Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange proposes to amend Rule 10.12 Minor Rule Plan by increasing certain sanctions contained in the fine schedule. The Exchange also proposes to make minor technical changes at this time. A copy of this filing is available on the Exchange's Web site at
In its filing with the Commission, the Exchange 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 these 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 aspects of such statements.
The Minor Rule Plan (“MRP”) fosters compliance with applicable rules and also helps to reduce the number and extent of rule violations committed by Options Trading Permit (“OTP”) Holders, OTP Firms and associated persons. The prompt imposition of a financial penalty helps to quickly educate and improve the conduct of OTP Holders, OTP Firms and associated persons that have engaged in inadvertent or otherwise minor violations of the Exchange's rules, particularly those who may not pay attention to mere warnings that they are violating Exchange rules. By promptly imposing a meaningful financial penalty for such violations, the MRP focuses on correcting conduct before it gives rise to more serious enforcement action.
Market Makers on NYSE Arca receive certain rights and privileges in return for meeting certain obligations. These obligations include adhering to certain rules regarding quoting, in-person trading requirements, and fulfilling the terms of a Market Maker Appointment.
Rule 10.12(k)(i)25.
At least 75% of the trading activity of a Market Maker (measured in terms of contract volume per quarter) must be in classes within the Market Maker's Appointment. A failure to comply with the 75% contract volume requirement may result in a fine of $500.00 for a first offense, $1,000.00 for a second offense and $2,500.00 for a third offense. The Exchange proposes to raise these suggested fines to $1,000.00 for a first offense, $2,500.00 for a second offense and $3,500.00 for a third offense.
Rule 10.12(k)(i)26.
At least 60% of a Market Maker's transactions must be executed by the Market Maker in person or through an approved facility of the Exchange. A failure to comply with this 60% in-person trading requirement may result in a fine of $500.00 for a first offense, $1,000.00 for a second offense and $2,500.00 for a third offense. The Exchange proposes to raise these
Rule 10.12(k)(i)37.
Market Makers on NYSE Arca must apply for an appointment in one or more classes of option contracts. A Market Maker who fails to apply for an Appointment may be subject to a fine of $500.00 for a first offense, $1,000.00 for a second offense and $1,500.00 for a third offense. The Exchange proposes to raise these suggested fines to $1,000.00 for a first offense, $2,500.00 for a second offense and $3,500.00 for a third offense.
Rule 10.12(k)(i)39.
Market Makers, including Lead Market Makers, have certain obligations pertaining to quotes and quoting, which are governed by Rule 6.37B. Market Makers or Lead Market Makers who fail to comply with the Quotation Requirements of Rule 6.37B may be subject to a fine of $500.00 for a first offense, $1,000.00 for a second offense and $2,500.00 for a third offense. The Exchange proposes to raise these suggested fines to $1,000.00 for a first offense, $2,500.00 for a second offense and $3,500.00 for a third offense.
Rule 10.12(k)(i)41.
Market Makers are required to provide accurate quotes, and quote markets within the maximum quote spread differentials prescribed in Rule 6.37. Market Makers who fail to provide accurate quotes within the maximum quote spread differentials may be subject to a fine of $500.00 for a first offense, $1,000.00 for a second offense and $2,000.00 for a third offense. The Exchange proposes to raise these suggested fines to $1000.00 for a first offense, $2,500.00 for a second offense and $3,500.00 for a third offense.
Rule 10.12(h)(25) deals with a failure to meet a 75% Primary Appointment requirement for Market Makers and cites Rules 6.35 Commentary .03 and 6.37(h)(5). The 75 percent Appointment requirement is actually governed by Rule 6.35(i). The Exchange proposes to make a change so that the correct rule number is properly referenced. A similar change is proposed for the corresponding fine schedule in Rule 10.12(k)(i)25.
Rule 10.12(h)(41) deals with Market Makers who fail to quote markets within the maximum quote spread differentials or who fail to disseminate quotes accurately and cites only Rules 6.37(b)(1) and 6.82(c)(1). However, Rule 6.37A(b) also deals with maximum quote spread differentials, and was inadvertently left out of the MRP. It has always been the intent of the Exchange to have violations of Market Maker quoting obligations eligible for disposition under the MRP. This rule change simply serves to add the previously omitted rule citation at this time. A similar change is proposed for the corresponding fine schedule in Rule 10.12(k)(i)41.
The proposed rule change is consistent with Section 6(b)
The proposal is also consistent with Section 6(b)(6)
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.
No written comments were solicited or received with respect to the proposed rule change.
Within 35 days of the date of publication of this notice in the
(A) By order approve such proposed rule change; or
(B) Institute proceedings to determine whether the proposed rule change should be disapproved.
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 (
• Send an e-mail to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090.
All submissions should refer to File Number SR–NYSEArca–2008–139. 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 (
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.