Pursuant to Section 19(b)(1)  of the Securities Exchange Act of 1934 (the “Act”)  and Rule 19b-4 thereunder, notice is hereby given that, on August 27, 2009, New York Stock Exchange LLC (“NYSE” or the “Exchange”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change, as described in Items I, II, and III below, which Items have been prepared by the Exchange. On September 17, 2009, the Exchange filed Amendment No. 1 to the proposed rule change. The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 1, from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to amend NYSE Rule 36 (Communications Between Exchange and Members' Offices) to permit the use of personal portable or wireless communication devices off the Exchange Trading Floor. Amendment No. 1 supersedes the original filing in its entirety. Amendment No. 1 serves to clarify in the rule text the specific areas where employees of member organizations are permitted to use personal portable or wireless communications devices. 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 Statutory Basis for, the Proposed Rule Change
This Amendment No. 1 to SR-NYSE-2009-84 supersedes and replaces the original filing in its entirety.
The purpose of the proposed rule changes is to amend NYSE Rule 36 (Communications Between Exchange and Members' Offices) to permit the use of personal portable or wireless communication devices off the Exchange Trading Floor.
Current Rule 36
NYSE Rule 36 prohibits members and member organizations from establishing or maintaining any telephonic or electronic communication, including the usage of any portable or wireless communication devices (i.e. cellular phone, wireless pager, BlackBerryTM etc.), between the Floor and any other location without prior Exchange approval.
Under Rule 36, notwithstanding the general prohibition on the use of portable or wireless communication devices, Floor brokers may use Exchange authorized and issued portable phones on the Floor to communicate with both member firms and non-members off the Floor, subject to certain restrictions. Floor brokers Start Printed Page 49432may not, however, use Exchange authorized and issued devices on the NYSE Amex Options Trading Floor (as defined in NYSE Rule 6A). See Rule 36, Supplementary Material .20-.23.
Designated Market Makers (“DMMs”) may, subject to restriction, maintain at their posts telephone lines to the off-Floor offices of the DMM unit or the unit's clearing firm. Such telephone lines may only be used to enter options or futures hedging orders through the DMM unit's off-Floor office or the unit's clearing firm, or through a member (on the Floor) of an options or futures exchange. These lines may not, however, be used for the purpose of transmitting to the Floor orders for the purchase or sale of securities. DMMs are also permitted to use at their posts wired or wireless devices, including computer terminals or laptops, that are registered with the Exchange to communicate with their system algorithms. See Rule 36.30.
Under Rule 36, the use of all other portable or wireless communication devices on the Floor is prohibited.
The prescriptions of Rule 36 must be viewed in conjunction with NYSE Rules 6 (“Floor”) and 6A (“Trading Floor”). Under Rule 6, the term “Floor” is defined as “the trading Floor of the Exchange and the premises immediately adjacent thereto, such as the various entrances and lobbies of the 11 Wall Street, 18 New Street, 8 Broad Street, 12 Broad Street and 18 Broad Street Buildings, and also means the telephone facilities available in these locations.” The Exchange has issued interpretive guidance that the “Floor” also includes the areas outside the “Blue Line” (member and member organization booths adjacent to the trading Floor) and “any area reserved primarily for members, including members' lounges and bathrooms.”
In addition, under recently adopted Rule 6A, the “Trading Floor” is within the area of the “Floor” and defined as “the restricted-access physical areas designated by the Exchange for the trading of securities, commonly known as the `Main Room' and the `Garage.'” In accordance with Rule 6A, the Trading Floor does not, however, include the areas where NYSE Amex-listed options are traded, commonly known as the “Blue Room” and the “Extended Blue Room” (the “NYSE Amex Options Trading Floor”).
Proposed Rule Changes
The Exchange proposes to amend Rule 36.23 to permit members and member firm employees to use personal portable or wireless communications devices outside the Trading Floor (i.e. outside the turnstiles or card swipe pads that electronically release locked doors to permit authorized entry).
Although there are other areas on the Exchange's premises where personal communications devices may be used by members and member firm employees (e.g., the cafeteria in 11 Wall Street), these areas are either too far from the Trading Floor to be practical or do not have adequate reception for such devices. Thus, due to the prescriptions of Rule 36 and the broad definition of “Floor” under Rule 6, Exchange members and member firm employees are effectively required to leave the physical premises of the Exchange's buildings and facilities in order to use their personal portable or wireless communications devices. Once outside, members and member firm employees may use their personal phones, BlackBerryTM or other devices to make personal calls and these conversations are not subject to the requirements of Rule 36. The requirement to leave the physical premises of the Exchange's buildings and facilities to make personal communications can be overly burdensome, particularly during times of inclement weather. It is also burdensome to ask a member or member firm employee to go outside to make a personal call when there is no regulatory purpose for requiring personal calls to be made outside as opposed to inside the Exchange's facilities.
The Exchange thus proposes to amend Rule 36.23 to provide a limited exception permitting members and member firm employees to use personal portable or wireless communications devices in designated areas of the Exchange's buildings and facilities that fall within the technical definition of the Floor under Rule 6, but that are outside the Trading Floor as defined under Rule 6A. The proposed changes would permit members and member firm employees to use their personal communications devices in the hallways, stairwells, lobbies or members-only areas of the Exchange premises that are adjacent to the Trading Floors of the Exchange, NYSE Amex Options and/or NYSE Amex Equities. Specifically, such usage would be permitted in the lobby areas of the Exchange's facilities at 11 Wall Street, 6 and 18 New Street, and 2, 12, 18 and 20 Broad Street, as well as in the corridor in front of the interior elevator bank inside of 18 Broad Street. Again, it is important to note that a member would need to re-enter the Trading Floor from these areas through a restricted access point (i.e. turnstiles or card swipe pads that electronically release locked doors to permit authorized entry).
In addition, such usage would need to be consistent with all other Exchange Rules and/or federal securities laws, including, but not limited to, the requirements of Securities Exchange Act Release Nos. 33-7288 and 34-37182, concerning the “Use of Electronic Media by Broker-Dealers, Transfer Agents, and Investment Advisers for Delivery of Information.” The Exchange represents that it will issue a notice to members that will, inter alia, remind them of their obligations under these Start Printed Page 49433releases. Finally, the Exchange proposes corresponding technical amendments to Rule 36.20.
In proposing this limited exception, the Exchange seeks to provide its members and member firm employees with a reasonable and comfortable space inside the physical confines of the Exchange's buildings and facilities within which they may use their personal portable or wireless communication devices, without diminishing the ability to monitor and regulate their conduct. The Exchange believes that the distance afforded by allowing a DMM, for example, to use a personal portable or wireless communication device outside the turnstiles is, in essence, equivalent to requiring a DMM to leave the Exchange's premises to do the same. Any time or place advantage to using such devices outside the turnstiles is significantly reduced by the fact that a DMM has no line of sight and no ability to hear trading activity on the Floor and the speed of electronic trading would likely render stale any information a DMM had prior to leaving his or her post on the Trading Floor.
In addition, the proposed amendments do not change the current obligations of members and member firm employees to use their personal portable or wireless communication devices consistent with Exchange Rules and federal securities laws. Floor brokers would still be limited to using only Exchange authorized and issued portable phones on the Exchange Trading Floor and DMMs would still only be permitted to use registered telephone lines and/or wired or wireless devices at their posts, and all such devices and communications would continue to be regulated by the Exchange. All other usage of portable or wireless communication devices on the Trading Floor would continue to be prohibited.
Finally, the Exchange would still retain jurisdiction over its members and member firm employees to regulate conduct that is inconsistent with Exchange Rules and/or the federal securities laws (e.g., trading ahead, insider trading, market manipulation).
2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent with, and further the objectives of, Section 6(b)(5) of the Act, in that they are designed to prevent fraudulent and manipulative acts and practices, 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 the proposed rule changes are consistent with these principles because they do not modify the current prescribed uses (and limitations thereof) of personal portable or wireless communications devices. Rather, they merely change where those devices may be used to reflect the reality of the current trading environment, in which any time and place advantage to using such devices outside the Trading Floor and other restricted access areas is significantly reduced by the fact that a DMM or Floor broker has no line of sight or ability to hear trading activity on the Trading Floor. The Exchange further believes that, given the current speed of Exchange systems and the marketplace, any information a DMM obtained prior to leaving his or her post would be rendered stale by the time the DMM is outside the turnstiles. As such, the location change for the use of personal portable or wireless communication devices in the current trading environment is consistent with the Exchange's current regulatory controls governing the used of personable portable or wireless communication devices on the Floor, which were previously approved by the Commission or submitted by the Exchange for immediate effectiveness.
The Exchange further believes that the proposal will permit Exchange members and member firm employees to, within the existing regulatory framework at the Exchange, efficiently and effectively conduct business on the Trading Floor and engage in personal communications while off the Trading Floor.
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 35 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 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:
- Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
- Send an e-mail to firstname.lastname@example.org. Please include File Number SR-NYSE-2009-84 on the subject line.
- 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-NYSE-2009-84. 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 inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549, on official business days Start Printed Page 49434between 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 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 available publicly. All submissions should refer to File Number SR-NYSE-2009-84 and should be submitted on or before October 19, 2009.Start Signature
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Florence E. Harmon,
1. 15 U.S.C.78s(b)(1).Back to Citation
4. Amendment No. 1 supersedes and replaces the original filing in its entirety.Back to Citation
5. The Commission notes that the rule text makes clear that personal portable or wireless communication devices can only be used outside of the Trading Floor and all other restricted access areas.Back to Citation
6. The Exchange's corporate affiliate, NYSE Amex LLC (“NYSE Amex”), has submitted a companion filing. See SR-NYSE-Amex-2009-57. The Commission notes that the rule text makes clear that personal portable or wireless communication devices can only be used outside of the Trading Floor and all other restricted access areas. See supra note 5.Back to Citation
7. Prior to the implementation of a pilot program in 2003, Rule 36 prohibited, inter alia, the use of any portable or wireless communication devices on the Floor of the Exchange. In 2003, the Commission approved a six-month pilot program under NYSE Rule 36 for the use of portable phones by Floor brokers on the Floor of the Exchange, which was subsequently extended several times to June 30, 2008. See footnotes 5 through 7 in Securities Exchange Act Release No. 58068 (June 30, 2008), 73 FR 39363 (July 9, 2008) (SR-NYSE-2008-20). In July 2008 the Commission approved the Exchange's proposed amendments to Rule 36, making the pilot program permanent. See id. (order approving the amendments to Rule 36).Back to Citation
8. All members and member firm employees who use an Exchange authorized and issued portable phone must execute a written acknowledgement as to the usage of the phone and authorizing the Exchange to receive data and records related to incoming and outgoing calls. See NYSE Information Memos 08-40 (August 14, 2008) and 08-41 (August 14, 2008) (concerning the use of Exchange authorized and issued portable phones on the Floor). See also NYSE/NYSE Amex Information Memo 08-66 (December 22, 2008).Back to Citation
9. The role of DMMs and their obligations on the Exchange are described in Securities Exchange Act Release No. 58845 (October 24, 2008), 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46).Back to Citation
10. See NYSE/NYSE Amex Information Memo 08-66 (December 22, 2008).Back to Citation
11. Pursuant to the definitions of “Floor” and “Trading Floor” in NYSE Rules 6 and 6A, and corresponding Rules 6- and 6A—NYSE Amex Equities, the NYSE and NYSE Amex Equities Trading Floors overlap and thus references in the proposed rule text as well as in the 19b-4 to “Trading Floor” include the NYSE Amex Equities Trading Floor. See Securities Exchange Act Release No. 59479 (March 2, 2009), 74 FR 10325 (March 10, 2009) (SR-NYSE-2009-23) (adopting, inter alia, NYSE Rule 6A). As noted in footnote 4, NYSE Amex has proposed corresponding rule changes for its members and member organizations. See SR-NYSE-Amex-2009-57.Back to Citation
12. See supra note 5.Back to Citation
13. It is important to note that the NYSE Amex Options Trading Floor is within the restricted access perimeter that encompasses the NYSE Trading Floor and thus member and member firm employees would not be permitted to use such devices in that space under the terms of the proposed Rule defining where such devices are permissible. See proposed NYSE Rule 36.23. In addition, while the NYSE Amex Options Rules permit NYSE Amex Options members to use personal communications devices on the NYSE Amex Options Trading Floor, those rules prohibit NYSE Amex Options members from using those devices on the Trading Floor of the Exchange. See NYSE Amex Options Rule 902NY.Back to Citation
14. The majority of the doors that require card swipe for entry are opaque.Back to Citation
15. See Securities Exchange Act Release Nos. 33-7288 and 34-37182 (May 9, 1996), 61 FR 24643 (May 15, 1996) (S7-13-96). See also FINRA Regulatory Notice 2007-59 (December 7, 2007), concerning the supervision of electronic communications.Back to Citation
17. See Securities Exchange Act Release No. 58068 (June 30, 2008), 73 FR 39363 (July 9, 2008) (SR-NYSE-2008-20); and Securities Exchange Act Release No. 59479 (March 2, 2009), 74 FR 10325 (March 10, 2009) (SR-NYSE-2009-23).Back to Citation
[FR Doc. E9-23304 Filed 9-25-09; 8:45 am]
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