[ by Howard Haykin ] The NYSE filed for immediate effectiveness to amend certain Exchange Rules related to Floor Official duties and responsibilities in the Exchange’s marketplace.  The role of the Floor Official evolved out of the self-regulatory scheme of the Securities Exchange Act of 1934, as amended (the "Act").  A number of Exchange Rules specify involvement in the marketplace by Floor Officials, senior-level Floor Officials - i.e., Floor Governors, Executive Floor Officials, Senior Floor Officials and Executive Floor Governors - or both. Typical Role on the Floor. Typically, these officials deal with requests to execute a particular kind of transaction, or the supervision of specified trading situations.  They also provide a more general level of oversight to the marketplace on a day-to-day basis. Yet, as the equities markets evolve away from manual executions and manual enforcement of rules and toward an electronic market - with automated executions and, in many cases, rule requirements that are hard coded into the execution logic - many of the trading procedures and situations that previously required Floor Officials involvement have been automated. In other cases, Floor Official approval has becomeR pro forma rather than substantive and, in light of this, the Exchange determined that several Exchange Rules should be amended with respect to the duties and responsibilities once assigned to Floor Officials to better reflect activities on today’s Exchange market structure. Adopted Amendments. NYSE Rule 122 provides that, to avoid unfair allocation of securities traded, no member or member organization shall maintain with more than one broker on the Exchange market orders or orders at the same price for the purchase or sale of the same security for the account of the same principal unless permission has been obtained from a Floor Official.  The Exchange is removing this approval as a Floor Official function and therefore ban this practice outright.

NYSE Rule 123D addresses openings and halts in trading.  The Exchange is making a technical amendment to this rule to remove any reference to "Floor Official Approval Form #3," as this form no longer exists and the information it captured is now maintained in the Floor Official Request Tracking Engine ("FORTÉ").

Rule 128B prescribes the procedures for the publication of changes, cancellations or other errors on the consolidated tape (the “Tape”).  Specifically, Rule 128B.10 requires Floor Official approval to change or correct a transaction that previously appeared on the Tape, cancel a transaction that previously appeared on the Tape and that has been agreed to by all buyers and sellers, and publish a transaction omitted from the Tape - i.e., a sold or sold last sale.  In addition, Rule 128B.13 requires Floor Official approval for the publication of a correction to a transaction erroneously reported to “a reporter” by a party to the transaction. In the interests of maintaining the integrity of the Tape, the Exchange has elevated the level of approval required under Rules 128B.10 and .13 from Floor Official to senior level Floor Official - i.e., Floor Governors, Executive Floor Officials, Senior Floor Officials and Executive Floor Governors.  Historically, Floor reporters were Exchange employees responsible for collecting and inputting transaction data into the ticker system. The position was eliminated many years ago. Finally, Rule 128B.10 provides that, in addition to (proposed senior-level) Floor Official approval, both "buying and selling members" must agree to the publication of: (i) a change or a correction in a transaction that previously appeared on the Tape; (ii) the cancellation of a transaction which previously appeared on the Tape and which was properly rescinded: or (iii) a transaction omitted from the Tape made on the Tape on the day of the transaction.

The Exchange has added "or member organizations" after "buying and selling members," with Rule 2 defining a "member" as a natural person.  A significant number of Exchange member organizations, however, no longer have Floor-based members, and nearly all transactions printed to the Tape are executed by automated systems.  The proposed change to Rule 128B.10 reflects the changes in the NYSE marketplace away from Floor-based members manually executing the majority of trades printed to the Tape to more automated trading by an increasing number of non-Floor based member organizations.

For further details, go to:   [NYSE Rule Filing 12-20, 6/21/12].