Commission also reminds the Exchanges and their members 
that, in addition to yielding priority to non-member orders at the 
same price, members submitting ``G orders'' must also meet the other 
requirements under section 11(a)(1)(G) and Rule 11a1-1(T) to effect 
transactions for their own accounts in reliance on this exception 
(or satisfy the requirements of another exception).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\23\ that the proposed rule changes (SR-NYSE-2012-19 and SR-
NYSEMKT-2012-13), as modified by Amendment No. 1, be, and hereby are, 
approved.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(2).
    \24\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-20839 Filed 8-23-12; 8:45 am]
BILLING CODE 8011-01-P


