Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating To Removal of Size and Frequency Restrictions on Orders Entered Through Direct+ in Investment Company Units, Trust Issued Receipts and StreetTRACKS ® Gold Shares, 44963-44966 [E5-4133]
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Federal Register / Vol. 70, No. 149 / Thursday, August 4, 2005 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The proposed rule change has been
filed by Nasdaq as a ‘‘non-controversial’’
rule change pursuant to Section
19(b)(3)(A) of the Act 8 and
subparagraph (f)(6) of Rule 19b–4
thereunder.9 Consequently, because the
foregoing 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 for 30 days
from the date of filing, or such shorter
time as the Commission may designate
if consistent with the protection of
investors and the public interest, it has
become effective pursuant to Section
19(b)(3)(A) of the Act and Rule 19b–
4(f)(6) thereunder.10
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative prior to 30 days after
the date of filing. However, Rule 19b–
4(f)(6)(iii) permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest.
Nasdaq has requested that the
Commission waive the 30-day preoperative period, which would make the
proposed rule operative immediately.
The Commission believes that it is
consistent with the protection of
investors and the public interest to
waive the 30-day pre-operative period
in this case.11 Allowing the rule change
to become operative immediately
should permit Nasdaq to provide Brut
users the benefits of enhanced routing
functionality as soon as possible.12
Consequently, the proposed rule change
has become effective pursuant to
Section 19(b)(3)(A) of the Act 13 and
Rule 19b–4(f)(6) thereunder.14
8 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
10 Rule 19b–4(f)(6) under the Act also requires a
self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule
change, along with a brief description and text of
the proposed rule change, at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The NASD complied with this
requirement.
11 For purposes only of waiving the operative
delay for this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
12 The Commission notes that Nasdaq intends the
proposed rule to enhance the speed and efficiency
of order execution by increasing the opportunity for
orders to be executed through automated electronic
trading venues and notes that use of the Brut system
and the Directed Cross Order is voluntary.
13 15 U.S.C. 78s(b)(3)(A).
14 17 CFR 240.19b–4(f)(6).
9 17
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At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
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.
44963
should be submitted on or before
August 25, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.15
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–4150 Filed 8–3–05; 8:45 am]
BILLING CODE 8010–01–P
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. 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–2005–090 on the
subject line.
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE,
Washington, DC 20549–9303.
All submissions should refer to File
Number SR–NASD–2005–090. 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 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 File
Number SR–NASD–2005–090 and
Frm 00081
Fmt 4703
[Release No. 34–52160; File No. SR–NYSE–
2005–49]
Self-Regulatory Organizations; New
York Stock Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change and
Amendment No. 1 Thereto Relating To
Removal of Size and Frequency
Restrictions on Orders Entered
Through Direct+ in Investment
Company Units, Trust Issued Receipts
and StreetTRACKS Gold Shares
July 28, 2005.
Paper Comments
PO 00000
SECURITIES AND EXCHANGE
COMMISSION
Sfmt 4703
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b-4 thereunder,2
notice is hereby given that on July 15,
2005, the New York Stock Exchange,
Inc. (‘‘NYSE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. On July
26, 2005, the Exchange filed
Amendment No. 1 to the proposed rule
change.3 The Exchange filed the
proposed rule change as a ‘‘noncontroversial’’ rule change under Rule
19b-4(f)(6) under the Act,4 which
rendered the proposal effective upon
filing with the Commission. The
Commission 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 would
amend NYSE Rule 13 in order to
eliminate the 10,000 share size
restriction for orders entered through
NYSE Direct+ (‘‘Direct+’’) in
Investment Company Units, as defined
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 In Amendment No. 1, the Exchange made nonsubstantive changes to the text of the proposed rule
change.
4 17 CFR 240.19b–4(f)(6).
1 15
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44964
Federal Register / Vol. 70, No. 149 / Thursday, August 4, 2005 / Notices
in paragraph 703.16 of the Listed
Company Manual, Trust Issued Receipts
(such as HOLDRs), as defined in NYSE
Rule 1200, streetTRACKS Gold
Shares, as defined in NYSE Rule 1300,
and any other product subject to the
same rules as Investment Company
Units (collectively ‘‘ETFs’’). In addition,
the 30-second time restriction in NYSE
Rule 1005 is proposed to be eliminated
for ETF orders entered through Direct+.
Below is the text of the proposed rule
change. Proposed additions are in italics
and proposed deletions are in [brackets].
*
*
*
*
*
Rule 13. Definitions of Orders
*
*
*
*
*
Auto Ex Order
Except as provided below, [A] an auto
ex order is a limit order of 1099 shares
or less priced at or above the Exchange’s
published offer (in the case of an order
to buy) or at or below the Exchange’s
published bid (in the case of an order to
sell), which a member or member
organization has entered for automatic
execution in accordance with, and to
the extent provided by, Exchange Rules
1000–1005.
[Pursuant to a pilot program to run
until December 23, 2004,] Auto ex
orders in Investment Company Units (as
defined in paragraph 703.16 of the
Listed Company Manual), [or] Trust
Issued Receipts (as defined in Rule
1200), streetTRACKS Gold Shares (as
defined in Rule 1300), or any product
subject to the same rules as Investment
Company Units may be entered as limit
orders in an amount greater than 1099
shares. [The pilot program shall provide
for a gradual, phased-in raising of order
size eligibility, up to a maximum of
10,000 shares. Each raising of order size
eligibility shall be preceded by a
minimum of a one-week advance notice
to the Exchange’s membership.]
*
*
*
*
*
Rule 1005. Orders May Not Be Broken
Into Smaller Amounts
Except for orders in Investment
Company Units (as defined in
paragraph 703.16 of the Listed
Company Manual), Trust Issued
Receipts (as defined in Rule 1200), or
streetTRACKS Gold Shares (as defined
in Rule 1300), or any product subject to
the same rules as Investment Company
Units, [A] an auto ex order for any
account in which the same person is
directly or indirectly interested may
only be entered at intervals of no less
than 30 seconds between entry of each
such order in a stock[, Investment
Company Unit (as defined in paragraph
703.16 of the Listed Company Manual),
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16:23 Aug 03, 2005
Jkt 205001
or Trust Issued Receipt (as defined in
Rule 1200)], unless the orders are
entered by means of separate order entry
terminals, and the member or member
organization responsible for entry of the
orders to the Floor has procedures in
place to monitor compliance with the
separate terminal requirement.
*
*
*
*
*
Rule 1300. streetTRACKS Gold Shares
(a) The provisions of this Rule 1300
series apply only to streetTRACKS
Gold Shares, which represent units of
fractional undivided beneficial interest
in and ownership of the streetTRACKS
Gold Trust. While streetTRACKS Gold
Shares are not technically Investment
Company Units and thus are not
covered by Rule 1100, all other rules
that reference ‘‘Investment Company
Units,’’ as defined and used in [Para.]
paragraph 703.16 of the Listed
Company Manual, including, but not
limited to Rules 13, 36.30, 98, 104,
460.10, and 1002[, and 1005] shall also
apply to streetTRACKS Gold Shares.
When these rules reference Investment
Company Units, the word ‘‘index’’ (or
derivative or similar words) will be
deemed to be ‘‘gold spot price’’ and the
word ‘‘security’’ (or derivative or similar
words) will be deemed to be
‘‘streetTRACKS Gold Trust’’.
(b) As is the case with Investment
Company Units, paragraph (m) of the
Guidelines to Rule 105 shall also apply
to streetTRACKS Gold Shares.
Specifically, Rule 105(m) shall be
deemed to prohibit an equity specialist,
his member organization, other member,
allied member or approved person in
such member organization or officer or
employee thereof from acting as a
market maker or functioning in any
capacity involving market-making
responsibilities in physical gold, gold
futures or options on gold futures, or
any other gold derivatives. However, an
approved person of an equity specialist
entitled to an exemption from Rule
105(m) under Rule 98 may act in a
market making capacity, other than as a
specialist in the streetTRACKS Gold
Shares on another market center, in
physical gold, gold futures or options on
gold futures, or any other gold
derivatives.
(c) Except to the extent that specific
provisions in this Rule govern, or unless
the context otherwise requires, the
provisions of the Constitution, all other
Exchange Rules and policies shall be
applicable to the trading of
streetTRACKS Gold Shares on the
Exchange. Pursuant to Exchange Rule 3
(‘‘Security’’), streetTRACKS Gold
Shares are included within the
definition of ‘‘security’’ or ‘‘securities’’
PO 00000
Frm 00082
Fmt 4703
Sfmt 4703
as those terms are used in the
Constitution and Rules of the Exchange.
*
*
*
*
*
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
Exchange 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 these
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 aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Executions of ETF Orders in Direct+
Under Existing Rules
With respect to ETFs, Direct+
currently provides for the automatic
execution of straight limit orders (i.e.
orders without tick restrictions) of
10,000 shares or less 5 against trading
interest reflected in the Exchange’s
published quotation. ETF orders capable
of execution via Direct+ are defined in
NYSE Rule 13 as ‘‘auto ex’’ orders. It is
not mandatory that all eligible ETF limit
orders be entered as auto ex orders;
rather, the member organization
entering the ETF order (or its customer
if enabled by the member organization)
can choose to enter an ETF auto ex
order when such member organization
(or customer) believes that the speed
and certainty of an execution at the
Exchange’s published bid or offer price
is in the customer’s best interest. Where
the customer’s interests are best served
by being afforded the opportunity for
price improvement, the member
organization (or customer) may enter a
limit or market order in an ETF by
means of the SuperDot() (‘‘DOT’’)
system for representation in the auction
market.
ETF Direct+ orders are entered
through DOT with the indicator NX
5 See Information Memorandum 03–28 (June 20,
2003) (Amendments to Direct+). The Commission
approved increasing the size of Direct+ orders in
Investment Company Units and Trust Issued
Receipts to a maximum level of 10,000 shares. See
Securities Exchange Act Release Nos. 47024
(December 18, 2002), 67 FR 79217 (December 27,
2002) (SR–NYSE–2002–37) and 50828 (December 9,
2004), 69 FR 75579 (December 17, 2004) (SR–
NYSE–2004–66) (extending Direct+ through
December 23, 2005).
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Federal Register / Vol. 70, No. 149 / Thursday, August 4, 2005 / Notices
added to identify the order as an auto
ex order. The ETF auto ex order receives
an automatic execution when its limit
price is equal to or better than the
published bid or offer, without being
exposed to the price improvement
mechanism of the auction market,
provided the bid or offer is still
available.6 The transaction report is
returned through DOT to the member
organization (or customer) that entered
it.
Current Direct+ rules restrict the
frequency of entry of all auto ex orders
including those in ETFs. An ETF auto
ex order for any account in which the
same person is directly or indirectly
interested may only be entered at
intervals of no less than 30 seconds
between entry of each such ETF order,
unless the orders are entered by means
of separate order entry terminals, and
the member or member organization
responsible for entry of the orders to the
Floor has procedures in place to
monitor compliance with the separate
terminal requirement.7
Proposed Rule Change
In the hybrid market filings,8 the
Exchange is proposing, among other
things, to remove size and frequency
restrictions on auto ex orders. However,
in order to increase the ability of
customers to automatically execute
orders in ETFs, the Exchange is
proposing to:
(i) Amend NYSE Rule 13 to eliminate
the 10,000 share restriction for auto ex
orders in ETFs; and
(ii) Eliminate the 30-second frequency
restriction in NYSE Rule 1005 for orders
in ETFs.
These proposals would be implemented
prior to the implementation of the
hybrid market.
The Exchange believes that this
proposed change should be
implemented for ETFs because of their
unique nature (i.e., they are derivatively
priced in relation to the values of the
underlying component securities, and
the high degree of liquidity in ETFs),
and to enable the Exchange to remain
competitive with other market centers,
where there are no size and frequency
restrictions on orders in ETFs.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act 9 in general, and
furthers the objectives of Section 6(b)(5)
of the Act 10 in particular, in that it is
designed to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest. The proposed rule
change also is designed to support the
principles of Section 11A(a)(1),11 in that
it seeks to assure economically efficient
execution of securities transactions,
make it practicable for brokers to
execute investors’ orders in the best
market and provide an opportunity for
investors’ orders to be executed without
the participation of a dealer.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any inappropriate burden on
competition 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 Exchange has neither solicited
nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change: (i)
Does not significantly affect the
protection of investors or the public
interest; (ii) does not impose any
significant burden on competition; and
(iii) by its terms, does not become
operative for 30 days after the date of
filing, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 12 and subparagraph (f)(6) of
Rule 19b–4 thereunder.13
As required under Rule 19b–
4(f)(6)(iii),14 the Exchange provided the
Commission with written notice of its
intent to file the proposed rule change,
along with a brief description and text
of the proposed rule change, at least five
business days prior to the date of the
filing of the proposed rule change. The
6 See
NYSE Rule 1000.
NYSE Rule 1005.
8 See Securities Exchange Act Release Nos. 50173
(August 10, 2004), 69 FR 50407 (August 16, 2004);
50667 (November 15, 2004), 69 FR 67980
(November 22, 2004); and 51906 (June 22, 2005), 70
FR 37463 (June 29, 2005) (SR–NYSE–2004–05).
7 See
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16:23 Aug 03, 2005
Jkt 205001
PO 00000
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
11 15 U.S.C. 78k-1(a)(1).
12 15 U.S.C. 78s(b)(3)(A).
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6)(iii).
10 15
Frm 00083
Fmt 4703
Sfmt 4703
44965
Exchange has requested that the
Commission waive the 30-day operative
delay to immediately expand the
availability of Direct+ for orders in ETFs
by eliminating order size and frequency
restrictions. The Commission believes
that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest,
because this filing should enhance the
execution of transactions in ETFs. For
this reason, the Commission designates
the proposal to be effective and
operative upon filing with the
Commission.15
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
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 the furtherance of the
purposes of the Act.
IV. Solicitation of Comments
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:
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-NYSE–2005–49 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
20549–9309.
All submissions should refer to File
Number SR-NYSE–2005–49. 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
15 For the purposes only of accelerating the
operative date of this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition and capital formation. 15
U.S.C. 78c(f).
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44966
Federal Register / Vol. 70, No. 149 / Thursday, August 4, 2005 / Notices
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
Section, 100 F Street, NE, Washington,
DC 20549. Copies of such filing also will
be available for inspection and copying
at the principal office of the Exchange.
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-2005–49 and should
be submitted on or before August 25,
2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.16
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–4133 Filed 8–3–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52154; File No. SR–NYSE–
2005–51]
Self-Regulatory Organizations; New
York Stock Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Eliminate
the ‘‘All or None’’ and ‘‘Fill or Kill’’
Order Types in the Exchange’s Equity
Market
July 28, 2005
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’)1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 20,
2005, the New York Stock Exchange,
Inc. (‘‘NYSE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by NYSE. The Exchange
filed the proposal pursuant to Section
19(b)(3)(A) of the Act,3 and Rule 19b–
4(f)(6) thereunder,4 which renders the
proposal effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
16 17
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
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16:23 Aug 03, 2005
Jkt 205001
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Exchange Rules 13, 79A.15, 123B, and
806 in order to eliminate the All or
None (‘‘AON’’) and Fill or Kill (‘‘FOK’’)
order types in the Exchange’s equity
market. The text of the proposed rule
change is available on NYSE’s Web site
(https://www.nyse.com), at NYSE’s Office
of the Secretary, 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
Exchange 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 these
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 aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Exchange Rule 13 defines AON orders
and FOK orders. An AON order is
defined as:
A market or limited price order which is
to be executed in its entirety or not at all, but,
unlike a fill or kill order, is not to be treated
as cancelled if not executed as soon as it is
represented in the Trading Crowd. The
making of ‘‘all or none’’ bids or offers in
stocks is prohibited and the making of ‘‘all
or none’’ bids or offers in bonds is subject to
the restrictions of Rule 61 and Rule 86.
An AON order cannot be represented in
the Exchange’s published best bid/offer
due to the conditional nature of its
execution.
An FOK order is defined as:
A market or limited price order which is
to be executed in its entirety as soon as it is
represented in the Trading Crowd, and such
order, if not so executed, is to be treated as
cancelled. For purposes of this definition, a
‘‘stop’’ is considered an execution.
The Exchange proposes to eliminate
the above two order types in its equity
market because, according to the
Exchange, such order types are
infrequently used and represent a very
small percentage of order flow, less than
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
one-tenth of 1% (approximately .06%
for AON orders and .00028% for FOK
orders). The average number of AON
orders is approximately 12,000 per day
and the average number of FOK orders
is approximately 55 orders per day, out
of approximately 20 million orders
received by the Exchange per day.
Approximately 65% of all AON orders
are cancelled. In addition, the Exchange
stated that, in informal discussions it
had with both buy-side and sell-side
customers, such customers did not
object to the proposed elimination of
these order types. Furthermore, the
Exchange believes that the wider
availability of immediate or cancel
orders, as proposed in the Exchange
Hybrid Market filings,5 would provide a
useful substitute for customers seeking
similar types of executions. In addition,
both order types would continue to exist
for purposes of the Automated Bond
System , as discussed in Exchange Rule
86. Exchange Rule 13 also would be
amended to clarify this.
In addition to Exchange Rule 13, the
proposed rule change would eliminate
references to AON orders and FOK
orders in Exchange Rules 79A.15(6)
(Miscellaneous Requirements on Stock
and Bond Market Procedures), 123B
(Exchange Automated Order Routing
Systems), and 806 (Taking or Supplying
Baskets Named in Order).
2. Statutory Basis
The Exchange believes that the basis
under the Act for this proposed rule
change is the requirement under Section
6(b)(5) 6 that an exchange have rules that
are designed to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system and, in general, to protect
investors and the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes that the
proposed rule change would not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
5 See Securities Exchange Act Release Nos. 50173
(August 10, 2004), 69 FR 50407 (August 16, 2004)
(Amendment No. 1 to SR–NYSE–2004–05); 50667
(November 15, 2004), 69 FR 67980 (November 22,
2004) (Amendment Nos. 2 and 3 to SR–NYSE–
2004–05); and 51906 (June 22, 2005), 70 FR 37463
(June 29, 2005) (Amendment No. 5 to SR–NYSE–
2004–05).
6 15 U.S.C. 78f(b)(5).
E:\FR\FM\04AUN1.SGM
04AUN1
]]>Agencies
[Federal Register Volume 70, Number 149 (Thursday, August 4, 2005)]
[Notices]
[Pages 44963-44966]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-4133]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52160; File No. SR-NYSE-2005-49]
Self-Regulatory Organizations; New York Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
and Amendment No. 1 Thereto Relating To Removal of Size and Frequency
Restrictions on Orders Entered Through Direct+ in Investment Company
Units, Trust Issued Receipts and StreetTRACKS [supreg] Gold Shares
July 28, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 15, 2005, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. On July 26,
2005, the Exchange filed Amendment No. 1 to the proposed rule
change.\3\ The Exchange filed the proposed rule change as a ``non-
controversial'' rule change under Rule 19b-4(f)(6) under the Act,\4\
which rendered the proposal effective upon filing with the Commission.
The Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Exchange made non-substantive
changes to the text of the proposed rule change.
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change would amend NYSE Rule 13 in order to
eliminate the 10,000 share size restriction for orders entered through
NYSE Direct+ [supreg] (``Direct+'') in Investment Company Units, as
defined
[[Page 44964]]
in paragraph 703.16 of the Listed Company Manual, Trust Issued Receipts
(such as HOLDRs), as defined in NYSE Rule 1200, streetTRACKS [supreg]
Gold Shares, as defined in NYSE Rule 1300, and any other product
subject to the same rules as Investment Company Units (collectively
``ETFs''). In addition, the 30-second time restriction in NYSE Rule
1005 is proposed to be eliminated for ETF orders entered through
Direct+. Below is the text of the proposed rule change. Proposed
additions are in italics and proposed deletions are in [brackets].
* * * * *
Rule 13. Definitions of Orders
* * * * *
Auto Ex Order
Except as provided below, [A] an auto ex order is a limit order of
1099 shares or less priced at or above the Exchange's published offer
(in the case of an order to buy) or at or below the Exchange's
published bid (in the case of an order to sell), which a member or
member organization has entered for automatic execution in accordance
with, and to the extent provided by, Exchange Rules 1000-1005.
[Pursuant to a pilot program to run until December 23, 2004,] Auto
ex orders in Investment Company Units (as defined in paragraph 703.16
of the Listed Company Manual), [or] Trust Issued Receipts (as defined
in Rule 1200), streetTRACKS [supreg] Gold Shares (as defined in Rule
1300), or any product subject to the same rules as Investment Company
Units may be entered as limit orders in an amount greater than 1099
shares. [The pilot program shall provide for a gradual, phased-in
raising of order size eligibility, up to a maximum of 10,000 shares.
Each raising of order size eligibility shall be preceded by a minimum
of a one-week advance notice to the Exchange's membership.]
* * * * *
Rule 1005. Orders May Not Be Broken Into Smaller Amounts
Except for orders in Investment Company Units (as defined in
paragraph 703.16 of the Listed Company Manual), Trust Issued Receipts
(as defined in Rule 1200), or streetTRACKS[supreg] Gold Shares (as
defined in Rule 1300), or any product subject to the same rules as
Investment Company Units, [A] an auto ex order for any account in which
the same person is directly or indirectly interested may only be
entered at intervals of no less than 30 seconds between entry of each
such order in a stock[, Investment Company Unit (as defined in
paragraph 703.16 of the Listed Company Manual), or Trust Issued Receipt
(as defined in Rule 1200)], unless the orders are entered by means of
separate order entry terminals, and the member or member organization
responsible for entry of the orders to the Floor has procedures in
place to monitor compliance with the separate terminal requirement.
* * * * *
Rule 1300. streetTRACKS[reg] Gold Shares
(a) The provisions of this Rule 1300 series apply only to
streetTRACKS[supreg] Gold Shares, which represent units of fractional
undivided beneficial interest in and ownership of the streetTRACKS
[supreg] Gold Trust. While streetTRACKS [supreg] Gold Shares are not
technically Investment Company Units and thus are not covered by Rule
1100, all other rules that reference ``Investment Company Units,'' as
defined and used in [Para.] paragraph 703.16 of the Listed Company
Manual, including, but not limited to Rules 13, 36.30, 98, 104, 460.10,
and 1002[, and 1005] shall also apply to streetTRACKS [supreg] Gold
Shares. When these rules reference Investment Company Units, the word
``index'' (or derivative or similar words) will be deemed to be ``gold
spot price'' and the word ``security'' (or derivative or similar words)
will be deemed to be ``streetTRACKS [supreg] Gold Trust''.
(b) As is the case with Investment Company Units, paragraph (m) of
the Guidelines to Rule 105 shall also apply to streetTRACKS [supreg]
Gold Shares. Specifically, Rule 105(m) shall be deemed to prohibit an
equity specialist, his member organization, other member, allied member
or approved person in such member organization or officer or employee
thereof from acting as a market maker or functioning in any capacity
involving market-making responsibilities in physical gold, gold futures
or options on gold futures, or any other gold derivatives. However, an
approved person of an equity specialist entitled to an exemption from
Rule 105(m) under Rule 98 may act in a market making capacity, other
than as a specialist in the streetTRACKS [supreg] Gold Shares on
another market center, in physical gold, gold futures or options on
gold futures, or any other gold derivatives.
(c) Except to the extent that specific provisions in this Rule
govern, or unless the context otherwise requires, the provisions of the
Constitution, all other Exchange Rules and policies shall be applicable
to the trading of streetTRACKS [supreg] Gold Shares on the Exchange.
Pursuant to Exchange Rule 3 (``Security''), streetTRACKS [supreg] Gold
Shares are included within the definition of ``security'' or
``securities'' as those terms are used in the Constitution and Rules of
the Exchange.
* * * * *
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 Exchange 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 these 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 aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Executions of ETF Orders in Direct+ Under Existing Rules
With respect to ETFs, Direct+ currently provides for the automatic
execution of straight limit orders (i.e. orders without tick
restrictions) of 10,000 shares or less \5\ against trading interest
reflected in the Exchange's published quotation. ETF orders capable of
execution via Direct+ are defined in NYSE Rule 13 as ``auto ex''
orders. It is not mandatory that all eligible ETF limit orders be
entered as auto ex orders; rather, the member organization entering the
ETF order (or its customer if enabled by the member organization) can
choose to enter an ETF auto ex order when such member organization (or
customer) believes that the speed and certainty of an execution at the
Exchange's published bid or offer price is in the customer's best
interest. Where the customer's interests are best served by being
afforded the opportunity for price improvement, the member organization
(or customer) may enter a limit or market order in an ETF by means of
the SuperDot([supreg]) (``DOT'') system for representation in the
auction market.
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\5\ See Information Memorandum 03-28 (June 20, 2003) (Amendments
to Direct+). The Commission approved increasing the size of Direct+
orders in Investment Company Units and Trust Issued Receipts to a
maximum level of 10,000 shares. See Securities Exchange Act Release
Nos. 47024 (December 18, 2002), 67 FR 79217 (December 27, 2002) (SR-
NYSE-2002-37) and 50828 (December 9, 2004), 69 FR 75579 (December
17, 2004) (SR-NYSE-2004-66) (extending Direct+ through December 23,
2005).
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ETF Direct+ orders are entered through DOT with the indicator NX
[[Page 44965]]
added to identify the order as an auto ex order. The ETF auto ex order
receives an automatic execution when its limit price is equal to or
better than the published bid or offer, without being exposed to the
price improvement mechanism of the auction market, provided the bid or
offer is still available.\6\ The transaction report is returned through
DOT to the member organization (or customer) that entered it.
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\6\ See NYSE Rule 1000.
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Current Direct+ rules restrict the frequency of entry of all auto
ex orders including those in ETFs. An ETF auto ex order for any account
in which the same person is directly or indirectly interested may only
be entered at intervals of no less than 30 seconds between entry of
each such ETF order, unless the orders are entered by means of separate
order entry terminals, and the member or member organization
responsible for entry of the orders to the Floor has procedures in
place to monitor compliance with the separate terminal requirement.\7\
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\7\ See NYSE Rule 1005.
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Proposed Rule Change
In the hybrid market filings,\8\ the Exchange is proposing, among
other things, to remove size and frequency restrictions on auto ex
orders. However, in order to increase the ability of customers to
automatically execute orders in ETFs, the Exchange is proposing to:
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\8\ See Securities Exchange Act Release Nos. 50173 (August 10,
2004), 69 FR 50407 (August 16, 2004); 50667 (November 15, 2004), 69
FR 67980 (November 22, 2004); and 51906 (June 22, 2005), 70 FR 37463
(June 29, 2005) (SR-NYSE-2004-05).
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(i) Amend NYSE Rule 13 to eliminate the 10,000 share restriction
for auto ex orders in ETFs; and
(ii) Eliminate the 30-second frequency restriction in NYSE Rule
1005 for orders in ETFs.
These proposals would be implemented prior to the implementation of the
hybrid market.
The Exchange believes that this proposed change should be
implemented for ETFs because of their unique nature (i.e., they are
derivatively priced in relation to the values of the underlying
component securities, and the high degree of liquidity in ETFs), and to
enable the Exchange to remain competitive with other market centers,
where there are no size and frequency restrictions on orders in ETFs.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \9\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \10\ in particular, in that it
is designed to promote just and equitable principles of trade, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system and, in general, to protect
investors and the public interest. The proposed rule change also is
designed to support the principles of Section 11A(a)(1),\11\ in that it
seeks to assure economically efficient execution of securities
transactions, make it practicable for brokers to execute investors'
orders in the best market and provide an opportunity for investors'
orders to be executed without the participation of a dealer.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ 15 U.S.C. 78k-1(a)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any inappropriate burden on competition 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 Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change: (i) Does not significantly affect
the protection of investors or the public interest; (ii) does not
impose any significant burden on competition; and (iii) by its terms,
does not become operative for 30 days after the date of filing, or such
shorter time as the Commission may designate, if consistent with the
protection of investors and the public interest, the proposed rule
change has become effective pursuant to Section 19(b)(3)(A) of the Act
\12\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
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As required under Rule 19b-4(f)(6)(iii),\14\ the Exchange provided
the Commission with written notice of its intent to file the proposed
rule change, along with a brief description and text of the proposed
rule change, at least five business days prior to the date of the
filing of the proposed rule change. The Exchange has requested that the
Commission waive the 30-day operative delay to immediately expand the
availability of Direct+ for orders in ETFs by eliminating order size
and frequency restrictions. The Commission believes that waiver of the
30-day operative delay is consistent with the protection of investors
and the public interest, because this filing should enhance the
execution of transactions in ETFs. For this reason, the Commission
designates the proposal to be effective and operative upon filing with
the Commission.\15\
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\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ For the purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition and capital formation. 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate 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 the furtherance of the purposes of the Act.
IV. Solicitation of Comments
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:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSE-2005-49 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 20549-9309.
All submissions should refer to File Number SR-NYSE-2005-49. 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
[[Page 44966]]
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 Section, 100 F Street, NE, Washington, DC 20549. Copies of
such filing also will be available for inspection and copying at the
principal office of the Exchange. 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-2005-49 and should be submitted on or before August
25, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4133 Filed 8-3-05; 8:45 am]
BILLING CODE 8010-01-P
