Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change To Amend NYSE Rule 123C (Market on the Close Policy and Expiration Procedures) To Eliminate the Requirement To Publish Pre-Opening Market Order Imbalances on Expiration Fridays, 48792-48794 [E5-4535]

Download as PDF 48792 Federal Register / Vol. 70, No. 160 / Friday, August 19, 2005 / Notices of investors and the public interest, to waive the five-day pre-filing notice and 30-day operative date so that the NYSE may meet the requirement in the Administrative Proceeding that the tracking of the time specialists and clerks spend on the Floor begin on or before October 1, 2005.13 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–NYSE–2005–47 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 No. SR–NYSE–2005–47. 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 the 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 No. SR–NYSE–2005–47 and should be submitted on or before September 9, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 Jonathan G. Katz, Secretary. [FR Doc. E5–4533 Filed 8–18–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52255; File No. SR–NYSE– 2005–54] Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change To Amend NYSE Rule 123C (Market on the Close Policy and Expiration Procedures) To Eliminate the Requirement To Publish Pre-Opening Market Order Imbalances on Expiration Fridays August 15, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 26, 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, II, and III below, which Items have been prepared by the NYSE. The Commission is publishing this notice to solicit 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 proposed rule change seeks to amend NYSE Rule 123C (Market on the Close Policy and Expiration Procedures) to eliminate the requirement to publish pre-opening market order imbalances on expiration Fridays. The text of the proposed rule change is below. Proposed new language is in italics; proposed deletions are in [brackets]. Market on the Close Policy and Expiration Procedures Rule 123C * 13 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). VerDate jul<14>2003 16:47 Aug 18, 2005 Jkt 205001 PO 00000 * * * * 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 Frm 00130 Fmt 4703 Sfmt 4703 (6) Expiration Friday Auxiliary Procedures for the Opening The Exchange adopted monthly auxiliary procedures for expiration days in order to integrate stock orders relating to expiring index contracts into the NYSE’s opening procedures in a manner that will assure an efficient market opening in each stock as close to 9:30 a.m. as possible. An expiration day is a trading day prior to the expiration of index-related derivative products (futures, options or options on futures), whose settlement pricing is based upon opening or closing prices on the Exchange, as identified by a qualified clearing corporation (e.g., the Options Clearing Corporation). The twelve expiration days are ‘‘expiration Fridays’’ which fall on the third Friday in every month. If that Friday is an Exchange holiday, there will be an expiration Thursday in such a month. Order Entry Stock orders relating to index contracts whose settlement pricing is based upon the ‘‘Expiration Friday’s’’ opening prices must be received by SuperDOT or by the specialist by 9 a.m. • These orders may be cancelled or reduced in size. Firms cancelling these orders or reducing them in size shall prepare contemporaneously a written record describing the rationale for the change and shall preserve it as Rule 410 provides. • Stock orders relating to index contracts whose settlement pricing is not based upon the ‘‘Expiration Friday’s’’ opening prices may be entered before or after 9 a.m. To facilitate early order entry, SuperDOT (a) will begin accepting orders at 7:30 a.m. and (b) will accept orders of 500,000 shares or less. ‘‘Limit at the opening’’ (‘‘limit OPG’’) orders are permitted, including delivery through Exchange systems. • Ordinary limit orders may also be entered. Order Identification Stock orders relating to opening-price settling contracts must be identified ‘‘OPG’’. • Firms entering these orders through SuperDOT, but unable to identify orders as ‘‘OPG,’’ may use a unique branch code or firm identifier (mnemonic) to identify these orders. • Firms unable to identify these orders in either way, and firms not using SuperDOT, must submit a list of all these orders and related details to the NYSE Market Surveillance Division. E:\FR\FM\19AUN1.SGM 19AUN1 Federal Register / Vol. 70, No. 160 / Friday, August 19, 2005 / Notices [Dissemination of Order Imbalances] Applicability of Regular Opening Procedures [On Expiration days, for any stocks having a market order imbalance of 50,000 shares or more at 9 a.m., the NYSE will disseminate the size of the order imbalance via the low-speed ticker and the news services as promptly as practicable after 9 a.m.] Except for the auxiliary procedures described above, all stocks are subject to the regular NYSE opening procedures, including price indications where a substantial price change is anticipated. Ten minutes must elapse between a first indication and a stock’s opening. However, when more than one indication is necessary, a stock may open five minutes after the last indication provided that ten minutes must have elapsed from the dissemination of the first indication. * * * * * 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 change. The text of these statements may be examined at the places specified in Item IV below. 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 NYSE Rule 123C (Market on the Close Policy and Expiration Procedures) contains requirements with respect to operation of the Exchange’s market concerning market-on-close (‘‘MOC’’) and limit-on-close (‘‘LOC’’) orders as well as order entry and imbalance publication requirements for use on expiration days. An ‘‘expiration day’’ as defined in NYSE Rule 123C is ‘‘a trading day prior to the expiration of indexrelated derivative products (futures, options or options on futures), whose settlement pricing is based upon opening or closing prices on the Exchange, as identified by a qualified clearing corporation (e.g., the Options Clearing Corporation). The twelve expiration days are ‘expiration Fridays’ which fall on the third Friday in every month.’’ On these expiration days, the Exchange has specific requirements governing the entry of orders in stocks relating to index contracts whose VerDate jul<14>2003 16:47 Aug 18, 2005 Jkt 205001 settlement prices are based on the opening prices on the Exchange of the stocks comprising the indices. Stock orders relating to index contracts whose settlement pricing is based upon the expiration Friday’s opening prices must be received by SuperDOT or by the specialist by 9 a.m. and must be identified as pertaining to opening-price settling contracts by placing the letters ‘‘OPG’’ on the order. Both market and limit orders in stocks which are part of an expiring index whose settlement is based on NYSE opening prices may be entered on expiration Fridays. Market and limit orders may also be entered with respect to stocks that are not part of an expiring index whose pricing is based on NYSE opening prices. Under NYSE Rule 123C(6), the Exchange publishes informational order imbalances, as promptly as possible after 9 a.m., only with respect to the imbalance of buy and sell market orders, and does not include buy and sell limit orders entered up to that time for execution at the opening. On occasion, this practice of publishing only pre-opening market order imbalances has prompted observations from some market participants that this may provide misleading information, since the imbalances disseminated may not show the true imbalance situation in a stock, especially in those stocks that are part of an expiring index whose settlement is based on NYSE opening prices, since limit orders are not included in the imbalance publication. To address these concerns, the Exchange proposes to eliminate the publication of pre-opening market order imbalances on expiration Fridays. The Exchange believes that, based on input from its market participants, the publication of only market order imbalances does not provide useful information, especially with respect to those stocks which are part of an expiring index whose settlement is based on NYSE opening prices on one of those days. To calculate an imbalance using pre-opening limit orders, reference prices at various points would have to be used to determine whether the limit order would be marketable, that is, whether, based on the reference price, the limit order could be executed. The Exchange’s systems are not able to show pre-opening limit order imbalances in this manner and, thus, the Exchange cannot expand the imbalance publications to include limit orders. The Exchange will, however, continue to utilize its pre-opening procedures with respect to price indications in situations where the opening price PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 48793 would be affected by an imbalance of buy and sell orders, both market and limit orders, in a security. These procedures, as set forth in NYSE Rule 123D (Openings and Halts in Trading), provide ample notification to the marketplace through multiple price indications if necessary under the supervision of a Floor Official. In addition, Intermarket Trading System procedures contained in NYSE Rule 15 (ITS and Pre-Opening Applications) require pre-opening price notifications if the opening price of a stock is anticipated to be more than .10 of a point from a composite last sale under $15 or more than .25 of a point from a composite last sale of $15 or higher. These procedures set forth in NYSE Rules 123D and 15 have proven effective in providing adequate and useful information to the marketplace in situations involving price changes based on order imbalances and the Exchange believes they will continue to do so. 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) 3 that an Exchange have rules that are 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. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange 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 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 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 Exchange consents, the Commission shall: 3 15 E:\FR\FM\19AUN1.SGM U.S.C. 78f(b)(5). 19AUN1 48794 Federal Register / Vol. 70, No. 160 / Friday, August 19, 2005 / Notices (A) By order approve such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.4 Jonathan G. Katz, Secretary. [FR Doc. E5–4535 Filed 8–18–05; 8:45 am] IV. Solicitation of Comments BILLING CODE 8010–01–P 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 No. SR–NYSE–2005–54 on the subject line. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52254; File No. SR–Phlx– 2005–36] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Order Approving a Proposed Rule Change Relating to Phlx Rule 1023 August 15, 2005. I. Introduction On May 19, 2005, the Philadelphia Stock Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission Paper Comments (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act • Send paper comments in triplicate of 1934 (‘‘Act’’) 1 and Rule 19b–4 to Jonathan G. Katz, Secretary, thereunder,2 a proposal to amend Phlx Securities and Exchange Commission, Rule 1023, ‘‘Specialist’s Transactions Station Place, 100 F Street, NE., with Listed Company.’’ The proposed Washington, DC 20549–9303. rule change was published for comment All submissions should refer to File in the Federal Register on July 7, 2005.3 Number SR–NYSE–2005–54. This file The Commission received no comments number should be included on the regarding the proposal. This order subject line if e-mail is used. To help the approves the proposed rule change. Commission process and review your II. Description of the Proposal comments more efficiently, please use Phlx Rule 1023(a) currently prohibits only one method. The Commission will a specialist from effecting any business post all comments on the Commissions transaction with a company or any Internet Web site (https://www.sec.gov/ officer, director, or 10% shareholder of rules/sro.shtml). Copies of the a company underlying an option in submission, all subsequent which the specialist is registered. The amendments, all written statements Phlx proposes to amend Phlx Rule with respect to the proposed rule 1023(a) to exclude from its restriction change that are filed with the on an option specialist’s business Commission, and all written transactions with the issuer of the communications relating to the underlying stock and related persons proposed rule change between the Commission and any person, other than business transactions in goods and services on terms generally available to those that may be withheld from the the public. The Phlx believes that the public in accordance with the proposed exception will not provide the provisions of 5 U.S.C. 552, will be option specialist with access to material available for inspection and copying in non-public information concerning the the Commission’s Public Reference Room. Copies of such filing also will be issuer or give rise to a control relationship between the issuer and the available for inspection and copying at specialist. the principal office of the NYSE. All comments received will be posted III. Discussion without change; the Commission does The Commission finds that the not edit personal identifying proposed rule change is consistent with information from submissions. You the requirements of the Act and the should submit only information that you wish to make available publicly. All 4 17 CFR 200.30–3(a)(12). submissions should refer to File 1 15 U.S.C. 78s(b)(1). Number SR–NYSE–2005–54 and should 2 17 CFR 240.19b–4. be submitted on or before September 9, 3 See Securities Exchange Act Release No. 51928 2005. (June 28, 2005), 70 FR 39351. VerDate jul<14>2003 16:47 Aug 18, 2005 Jkt 205001 PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 rules and regulations thereunder applicable to a national securities exchange.4 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,5 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, 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 Commission believes that the proposal will ease the restriction in Phlx Rule 1023(a) on a specialist’s business transactions with the issuer of the stock underlying an option in which the specialist is registered and related persons without providing the specialist with access to material non-public information regarding the issuer or giving rise to a control relationship between the issuer and the specialist. In addition, the Commission notes that Phlx Rule 1023(a), as amended, is substantially similar to Chicago Board Options Exchange Rule (‘‘CBOE’’) 8.91(b).6 IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,7 that the proposed rule change (SR–Phlx–2005– 36) is approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.8 Jonathan G. Katz, Secretary. [FR Doc. E5–4534 Filed 8–18–05; 8:45 am] BILLING CODE 8010–01–P 4 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 5 15 U.S.C. 78f(b)(5). 6 CBOE Rule 8.9(b) provides, in part, that ‘‘Neither a DPM for an equity option, nor any member affiliated with the DPM, shall engage in any material business transaction with the issuer of the security that underlies the equity option or with any officer, director, or 10% shareholder of the issuer of the security * * *. For purposes of this paragraph (b), a material business transaction shall be deemed to be a transaction which is material in value either to the issuer or the DPM, would provide access to material non-public information relating to the issuer, or would give rise to a control relationship between the issuer and the DPM. Notwithstanding the foregoing, the receipt of routine business services, goods, materials, or insurance, on terms that would be generally available shall not be deemed a material business transaction for the purposes of this paragraph (b).’’ 7 15 U.S.C. 78s(b)(2). 8 17 CFR 200.30–3(a)(12). E:\FR\FM\19AUN1.SGM 19AUN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 160 (Friday, August 19, 2005)]
[Notices]
[Pages 48792-48794]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-4535]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52255; File No. SR-NYSE-2005-54]


Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change To Amend NYSE Rule 123C 
(Market on the Close Policy and Expiration Procedures) To Eliminate the 
Requirement To Publish Pre-Opening Market Order Imbalances on 
Expiration Fridays

August 15, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on July 26, 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, II, 
and III below, which Items have been prepared by the NYSE. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The proposed rule change seeks to amend NYSE Rule 123C (Market on 
the Close Policy and Expiration Procedures) to eliminate the 
requirement to publish pre-opening market order imbalances on 
expiration Fridays.
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in [brackets].

Market on the Close Policy and Expiration Procedures

Rule 123C
* * * * *
(6) Expiration Friday Auxiliary Procedures for the Opening
    The Exchange adopted monthly auxiliary procedures for expiration 
days in order to integrate stock orders relating to expiring index 
contracts into the NYSE's opening procedures in a manner that will 
assure an efficient market opening in each stock as close to 9:30 a.m. 
as possible. An expiration day is a trading day prior to the expiration 
of index-related derivative products (futures, options or options on 
futures), whose settlement pricing is based upon opening or closing 
prices on the Exchange, as identified by a qualified clearing 
corporation (e.g., the Options Clearing Corporation). The twelve 
expiration days are ``expiration Fridays'' which fall on the third 
Friday in every month. If that Friday is an Exchange holiday, there 
will be an expiration Thursday in such a month.
Order Entry
    Stock orders relating to index contracts whose settlement pricing 
is based upon the ``Expiration Friday's'' opening prices must be 
received by SuperDOT or by the specialist by 9 a.m.
     These orders may be cancelled or reduced in size. Firms 
cancelling these orders or reducing them in size shall prepare 
contemporaneously a written record describing the rationale for the 
change and shall preserve it as Rule 410 provides.
     Stock orders relating to index contracts whose settlement 
pricing is not based upon the ``Expiration Friday's'' opening prices 
may be entered before or after 9 a.m.
    To facilitate early order entry, SuperDOT (a) will begin accepting 
orders at 7:30 a.m. and (b) will accept orders of 500,000 shares or 
less.
    ``Limit at the opening'' (``limit OPG'') orders are permitted, 
including delivery through Exchange systems.
     Ordinary limit orders may also be entered.
Order Identification
    Stock orders relating to opening-price settling contracts must be 
identified ``OPG''.
     Firms entering these orders through SuperDOT, but unable 
to identify orders as ``OPG,'' may use a unique branch code or firm 
identifier (mnemonic) to identify these orders.
     Firms unable to identify these orders in either way, and 
firms not using SuperDOT, must submit a list of all these orders and 
related details to the NYSE Market Surveillance Division.

[[Page 48793]]

[Dissemination of Order Imbalances] Applicability of Regular Opening 
Procedures
    [On Expiration days, for any stocks having a market order imbalance 
of 50,000 shares or more at 9 a.m., the NYSE will disseminate the size 
of the order imbalance via the low-speed ticker and the news services 
as promptly as practicable after 9 a.m.]
    Except for the auxiliary procedures described above, all stocks are 
subject to the regular NYSE opening procedures, including price 
indications where a substantial price change is anticipated. Ten 
minutes must elapse between a first indication and a stock's opening. 
However, when more than one indication is necessary, a stock may open 
five minutes after the last indication provided that ten minutes must 
have elapsed from the dissemination of the first indication.
* * * * *

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 change. The 
text of these statements may be examined at the places specified in 
Item IV below. 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
    NYSE Rule 123C (Market on the Close Policy and Expiration 
Procedures) contains requirements with respect to operation of the 
Exchange's market concerning market-on-close (``MOC'') and limit-on-
close (``LOC'') orders as well as order entry and imbalance publication 
requirements for use on expiration days. An ``expiration day'' as 
defined in NYSE Rule 123C is ``a trading day prior to the expiration of 
index-related derivative products (futures, options or options on 
futures), whose settlement pricing is based upon opening or closing 
prices on the Exchange, as identified by a qualified clearing 
corporation (e.g., the Options Clearing Corporation). The twelve 
expiration days are `expiration Fridays' which fall on the third Friday 
in every month.'' On these expiration days, the Exchange has specific 
requirements governing the entry of orders in stocks relating to index 
contracts whose settlement prices are based on the opening prices on 
the Exchange of the stocks comprising the indices. Stock orders 
relating to index contracts whose settlement pricing is based upon the 
expiration Friday's opening prices must be received by SuperDOT[reg] or 
by the specialist by 9 a.m. and must be identified as pertaining to 
opening-price settling contracts by placing the letters ``OPG'' on the 
order.
    Both market and limit orders in stocks which are part of an 
expiring index whose settlement is based on NYSE opening prices may be 
entered on expiration Fridays. Market and limit orders may also be 
entered with respect to stocks that are not part of an expiring index 
whose pricing is based on NYSE opening prices. Under NYSE Rule 123C(6), 
the Exchange publishes informational order imbalances, as promptly as 
possible after 9 a.m., only with respect to the imbalance of buy and 
sell market orders, and does not include buy and sell limit orders 
entered up to that time for execution at the opening. On occasion, this 
practice of publishing only pre-opening market order imbalances has 
prompted observations from some market participants that this may 
provide misleading information, since the imbalances disseminated may 
not show the true imbalance situation in a stock, especially in those 
stocks that are part of an expiring index whose settlement is based on 
NYSE opening prices, since limit orders are not included in the 
imbalance publication.
    To address these concerns, the Exchange proposes to eliminate the 
publication of pre-opening market order imbalances on expiration 
Fridays. The Exchange believes that, based on input from its market 
participants, the publication of only market order imbalances does not 
provide useful information, especially with respect to those stocks 
which are part of an expiring index whose settlement is based on NYSE 
opening prices on one of those days. To calculate an imbalance using 
pre-opening limit orders, reference prices at various points would have 
to be used to determine whether the limit order would be marketable, 
that is, whether, based on the reference price, the limit order could 
be executed. The Exchange's systems are not able to show pre-opening 
limit order imbalances in this manner and, thus, the Exchange cannot 
expand the imbalance publications to include limit orders.
    The Exchange will, however, continue to utilize its pre-opening 
procedures with respect to price indications in situations where the 
opening price would be affected by an imbalance of buy and sell orders, 
both market and limit orders, in a security. These procedures, as set 
forth in NYSE Rule 123D (Openings and Halts in Trading), provide ample 
notification to the marketplace through multiple price indications if 
necessary under the supervision of a Floor Official. In addition, 
Intermarket Trading System procedures contained in NYSE Rule 15 (ITS 
and Pre-Opening Applications) require pre-opening price notifications 
if the opening price of a stock is anticipated to be more than .10 of a 
point from a composite last sale under $15 or more than .25 of a point 
from a composite last sale of $15 or higher. These procedures set forth 
in NYSE Rules 123D and 15 have proven effective in providing adequate 
and useful information to the marketplace in situations involving price 
changes based on order imbalances and the Exchange believes they will 
continue to do so.
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) \3\ that 
an Exchange have rules that are 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.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange 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 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

    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 Exchange consents, the Commission shall:

[[Page 48794]]

    (A) By order approve such 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 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 No. SR-NYSE-2005-54 on the subject line.

Paper Comments

     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-NYSE-2005-54. 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 Commissions 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-2005-54 and should be submitted on or before 
September 9, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
---------------------------------------------------------------------------

    \4\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jonathan G. Katz,
Secretary.
[FR Doc. E5-4535 Filed 8-18-05; 8:45 am]
BILLING CODE 8010-01-P

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