Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Extension of Two Crossing Sessions in the Exchange's Off-Hours Trading Facility, 8626-8628 [E6-2299]
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8626
Federal Register / Vol. 71, No. 33 / Friday, February 17, 2006 / Notices
member that directly or indirectly
controls an exchange might be tempted
to exercise that controlling influence by
directing the exchange to refrain from
diligently monitoring and surveiling the
member’s conduct or diligently
enforcing its rules and the federal
securities laws with respect to conduct
by the member that violates such
provisions.
The Commission believes that the
proposal would not give rise to concerns
about the Exchange’s ability to
effectively carry out its regulatory
responsibilities under the Act because
the proposed rule change preserves
existing ownership and voting
limitations.
In light of the foregoing, the
Commission believes that the
Exchange’s proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,13 that the
proposed rule change (File No. SR–ISE–
2005–46) is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.14
Nancy M. Morris,
Secretary.
[FR Doc. E6–2300 Filed 2–16–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53275; File No. SR–NYSE–
2006–02]
Self-Regulatory Organizations; New
York Stock Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
Extension of Two Crossing Sessions
in the Exchange’s Off-Hours Trading
Facility
February 13, 2006.
sroberts on PROD1PC70 with NOTICES
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 January
25, 2006, the New York Stock Exchange,
2006); 51149 (February 8, 2005), 70 FR 7531
(February 14, 2005) (SR–CHX–2004–26); 49718
(May 17, 2004), 69 FR 29611 (May 24, 2004) (SR–
PCX–2004–08); 49098 (January 16, 2004), 69 FR
3974 (January 27, 2004) (SR–Phlx–2003–73); and
49067 (January 13, 2004), 69 FR 2761 (January 20,
2004) (SR–BSE–2003–19).
13 15 U.S.C. 78s(b)(2).
14 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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18:51 Feb 16, 2006
Jkt 208001
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. The
Exchange filed the proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6) thereunder,
which renders it effective upon filing
with the Commission.4 The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested persons.
(Crossing Sessions III and IV) in the
Exchange’s Off-Hours Trading Facility
(‘‘OHTF’’) as pilot programs that expired
on December 1, 2004. Subsequently, the
Commission published a notice of filing
and immediate effectiveness of a
proposed rule change extending the
Pilots until February 1, 2006.6 This
proposal extends the Pilots until
February 1, 2007.7 Crossing Sessions III
and IV are described below.
Background
The purpose of SR–NYSE–2002–40
was to add two additional ‘‘Crossing
Sessions’’ (Crossing Sessions III and IV)
to the Exchange’s OHTF. Before SR–
NYSE–2002–40, the OHTF consisted of
Crossing Sessions I and II. Crossing
Session I permits the execution, at the
Exchange’s closing price, of singlestock, single-sided closing price orders
and crosses of single-stock, closing price
buy and sell orders. Crossing Session II
permits the execution of crosses of
multiple-stock (‘‘basket’’) aggregate
priced buy and sell orders. For Crossing
Session II, trade reporting is
accomplished by reporting to the
Consolidated Tape the total number of
shares and the total market value of the
aggregate-price trades. There is no
indication of the individual component
stocks involved in the aggregate-price
transactions.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The NYSE proposes to extend until
February 1, 2007 the following pilot
programs (‘‘Pilots’’): Crossing Session
III, for the execution of guaranteed price
coupled orders by member
organizations to fill the balance of
customer orders at a price that was
guaranteed to a customer prior to the
close of the Exchange’s 9:30 a.m. to 4
p.m. trading session (‘‘Crossing Session
III’’); and Crossing Session IV, whereby
an unfilled balance of an order may be
filled at a price such that the entire
order is filled at no worse price than the
Volume Weighted Average Price
(‘‘VWAP’’) for the subject security
(‘‘Crossing Session IV’’). The text of the
proposed rule change is available on the
Crossing Session III
NYSE’s Web site (https://www.nyse.com),
In the instant proposed rule change,
at the NYSE’s Office of Secretary, and at
the Exchange is proposing to extend
the Commission’s Public Reference
until February 1, 2007, the Pilot in
Room.
Crossing Session III. Crossing Session III
II. Self-Regulatory Organization’s
is described in NYSE Rule 907. This
Statement of the Purpose of, and
Pilot would continue to allow for the
Statutory Basis for, the Proposed Rule
execution on the NYSE of ‘‘guaranteed
Change
price coupled orders’’ whereby member
organizations could fill the unfilled
In its filing with the Commission, the
balance of a customer order at a price
NYSE included statements concerning
which was guaranteed to the customer
the purpose of, and basis for, the
proposed rule change and discussed any prior to the close of the Exchange’s 9:30
a.m. to 4 p.m. trading session.
comments it received on the proposed
rule change. The Exchange has prepared
The Granting of ‘‘Upstairs Stops’’
summaries set forth in Sections A, B,
In serving their institutional
and C below of the most significant
customers, member firms may offer
aspects of such statements.
them a guarantee that a large size order
A. Self-Regulatory Organization’s
will receive no worse than a particular
Statement of the Purpose of, and
price. Such a practice is usually referred
Statutory Basis for, the Proposed Rule
to as an ‘‘upstairs stop,’’ meaning that
Change
1. Purpose
In SR–NYSE–2002–40,5 the
Commission approved an order
establishing two new crossing sessions
3 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
5 See Securities Exchange Act Release No. 48857
(December 1, 2003), 68 FR 68440 (December 8,
2003).
4 17
PO 00000
Frm 00064
Fmt 4703
Sfmt 4703
6 See Securities Exchange Act Release No. 51091
(January 28, 2005), 70 FR 6484 (February 7, 2005)
(SR–NYSE–2005–01).
7 The NYSE confirmed that the Pilots will
continue to function in the same manner that they
operated prior to the one-year extension. Telephone
conversation between Donald Siemer, Director,
Market Surveillance, NYSE, Joseph P. Morra,
Special Counsel, Division of Market Regulation
(‘‘Division’’), Commission and Johnna B. Dumler,
Attorney, Division, Commission on February 10,
2006.
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Federal Register / Vol. 71, No. 33 / Friday, February 17, 2006 / Notices
the firm guarantees that its customer’s
order will be executed at no worse price
than the agreed-upon, guaranteed price,
with the member firm trading for its
own account, if necessary, to effectuate
the guarantee.
Typically, a member firm will seek to
execute as much of the order as possible
during the trading day at or below the
‘‘stop’’ price (in the case of a buy order)
or at or above the ‘‘stop’’ price (in the
case of a sell order). Any portion of the
order not filled during the trading day
will be completed after hours, with the
firm either buying from, or selling to, its
customer at a price which ensures that
the entire order is executed at a price
which is no worse than the ‘‘stop’’ price.
Member firms typically execute the
unfilled balance of the order, after the
U.S. Consolidated Tape is closed, in the
London over-the-counter market, where
trades are not reported in real time. The
purpose of this is simply to minimize
the possibility that other market
participants may ascertain the firm’s, or
the customer’s inventory position, and
possibly trade in the subject security to
the detriment of the firm that granted
the ‘‘upstairs stop.’’ According to the
Exchange, it is more transparent to print
the trade in the NYSE primary market
during U.S. Consolidated Tape hours.
Crossing Session IV
The Exchange is also proposing to
extend the Pilot in Crossing Session IV
(which is also described in NYSE Rule
907), until February 1, 2007. Crossing
Session IV is a facility whereby member
organizations may fill the unfilled
balance of a customer’s order at a price
such that the overall order is filled at a
price that is no worse than the VWAP
for the subject security on that trading
day. The member organization would be
required to document its VWAP
agreement with the customer and the
basis upon which the VWAP price
would be determined.
sroberts on PROD1PC70 with NOTICES
Operation of Crossing Sessions
As described in NYSE InformationMemos 04–30 and 05–57 and NYSE
Rule 907, Crossing Session III and
Crossing Session IV would continue to
operate as follows:
(i) The original order as to which an
‘‘upstairs stop’’ or ‘‘VWAP’’ has been
granted may be of any size;
(ii) The customer must have received
a ‘‘stop’’ (guaranteed price) or VWAP for
the entire order;
(iii) The member firm must record all
details of the order, including the price
it has guaranteed its customer or that
the entire order will be filled at no
worse than the VWAP;
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18:51 Feb 16, 2006
Jkt 208001
(iv) An order or the unfilled balance
of an order that would be executed in
Crossing Session III or Crossing Session
IV may be of any size;
(v) The customer’s order must be
executed in Crossing Session III or
Crossing Session IV at a price that
ensures that the entire order is executed
at a price that is no worse than the
guaranteed price or the VWAP;
(vi) Orders may be entered in Crossing
Session III or Crossing Session IV
between 4 p.m. and 6:30 p.m., and must
be identified as either a Crossing
Session III or Crossing Session IV order;
(vii) Member firms will receive an
immediate report of execution upon
entering an order into Crossing Session
III or Crossing Session IV;
(viii) Orders may be entered into
Crossing Session III for execution at
prices outside the trading range in the
subject security during the 9:30 a.m. to
4 p.m. trading session;
(ix) Orders may not be entered into
Crossing Session III or Crossing Session
IV in a security that is subject to a
trading halt at the close of the regular
9:30 a.m. to 4 p.m. trading session; and
(x) At 6:30 p.m., the Exchange will
print trades reported through Crossing
Session III as guaranteed price coupled
orders or in Crossing Session IV as
VWAP executions.
2. Statutory Basis
NYSE believes that the proposed rule
change is consistent with Section 6 of
the Act 8 in general, and furthers the
objectives of Section 6(b)(5) of the Act 9
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.
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.
8 15
9 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00065
Fmt 4703
Sfmt 4703
8627
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed 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 on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)10 and Rule 19b–4(f)(6)
thereunder.11 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.
NYSE has asked the Commission to
waive the five-day pre-filing notice
requirement and the 30-day operative
delay. The Commission believes such
waiver is consistent with the protection
of investors and the public interest
because it would allow the Pilots to
operate without interruption.12 For this
reason, the Commission designates the
proposal to be operative upon filing
with the Commission.
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 e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSE–2006–02 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSE–2006–02. This file
number should be included on the
subject line if e-mail is used. To help the
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
12 For purposes only of waiving the 30-day preoperative period, the Commission has considered
the proposed rule’s impact on efficiency,
competition and capital formation. 15 U.S.C. 78c(f).
11 17
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8628
Federal Register / Vol. 71, No. 33 / Friday, February 17, 2006 / Notices
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 will also 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–2006–02 and should be
submitted by March 10, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Nancy M. Morris,
Secretary.
[FR Doc. E6–2299 Filed 2–16–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53267; File No. SR–OCC–
2005–25]
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change Relating to
Adjustment Panels
sroberts on PROD1PC70 with NOTICES
February 9, 2006.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
December 23, 2005, The Options
Clearing Corporation (‘‘OCC’’) 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 primarily by OCC.
OCC filed the proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 2 whereby the proposal was effective
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78s(b)(3)(A)(ii).
upon filing with the Commission. 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 amends
certain By-Law provisions in order to
consolidate common policies and
procedures relevant to adjustment
panels that act from time to time on
behalf of OCC to adjust the terms of
outstanding cleared contracts to reflect
events affecting the issuer of the
instrument underlying the relevant
contract.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
OCC 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. OCC has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of such statements.3
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
As currently in effect, Article VI
(Clearance of Exchange Transactions)
Section 11 (Adjustments Panel Policies
and Procedures) paragraph (b) of OCC’s
By-Laws provides that adjustments are
to be made by OCC’s Securities
Committee and describes factors to be
taken into account by the Securities
Committee in making adjustments.
Under Article VI, Section 11(k), also as
currently in effect, the authority of the
Securities Committee to make
adjustment determinations in particular
cases is delegated to adjustment panels
whose actions are deemed to constitute
actions by the Securities Committee.
Article VI, Section 11(k) sets forth
procedures governing matters such as
adjustment panel composition and
voting. Several other articles of the ByLaws that are applicable to specific
products other than stock options also
provide for adjustment panels and
incorporate certain provisions of the
current Article VI, Section 11(k) by
reference. Specifically, these other
articles and the relevant sections are:
13 17
1 15
VerDate Aug<31>2005
18:51 Feb 16, 2006
3 The Commission has modified parts of these
statements.
Jkt 208001
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Frm 00066
Fmt 4703
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Article XV (Foreign Currency Options),
Section 4; Article XVII (Index Options),
Section 3; Article XX (Cross-Rate
Foreign Currency Options), Section 4;
Article XXII (Cash-Settled Foreign
Currency Options), Section 3; Article
XXIII (Flexibly Structured Index
Options), Section 4; and Article XXIV
(BOUNDs), Section 6. These adjustment
provisions, which are generally
duplicative of those in Article VI,
Section 11(k), inadvertently omit the
conflict of interest provision of Article
VI, Section 11(k) that prohibits persons
with a financial interest in the
adjustment from serving on an
adjustment panel. Although the
adjustment provisions governing
products other than stock options
incorporate by reference some policies
and procedures from Article VI, Section
11, they repeat other provisions.
In order to correct the inadvertent
exclusion of the conflict of interest
provision and to eliminate repetitive
language, thereby decreasing the
potential for inadvertent inconsistencies
between the adjustment provisions of
the various articles of the By-Laws if
one or more of such provisions were
amended in the future, OCC proposes to
revise Section 11 of Article VI to be
generally applicable to all adjustment
panels regardless of the product type
and to insert cross-references to Section
11 in the other articles where
appropriate. In addition, OCC is
proposing to add Section 11A to Article
VI that will preserve those paragraphs of
the existing Section 11 that apply
specifically to stock options.
Proposed Section 11(a)–(c) of Article
VI is largely a restatement of policies
and procedures currently applicable to
the Securities Committee and
adjustment panels acting on its behalf as
found in existing Sections 11(b) and (k)
of Article VI. In proposed Article VI,
Section 11(a), the list of factors which
the Securities Committee may consider
in making an adjustment determination
is a comprehensive list of such factors,
some of which may not be applicable to
a particular cleared contract. In
proposed Article VI, Section 11(c), the
term ‘‘cleared contracts’’ replaces
references to ‘‘option contracts and
BOUNDs’’ in the corresponding
sentences of existing Section 11(k).
Proposed Section 11A of Article VI is
a restatement of existing Section 11(a)
and (c)–(j) of Article VI except for
revisions to reflect proper references to
Section 11A or Section 11, as
applicable.
To preserve stockholder prerogatives,
Article XI (Amendment of the By-Laws
and Rules), Section 1, which requires
stockholder approval for amendments to
E:\FR\FM\17FEN1.SGM
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]]>Agencies
[Federal Register Volume 71, Number 33 (Friday, February 17, 2006)]
[Notices]
[Pages 8626-8628]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-2299]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53275; File No. SR-NYSE-2006-02]
Self-Regulatory Organizations; New York Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Extension of Two Crossing Sessions in the Exchange's Off-
Hours Trading Facility
February 13, 2006.
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 January 25, 2006, 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. The Exchange
filed the proposed rule change pursuant to Section 19(b)(3)(A) of the
Act \3\ and Rule 19b-4(f)(6) thereunder, which renders it effective
upon filing with the Commission.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NYSE proposes to extend until February 1, 2007 the following
pilot programs (``Pilots''): Crossing Session III, for the execution of
guaranteed price coupled orders by member organizations to fill the
balance of customer orders at a price that was guaranteed to a customer
prior to the close of the Exchange's 9:30 a.m. to 4 p.m. trading
session (``Crossing Session III''); and Crossing Session IV, whereby an
unfilled balance of an order may be filled at a price such that the
entire order is filled at no worse price than the Volume Weighted
Average Price (``VWAP'') for the subject security (``Crossing Session
IV''). The text of the proposed rule change is available on the NYSE's
Web site (https://www.nyse.com), at the NYSE's Office of 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 NYSE 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
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
In SR-NYSE-2002-40,\5\ the Commission approved an order
establishing two new crossing sessions (Crossing Sessions III and IV)
in the Exchange's Off-Hours Trading Facility (``OHTF'') as pilot
programs that expired on December 1, 2004. Subsequently, the Commission
published a notice of filing and immediate effectiveness of a proposed
rule change extending the Pilots until February 1, 2006.\6\ This
proposal extends the Pilots until February 1, 2007.\7\ Crossing
Sessions III and IV are described below.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 48857 (December 1,
2003), 68 FR 68440 (December 8, 2003).
\6\ See Securities Exchange Act Release No. 51091 (January 28,
2005), 70 FR 6484 (February 7, 2005) (SR-NYSE-2005-01).
\7\ The NYSE confirmed that the Pilots will continue to function
in the same manner that they operated prior to the one-year
extension. Telephone conversation between Donald Siemer, Director,
Market Surveillance, NYSE, Joseph P. Morra, Special Counsel,
Division of Market Regulation (``Division''), Commission and Johnna
B. Dumler, Attorney, Division, Commission on February 10, 2006.
---------------------------------------------------------------------------
Background
The purpose of SR-NYSE-2002-40 was to add two additional ``Crossing
Sessions'' (Crossing Sessions III and IV) to the Exchange's OHTF.
Before SR-NYSE-2002-40, the OHTF consisted of Crossing Sessions I and
II. Crossing Session I permits the execution, at the Exchange's closing
price, of single-stock, single-sided closing price orders and crosses
of single-stock, closing price buy and sell orders. Crossing Session II
permits the execution of crosses of multiple-stock (``basket'')
aggregate priced buy and sell orders. For Crossing Session II, trade
reporting is accomplished by reporting to the Consolidated Tape the
total number of shares and the total market value of the aggregate-
price trades. There is no indication of the individual component stocks
involved in the aggregate-price transactions.
Crossing Session III
In the instant proposed rule change, the Exchange is proposing to
extend until February 1, 2007, the Pilot in Crossing Session III.
Crossing Session III is described in NYSE Rule 907. This Pilot would
continue to allow for the execution on the NYSE of ``guaranteed price
coupled orders'' whereby member organizations could fill the unfilled
balance of a customer order at a price which was guaranteed to the
customer prior to the close of the Exchange's 9:30 a.m. to 4 p.m.
trading session.
The Granting of ``Upstairs Stops''
In serving their institutional customers, member firms may offer
them a guarantee that a large size order will receive no worse than a
particular price. Such a practice is usually referred to as an
``upstairs stop,'' meaning that
[[Page 8627]]
the firm guarantees that its customer's order will be executed at no
worse price than the agreed-upon, guaranteed price, with the member
firm trading for its own account, if necessary, to effectuate the
guarantee.
Typically, a member firm will seek to execute as much of the order
as possible during the trading day at or below the ``stop'' price (in
the case of a buy order) or at or above the ``stop'' price (in the case
of a sell order). Any portion of the order not filled during the
trading day will be completed after hours, with the firm either buying
from, or selling to, its customer at a price which ensures that the
entire order is executed at a price which is no worse than the ``stop''
price.
Member firms typically execute the unfilled balance of the order,
after the U.S. Consolidated Tape is closed, in the London over-the-
counter market, where trades are not reported in real time. The purpose
of this is simply to minimize the possibility that other market
participants may ascertain the firm's, or the customer's inventory
position, and possibly trade in the subject security to the detriment
of the firm that granted the ``upstairs stop.'' According to the
Exchange, it is more transparent to print the trade in the NYSE primary
market during U.S. Consolidated Tape hours.
Crossing Session IV
The Exchange is also proposing to extend the Pilot in Crossing
Session IV (which is also described in NYSE Rule 907), until February
1, 2007. Crossing Session IV is a facility whereby member organizations
may fill the unfilled balance of a customer's order at a price such
that the overall order is filled at a price that is no worse than the
VWAP for the subject security on that trading day. The member
organization would be required to document its VWAP agreement with the
customer and the basis upon which the VWAP price would be determined.
Operation of Crossing Sessions
As described in NYSE Information-Memos 04-30 and 05-57 and NYSE
Rule 907, Crossing Session III and Crossing Session IV would continue
to operate as follows:
(i) The original order as to which an ``upstairs stop'' or ``VWAP''
has been granted may be of any size;
(ii) The customer must have received a ``stop'' (guaranteed price)
or VWAP for the entire order;
(iii) The member firm must record all details of the order,
including the price it has guaranteed its customer or that the entire
order will be filled at no worse than the VWAP;
(iv) An order or the unfilled balance of an order that would be
executed in Crossing Session III or Crossing Session IV may be of any
size;
(v) The customer's order must be executed in Crossing Session III
or Crossing Session IV at a price that ensures that the entire order is
executed at a price that is no worse than the guaranteed price or the
VWAP;
(vi) Orders may be entered in Crossing Session III or Crossing
Session IV between 4 p.m. and 6:30 p.m., and must be identified as
either a Crossing Session III or Crossing Session IV order;
(vii) Member firms will receive an immediate report of execution
upon entering an order into Crossing Session III or Crossing Session
IV;
(viii) Orders may be entered into Crossing Session III for
execution at prices outside the trading range in the subject security
during the 9:30 a.m. to 4 p.m. trading session;
(ix) Orders may not be entered into Crossing Session III or
Crossing Session IV in a security that is subject to a trading halt at
the close of the regular 9:30 a.m. to 4 p.m. trading session; and
(x) At 6:30 p.m., the Exchange will print trades reported through
Crossing Session III as guaranteed price coupled orders or in Crossing
Session IV as VWAP executions.
2. Statutory Basis
NYSE believes that the proposed rule change is consistent with
Section 6 of the Act \8\ in general, and furthers the objectives of
Section 6(b)(5) of the Act \9\ 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.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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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 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
Because the foregoing proposed 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 on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)\10\ and Rule 19b-4(f)(6)
thereunder.\11\ 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.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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NYSE has asked the Commission to waive the five-day pre-filing
notice requirement and the 30-day operative delay. The Commission
believes such waiver is consistent with the protection of investors and
the public interest because it would allow the Pilots to operate
without interruption.\12\ For this reason, the Commission designates
the proposal to be operative upon filing with the Commission.
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\12\ For purposes only of waiving the 30-day pre-operative
period, 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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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 e-mail to rule-comments@sec.gov. Please include File
Number SR-NYSE-2006-02 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2006-02. This file
number should be included on the subject line if e-mail is used. To
help the
[[Page 8628]]
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 will also 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-2006-02 and should be submitted by March 10, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
Nancy M. Morris,
Secretary.
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\13\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E6-2299 Filed 2-16-06; 8:45 am]
BILLING CODE 8010-01-P
