Self-Regulatory Organizations; New York Stock Exchange, Inc.; Order Approving Proposed Rule Change and Amendment Nos. 1 and 2 Thereto To Amend Exchange Rules Relating to the Return of Membership Certificates, Notice and Return of Exchange-Issued Identification Cards, and Minor Violations of Rules, 8123 [E5-653]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 32 (Thursday, February 17, 2005)]
[Notices]
[Page 8123]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-653]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51188; File No. SR-NYSE-2004-63]


Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Order Approving Proposed Rule Change and Amendment Nos. 1 and 2 Thereto 
To Amend Exchange Rules Relating to the Return of Membership 
Certificates, Notice and Return of Exchange-Issued Identification 
Cards, and Minor Violations of Rules

February 10, 2005.
    On November 1, 2004, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to: (1) Delete the requirement in NYSE Rule 343(d) 
to return certificates of membership upon termination of customer 
offices or status as a member organization; (2) add NYSE Rule 35.80 to 
require members and member organizations to notify the Exchange's 
security office and surrender Exchange-issued identification cards 
within 24 hours of all employee terminations, re-assignments to non-
Floor duties, or cancellations of such identification cards; (3) 
rescind NYSE Rule 412(g), which currently allows the Exchange to impose 
fees of up to $100 per securities account per day for violations of 
NYSE Rule 412; and (4) enable violations of proposed NYSE Rule 35.80 to 
be administered through the Exchange's minor rule violation plan (NYSE 
Rule 476A). On December 15, 2004 and December 23, 2004, the Exchange 
filed Amendment Nos. 1 \3\ and 2 \4\ to the proposed rule change, 
respectively.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Form 19b-4 dated December 15, 2004 (``Amendment No. 
1''). In Amendment No. 1, the Exchange included current rule text 
that was omitted from the original rule filing and made technical 
changes to the rule text. Amendment No. 1 replaced the original 
filing in its entirety.
    \4\ See Partial Amendment dated December 23, 2004 (``Amendment 
No. 2''). In Amendment No. 2, the Exchange: (i) submitted the 
proposed rule text changes in an Exhibit 4, which was inadvertently 
omitted from Amendment No. 1; and (ii) made minor technical 
corrections to the existing and proposed rule text.
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    The proposed rule change, as amended, was published for notice and 
comment in the Federal Register on January 7, 2005.\5\ The Commission 
received no comment letters on the proposal. This order approves the 
proposed rule change, as amended.
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    \5\ See Securities Exchange Act Release No. 50942 (December 29, 
2004), 70 FR 1487.
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    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\6\ In 
particular, the Commission believes that the proposal is consistent 
with Section 6(b)(5) of the Act,\7\ because rules that are reasonably 
designed to strengthen the Exchange's security procedures will protect 
investors and the public interest. The Commission also believes that 
the Exchange's addition to its minor rule violation plan is consistent 
with Sections 6(b)(1) and 6(b)(6) of the Act,\8\ which require that the 
rules of an exchange enforce compliance and provide appropriate 
discipline for violations of Commission and Exchange rules. In 
addition, because NYSE Rule 476A provides procedural rights to a person 
fined under that rule to contest the fine and permit a hearing on the 
matter, the Commission believes the proposal provides a fair procedure 
for the disciplining of members and persons associated with members, 
consistent with Sections 6(b)(7) and 6(d)(1) of the Act.\9\
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    \6\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \9\ 15 U.S.C. 78f(b)(7) and 78f(d)(1).
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    Finally, the Commission finds that the proposal is consistent with 
the public interest, the protection of investors, or otherwise in 
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2) 
under the Act \10\ which governs minor rule violation plans. The 
Commission believes that the change to the Exchange's minor rule 
violation plan will strengthen the Exchange's ability to carry out its 
oversight and enforcement responsibilities as a self-regulatory 
organization in cases where full disciplinary proceedings are 
unsuitable in view of the minor nature of the particular violation.
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    \10\ 17 CFR 240.19d-1(c)(2).
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    In approving this proposed rule change, the Commission in no way 
minimizes the importance of compliance with NYSE rules and all other 
rules subject to the imposition of fines under the Exchange's minor 
rule violation plan. The Commission believes that the violation of any 
self-regulatory organization's rules, as well as Commission rules, is a 
serious matter. However, the Exchange's minor rule violation plan 
provides a reasonable means of addressing rule violations that do not 
rise to the level of requiring formal disciplinary proceedings, while 
providing greater flexibility in handling certain violations. The 
Commission expects that the Exchange will continue to conduct 
surveillance with due diligence and make a determination based on its 
findings, on case-by-case basis, whether fines of more or less than the 
recommended amount are appropriate for violations under the minor rule 
violation plan or a violation requires formal disciplinary action.
    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act 
\11\ and Rule 19d-1(c)(2) under the Act,\12\ that the proposed rule 
change (SR-NYSE-2004-63), as amended, be, and hereby is, approved and 
declared effective.
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    \11\ 15 U.S.C. 78s(b)(2).
    \12\ 17 CFR 240.19d-1(c)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12) and 200.30-3(a)(44).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-653 Filed 2-16-05; 8:45 am]
BILLING CODE 8010-01-P