Self-Regulatory Organizations; New York Stock Exchange, Inc., Notice of Filing of Proposed Rule Change and Amendment Nos. 1, 2 and 3 Relating to Amendments to Exchange Rule 607, 36451-36453 [E5-3262]

Download as PDF Federal Register / Vol. 70, No. 120 / Thursday, June 23, 2005 / Notices general public arbitrator roster. NASD also has stated that to avoid duplication of names on the lists sent to parties, arbitrators who are on the chairperson roster will not be on the general public arbitrator roster. Does limiting arbitrators on the chairperson roster to service only as chairpersons limit the pool of arbitrators available to serve on panels, particularly in regions where relatively few arbitrators are available? Should chairpersons be permitted to serve in a non-chairperson capacity as well? E. Proposed Rule 12408, Disclosures of Arbitrators: This proposed rule would require arbitrators to disclose any existing or past service as a mediator before they are appointed to a panel.17 Does the proposed rule suggest that arbitrators must disclose only any service as a mediator that might preclude the arbitrator from rendering an objective and impartial determination in the proceeding? Alternatively, do commenters understand from the rule that arbitrators must disclose any existing or past service as a mediator, even it has no connection with the proceeding? Should the rule be revised to reflect more clearly one or the other of these readings? If so, which? F. Proposed Rule 12600(c), Required Hearings: This proposed rule would provide that if a hearing will be held, the Director will notify the parties of the time and place of the hearing at least 10 days before the hearing begins, unless the parties agree to a shorter time. Do parties need notice of the hearing earlier than 10 days before the hearing, or is 10 days sufficient? G. Proposed Rule 12702, Withdrawal of Claims: This proposed rule provides that before a claim has been answered by a party, the claimant may withdraw the claim against the party with or without prejudice. After a claim has been answered by a party, the claimant may only withdraw it against that party with prejudice unless the panel decides, or the claimant and that party agree, otherwise. Does the proposed rule appropriately address the concern of allowing claimants to withdraw claims without prejudice, while protecting the respondent from expending significant resources to respond to a claim (that is later withdrawn) or having to respond to the same claim multiple times? How 17 This amendment seeks to incorporate IM– 10308, relating to arbitrators who also serve as mediators, which was adopted earlier this year. See Exchange Act Rel. No. 51325 (Mar. 7, 2005), 70 FR 12522 (Mar. 14, 2005) (Order Approving Proposed Rule Change); Exchange Act Rel. No. 51097 (Jan. 28, 2005), 70 FR 5715 (Feb. 3, 2005) (Notice of Proposed Change). VerDate jul<14>2003 18:40 Jun 22, 2005 Jkt 205001 prevalent are the problems of respondents (1) expending significant resources to respond to a claim that is later withdrawn, or (2) having to respond to the same claim multiple times? Are there other ways to address these competing concerns? Would the proposed rule unnecessarily deter claimants from filing claims? Would the proposed rule encourage respondents to increase the amount in controversy in the arbitration, and therefore the fees that the parties may have to bear? Should the proposed rule exclude arbitrations involving $25,000 or less, i.e., those to which Proposed Rule 12800, Simplified Arbitrations, apply? H. Proposed Rule 12800, Simplified Arbitrations: This proposed rule provides that all provisions of the Code apply to simplified arbitrations, unless otherwise provided under proposed rule 12800. This means that the time within which parties must answer a statement of claim in simplified arbitrations is 45 days, as in regular arbitrations. Should this time be shortened for simplified arbitrations, as they are meant to be more expedient than regular arbitrations? If so, what would be an appropriate amount of time? Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASD–2003–158 on the subject line. 36451 provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filing will also be available for inspection and copying at the principal office of NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to SR-NASD– 2003–158 and should be submitted on or before July 14, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority, 17 CFR 200.30–3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–3268 Filed 6–22–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51863; File No. SR–NYSE– 2005–02] Self-Regulatory Organizations; New York Stock Exchange, Inc., Notice of Filing of Proposed Rule Change and Amendment Nos. 1, 2 and 3 Relating to Amendments to Exchange Rule 607 June 16, 2005. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Exchange Act’’ or ‘‘Act’’),2 and Rule 19b–4 thereunder,3 notice is hereby given that on January 4, 2005, the New Paper Comments York Stock Exchange, Inc. (‘‘NYSE’’ or • Send paper comments in triplicate ‘‘Exchange’’) filed with the Securities to Jonathan G. Katz, Secretary, and Exchange Commission Securities and Exchange Commission, (‘‘Commission’’) the proposed 100 F Street, NE., Washington, DC amendments to its arbitration rules as 20549–9303. described in Items I, II and III below, All submissions should refer to File which items have been prepared by the Number SR-NASD–2003–158. The file NYSE. On May 12, 2005, the NYSE filed number should be included on the Amendment No. 1 to the proposed rule subject line if e-mail is used. To help the change (‘‘Amendment No. 1’’).4 On May Commission process and review your 13, 2005, the NYSE filed Amendment comments more efficiently, please use No. 2 to the proposed rule change only one method. The Commission will (‘‘Amendment No. 2).5 On June 16, post all comments on the Commission’s 2005, the NYSE filed Amendment No. 3 Internet Web site (https://www.sec.gov/ to the proposed rule change rules/sro.shtml). Copies of the (Amendment No. 3).6 The Commission submission, all subsequent amendments, all written statements 1 15 U.S.C. 78s(b)(1). with respect to the proposed rule 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. change that are filed with the 4 Amendment No. 1 was filed and withdrawn by Commission, and all written the NYSE on May 12, 2005. communications relating to the 5 See Amendment No. 2. Amendment No. 2 proposed rule change between the supplemented the initial filing. Commission and any person, other than 6 See Amendment No. 3. Amendment No. 3 those that may be withheld from the supplemented the initial filing and modified certain statements in Amendment No. 2. public in accordance with the PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 E:\FR\FM\23JNN1.SGM 23JNN1 36452 Federal Register / Vol. 70, No. 120 / Thursday, June 23, 2005 / Notices is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change consists of amendments to Rule 607 concerning the procedures for the appointment of arbitrators to arbitration cases administered by the NYSE. The text of the proposed rule change is available on the NYSE’s Web site (https:// www.NYSE.com), at the NYSE’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the NYSE included statements concerning the purpose of and basis for the proposed rule changes. The text of these statements, as amended, may be examined at the places specified in Item IV below. The NYSE has prepared summaries, set forth in Sections A, B and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The NYSE currently has several methods by which arbitrators are assigned to cases, including the traditional method pursuant to NYSE Rule 607 where NYSE staff appoints arbitrators to cases. a. The Pilot Program On August 1, 2000, the NYSE implemented a two-year pilot program to allow parties, on a voluntary basis, to select arbitrators under three alternative methods (in addition to the traditional method).7 Upon expiration of the twoyear pilot, the NYSE renewed the pilot for an additional two years, ending on July 31, 2004.8 The pilot was subsequently extended again until January 31, 2005,9 and further extended until July 31, 2005.10 7 The pilot program was implemented originally for a two-year period. Exchange Act Release No. 43214 (August 28, 2000), 65 FR 53247 (September 1, 2000) (SR–NYSE–2000–34). 8 See Exchange Act Release No. 46372 (August 16, 2002), 67 FR 54521 (August 22, 2002) (SR–NYSE– 2002–30). 9 See Exchange Act Release No. 49915 (June 25, 2004), 69 FR 39993 (July 1, 2004). 10 See Exchange Act Release No. 51085 (Jan. 27, 2005), 70 FR 5716 (Feb. 3, 2005), corrected at 70 FR 7143 (Feb. 10, 2005). VerDate jul<14>2003 18:40 Jun 22, 2005 Jkt 205001 The first alternative under the pilot program is the Random List Selection method, by which the parties are provided randomly-generated (as described below) lists of public- and securities-classified arbitrators. The parties have ten days to strike and rank the names on the lists. Based on mutual ranking of the lists, the highest-ranking arbitrators are invited to serve on the case. If a panel cannot be generated from the first list, a second list is generated, with three potential arbitrators for each vacancy, and one peremptory challenge available to each party for each vacancy. Under the pilot program, if vacancies remain after the second list has been processed, arbitrators are then randomly assigned to serve, subject only to challenges for cause. The second alternative method under the pilot program is the Enhanced List Selection method, in which six publicand three securities-classified arbitrators are selected by NYSE staff, based on their qualifications and expertise. The lists are then sent to the parties. The parties have three strikes to use and are required to rank the arbitrators not stricken. Based on mutual ranking of the lists, the highest-ranking arbitrators are invited to serve on the case. Lastly, the pilot program permits parties, pursuant to mutual agreement, to choose arbitrators through any alternative method. Under the pilot program, the parties must all agree to use either the Random List Selection method, the Enhanced List Selection method or an ‘‘alternative method.’’ Absent such agreement, under the pilot program, the traditional method is used. b. The Initial Filing The proposed amendments to Rule 607 in the initial filing, filed on January 4, 2005 (the ‘‘Initial Filing’’) retained the traditional method of staff appointment of arbitrators as an option. In addition, the proposed amendments modified and made permanent the Random List Selection method by specifying the number of arbitrators on each list (the pilot did not specify the numbers, but the Initial Filing specified that it would be 10 public arbitrators and five securities arbitrators) and limiting the number of strikes (four against the public arbitrators and two against the securities arbitrators). The proposed amendments in the Initial Filing also eliminated the second list of arbitrators. According to the NYSE, this would simplify and shorten the appointment process. The Initial Filing also specified that for simplified arbitrations, the randomly generated list would contain PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 the names of three arbitrators.11 Further, the Initial Filing gave the customer or non-member the election of choosing to use Random List Selection as the method to appoint arbitrators. If a claim included a customer and a non-member, the election of the customer controlled, and all parties’ agreement to use list selection would no longer be required. The Initial Filing also retained for the Director of Arbitration the discretion to appoint arbitrators to the panel pursuant to the traditional method of appointment in the event a full panel could not be appointed under Random List Selection. Further, in the Initial Filing, because parties rarely request Enhanced List Selection, or other alternative methods pursuant to mutual agreement, the NYSE proposed to eliminate those options as methods for selecting arbitrators.12 The Initial Filing also provided that a party could request an arbitrator’s last three NYSE arbitration decisions, if any, whereas the pilot program had provided that these decisions would be sent automatically. Lastly, the Initial Filing provided that any request for additional information must be made within the ten business days in which the parties must return the lists, and that this time period is applicable to all requests for additional information under NYSE Rule 607 as well as NYSE Rule 608, which governs notice of selection of arbitrators and provides, among other things, that the Director of Arbitration will provide the parties with the names and employment histories of the arbitrators for the past ten years, and that a party may request additional information concerning an arbitrator’s background. c. The Amended Filing. In response to Commission staff comments, the NYSE filed Amendment No. 2. Amendment No. 2 increased the number of arbitrators and party strikes for simplified arbitrations, and provided that the NYSE would accommodate any reasonable alternative method of appointing arbitrators, if the parties agree, thereby retaining the provision currently in the pilot program. In Amendment No. 2, the NYSE also provided information regarding the random generation of lists or arbitrators. The computer randomly selects arbitrators for appointment after doing a conflicts check based on both brokerage house accounts and securities affiliations. For simplified arbitrations, 11 11 This provision was changed in Amendment No. 2, discussed below. 12 In Amendment No. 2, the NYSE reinserted parties’ ability to choose alternate methods pursuant to mutual agreement, although it retained the elimination of Enhanced List selection. E:\FR\FM\23JNN1.SGM 23JNN1 Federal Register / Vol. 70, No. 120 / Thursday, June 23, 2005 / Notices the randomly generated list would contain the names of five arbitrators and each party would have two strikes. If a full panel cannot be appointed from the list(s) of proposed arbitrators, the computer continues to select arbitrators, one at a time, randomly until the panel has been filled by arbitrators able to serve. If a panel cannot be filled by arbitrators able to serve pursuant to Random List Selection, the Director of Arbitration would have the discretion to appoint arbitrators to the panel pursuant to the traditional method of appointment. This discretion would only be exercised if the lists of all arbitrators who have indicated their willingness to serve in a particular location, either at their own expense or at the expense of the NYSE, have been exhausted and no acceptable arbitrators on the lists were able to serve. d. Comparison to SICA Rules. The proposed amendments resemble the Uniform Code of Arbitration (‘‘UCA’’) developed by the Securities Industry Conference on Arbitration (‘‘SICA’’).13 Aside from word choice and punctuation, the principal differences between the NYSE’s proposed rules and the SICA-developed UCA are: • The NYSE retains the traditional method of staff appointment. • The NYSE specifies the number of arbitrators on the lists. • The NYSE limits the number of peremptory challenges. • The NYSE eliminates a second list containing three names for each vacancy under the Random List Selection method. • The NYSE does not send the two lists of public and industry arbitrators under the Random List Selection method unless and until the customer or non-member requests in writing the use of the Random List Selection method within 45 days from the date of filing of the statement of claim. • The NYSE does not set a time period in which the director of arbitration must send lists of potential arbitrators to the parties. • The NYSE sets a ten business day period for the parties to return the lists to the director of arbitration. • The NYSE sets a ten business day period for the parties to request additional information about a potential arbitrator. • The NYSE permits the parties to agree to extend the time period in which to return the lists. 2. Statutory Basis The NYSE believes that the proposed rule change is consistent with Section 6(b) 14 of the Act in general and Section 6(b)(5) of the Act 15 in particular in that it promotes just and equitable principles of trade by ensuring that members and member organizations and the public have a fair and impartial forum for the resolution of their disputes. B. Self-Regulatory Organization’s Statement on Burden on Competition The NYSE 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. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The NYSE has not solicited but has received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve the proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. We solicit specific comment on whether the Exchange should automatically send parties a potential arbitrator’s prior three arbitration decisions, as provided in the pilot program, or whether it is appropriate for the Exchange only to send such decisions upon a party’s request. We also solicit specific comment on whether the Exchange should inform parties that prior arbitration decisions are available on its Web site. 13 The NASD also has a rule that provides for the appointment of arbitrators by list selection. See NASD Rule 10308. VerDate jul<14>2003 18:40 Jun 22, 2005 Jkt 205001 PO 00000 14 15 15 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00087 Fmt 4703 Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send e-mail to rulecomments@sec.gov. Please include File Number SR–NYSE–2005–02 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–9303. All submissions should refer to File Number SR–NYSE–2005–02. 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 (https://www.sec.gov/ rules/sro/shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2005–02 and should be submitted on or before July 14, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.16 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–3262 Filed 6–22–05; 8:45 am] BILLING CODE 8010–01–P 16 17 Sfmt 4703 36453 E:\FR\FM\23JNN1.SGM CFR 200.30–3(a)(12). 23JNN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 120 (Thursday, June 23, 2005)]
[Notices]
[Pages 36451-36453]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-3262]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51863; File No. SR-NYSE-2005-02]


Self-Regulatory Organizations; New York Stock Exchange, Inc., 
Notice of Filing of Proposed Rule Change and Amendment Nos. 1, 2 and 3 
Relating to Amendments to Exchange Rule 607

June 16, 2005.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Exchange Act'' or ``Act''),\2\ and Rule 19b-4 thereunder,\3\ 
notice is hereby given that on January 4, 2005, the New York Stock 
Exchange, Inc. (``NYSE'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed amendments to its 
arbitration rules as described in Items I, II and III below, which 
items have been prepared by the NYSE. On May 12, 2005, the NYSE filed 
Amendment No. 1 to the proposed rule change (``Amendment No. 1'').\4\ 
On May 13, 2005, the NYSE filed Amendment No. 2 to the proposed rule 
change (``Amendment No. 2).\5\ On June 16, 2005, the NYSE filed 
Amendment No. 3 to the proposed rule change (Amendment No. 3).\6\ The 
Commission

[[Page 36452]]

is publishing this notice to solicit comments on the proposed rule 
change, as amended, from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ Amendment No. 1 was filed and withdrawn by the NYSE on May 
12, 2005.
    \5\ See Amendment No. 2. Amendment No. 2 supplemented the 
initial filing.
    \6\ See Amendment No. 3. Amendment No. 3 supplemented the 
initial filing and modified certain statements in Amendment No. 2.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change consists of amendments to Rule 607 
concerning the procedures for the appointment of arbitrators to 
arbitration cases administered by the NYSE. The text of the proposed 
rule change is available on the NYSE's Web site (https://www.NYSE.com), 
at the NYSE's principal office, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the NYSE included statements 
concerning the purpose of and basis for the proposed rule changes. The 
text of these statements, as amended, may be examined at the places 
specified in Item IV below. The NYSE has prepared summaries, set forth 
in Sections A, B and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The NYSE currently has several methods by which arbitrators are 
assigned to cases, including the traditional method pursuant to NYSE 
Rule 607 where NYSE staff appoints arbitrators to cases.
a. The Pilot Program
    On August 1, 2000, the NYSE implemented a two-year pilot program to 
allow parties, on a voluntary basis, to select arbitrators under three 
alternative methods (in addition to the traditional method).\7\ Upon 
expiration of the two-year pilot, the NYSE renewed the pilot for an 
additional two years, ending on July 31, 2004.\8\ The pilot was 
subsequently extended again until January 31, 2005,\9\ and further 
extended until July 31, 2005.\10\
---------------------------------------------------------------------------

    \7\ The pilot program was implemented originally for a two-year 
period. Exchange Act Release No. 43214 (August 28, 2000), 65 FR 
53247 (September 1, 2000) (SR-NYSE-2000-34).
    \8\ See Exchange Act Release No. 46372 (August 16, 2002), 67 FR 
54521 (August 22, 2002) (SR-NYSE-2002-30).
    \9\ See Exchange Act Release No. 49915 (June 25, 2004), 69 FR 
39993 (July 1, 2004).
    \10\ See Exchange Act Release No. 51085 (Jan. 27, 2005), 70 FR 
5716 (Feb. 3, 2005), corrected at 70 FR 7143 (Feb. 10, 2005).
---------------------------------------------------------------------------

    The first alternative under the pilot program is the Random List 
Selection method, by which the parties are provided randomly-generated 
(as described below) lists of public- and securities-classified 
arbitrators. The parties have ten days to strike and rank the names on 
the lists. Based on mutual ranking of the lists, the highest-ranking 
arbitrators are invited to serve on the case. If a panel cannot be 
generated from the first list, a second list is generated, with three 
potential arbitrators for each vacancy, and one peremptory challenge 
available to each party for each vacancy. Under the pilot program, if 
vacancies remain after the second list has been processed, arbitrators 
are then randomly assigned to serve, subject only to challenges for 
cause.
    The second alternative method under the pilot program is the 
Enhanced List Selection method, in which six public- and three 
securities-classified arbitrators are selected by NYSE staff, based on 
their qualifications and expertise. The lists are then sent to the 
parties. The parties have three strikes to use and are required to rank 
the arbitrators not stricken. Based on mutual ranking of the lists, the 
highest-ranking arbitrators are invited to serve on the case.
    Lastly, the pilot program permits parties, pursuant to mutual 
agreement, to choose arbitrators through any alternative method.
    Under the pilot program, the parties must all agree to use either 
the Random List Selection method, the Enhanced List Selection method or 
an ``alternative method.'' Absent such agreement, under the pilot 
program, the traditional method is used.
b. The Initial Filing
    The proposed amendments to Rule 607 in the initial filing, filed on 
January 4, 2005 (the ``Initial Filing'') retained the traditional 
method of staff appointment of arbitrators as an option. In addition, 
the proposed amendments modified and made permanent the Random List 
Selection method by specifying the number of arbitrators on each list 
(the pilot did not specify the numbers, but the Initial Filing 
specified that it would be 10 public arbitrators and five securities 
arbitrators) and limiting the number of strikes (four against the 
public arbitrators and two against the securities arbitrators). The 
proposed amendments in the Initial Filing also eliminated the second 
list of arbitrators. According to the NYSE, this would simplify and 
shorten the appointment process. The Initial Filing also specified that 
for simplified arbitrations, the randomly generated list would contain 
the names of three arbitrators.\11\ Further, the Initial Filing gave 
the customer or non-member the election of choosing to use Random List 
Selection as the method to appoint arbitrators. If a claim included a 
customer and a non-member, the election of the customer controlled, and 
all parties' agreement to use list selection would no longer be 
required.
---------------------------------------------------------------------------

    \11\ 11 This provision was changed in Amendment No. 2, discussed 
below.
---------------------------------------------------------------------------

    The Initial Filing also retained for the Director of Arbitration 
the discretion to appoint arbitrators to the panel pursuant to the 
traditional method of appointment in the event a full panel could not 
be appointed under Random List Selection. Further, in the Initial 
Filing, because parties rarely request Enhanced List Selection, or 
other alternative methods pursuant to mutual agreement, the NYSE 
proposed to eliminate those options as methods for selecting 
arbitrators.\12\ The Initial Filing also provided that a party could 
request an arbitrator's last three NYSE arbitration decisions, if any, 
whereas the pilot program had provided that these decisions would be 
sent automatically. Lastly, the Initial Filing provided that any 
request for additional information must be made within the ten business 
days in which the parties must return the lists, and that this time 
period is applicable to all requests for additional information under 
NYSE Rule 607 as well as NYSE Rule 608, which governs notice of 
selection of arbitrators and provides, among other things, that the 
Director of Arbitration will provide the parties with the names and 
employment histories of the arbitrators for the past ten years, and 
that a party may request additional information concerning an 
arbitrator's background.
---------------------------------------------------------------------------

    \12\ In Amendment No. 2, the NYSE reinserted parties' ability to 
choose alternate methods pursuant to mutual agreement, although it 
retained the elimination of Enhanced List selection.
---------------------------------------------------------------------------

c. The Amended Filing.
    In response to Commission staff comments, the NYSE filed Amendment 
No. 2. Amendment No. 2 increased the number of arbitrators and party 
strikes for simplified arbitrations, and provided that the NYSE would 
accommodate any reasonable alternative method of appointing 
arbitrators, if the parties agree, thereby retaining the provision 
currently in the pilot program. In Amendment No. 2, the NYSE also 
provided information regarding the random generation of lists or 
arbitrators. The computer randomly selects arbitrators for appointment 
after doing a conflicts check based on both brokerage house accounts 
and securities affiliations. For simplified arbitrations,

[[Page 36453]]

the randomly generated list would contain the names of five arbitrators 
and each party would have two strikes. If a full panel cannot be 
appointed from the list(s) of proposed arbitrators, the computer 
continues to select arbitrators, one at a time, randomly until the 
panel has been filled by arbitrators able to serve. If a panel cannot 
be filled by arbitrators able to serve pursuant to Random List 
Selection, the Director of Arbitration would have the discretion to 
appoint arbitrators to the panel pursuant to the traditional method of 
appointment. This discretion would only be exercised if the lists of 
all arbitrators who have indicated their willingness to serve in a 
particular location, either at their own expense or at the expense of 
the NYSE, have been exhausted and no acceptable arbitrators on the 
lists were able to serve.
d. Comparison to SICA Rules.
    The proposed amendments resemble the Uniform Code of Arbitration 
(``UCA'') developed by the Securities Industry Conference on 
Arbitration (``SICA'').\13\ Aside from word choice and punctuation, the 
principal differences between the NYSE's proposed rules and the SICA-
developed UCA are:
---------------------------------------------------------------------------

    \13\ The NASD also has a rule that provides for the appointment 
of arbitrators by list selection. See NASD Rule 10308.
---------------------------------------------------------------------------

     The NYSE retains the traditional method of staff 
appointment.
     The NYSE specifies the number of arbitrators on the lists.
     The NYSE limits the number of peremptory challenges.
     The NYSE eliminates a second list containing three names 
for each vacancy under the Random List Selection method.
     The NYSE does not send the two lists of public and 
industry arbitrators under the Random List Selection method unless and 
until the customer or non-member requests in writing the use of the 
Random List Selection method within 45 days from the date of filing of 
the statement of claim.
     The NYSE does not set a time period in which the director 
of arbitration must send lists of potential arbitrators to the parties.
     The NYSE sets a ten business day period for the parties to 
return the lists to the director of arbitration.
     The NYSE sets a ten business day period for the parties to 
request additional information about a potential arbitrator.
     The NYSE permits the parties to agree to extend the time 
period in which to return the lists.
2. Statutory Basis
    The NYSE believes that the proposed rule change is consistent with 
Section 6(b) \14\ of the Act in general and Section 6(b)(5) of the Act 
\15\ in particular in that it promotes just and equitable principles of 
trade by ensuring that members and member organizations and the public 
have a fair and impartial forum for the resolution of their disputes.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The NYSE 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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The NYSE has not solicited but has received written comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Act. We solicit specific 
comment on whether the Exchange should automatically send parties a 
potential arbitrator's prior three arbitration decisions, as provided 
in the pilot program, or whether it is appropriate for the Exchange 
only to send such decisions upon a party's request. We also solicit 
specific comment on whether the Exchange should inform parties that 
prior arbitration decisions are available on its Web site.
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send e-mail to rule-comments@sec.gov. Please include File 
Number SR-NYSE-2005-02 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NYSE-2005-02. 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 (https://www.sec.gov/
rules/sro/shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the NYSE. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSE-2005-02 and should be submitted on or before July 
14, 2005. For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-3262 Filed 6-22-05; 8:45 am]
BILLING CODE 8010-01-P

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