Daily Rules, Proposed Rules, and Notices of the Federal Government
The Exchange proposes to temporarily suspend those aspects of Rules 36.20, 36.21, and 36.30 that would not permit Designated Market Makers ("DMMs") and Floor brokers to use personal portable phone devices on the Trading Floor following the aftermath of Hurricane Sandy from October 31, 2012 until the earlier of when phone service is fully restored or Friday, November 2, 2012. The text of the proposed rule change is available on the Exchange's Web site at
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.
The Exchange proposes to temporarily suspend those aspects of Rules 36.20, 36.21, and 36.30 that would not permit Floor brokers and Designated Market Makers ("DMMs") to use personal portable phone devices on the Trading Floor
On October 29 and 30, 2012, due to the dangerous conditions that developed as a result of Hurricane Sandy, and in consultation with other equities, options, bonds, and derivative exchanges, market participants, and Commission staff, all U.S. equities and options markets were closed, including the Exchange, NYSE MKT LLC, and NYSE Arca, Inc.
On October 31, 2012, notwithstanding the ongoing lack of power in the downtown Manhattan vicinity, the Exchange, using back-up generators, was able to open trading at its physical location in New York City. However, due to intermittent telephone and cell phone service, neither the wired or wireless telephone connections on the Trading Floor are fully operational.
Rule 36.23 generally permits Exchange members, including Floor brokers and DMMs, to use personal portable telephone devices at locations outside of the Trading Floor, other than on the NYSE Amex Options Trading Floor. Rules 36.20 and 36.21 govern the type of telephone communications that are approved for Floor brokers and Rule 36.30 governs the type of telephone communications that are approved for DMMs.
Pursuant to Rule 36.20, Floor brokers may maintain a telephone line on the Trading Floor and use Exchange authorized and provided portable phones while on the Trading Floor. The use of such Exchange authorized and provided portable phones is governed by Rule 36.21. Because of intermittent cell phone service, many Exchange authorized and provided portable phones are not functional and therefore Floor brokers cannot use the Exchange authorized and provided portable phones. In certain instances, however, the personal cell phones of Floor brokers are operational on the Trading Floor. The Exchange believes that because communications with customers is a vital part of a Floor broker's role as agent and therefore contributes to maintaining a fair and orderly market, during the period when phone service continues to be intermittent, Floor brokers should be permitted to use personal portable phone devices in lieu of the non-operational Exchange authorized and provided portable phones.
The Exchange therefore proposes to temporarily suspend the limitations in Rules 36.20 and 21 that permit Floor brokers to use only Exchange authorized and provided portable phones so that Floor brokers may also use personal portable phones on the Trading Floor. The Exchange proposes that pursuant to this temporary suspension, Floor brokers must provide the Exchange with the names of all Floor-based personnel who used personal portable phones during this temporary suspension period, together with the phone number and applicable carrier for each number. Floor broker member organizations must maintain in their books and records all cell phone records that show both incoming and outgoing calls that were made during the period that a personal portable phone was used on the Trading Floor. To the extent the records are unavailable from the third-party carrier, the Floor brokers must maintain contemporaneous records of all calls made or received on a personal portable phone while on the Trading Floor. As with all member organization records, such cell phone records must be provided to Exchange regulatory staff, including without limitation staff of the Financial Industry Regulatory Authority ("FINRA"), on request.
Pursuant to Rule 36.30, with the permission of the Exchange, a DMM unit may maintain a telephone line at its stock trading post location to the off-Floor offices of the DMM unit, the unit's clearing firm, or to persons providing non-trading related services, as permitted under Rule 98.
The inability of a DMM unit to use its telephone lines could impact the ability of a DMM unit to comply with its obligations in securities registered to the DMM unit. For example, if a DMM unit experiences connectivity issues or problems with its algorithms and needs to speak with one of its back-office support teams, with the current phone limitations, the DMM would not be able to do so. Accordingly, the Exchange proposes to temporarily suspend the requirements of Rule 36.30 that restrict the use of personal cell phones so that DMM unit Trading Floor personnel may use personal portable phone devices while on the Trading Floor in lieu of their non-operational wired telephone lines.
The Exchange proposes that notwithstanding this temporary suspension, DMM units and their Floor-based personnel would remain subject to both the Rule 36.30 and 98 limitations of whom they may contact directly from the Trading Floor. However, because of the extensive, ongoing issues with power and phone lines in the New York City area and vicinity, the persons with whom a DMM may be permitted to communicate from the Trading Floor may not be at their regular physical location. Accordingly, the Exchange proposes to temporarily permit DMMs to use their personal portable phones to contact the off-Floor persons that they are permitted to contact by rule, even if such off-Floor personnel are not located in their regular office locations. The Exchange believes that this relief is consistent with guidance issued by FINRA, which recognizes that in the aftermath of Hurricane Sandy, a FINRA member may relocate displaced office personnel to temporary locations.
DMM units that use personal portable phones during this temporary suspension must provide the Exchange with the names of all Floor-based personnel who used personal portable phones during this temporary suspension period, together with the phone number and applicable carrier for each number. DMM units must also maintain in their books and records all cell phone records that show both incoming and outgoing calls that were made during the period that a personal portable phone was used on the Trading Floor. To the extent the records are unavailable from the third-party carrier, the DMM unit must maintain contemporaneous records of all calls made or received on a personal portable phone while on the Trading Floor. As with all member organization records, such cell phone records must be provided to Exchange regulatory staff, including without limitation staff of the FINRA, on request.
At this time, because the Exchange is dependent on third-party carriers for both wired and wireless phone service
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
In particular, in the aftermath of Hurricane Sandy, while the Exchange was able to open for trading, many of the services that the Exchange depends on from third-party carriers, such as wired and wireless telephone connections, are not fully restored. The Exchange believes that the proposed temporary suspensions from those aspects of Rule 36 that restrict the use of personal portable phones on the Trading Floor removes impediments to and perfects the mechanism of a free and open market and national market system because the proposed relief will enable both Floor brokers and DMMs to conduct their regular business, notwithstanding the ongoing issues with telephone service. The Exchange further believes that without the requested relief, both Floor brokers and DMMs would be compromised in their ability to conduct their regular course of business on the Trading Floor, which could adversely impact the market generally and investor confidence during this time of unprecedented weather disruptions. In particular, for Floor brokers, because they operate as agents for customers, their inability to communicate with customers could compromise their ability to represent public orders on the Trading Floor. For DMM units, any inability to communicate with personnel from their off-Floor offices, clearing firms, or non-trading related support staff, regardless of where such off-Floor personnel may be located in the aftermath of Hurricane Sandy, could compromise the DMM unit's ability to meet their obligations, particularly if the DMM unit experiences issues with connectivity or its algorithms.
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.
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, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act
At any time within 60 days of the filing of the 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.
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 email to
* 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-2012-58. 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 (