Information Memo - FINRA - Rules and Regulations

Information MemoMarket SurveillanceNYSE Regulation, Inc. | 11 Wall StreetNew York, NY 10005nyse.comNumber 08-59November 25, 2008TO:SUBJECT:ALL MEMBERS, MEMBER ORGANIZATIONS, ANDCOMPLIANCE OFFICERSReminder: Reporting Requirements Related to Planned Transfer ofEquities Operations to NYSE Alternext US LLCThis Is Being Issued Jointly By NYSE Alternext US and NYSE Regulation, Inc.PurposeThe purpose of this Notice is to update and reiterate the reporting requirementspreviously disseminated via NYSE Information Memo 08-44, and NYSE AlternextRegulatory Notice 2008-38. Those publications notified all members and memberorganizations that, in connection with the planned relocation of NYSE Alternext(“Alternext”) equities trading to NYSE Alternext Trading Systems and facilities located at11 Wall Street, all Alternext members and member organizations that trade in Alternextlisted equities including “upstairs” member organizations which trade electronically onAlternext, and are planning on relocating equities operations to NYSE Alternext TradingSystems, will be required to make certain submissions pursuant to applicable regulatoryrequirements upon relocation to the NYSE Alternext Trading Systems. Therequirements described below are applicable to equities and exclude Exchange TradedFunds and other structured products (“ETFs”) and options, which will transfer to NYSEArca.Please pay particular attention to the guidance provided in the DMM Equity TradingReporting section and the NYSE Alternext Form 121 and SS20 Reporting section asthis guidance has changed.BackgroundOn October 1, 2008, NYSE Euronext completed its acquisition of the American StockExchange(R). On December 1, 2008, NYSE Alternext US equities trading currentlyconducted on trading systems at 86 Trinity Place, will be relocated to the NYSEAlternext US Trading Systems and facilities located at 11 Wall Street. In addition, with

the Securities and Exchange Commission’s ("SEC") approval, has adopt rules that arevirtually identical to current NYSE rules applicable to the NYSE Hybrid Market smgoverning equities trading, since such rules reflect the market structure and features ofthe NYSE Alternext Trading Systems. 1 See SR-Amex-2008-63, which sets forth the rulechanges applicable to equities trading and other related requirements, as well as SR-Amex-2008-62 with respect to other rule changes applicable to Alternext members andmember organizations.Although NYSE Alternext and the NYSE will share certain facilities and the NYSEAlternext rules are extremely similar to the current NYSE rules, NYSE Alternext andNYSE will act as two independent exchanges. Additionally, these two exchanges willhave two distinct SROs. NYSE Alternext members and member organizations will beobligated to meet a variety of reporting and other regulatory requirements specified inthe equities trading rules. Key aspects of these requirements are described in thisNotice.Alternext members and member firms with a Floor presence will be prohibitedfrom trading on NYSE Alternext US Trading Systems if they have not previouslysubmitted written supervisory procedures to FINRA Please see Amex Notice REG2008-28 and 2008-34 for more details.DiscussionThe following information only highlights major equities-related regulatory requirementsfor the benefit of prospective NYSE Alternext members and member organizations.This information does not encompass all members’ and member organizations’obligations or responsibilities under NYSE Alternext rules and/or federal securities laws.It is the responsibility of all members and member organizations to be familiar andcomply with all applicable NYSE Alternext rules and federal securities rules andregulations. Unless otherwise indicated within the individual sections,prospective NYSE Alternext equity members and member organizations must becompliant with the below requirements prior to the actual relocation date, whichis scheduled for December 1, 2008.Front End System Capture (“FESC”)FESC reporting will be required immediately upon relocation to NYSE Alternext. NYSEAlternext Rules 123(e) and (f) require that Floor members submit order information inthe FESC database before the orders are represented on the Floor, and also requiresall reports of execution related to such orders be reported through FESC. Additionally,Rule 123 (Record of Orders) requires that specific data elements be recorded when anorder is entered, and the related execution is reported. Further, NYSE Alternext Rule130(c) and (c)(ii) requires that transactions executed on NYSE Alternext must becompared or closed out by the day following the execution, and that each party to thetransaction must submit trade data to “such facility that the Exchange may develop andimplement to facilitate comparison of transactions effected on the Exchange.”1A major distinction between the NYSE Alternext rules and the current NYSE rules is the treatmentof clearly erroneous errors, which is further described in SR-Amex-2008-63. Currently, there areno plans for NYSE Alternext to adopt the current NYSE clearly erroneous rules and proceduresfound in NYSE Rule 128, as the current NYSE version is under revision.

To ensure compliance with the FESC requirements, member organizations shouldthoroughly review the requirements of NYSE Alternext Rule 123 and Rule 130 inconjunction with the relevant previous NYSE Information Memos including, but notlimited to, Information Memos 05-13, 06-67, and 08-31. These Information Memosprovide the programming requirements for all proprietary or vendor-provided ordermanagement systems. Additionally, they provide guidance related to the entry of ordersand reports of execution into the FESC database to ensure compliance as required bythe Rule. For additional information on FESC reporting, please contact John Saxton,Director, NYSE Market Surveillance, at (212) 656-2324.Error TrackingThe NYSE Alternext error and erroneous reports rules (NYSE Alternext Rules 134 and411(a), respectively) add to and differ from the old AMEX rules. NYSE Alternext Rule134 (Differences and Omissions - Cleared Transactions) and NYSE Rule 411(a)(Erroneous Reports) require or permit Floor brokers to use their error accounts incertain instances. NYSE Alternext Rule 134(d) requires an error account devoted solelyto Floor-based trading where applicable. 2Member organizations operating under the provisions of NYSE Alternext Rule 134 arerequired to create error records contemporaneous to the error. These records must besigned, time stamped and include supporting documentation. Such records shallinclude the audit trail data elements prescribed in Rule 132, as well as the nature andamount of the error, the means whereby the member resolved the error with themember or member organization that cleared the trade on the member's behalf, theaggregate amount of liability that the member has incurred and has outstanding, as ofthe time each such error trade entry is recorded, and such other information as mayfrom time to time be required. A mandatory Error Account Detail Log must be used inmeeting these requirements. Please see NYSE Information Memo 06-63 for moredetails regarding the Error Account Detail Log. When a not held order remainsunexecuted in whole or in part due to the order being lost or misplaced, or as a result ofa system malfunction, applicable records and supporting documentation must besubmitted prior to the opening of trading on the Floor on the next trade date followingdiscovery of the error.NYSE Alternext Rule 411(a) relates to erroneous reports and applies irrespective ofwhether the error trade was the result of an automatic or an auction market execution.In certain instances, non-members who receive erroneous reports as to price do nothave to accept a corrected report if all of the following conditions are met: (i) the priceand size of the erroneous report are within the price and size range of the ConsolidatedTape, (ii) the Floor broker reports the nature of the error to the non-member andwhether it was favorable or not, and (iii) the member documents on a trade-by-tradebasis, the name of the individual authorized to reject the erroneous report and whether itwas in the non-member’s favor.In addition, among other things, in the case of not held orders where the Floor brokerexecuted in the wrong security, at the wrong price or on the wrong side of the market,but issued a report in the correct security, within the price instructions or on the correctside of the market, respectively, the NYSE Alternext Rule 411(a) allows the erroneousreport to stand regardless of whether the customer to whom the report was issued was2Member organizations must have a separate error account if participating in so called “blue linetrading” and/or certain pilot programs. For more details please see Information Memos 07-77 and07-72, as well as Information Memos 05-88 and 06-37.

a member or non-member. In this instance, the following conditions must be met: (i)the price and size of the erroneous report were within the range of prices and sizes inthe specified security reported to the NYSE Alternext portion of the Consolidated Tapeon the day in which the order was executed, (ii) the Floor broker reports the error to thecustomer, including whether the error was favorable or unfavorable to the customer,and (iii) the Floor broker documents on a trade-by-trade basis, the name of theindividual authorized to accept the erroneous report for the customer, the amount of theerror, and whether it was in the customer’s favor.To better understand what constitutes an error and to ensure compliance with errorreporting requirements, member organizations should thoroughly review the text ofthese rules in conjunction with the relevant previous NYSE Information Memosincluding, but not limited to, NYSE Information Memo 07-72. For additional information,please contact Patricia Bergholc, Director, NYSE Market Surveillance, at (212) 656-4948, or Michael Matejczyk, Director, NYSE Market Surveillance, at (212) 656-4854.DMM Equity Trading ReportingThe NYSE Alternext Rule 104A.50 requires every Designated Market Maker (“DMM”) tokeep a record of purchases and sales initiated on the Floor in the DMM’s registeredstocks for an account in which the DMM has an interest. Additionally, DMM firms mustelectronically submit their daily opening positions and their dealer purchases and salesin their specialty issues in an automated format. This data is often referred to as Form81 information, because historically Form 81 was the form on which the data wassubmitted at the NYSE. Consistent with NYSE’s current practice, NYSE Alternext USwill record dealer activity at the end of each trading day in a file known as “PositionMinder MRO” that is derived from the DMMs’ input to the Display Book. This report willbe provided to the DMMs. The DMMs’ principal transactions, and other events thataffect their positions captured by the Display Book, do not need to be reportedseparately to NYSE Alternext US. However, DMMs must continue to report their dailyopening positions, and may make additions or replacements to the Position MinderMRO data, using the DMM Transaction Data Reporting System (formerly the SpecialistTransaction Data Reporting System).To ensure compliance with the DMM Transaction Data Reporting System requirements,member organizations should thoroughly review the requirements of NYSE AlternextRule 104A.50. For additional information on reporting, please contact Michael Fryer,Director, NYSE Market Surveillance, at (212) 656-4656. The technical documentationfor the DMM Transaction Data Reporting System is available for review in the DMMTransaction Data Reporting System Technical Specifications version 1.5. For technicalissues concerning reporting please forward all questions via email to Scott Menkes,Managing Director in Regulatory Systems, at smenkes@nyx.com, Mark Salem, SeniorTechnical Director in Development, at msalem@nyx.com, or Neal Feder, TechnicalDirector in Development, at nfeder@nyx.com.DMM Options and Single Stock Futures Trading Data ReportingNYSE Alternext Rule 105 permits DMMs to hedge their equity positions, using optioncontracts, against their equity positions within certain guidelines provided within Rule105. NYSE Alternext Rule 104A.50 requires every DMM to keep a record of all optionsand single stock futures purchases and sales to hedge his designated stock positionsas permitted by Rule 105. Additionally, DMMs must report such transaction in anautomated format using a Form 81-O. DMMs are required to submit all orders andpositions for options overlying their designated stocks regardless of whether orders are

executed. The Form 81-O submission deadline is currently three days after thereportable activity occurred (T+3). DMMs are required to submit their Form 81-O datato the NYSE on a weekly basis via the Electronic Filing Platform (“EFP”).To ensure compliance with the Form 81-O reporting requirements, memberorganizations should thoroughly review the requirements of NYSE Alternext Rule104A.50 and NYSE Alternext Rule 105. For additional information on Form 81-Oreporting, please contact Michael Fryer, Director, NYSE Market Surveillance, at (212)656-4656. For technical assistance with Form 81-O reporting, please contact ScottMenkes, Managing Director in Regulatory Systems, at smenkes@nyx.com.Rule 410BPursuant to NYSE Alternext Rule 410B, all transactions effected in NYSE Alternextlisted securities by members and member organizations which are not reported to theConsolidated Tape must be electronically reported to NYSE Alternext. This includestransactions for a member or member organization's own account or for their customeraccounts. NYSE Alternext securities will be 410B reportable and will follow the sameprocedures as NYSE listed securities. Applicable transactions are required to bereported through the NYSE Electronic Filing Platform (“EFP”) application, which may beaccessed by computer at the following website address: https://triton.efp.nyse.com. Foradditional information, please review Rule 410B and NYSE Information Memos 02-47and 92-32. For additional information on technical issues regarding the EFP Rule 410BData Entry application, please email regsysops@nyx.com. For additional informationon 410B reporting requirements please contact Aleksandra Radakovic, ManagingDirector, NYSE Market Surveillance, at (212) 656-4144.NYSE Alternext Form 121 and SS20 ReportingNYSE Alternext securities will be subject to NYSE Form SS20 and 121 reporting uponrelocation, pursuant to NYSE Alternext Rules 440F and 440G, respectively.NYSE Alternext Rule 440F requires members and member organizations to reportround-lot short sale transactions for public customers on Form SS20. Rule 440Grequires members and member organizations to report round-lot transactions(purchases, long sales, and short sales) for members, allied members and memberorganizations on Form 121. Currently, pursuant to NYSE Alternext Rule 30, NYSEAlternext members and member organizations are required to file Amex Forms 1-S and1-RA (which are similar, but not identical, to NYSE Forms SS20 and 121) throughFINRA’s Regulation Filing Application System.Amex Notice REG 2008-38 previously stated that, following the equities relocation toNYSE facilities on December 1, 2008, members would be required to report thetransactions described above on NYSE Forms SS20 and 121, pursuant to NYSEAlternext Rules 440F and 440G, respectively. It has now been determined that existingNYSE Alternext members and member organizations should continue to file legacyAmex Forms 1-S and 1-RA, rather than NYSE Forms SS20 and 121, following theequities relocation. Members filing in the manner described above will be deemed incompliance with NYSE Alternext Rules 440F and 440G.For additional information regarding the filing of Amex Forms 1-S and 1-RA, pleasecontact James Turnbull of FINRA at (212) 306-1526. For additional information onForm SS20 or Form 121, please contact Glen Garofalo of FINRA at (646) 315-8464,

Theresa Reynolds of FINRA at (646) 315-8567, or Debra German of FINRA at (646)315-8467.NYSE Alternext Daily Program Trading Report (“DPTR”) ReportingCurrently, under NYSE Rule 132B, NYSE member organizations are subject to tradereporting obligations for program trading. NYSE Alternext member firms that are notcurrently NYSE member firms will not be subject to DPTR reporting obligations. NYSERegulation expects to issue separate guidance in the form of an Information Memoregarding NYSE member firms’ DPTR reporting obligations following the relocation ofNYSE Alternext.NYSE Crossing Session IIUnder NYSE Rule 907, the Off-Hours Trading Facility ("OHTF") consists of foursessions. NYSE Alternext listed securities will be executable in Crossing Session I,which permits the execution of single-stock, single-sided closing price orders andcrosses of single-stock, closing price buy and sell orders. The availability of CrossingSession II for NYSE Alternext listed securities will be described at a later date.Crossing Session II currently allows NYSE members and member organizations tocross program trading orders in NYSE listed securities between 4:00 p.m. and 6:30 p.m.based on the aggregate price of the program. Matched buy and sell orders for aminimum of 15 NYSE listed stocks may be transmitted to the Exchange for execution inCrossing Session II. These orders are transmitted via the EFP detailing the total numberof stocks, total number of shares and total dollar value. NYSE Alternext listed securitieswill not be executable on Crossing Sessions III and IV. For additional information on theOHTF please review Rule 907 and NYSE Information Memo 05-57. For additionalquestions concerning Crossing Sessions please contact Aleksandra Radakovic,Managing Director, NYSE Market Surveillance, at (212) 656-4144, or Michael Graham,Director, NYSE Market Surveillance, at (212) 656-4519.Electronic Blue Sheet (“EBS”) ReportingUnder NYSE Alternext Rules 410A and 342.23, NYSE Alternext firms have a continuingobligation to make automated submissions of trading information including reports oftheir customer, employee, and proprietary trading data via the EBS System uponrequest. These requirements are comparable to existing Amex requirements underAmex Rule 153. In requiring these submissions, NYSE Alternext will be acting jointlywith the other members of the Intermarket Surveillance Group. Securities executed onNYSE Alternext should be assigned an exchange code value of “B” which is the currentAMEX code. For additional questions related to the EBS System, please refer to theNYSE Alternext Rules 410A and 342.23, NYSE Information Memos 06-48 and 88-22 orcontact John Kroog, Director, NYSE Market Surveillance, at (212) 656-6532, or LisaNeuner, Director, NYSE Market Surveillance, at (212) 656-5393. For technicalquestions, please contact Venkata Sreeram of NYSE Regulatory Systems at 212-656-2579 or at vsreeram@nyx.com.Internal Investigation Reporting RequirementsNYSE Alternext Rule 342.21 requires members and member organizations to haveprocedures that are "reasonably designed" to identify proprietary, employee andemployee-related trades "that may violate" federal securities laws and NYSE Alternextrules prohibiting insider trading and manipulative and deceptive devices. Additionally,member and member organizations are required to subject such trades in Alternextlisted securities and related financial instruments to these procedures and to conductinternal investigations of the potentially violative trades that the firm has identified after

applying its procedures. NYSE Alternext Rule 351(e) requires members and memberorganizations to report NYSE Alternext Rule 342.21(b) "internal investigations" inquarterly filings. Although not every trade subjected to a firm inquiry or review will resultin a reportable Rule 342.21(b) internal investigation, when a firm subjects a trade to alevel of review sufficient to constitute a Rule 342.21(b) internal investigation, membersand member organizations must, without exception, report in one or more Rule 351(e)filings every Rule 342.21(b) internal investigation that is commenced. The reportingrequirement includes investigations which are commenced and completed within thesame calendar quarter and result in no further action being taken must be reported in aRule 351(e) filing.For additional information, please review NYSE Alternext Rules 342 and 351, as well asNYSE Information Memo 06-06. The Quarterly Insider Trading Attestations are requiredto be delivered on a quarterly basis to the Financial Industry Regulatory Authority(“FINRA”). The appropriate department is Risk Oversight & Operational Regulation,which is located at 20 Broad Street, 23rd Floor, New York, NY 10005. For additionalquestions concerning Internal Investigation Reporting please contact AleksandraRadakovic, Managing Director, NYSE Market Surveillance, at (212) 656-4144, orMichael Graham, Director, NYSE Market Surveillance, at (212) 656-4519. Foradditional information about the form and the submission process please contact DebraGerman, Credit Regulation, FINRA at (646) 315-8467.Regulation NMS Rule 606 ReportingNYSE Alternext members and member organizations will continue to be subject to bestexecution obligations. Regulation NMS Rule 606 routing information requires, amongother things, that broker-dealers make available a report on their routing of non-directedorders in covered securities. In addition, if requested by a customer, broker-dealersmust disclose the venue to which the customer's orders were routed for execution andthe execution time of the transactions that resulted from the orders. NYSE Alternext isa separate market center from NYSE and applicable reporting must accurately reflectthe applicable marketplace. Member organizations will thus be required to segregatetrades executed at different exchanges, including instances where firms route to the onedestination and receive more than one exchange value on the executions.NYSE Alternext trades and quotes will be disseminated with the market centerparticipant ID “A” in the consolidated market data streams, reflecting the fact that NYSEAlternext and NYSE will continue to be separate registered securities exchanges.Following new trading systems enhancements, the Common Customer Gateway(“CCG”) will automatically direct incoming order, cancel and cancel/replacementmessages to the appropriate executing market destination (“N” for NYSE and “A” forNYSE Alternext.)For this and other Regulation NMS-related requirements please see NYSE InformationMemo 07-44. For additional information please contact David De Gregorio, ChiefCounsel, NYSE Market Surveillance, at (212) 656-4166, or Peter Bon Viso, SeniorCounsel, NYSE Market Surveillance at (212) 656-5621. For business questions relatingto the Amex equities integration, please contact your NYSE Relationship Manager. Fortesting arrangements and/or other questions, please contact the Service Desk at 1-866-873-7422 or send an email to support@nyx.com with “NYSE Alternext” in the subjectline.

Regulation M and Rule 392NYSE Alternext Rule 392 requires notification whenever a member or memberorganization acts as a lead underwriter of any offering of an NYSE Alternext-listedsecurity (a Regulation M Notice). The data required to be submitted as well as theformat to be used in providing the information are outlined in Rule 392. 3 The Rule alsorequires notification prior to the placing or transmitting of a stabilizing bid, any syndicatecovering transaction, and the imposition of any penalty bid. Rule 392 provides a list ofreporting criteria where applicable. In addition, Information Memo 08-53 was recentlyissued to clarify NYSE Rule 392 and PIPE reporting requirements. For additionalinformation on notification requirements for offerings, Rule 392, or the Regulation MNotice, please contact John Kroog, Director, NYSE Market Surveillance, at (212) 656-6532, or Lisa Neuner, Director, NYSE Market Surveillance, at (212) 656-5393.Customer Trade ConfirmationsNYSE Alternext Rule 409(a) provides that, except with the permission of NYSEAlternext, members and member organizations must send customers’ statements ofaccount showing security and money positions and entries at least quarterly to allaccounts having an entry, money or security position during the preceding quarter. Thisrule assures that customers receive notice of such transactions, positions and balanceson a regular basis.Firms are not required by the Rule to disclose the execution market on a clientconfirmation, however, any such disclosure must be accurate. As NYSE Alternext andNYSE are two distinct execution markets, NYSE Alternext and NYSE designations arenot interchangeable and the appropriate market center must be noted. If executions fora single order occur on both exchanges, a mixed market designation may be used. 4Please review Rule 409 and NYSE Information Memos 07-119 and 06-80. Foradditional, information please contact Gregory Taylor of FINRA at (646) 315-2920 or theFINRA Office of General Counsel at (202) 728-8071.Account Type IndicatorsFirms often associate Tag 47 with the now rescinded NYSE Rule 80A for purposes ofidentifying account types (e.g., “P” for principal, “A” for agency, “I” for individual, etc.)NYSE Alternext will use the same account type indicators as NYSE for equities.Currently, NYSE uses these same Tag 47 account type indicators for other forms ofreporting and supports these values. However, member organizations must be alert toaccount type changes and will be responsible for using the appropriate NYSE Alternextaccount types. NYSE Alternext Members should verify they are using the sixteen validvalues for Tag 47 available online athttp://www.nyse.com/pdfs/MatchPoint_FIX_Web_Cap_Requirements.pdf. For technicaltype information, testing arrangements and/or questions please contactConnectivity@nyx.com.34Please note that all spaces in “blank” on the applicable form must be appropriately filled in at thetime of filing. Any change to the information provided will necessitate an amended form. Formore information please see NYSE Information Memo 97-41.Under certain circumstances, members and member organizations may have relief from Rule10b-10 for average price, multiple capacity trade confirmations. For additional, informationplease review the information on the SEC website by going tohttp://www.sec.gov/divisions/marketreg/mr-noaction/ap030305.htm.

Rule 98NYSE Alternext is adopting a rule comparable to the recently approved new NYSE Rule98. 5 The Rule requires reporting of information regarding material investment bankingactivities in which the member organization or approved person has been engaged(e.g., underwriting, tender offers, mergers, acquisitions, recapitalizations, etc.) andmaterial research reports, recommendations, etc., pertaining to any security that hasbeen allocated to the DMM unit. Alternext Rule 98 requires reporting of informationabout determinations regarding whether the DMM should cease acting as DMM in theevent the DMM unit receives non-public information. Additionally, DMM units will berequired to report any actual breaches, or internal investigations of possible breaches,of the information barriers required by the rule. In particular, a DMM unit would berequired to conduct an internal investigation into any trading activity that may be a resultof a breach of information barriers required by the anticipated new NYSE Alternext Rule98. In addition, on a quarterly basis, a DMM unit would have to report in writing whetherit has commenced such an internal investigation, the quarterly progress of any openinvestigations, what remedial measures, if any, were taken, and the completion of anyinternal investigation, including the methodology and results of such investigation, anyinternal disciplinary action taken, and any referral of the matter to NYSE Alternext,another SRO, or the SEC. For additional information on new Rule 98 reporting, pleasecontact Sheldon Richter, Director, NYSE Market Surveillance, at (212) 656-3365. Foradditional information regarding other types of new Rule 98 reporting requirementsplease contact Sheila Rennert, Senior Counsel, NYSE Market Surveillance, at (212)656-2771, or Peter Bon Viso, Senior Counsel, NYSE Market Surveillance, at (212) 656-5621.Rule 460.10NYSE Alternext is also adopting a rule comparable to recently amended NYSE Rule460.10, which would apply only to the DMM and his DMM unit and not to his memberorganization or approved persons. The recently amended NYSE Rule 460.10 requiresthat the DMM unit report the beneficial ownership of more than 5% of an equity securitythat is allocated to it. The DMM unit would be required to update such reports if itsbeneficial ownership exceeds 10% or falls below 5%. In addition, the DMM unit wouldbe prohibited from acquiring, directly or indirectly, more than 25% of the outstandingshares in any security allocated to the specialist unit. These requirements would applyto DMM units operating under new Rule 98, as well as to DMM member organizationsthat continue to operate under Rule 98 Former. Please contact Sheldon Richter,Director, NYSE Market Surveillance, at (212) 656-3365, or Lisa Neuner, Director, NYSEMarket Surveillance, at (212) 656-5393, for additional information and reportingprocedures.Order Tracking System (“OTS”) Rules 132 A, 132B, and 132 CNYSE Alternext members will be subject to OTS reporting for NYSE Alternext-listedsecurities under NYSE Alternext Rules 132A, 132B and 132C. There is a grace periodextending until February 1, 2009, at which time firms must be compliant with such OTSreporting requirements. Firms are being provided with a grace period with theunderstanding that in the interim period NYSE Alternext order information and trade5Rule 98 Former, which is comparable to current Amex Rule 193, remains as an NYSE rule,but is not available for new entrants to become a DMM unit at the NYSE. Furtherinformation will be provided as to the applicability of new Rule 98 and/or Rule 98 Formeras they pertain to NYSE Alternext members.

details must be in a readily accessible alternative format, such as order tickets. TheseNYSE Alternext securities will be included in the daily list of applicable securities forOTS reporting.NYSE Alternext member organizations handling orders for NYSE Alternext listedequities must comply with the relevant order entry requirements of NYSE Alternextrules, including Rule 123 and Rules 132A (Synchronization of Member BusinessClocks), 132B (Order Tracking Requirements) and 132C (Transmission of OrderTracking Information). Member organizations must also certify that their systems meetthose applicable requirements. Within the OTS system, all NYSE Alternext upstairsfirms must capture and record an order’s history and relevant data beginning at time ofreceipt as defined by the Rule 132B. The data elements listed in Rule 132B arerequired to be reported upon request.Upon request, member organizations must be able to provide a systemic order audittrail from member origination to the point of delivery for execution, modification orcancellation. Member organizations must label orders transmitted to NYSE Alternext forexecution with the appropriate recipient type of “A” to represent NYSE Alternext. Forfurther clarification, Rule 132B sets forth specific requirements for the tracking of anorder between different member organization departments. To ensure compliance withthe OTS requirements, member organizations should thoroughly review the text ofNYSE Alternext Rule 123 and Rule 132A, 132B, and 132C in conjunction with therelevant previous NYSE Information Memos including, but not limited to, NYSEInformation Memo 04-29. For additional information on OTS obligations please contactAlexander Razdolski, Director, NYSE Market Surveillance, at (212) 656-4435.Member organizations can deliver requested OTS files through the EFP PortalAuthorized Applications Panel that can be accessed via the following link:https://efp.nyse.com/efp/efp_login.html. A username and password will be required toaccess the system and each firm’s authorized user will be required to authenticate theirlogin. The technical specifications can be found at http://www.nyse.com/techspecs.Applicable members and member firms must be OTS compliant before February1, 2009. This includes having adequate written supervisory procedures regardingOTS.Staff ContactsIf you have any questions pertaining to this Notice or other NYSE Alternext reportingrequirements, please contact John Saxton, Director, NYSE Market Surveillance, at(212) 656-2324, or Andrew White, Director, NYSE Market Surveillance, at (212) 656-4498.___________________________John F. MalitzisExecutive Vice PresidentMarket Surveillance