Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to NYSE Rule 103.12 Regarding Time Tracking Requirements of Specialists and Clerks, 17534-17537 [E6-4987]

Download as PDF 17534 Federal Register / Vol. 71, No. 66 / Thursday, April 6, 2006 / Notices B. Notification of the Annual Shareholder Meeting With respect to Nasdaq’s proposal to eliminate the notice requirement in NASD Rule 4350(e), the Commission believes that, because Nasdaq’s practice to monitor the annual shareholder meeting requirement involves the review of proxy statements and other Commission filings, the current notification requirement is redundant and its elimination from NASD Rule 4350(e) would be reasonable. Of course, Nasdaq will still be required to ensure compliance with the annual shareholder meeting requirement and is simply eliminating a notification requirement which Nasdaq claims is not necessary. The proposed change would be consistent with Section 15A(b)(6) of the Act because the elimination of a redundancy and an unnecessary obligation of Nasdaq issuers removes impediments to the mechanism of a free and open market and a national market system, while continuing to ensure the protection of investors and the public interest. C. Timing of the Annual Shareholder Meeting Finally, the provision concerning the holding of an annual meeting is being amended to require that the annual meeting must be held within one year after the end of the fiscal year. The Commission believes that such proposed change reasonably establishes a time frame to the annual shareholder meeting requirement that is consistent with the Act, and in particular, Section 15A(b)(6) thereof. The Commission notes that this change makes explicit that the annual meeting must be held within a year of the fiscal year-end of the company.14 In addition, the Commission notes that the date a company holds its annual meeting must be consistent with state law. The Commission also notes that the provision requires those issuers that must hold an annual shareholder meeting under NASD Rule 4350(e) to hold such meetings within a certain time frame, for the benefit of the security holders, the investors, and the public interest, consistent with Section 15A(b)(6) of the Act.15 sroberts on PROD1PC70 with NOTICES III. Solicitation of Comments Interested persons are invited to submit written data, views, and 14 The proposed rule text of IM–4350–8 also states that for a new listing that was not previously subject to a requirement to hold an annual meeting, the company is required to hold its first meeting within one year after its first fiscal year-end following such listing. 15 15 U.S.C. 78o–3(b)(6). VerDate Aug<31>2005 19:52 Apr 05, 2006 Jkt 208001 doing and publishes its reasons for so finding. The Commission hereby finds good cause for approving Amendment No. 3 to the proposal, prior to the 30th day after publishing notice of Amendment No. 3 in the Federal Electronic Comments Register. The revisions made to the • Use the Commission’s Internet proposal in Amendment No. 3 are comment form (https://www.sec.gov/ typographical changes intended to rules/sro.shtml); or clarify that at the annual shareholder • Send an e-mail to rulemeeting shareholders must be afforded comments@sec.gov. Please include File the opportunity to discuss company No. SR–NASD–2005–073 on the subject affairs with management. In addition, if line. required by the issuer’s governing documents, shareholders must be Paper Comments afforded the opportunity to elect • Send paper comments in triplicate directors. This was the intent of the to Nancy M. Morris, Secretary, provision as originally proposed. The Securities and Exchange Commission, Commission believes that accelerating Station Place, 100 F Street, NE., Amendment No. 3 is appropriate Washington, DC 20549–1090. All because these revisions are clarifying submissions should refer to File and do not raise new regulatory issues. Number SR–NASD–2005–073. This file Accordingly, pursuant to Section number should be included on the 19(b)(2) of the Act,17 the Commission subject line if e-mail is used. To help the finds good cause to approve Commission process and review your Amendment No. 3 prior to the thirtieth comments more efficiently, please use only one method. The Commission will day after notice of the Amendment is post all comments on the Commission’s published in the Federal Register. Internet Web site (https://www.sec.gov/ V. Conclusion rules/sro.shtml). Copies of the It is therefore ordered, pursuant to submission, all subsequent Section 19(b)(2) of the Act,18 that the amendments, all written statements proposed rule change (File No. SR– with respect to the proposed rule NASD–2005–073), as amended, is change that are filed with the approved, and Amendment No. 3 to the Commission, and all written proposed rule change is hereby granted communications relating to the accelerated approval. proposed rule change between the For the Commission, by the Division of Commission and any person, other than Market Regulation, pursuant to delegated those that may be withheld from the authority.19 public in accordance with the Nancy M. Morris, provisions of 5 U.S.C. 552, will be Secretary. available for inspection and copying in the Commission’s Public Reference [FR Doc. E6–5033 Filed 4–5–06; 8:45 am] Room. Copies of such filing also will be BILLING CODE 8010–01–P available for inspection and copying at the principal office of the NASD. All comments received will be posted SECURITIES AND EXCHANGE without change; the Commission does COMMISSION not edit personal identifying information from submissions. You [Release No. 34–53579; File No. SR–NYSE– should submit only information that 2006–12] you wish to make available publicly. All Self-Regulatory Organizations; New submissions should refer to File York Stock Exchange LLC; Notice of Number SR–NASD–2005–073 and Filing and Immediate Effectiveness of should be submitted on or before April Proposed Rule Change and 27, 2006. Amendment No. 1 Thereto Relating to IV. Accelerated Approval of NYSE Rule 103.12 Regarding Time Amendment No. 3 Tracking Requirements of Specialists Pursuant to Section 19(b)(2) of the and Clerks Act,16 the Commission may not approve March 30, 2006. any proposed rule change, or amendment thereto, prior to the 30th Pursuant to Section 19(b)(1) of the day after the date of publication of Securities Exchange Act of 1934 notice of the filing thereof, unless the 17 Id. Commission finds good cause for so arguments concerning Amendment No. 3, including whether Amendment No. 3 is consistent with the Act. Comments may be submitted by any of the following methods: 18 Id. 16 15 PO 00000 U.S.C. 78s(b)(2). Frm 00101 Fmt 4703 19 17 Sfmt 4703 E:\FR\FM\06APN1.SGM CFR 200.30–3(a)(12). 06APN1 Federal Register / Vol. 71, No. 66 / Thursday, April 6, 2006 / Notices (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 28, 2006, the New York Stock Exchange LLC (‘‘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 has designated the proposed rule change as constituting a ‘‘noncontroversial’’ rule change under Section 19(b)(3)(A)(iii) of the Act,3 and paragraph (f)(6) of Rule 19b–4 under the Act,4 which renders the proposal effective upon receipt of this filing by the Commission.5 On March 30, 2006, NYSE filed Amendment No. 1 to the proposed rule change.6 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 Exchange is proposing to amend NYSE Rule 103.12 (Registration of Specialists) by requiring specialists and specialist clerks to electronically sign and certify as accurate the end-of-day IDTrackSM reports identifying: (1) The time they spent on the Floor of the Exchange working in those capacities; and (2) the identity of the specialty stocks in which they worked during the trading day. IDTrack is an electronic touch screen application that electronically records the login and logout time of specialists and specialist clerks during the trading day and the names of the specialty stock in which they work during a particular trading day. 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 the Secretary, and at the Commission’s Public Reference Room. 15 U.S.C. 78s(b)(1). 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). 5 NYSE has requested that the Commission waive both the five-day pre-filing notification requirement and the 30-day operative delay, as specified in Rule 19b–4(f)(6)(iii). 17 CFR 240.19b–4(f)(6)(iii). 6 Amendment No. 1 replaces and supersedes the original filing in its entirety. In Amendment No. 1, the Exchange: (i) Revised the purpose section of the filing to provide additional details regarding how the IDTrack reports and electronic signature component will work; (ii) removed unnecessary language from the rule text; and (iii) withdrew the proposed addition of subparagraph (C) of NYSE Rule 103.12 to the ‘‘List of Exchange Rule Violations and Fines Applicable Thereto Pursuant to Rule 476A,’’ which the Exchange represents it will file separately at a later date. 1 sroberts on PROD1PC70 with NOTICES 2 VerDate Aug<31>2005 19:52 Apr 05, 2006 Jkt 208001 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. 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 As part of the settlement with the Commission,7 the Exchange agreed to undertake certain initiatives concerning the oversight of the Floor. In one of these undertakings, the Exchange is required to develop systems to track the identity of specialists and their clerks and the times when each specialist and clerk act as such while on the Floor. NYSE Rule 103.12, adopted in 2005,8 requires specialist firms to track the identity of specialists and their clerks, the times when each specialist and clerk acts as such while on the Floor, and the identity of the specialty stocks in which the specialist and the clerk worked on any given trading day. The rule also requires that specialist firms independently make and keep, in the regular course of business, records of the times that each of the firm’s specialists and clerks work in these capacities on the Floor. The specialist firms must be able to provide these records to the Exchange within the time frame and in a format determined by the Exchange. To facilitate the Exchange’s ability to monitor specialist and clerk activity, in November 2005 the Exchange installed a system to capture this information electronically. This system, known as IDTrack, requires specialists and clerks to log in to the IDTrack system and register their presence with respect to specialty stocks in which they worked. IDTrack is an electronic touch screen application that electronically records the login and logout times of specialists and specialist clerks during the trading day, and the names of the specialty 7 See Securities Exchange Act Release No. 51524 (April 12, 2005) announcing Administrative Proceeding File No. 3–11892 (the ‘‘Administrative Proceeding’’). 8 See Securities Exchange Act Release No. 52251 (August 12, 2005), 70 FR 48790 (August 19, 2005) (SR–NYSE–2005–47). PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 17535 stocks in which they are working. The IDTrack system also provides electronic reports and information to the Exchange’s Division of Market Surveillance and to specialist firms with respect to this information. The IDTrack reports do not replace the specialist firms’ obligations under NYSE Rule 103.12 to make and keep their own records regarding specialist and specialist clerk activity during the trading day. The Exchange is proposing to enhance the IDTrack application and improve accountability by developing supplemental components to the end-ofday report. The end-of-day report will continue to detail the login and logout times and the specialty stocks of specialists and clerks throughout the trading day. However, the Exchange will further require that each specialist and clerk provide their electronically written signature to certify as accurate the daily IDTrack report at the end of the trading day, thereby improving the reliability of the information in the reports. The electronic signature will be written using an optical pen attached to the touch screen terminal. In the event a specialist or clerk disagrees with the information in the end-of-day report, a ‘‘comment’’ section is available on the electronic screen to enter a comment regarding a disputed fact, i.e., a disputed login/logout time or stock name. Comments added by the specialists and specialist clerks on the actual trading day of the report in question will become part of the end-ofday report. If the specialists and clerks do not make entries in the comment section on that day, then they forfeit their ability to directly enter such comments in their IDTrack end-of-day report.9 The proposed rule requires each specialist and specialist clerk to electronically sign and certify as accurate each end-of-day report, even if they disagree or have comments regarding information in the report. In the event that a specialist or clerk has a question or concern about the information in the end-of-day report, the IDTrack system directs them to contact Exchange personnel as soon as the issue arises. Specialists and clerks are also directed to inform their firms’ compliance officers with concerns or questions about their end-of-day report. Despite any questions, concerns or 9 Comments may be entered in a separate electronic screen by a firm’s ‘‘administrative user’’ when the administrative user reviews the ‘‘pending report’’ list, but the original end-of-day report cannot be altered by any user after the trade date in question. E:\FR\FM\06APN1.SGM 06APN1 17536 Federal Register / Vol. 71, No. 66 / Thursday, April 6, 2006 / Notices comments about the information in the end-of-day report, the specialists and clerks are required to electronically sign the report at the end of each trading day. IDTrack includes an ‘‘administrative user’’ screen to administer certain aspects of the system. The administrative user may be the firm’s compliance office or a designee of the compliance officer. The administrative user may view a list of unsigned ‘‘pending’’ reports of their firm’s specialists and clerks. Through the use of this screen, administrative users may file an end-of-day report for their firm’s specialists or clerks without the required signatures, but the administrative user must enter a comment into their electronic screen explaining this action. To ensure the integrity of IDTrack electronic reports, IDTrack users, including specialists, clerks and administrative personnel, will not be able to override the information in IDTrack reports. Thus, under the proposed rule change, the Exchange will have an electronically signed record of the times that specialists and their clerks spend on the Floor of the Exchange working in those capacities, and the identity of specialty stocks in which the specialists and clerks worked on any given trading day. As with other Exchange rules, failure by a specialist or specialist clerk to sign the end-of-day report at the end of the trading day or comply with IDTrack obligations may result in disciplinary action.10 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) 11 that an Exchange have rules that are 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. B. Self-Regulatory Organization’s Statement on Burden on Competition sroberts on PROD1PC70 with NOTICES The Exchange does not believe that the proposed rule change will impose any burden on competition that is not 10 See Securities Exchange Act Release No. 52768 (November 10, 2005), 70 FR 70014 (November 18, 2005) (SR–NYSE–2005–64) (adding NYSE Rule 103.12 to the NYSE List of Exchange Rule Violations and Fines under Rule 476A). The Exchange intends to propose, in a separate rule filing, an amendment to Rule 476A that will apply to all requirements under Rule 103.12, including this proposed rule change, Rule 103.12(C). 11 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 19:52 Apr 05, 2006 Jkt 208001 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) does not become operative for 30 days after the date of the 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 Rule 19b– 4(f)(6) thereunder.13 A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative for 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. In addition, Rule 19b–4(f)(6)(iii) requires a self-regulatory organization to provide 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 filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has asked the Commission to waive the five-day prefiling requirement and the 30-day operative delay to allow NYSE to immediately enhance its IDTrack system, so that the tracking of the time specialists and clerks spend on the Floor, and the signing and certification of the daily IDTrack reports comply with the requirements of the Administrative Proceeding. The Commission has decided, consistent with the protection of investors and the public interest, to waive the five-day pre-filing notice and 30-day operative delay so that the NYSE may meet the requirement in the Administrative Proceeding.14 12 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 14 For purposes only of waiving the 30-day operative delay, the Commission has considered the 13 17 PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 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.15 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–2006–12 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 No. SR–NYSE–2006–12. 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 proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 15 For purposes of calculating the 60-day abrogation period, the Commission considers the proposed rule change to have been filed on March 30, 2006, the date the NYSE filed Amendment No. 1. E:\FR\FM\06APN1.SGM 06APN1 Federal Register / Vol. 71, No. 66 / Thursday, April 6, 2006 / Notices 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–2006–12 and should be submitted on or before April 27, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.16 Nancy M. Morris, Secretary. [FR Doc. E6–4987 Filed 4–5–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53575; File No. SR–NYSE– 2006–23] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendments to Exchange Rules 475 and 476 March 30, 2006. 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 March 27, 2006, the New York Stock Exchange LLC (‘‘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,4 which renders the proposed rule change effective 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 Exchange proposes to amend Exchange Rules 475 and 476 in order to reconcile amendments to the text of Exchange Rules 475 and 476 as previously approved by the Commission.5 The proposed 16 17 CFR 200.30–3(a)(12). 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). 5 See Securities Exchange Act Release Nos. 53124 (January 13, 2006), 71 FR 3595 (January 23, 2006) (SR–NYSE–2005–37) (which will become operative on April 1, 2006), and 53382 (February 27, 2006), 71 FR 11251 (March 6, 2006) (SR–NYSE–2005–77). sroberts on PROD1PC70 with NOTICES 1 15 VerDate Aug<31>2005 19:52 Apr 05, 2006 Jkt 208001 amendments further seek to remove inadvertently inserted text from the approved changes in Exchange Rule 476(l) 6 and incorporate the corrected text of Rule 476(l) into Rule 476(k). In addition, the proposed amendments make technical changes and render the rules gender neutral. The text of the proposed rule change is available on the Exchange’s Web site (https://www.nyse.com), at the Exchange’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 On May 23, 2005, the New York Stock Exchange, Inc. (‘‘NYSE Inc.’’) filed SR– NYSE–2005–37 (‘‘Filing 2005–37’’) with the Commission to amend Article IX of its Constitution and Rules 475 and 476 to modify certain aspects of its disciplinary procedures and to provide a structure for a summary suspension hearing and a ‘‘call-up’’ procedure for review by members of the board of directors, certain members of the Board of Executives listed in Rule 476(f), any member of the Regulation, Enforcement and Listing Standards Committee and either the division of the Exchange that initiated the proceedings or the respondent. On January 13, 2006, the Commission approved Filing 2005–37 and its subsequent amendments, to be operative on April 1, 2006.7 On November 3, 2005, NYSE Inc. filed SR–NYSE–2005–77 (‘‘Filing 2005–77’’) with the Commission concerning a proposed rule change relating to its business combination with Archipelago Holdings, Inc. (‘‘Merger’’). Contained in Filing 2005–77, among other proposed 6 See Securities Exchange Act Release No. 53382, supra note 5. 7 See Securities Exchange Act Release No. 53124, supra note 5. PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 17537 amendments, were modifications to Rules 475 and 476. On February 27, 2006, the Commission approved Filing 2005–77 and its subsequent amendments to be operative upon the date of the closing of the Merger, which occurred on March 7, 2006.8 Pursuant to the terms of the Merger, the Exchange became the successor entity to NYSE Inc. Filing 2005–37 references certain committees and boards that are no longer part of the corporate structure of the Exchange as approved in Filing 2005–77. The Exchange seeks to amend Exchange Rules 475 and 476 to remove these references to conform the rules to the current corporate structure of the Exchange. The proposed rule change seeks to revise paragraph lettering to reconcile rule text; to use consistent references to current Exchange entities; and to correct minor typographical errors. In addition, Filing 2005–37 modified sections of the NYSE Inc. Constitution as it related to its disciplinary process. However, Filing 2005–77, among other things, rescinded the NYSE Inc. Constitution and incorporated certain of its provisions into Rule 476. The provisions incorporated into Rule 476 by Filing 2005–77 are reconciled in this filing with the modifications made in Filing 2005–37. Additionally, certain corrections are made to the text of Rule 476(l) as approved in Filing 2005–77. The Exchange further seeks to incorporate the amended text of Rule 476(l) into Rule 476(k) as the second paragraph of Rule 476(k). Specifically, Filing 2005–77 incorporated the provisions from Article X, Section 6 of the NYSE Inc. Constitution into Rule 476 as section (l). Those provisions govern penalties imposed upon members, allied members and member organizations for failure to pay fines or other sums due the exchange. Rule 476(l) as approved in Filing 2005–77 reads as follows: (l) Any member, member organization, allied member, approved person or registered or non-registered employee of a member organization who shall not pay a fine, or any other sums due to the Exchange, within forty-five days after the same shall become payable, shall be reported by the Exchange Treasurer to the Chairman of the Exchange Board and, after written notice mailed to such member, member organization, allied member, approved person or registered or non-registered employee of a member organization of such arrearages, may be suspended by 8 See Securities Exchange Act Release No. 53382, supra note 5. E:\FR\FM\06APN1.SGM 06APN1

Agencies

[Federal Register Volume 71, Number 66 (Thursday, April 6, 2006)]
[Notices]
[Pages 17534-17537]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-4987]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53579; File No. SR-NYSE-2006-12]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto Relating to NYSE Rule 103.12 Regarding Time 
Tracking Requirements of Specialists and Clerks

March 30, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 17535]]

(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 28, 2006, the New York Stock Exchange LLC (``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 
has designated the proposed rule change as constituting a ``non-
controversial'' rule change under Section 19(b)(3)(A)(iii) of the 
Act,\3\ and paragraph (f)(6) of Rule 19b-4 under the Act,\4\ which 
renders the proposal effective upon receipt of this filing by the 
Commission.\5\ On March 30, 2006, NYSE filed Amendment No. 1 to the 
proposed rule change.\6\ The Commission is publishing this notice to 
solicit comments on the proposed rule change, as amended, from 
interested persons.
---------------------------------------------------------------------------

    \1 \ 15 U.S.C. 78s(b)(1).
    \2 \ 17 CFR 240.19b-4.
    \3 \ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4 \ 17 CFR 240.19b-4(f)(6).
    \5 \ NYSE has requested that the Commission waive both the five-
day pre-filing notification requirement and the 30-day operative 
delay, as specified in Rule 19b-4(f)(6)(iii). 17 CFR 240.19b-
4(f)(6)(iii).
    \6 \ Amendment No. 1 replaces and supersedes the original filing 
in its entirety. In Amendment No. 1, the Exchange: (i) Revised the 
purpose section of the filing to provide additional details 
regarding how the IDTrack reports and electronic signature component 
will work; (ii) removed unnecessary language from the rule text; and 
(iii) withdrew the proposed addition of subparagraph (C) of NYSE 
Rule 103.12 to the ``List of Exchange Rule Violations and Fines 
Applicable Thereto Pursuant to Rule 476A,'' which the Exchange 
represents it will file separately at a later date.
---------------------------------------------------------------------------

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

    The Exchange is proposing to amend NYSE Rule 103.12 (Registration 
of Specialists) by requiring specialists and specialist clerks to 
electronically sign and certify as accurate the end-of-day 
IDTrackSM reports identifying: (1) The time they spent on 
the Floor of the Exchange working in those capacities; and (2) the 
identity of the specialty stocks in which they worked during the 
trading day. IDTrack is an electronic touch screen application that 
electronically records the login and logout time of specialists and 
specialist clerks during the trading day and the names of the specialty 
stock in which they work during a particular trading day. 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 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. 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
    As part of the settlement with the Commission,\7\ the Exchange 
agreed to undertake certain initiatives concerning the oversight of the 
Floor. In one of these undertakings, the Exchange is required to 
develop systems to track the identity of specialists and their clerks 
and the times when each specialist and clerk act as such while on the 
Floor.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 51524 (April 12, 
2005) announcing Administrative Proceeding File No. 3-11892 (the 
``Administrative Proceeding'').
---------------------------------------------------------------------------

    NYSE Rule 103.12, adopted in 2005,\8\ requires specialist firms to 
track the identity of specialists and their clerks, the times when each 
specialist and clerk acts as such while on the Floor, and the identity 
of the specialty stocks in which the specialist and the clerk worked on 
any given trading day. The rule also requires that specialist firms 
independently make and keep, in the regular course of business, records 
of the times that each of the firm's specialists and clerks work in 
these capacities on the Floor. The specialist firms must be able to 
provide these records to the Exchange within the time frame and in a 
format determined by the Exchange.
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 52251 (August 12, 
2005), 70 FR 48790 (August 19, 2005) (SR-NYSE-2005-47).
---------------------------------------------------------------------------

    To facilitate the Exchange's ability to monitor specialist and 
clerk activity, in November 2005 the Exchange installed a system to 
capture this information electronically. This system, known as IDTrack, 
requires specialists and clerks to log in to the IDTrack system and 
register their presence with respect to specialty stocks in which they 
worked. IDTrack is an electronic touch screen application that 
electronically records the login and logout times of specialists and 
specialist clerks during the trading day, and the names of the 
specialty stocks in which they are working. The IDTrack system also 
provides electronic reports and information to the Exchange's Division 
of Market Surveillance and to specialist firms with respect to this 
information. The IDTrack reports do not replace the specialist firms' 
obligations under NYSE Rule 103.12 to make and keep their own records 
regarding specialist and specialist clerk activity during the trading 
day.
    The Exchange is proposing to enhance the IDTrack application and 
improve accountability by developing supplemental components to the 
end-of-day report. The end-of-day report will continue to detail the 
login and logout times and the specialty stocks of specialists and 
clerks throughout the trading day. However, the Exchange will further 
require that each specialist and clerk provide their electronically 
written signature to certify as accurate the daily IDTrack report at 
the end of the trading day, thereby improving the reliability of the 
information in the reports.
    The electronic signature will be written using an optical pen 
attached to the touch screen terminal. In the event a specialist or 
clerk disagrees with the information in the end-of-day report, a 
``comment'' section is available on the electronic screen to enter a 
comment regarding a disputed fact, i.e., a disputed login/logout time 
or stock name. Comments added by the specialists and specialist clerks 
on the actual trading day of the report in question will become part of 
the end-of-day report. If the specialists and clerks do not make 
entries in the comment section on that day, then they forfeit their 
ability to directly enter such comments in their IDTrack end-of-day 
report.\9\
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    \9\ Comments may be entered in a separate electronic screen by a 
firm's ``administrative user'' when the administrative user reviews 
the ``pending report'' list, but the original end-of-day report 
cannot be altered by any user after the trade date in question.
---------------------------------------------------------------------------

    The proposed rule requires each specialist and specialist clerk to 
electronically sign and certify as accurate each end-of-day report, 
even if they disagree or have comments regarding information in the 
report. In the event that a specialist or clerk has a question or 
concern about the information in the end-of-day report, the IDTrack 
system directs them to contact Exchange personnel as soon as the issue 
arises. Specialists and clerks are also directed to inform their firms' 
compliance officers with concerns or questions about their end-of-day 
report. Despite any questions, concerns or

[[Page 17536]]

comments about the information in the end-of-day report, the 
specialists and clerks are required to electronically sign the report 
at the end of each trading day.
    IDTrack includes an ``administrative user'' screen to administer 
certain aspects of the system. The administrative user may be the 
firm's compliance office or a designee of the compliance officer. The 
administrative user may view a list of unsigned ``pending'' reports of 
their firm's specialists and clerks. Through the use of this screen, 
administrative users may file an end-of-day report for their firm's 
specialists or clerks without the required signatures, but the 
administrative user must enter a comment into their electronic screen 
explaining this action. To ensure the integrity of IDTrack electronic 
reports, IDTrack users, including specialists, clerks and 
administrative personnel, will not be able to override the information 
in IDTrack reports.
    Thus, under the proposed rule change, the Exchange will have an 
electronically signed record of the times that specialists and their 
clerks spend on the Floor of the Exchange working in those capacities, 
and the identity of specialty stocks in which the specialists and 
clerks worked on any given trading day. As with other Exchange rules, 
failure by a specialist or specialist clerk to sign the end-of-day 
report at the end of the trading day or comply with IDTrack obligations 
may result in disciplinary action.\10\
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    \10\ See Securities Exchange Act Release No. 52768 (November 10, 
2005), 70 FR 70014 (November 18, 2005) (SR-NYSE-2005-64) (adding 
NYSE Rule 103.12 to the NYSE List of Exchange Rule Violations and 
Fines under Rule 476A). The Exchange intends to propose, in a 
separate rule filing, an amendment to Rule 476A that will apply to 
all requirements under Rule 103.12, including this proposed rule 
change, Rule 103.12(C).
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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) \11\ that 
an Exchange have rules that are 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.
---------------------------------------------------------------------------

    \11\ 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

    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) does not become 
operative for 30 days after the date of the 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 
Rule 19b-4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 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. In addition, Rule 19b-4(f)(6)(iii) requires a 
self-regulatory organization to provide 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 filing of the proposed rule change, 
or such shorter time as designated by the Commission.
    The Exchange has asked the Commission to waive the five-day pre-
filing requirement and the 30-day operative delay to allow NYSE to 
immediately enhance its IDTrack system, so that the tracking of the 
time specialists and clerks spend on the Floor, and the signing and 
certification of the daily IDTrack reports comply with the requirements 
of the Administrative Proceeding. The Commission has decided, 
consistent with the protection of investors and the public interest, to 
waive the five-day pre-filing notice and 30-day operative delay so that 
the NYSE may meet the requirement in the Administrative Proceeding.\14\
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    \14\ 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).
---------------------------------------------------------------------------

    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.\15\
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    \15\ For purposes of calculating the 60-day abrogation period, 
the Commission considers the proposed rule change to have been filed 
on March 30, 2006, the date the NYSE filed Amendment No. 1.
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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, 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 rule-comments@sec.gov. Please include 
File Number SR-NYSE-2006-12 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 No. SR-NYSE-2006-12. 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

[[Page 17537]]

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-2006-12 and should be 
submitted on or before April 27, 2006.

    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).

Nancy M. Morris,
Secretary.
 [FR Doc. E6-4987 Filed 4-5-06; 8:45 am]
BILLING CODE 8010-01-P
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