Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Relating to Exchange Rule 104(d) Governing Specialist Trading in the NYSE Hybrid Market, 28398-28399 [E6-7392]

Download as PDF 28398 Federal Register / Vol. 71, No. 94 / Tuesday, May 16, 2006 / Notices For the Commission, by the Division of Market Regulation, pursuant to delegated authority.16 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6–7454 Filed 5–15–06; 8:45 am] of the market as the reserve interest. The text of the proposed rule change is available on the Exchange’s Web site (http://www.nyse.com), at the Exchange’s Office of Secretary, and at the Commission’s Public Reference Room. BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53780; File No. SR–NYSE– 2006–24] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Relating to Exchange Rule 104(d) Governing Specialist Trading in the NYSE Hybrid Market May 10, 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 April 7, 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, II, and III below, which Items have been prepared by the Exchange. 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 Rule 104(d) governing specialist trading in the NYSE HYBRID MARKET SM (‘‘Hybrid Market’’).3 Specifically, the Exchange proposes to amend Exchange Rule 104(d) to provide that specialists shall have the ability to maintain undisplayed reserve interest on behalf of the dealer account at the Exchange best bid and offer, provided at least 1,000 shares of dealer interest is displayed at that price, on the same side 16 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 On March 22, 2006, the Commission approved the Exchange’s proposal to establish a ‘‘Hybrid Market.’’ See Securities Exchange Act Release No. 53539, 71 FR 16353 (March 31, 2006) (‘‘Hybrid Market Approval Order’’). In the Hybrid Market Approval Order, the Commission approved the Exchange’s plan to implement the Hybrid Market in multiple phases. To date, the Exchange has not implemented the approved changes to Exchange Rule 104(d). The Commission notes that in this proposal, the Exchange proposes to amend the text of Rule 104(d) as approved in the Hybrid Market Approval Order. Further, the Commission notes that the Exchange’s description of Rule 104(d) herein refers to the approved text of Rule 104(d). sroberts on PROD1PC70 with NOTICES 1 15 VerDate Aug<31>2005 16:06 May 15, 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 The Exchange notes that the Hybrid Market was approved by the Commission on March 22, 2006.4 In the Hybrid Market, Exchange Rule 104(d) provides that specialists may, but are not required to, have non-displayed ‘‘reserve’’ interest at the best bid and offer. Reserve interest is interest at the best bid or offer that is not displayed. Reserve interest will participate in automatic executions after displayed interest on that side trades. Currently, the specialist must have a minimum amount of 2,000 shares displayed at the best bid or offer in order to have reserve interest on that side of the quote. Floor brokers also are permitted to have reserve interest.5 However, Floor brokers are only required to display 1,000 shares at the best bid or offer in order to have reserve interest. Accordingly, the Exchange proposes to conform the minimum display requirements for reserve interest for specialists and Floor brokers. Therefore, the Exchange proposes to amend Exchange Rule 104(d)(i) to provide that specialists shall have the ability to maintain undisplayed reserve interest on behalf of the dealer account at the Exchange best bid and offer, provided at least 1,000 shares of dealer interest is displayed at that price, on the same side of the market as the reserve interest. In addition, the Exchange proposes to amend Exchange Rule 104(d)(ii) to 4 See Securities Exchange Act Release No. 53539 (March 22, 2006), 71 FR 16353 (March 31, 2006) (SR–NYSE–2004–05). 5 See Exchange Rule 70.20(c)(ii). PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 conform it to the 1,000 share minimum display requirement. Thus, this rule will require that after an execution, if specialist interest remains at the best bid or offer, the amount of such displayed interest will be replenished by the specialist’s reserve interest, if any, so that at least a minimum of 1,000 shares (instead of the current 2,000 shares) of specialist interest is displayed or whatever specialist interest remains at the best bid or offer, if less than 1,000 shares (instead of the current 2,000 shares). The Exchange believes that it is best to have a uniform standard for the minimum amount of interest required to be displayed at the best bid or offer in order to have reserve interest as it will deter market participants from trying to deduce if a certain amount of liquidity on the Display Book is associated with a Floor broker versus a specialist. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with section 6(b)(5) of the Act 6 because it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange believes that the proposed rule change also is designed to support the principles of section 11A(a)(1) of the Act 7 in that it seeks to assure economically efficient execution of securities transactions, make it practicable for brokers to execute investors’ orders in the best market, and provide an opportunity for investors’ orders to be executed without the participation of a dealer. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any 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. 6 15 7 15 U.S.C. 78f(b)(5). U.S.C. 78k–1(a)(1). E:\FR\FM\16MYN1.SGM 16MYN1 Federal Register / Vol. 71, No. 94 / Tuesday, May 16, 2006 / Notices III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSE–2006–24 on the subject line. the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2006–24 and should be submitted on or before June 6, 2006. national best bid or offer without requiring that they obtain Floor Official approval. The text of the proposed rule change is below. Proposed new language is in italics; proposed deletions are in [brackets]. * * * * * For the Commission, by the Division of Market Regulation, pursuant to delegated authority.8 Nancy M. Morris, Secretary. [FR Doc. E6–7392 Filed 5–15–06; 8:45 am] Rule 104 No change in (a) through .10(4) (5)(i) Transactions on the Exchange for his own account of a member acting as specialist are to be effected in a reasonable and orderly manner in relation to the condition of the general market, the market in the particular stock and the adequacy of the specialist’s position to the immediate and reasonably anticipated needs of the round-lot and the odd-lot market. The following types of transactions to establish or increase a position are not to be effected except when they are reasonably necessary to render the specialist’s position adequate to such needs: (A) A purchase at a price above the last sale in the same session: (B) The purchase of more than 50% of the stock offered in the market at a price equal to the last sale where such transaction would be on a ‘‘zero plus tic’’ (i.e., the last sale price was above the previous different regular way sale price); and (C) Failing to reoffer or rebid where necessary after effecting transactions described in (A) and (B) above. Transactions of these types may, nevertheless, be effected with the approval of a Floor Official or in less active markets where they are an essential part of a proper course of dealings and where the amount of stock involved and the price change, if any, are normal in relation to the market. (ii) Notwithstanding the provisions of subparagraphs (5)(i)(A) and (B) above, whenever a specialist effects a principal purchase of a [speciality] specialty stock, in another participating market center through ITS, at or above the price at which he holds orders to sell that stock, such orders which remain unexecuted on the Floor must be filled by the specialist buying the stock for his own account, at the same price at which he effected his principal transaction through ITS unless, effecting such a principal transaction on the Floor, at that price, would (a) be inconsistent with the maintenance of fair and orderly markets; or (b) result in the election of stop orders. (iii) Whenever a specialist effects a principal sale of a specialty stock, in BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53782; File No. SR–NYSE– 2006–07] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto To Amend Exchange Rule 104 Regarding the Requirement That Specialists Obtain Floor Official Approval for Destabilizing Dealer Account Transactions That Match the National Best Bid or Offer May 10, 2006. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (the • Send paper comments in triplicate ‘‘Act’’),1 and Rule 19b–4 thereunder,2 to Nancy M. Morris, Secretary, notice is hereby given that on February Securities and Exchange Commission, 16, 2006, the New York Stock Exchange 100 F Street, NE., Washington, DC LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with 20549–1090. the Securities and Exchange Commission (‘‘Commission’’) the All submissions should refer to File proposed rule change as described in Number SR–NYSE–2006–24. This file Items I, II, and III below, which Items number should be included on the subject line if e-mail is used. To help the have been prepared by the NYSE. On April 27, 2006, NYSE filed Amendment Commission process and review your No. 1 to the proposed rule change.3 The comments more efficiently, please use only one method. The Commission will Commission is publishing this notice to post all comments on the Commission’s solicit comments on the proposed rule change, as amended, from interested Internet Web site (http://www.sec.gov/ persons. rules/sro.shtml). Copies of the submission, all subsequent I. Self-Regulatory Organization’s amendments, all written statements Statement of the Terms of Substance of with respect to the proposed rule the Proposed Rule Change change that are filed with the The Exchange is proposing to amend Commission, and all written NYSE Rule 104 (Dealings by Specialists) communications relating to the to permit specialists to effect proposed rule change between the Commission and any person, other than destabilizing dealer account transactions when matching the those that may be withheld from the public in accordance with the 8 17 CFR 200.30–3(a)(12). provisions of 5 U.S.C. 552, will be 1 15 U.S.C. 78s(b)(1). available for inspection and copying in 2 17 CFR 240.19b–4. the Commission’s Public Reference 3 In Amendment No. 1, the Exchange made Room. Copies of such filing also will be technical corrections to the rule text of the proposed rule change. available for inspection and copying at sroberts on PROD1PC70 with NOTICES Paper Comments VerDate Aug<31>2005 16:06 May 15, 2006 Jkt 208001 28399 PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 Dealings by Specialists E:\FR\FM\16MYN1.SGM 16MYN1

Agencies

[Federal Register Volume 71, Number 94 (Tuesday, May 16, 2006)]
[Notices]
[Pages 28398-28399]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-7392]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53780; File No. SR-NYSE-2006-24]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Relating to Exchange Rule 
104(d) Governing Specialist Trading in the NYSE Hybrid Market

May 10, 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 April 7, 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, II, 
and III below, which Items have been prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Exchange Rule 104(d) governing 
specialist trading in the NYSE HYBRID MARKET SM (``Hybrid 
Market'').\3\ Specifically, the Exchange proposes to amend Exchange 
Rule 104(d) to provide that specialists shall have the ability to 
maintain undisplayed reserve interest on behalf of the dealer account 
at the Exchange best bid and offer, provided at least 1,000 shares of 
dealer interest is displayed at that price, on the same side of the 
market as the reserve interest. The text of the proposed rule change is 
available on the Exchange's Web site (http://www.nyse.com), at the 
Exchange's Office of Secretary, and at the Commission's Public 
Reference Room.
---------------------------------------------------------------------------

    \3\ On March 22, 2006, the Commission approved the Exchange's 
proposal to establish a ``Hybrid Market.'' See Securities Exchange 
Act Release No. 53539, 71 FR 16353 (March 31, 2006) (``Hybrid Market 
Approval Order''). In the Hybrid Market Approval Order, the 
Commission approved the Exchange's plan to implement the Hybrid 
Market in multiple phases. To date, the Exchange has not implemented 
the approved changes to Exchange Rule 104(d). The Commission notes 
that in this proposal, the Exchange proposes to amend the text of 
Rule 104(d) as approved in the Hybrid Market Approval Order. 
Further, the Commission notes that the Exchange's description of 
Rule 104(d) herein refers to the approved text of Rule 104(d).
---------------------------------------------------------------------------

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
    The Exchange notes that the Hybrid Market was approved by the 
Commission on March 22, 2006.\4\ In the Hybrid Market, Exchange Rule 
104(d) provides that specialists may, but are not required to, have 
non-displayed ``reserve'' interest at the best bid and offer. Reserve 
interest is interest at the best bid or offer that is not displayed. 
Reserve interest will participate in automatic executions after 
displayed interest on that side trades. Currently, the specialist must 
have a minimum amount of 2,000 shares displayed at the best bid or 
offer in order to have reserve interest on that side of the quote. 
Floor brokers also are permitted to have reserve interest.\5\ However, 
Floor brokers are only required to display 1,000 shares at the best bid 
or offer in order to have reserve interest. Accordingly, the Exchange 
proposes to conform the minimum display requirements for reserve 
interest for specialists and Floor brokers. Therefore, the Exchange 
proposes to amend Exchange Rule 104(d)(i) to provide that specialists 
shall have the ability to maintain undisplayed reserve interest on 
behalf of the dealer account at the Exchange best bid and offer, 
provided at least 1,000 shares of dealer interest is displayed at that 
price, on the same side of the market as the reserve interest.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 53539 (March 22, 
2006), 71 FR 16353 (March 31, 2006) (SR-NYSE-2004-05).
    \5\ See Exchange Rule 70.20(c)(ii).
---------------------------------------------------------------------------

    In addition, the Exchange proposes to amend Exchange Rule 
104(d)(ii) to conform it to the 1,000 share minimum display 
requirement. Thus, this rule will require that after an execution, if 
specialist interest remains at the best bid or offer, the amount of 
such displayed interest will be replenished by the specialist's reserve 
interest, if any, so that at least a minimum of 1,000 shares (instead 
of the current 2,000 shares) of specialist interest is displayed or 
whatever specialist interest remains at the best bid or offer, if less 
than 1,000 shares (instead of the current 2,000 shares).
    The Exchange believes that it is best to have a uniform standard 
for the minimum amount of interest required to be displayed at the best 
bid or offer in order to have reserve interest as it will deter market 
participants from trying to deduce if a certain amount of liquidity on 
the Display Book[supreg] is associated with a Floor broker versus a 
specialist.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b)(5) of the Act \6\ because it is designed to promote 
just and equitable principles of trade, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
The Exchange believes that the proposed rule change also is designed to 
support the principles of section 11A(a)(1) of the Act \7\ in that it 
seeks to assure economically efficient execution of securities 
transactions, make it practicable for brokers to execute investors' 
orders in the best market, and provide an opportunity for investors' 
orders to be executed without the participation of a dealer.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

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.

[[Page 28399]]

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve 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 (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2006-24 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-2006-24. 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 (http://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 Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSE-2006-24 and should be submitted on or before June 
6, 2006.
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    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
Nancy M. Morris,
Secretary.
[FR Doc. E6-7392 Filed 5-15-06; 8:45 am]
BILLING CODE 8010-01-P