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, 28399-28401 [E6-7453]
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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 (https://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 (https://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
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16:06 May 15, 2006
Jkt 208001
28399
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Dealings by Specialists
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16MYN1
sroberts on PROD1PC70 with NOTICES
28400
Federal Register / Vol. 71, No. 94 / Tuesday, May 16, 2006 / Notices
another participating market center
through ITS, at or below the price at
which he holds orders to buy that stock,
such orders which remain unexecuted
on the Floor must be filled by the
specialist by selling the stock for his
own account, at the same price at which
be effected his principal transaction
through ITS subject to the same
conditions as set forth in (ii)(a) and (b)
above and provided further that
effecting such a principal transaction on
the Floor, at that price, would not be
precluded by the short selling rules, or
would not result in a sale to a stabilizing
bid.
(iv) Notwithstanding the provisions of
(5)(i)(A) and (B) above, a specialist may
effect a principal purchase of a
specialty security to establish or
increase a position at a price above the
last sale in the same session at a price
that matches the then current national
best bid or, in the case of a sale, that
matches the then current national best
offer.
(6)(i) Transactions on the Exchange by
a specialist for his own account in
liquidating or decreasing his position in
a specialty stock 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 positions to the immediate
and reasonably anticipated needs of the
round-lot and the odd-lot market and in
this connection:
(A) The specialist may liquidate a
position by selling stock on a direct
minus tick or by purchasing stock on a
direct plus tick only if such transactions
are reasonably necessary in relation to
the specialist’s overall position in the
stocks in which he is registered[;] , and
the specialist has obtained the prior
approval of a Floor Official;
(B) The specialist may liquidate a
position by selling a security on a direct
or zero minus tick or by purchasing a
security on a direct or zero plus tick
without the need to obtain Floor Official
approval if such transaction is effected
at a price that matches the then current
national best bid or offer;
[(B)] (C) The specialist should
maintain a fair and orderly market
during liquidation and, after
reliquifying, should re-enter the market
to offset imbalances between supply and
demand. The selling of stock on a direct
minus tick or a zero minus tick, or the
purchasing of stock on a direct plus tick
or a zero plus tick should be effected in
conjunction with the specialist’s reentry in the market on the opposite side
of the market from the liquidating
transaction where the imbalance of
supply and demand indicates that
VerDate Aug<31>2005
16:06 May 15, 2006
Jkt 208001
immediately succeeding transactions
may result in a lower price (following
the specialist’s sale of stock on a direct
minus tick or a zero minus tick) or a
higher price (following the specialist’s
purchase of stock on a direct plus tick
or a zero plus tick). During any period
of volatile or unusual market conditions
resulting in a significant price
movement in the subject security, the
specialist’s transactions in re-entering
the market following a liquidating
transaction effected by selling stock on
a direct minus tick or zero minus tick,
or purchasing stock on a direct plus tick
or zero plus tick, should, at a minimum,
reflect the specialist’s usual level of
dealer participation in the subject
security. During such periods of
unusual price movement in a security,
any series of such transactions which
may be effected in a brief period of time
should be accompanied by the
specialist’s re-entry in the market and
effecting transactions which reflect a
significant degree of dealer
participation;
[(C)] (D) Transactions by a specialist
for his or her dealer account in
liquidating or decreasing a position in a
specialty security must yield parity to
and may not claim precedence based on
size over a customer order in the crowd
upon the request of the member
representing such order, where such
request has been documented as a term
of the order, to the extent of the volume
of such order that has been included in
the quote prior to the transaction.
However, this provision shall not apply
to automatic executions involving the
specialist dealer account.
(ii) Notwithstanding the provisions of
subparagraph (6)(i)(A) above, whenever
a specialist effects a principal purchase
(sale) of a specialty stock, in another
participating market center through ITS,
at or above (at or below) the price at
which he holds orders to sell (buy) that
stock, such orders which remain
unexecuted on the Floor must be filled
by the specialist by buying (selling) the
stock for his own account, at the same
price at which he effected his principal
transaction through ITS subject to the
same conditions as set forth in
subparagraphs (5)(ii) and (iii) above.
[No change to remainder of Rule]
*
*
*
*
*
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, as amended. The
PO 00000
Frm 00105
Fmt 4703
Sfmt 4703
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
NYSE Rule 104 governs specialists’
dealings in their specialty stocks. In
particular, NYSE Rules 104.10(5) and (6)
describe certain types of transactions
that are not to be effected unless they
are reasonably necessary to render the
specialist’s position adequate to the
needs of the market. In effect, these
restrictions generally require specialists’
transactions for their own accounts to be
‘‘stabilizing’’ (i.e., against the trend of
the market) and prohibit specialists
from making transactions that are
‘‘destabilizing’’ (i.e., with the market
trend by buying on plus ticks and
selling on minus ticks), except with the
approval of a Floor Official.
The Exchange is proposing to allow
specialists to effect proprietary
transactions on a destabilizing basis for
their own account when such trades are
effected at a price that matches the
current national best bid or offer
(‘‘NBBO’’). In certain circumstances
today, such as trading in exchange
traded funds (‘‘ETFs’’), specialists are
not currently restricted under NYSE
Rule 104 from effecting proprietary
destabilizing transactions that bring an
ETF into parity with the value of the
index on which the ETF is based. The
Exchange believes that this recognizes
that specialists are not leading the
market through proprietary transactions
in these instances, but rather following
the market as set by the independent
judgment of other market participants.4
Similarly, the Exchange believes that
amending NYSE Rules 104.10(5) and (6)
to permit specialists to effect a
destabilizing proprietary trade in an
equity security at a price established
independent of the specialist should not
be viewed as leading the market. The
Exchange states that the standard of
each specialist proprietary trade
meeting the test of reasonable necessity
would continue to apply to any such
destabilizing trade.
4 See Securities Exchange Act Release No. 49087
(January 15, 2004), 69 FR 3622 (January 26, 2004)
(SR–Amex–2002–116) (‘‘[T]he Commission believes
that because ETFs are priced derivatively, an
Exchange specialist would not be able to
manipulate the pricing of an ETF.’’).
E:\FR\FM\16MYN1.SGM
16MYN1
Federal Register / Vol. 71, No. 94 / Tuesday, May 16, 2006 / Notices
In addition, the Exchange notes that
the time required to obtain Floor
Official approval for such transactions
can have the effect of delaying trading
and could result in inferior execution
prices for customer orders.
Finally, the Exchange believes that
removing these restrictions should
enhance the specialist’s ability to make
competitive markets since the trades
would be done at prices matching the
then current national best bid or offer.
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
2. Statutory Basis
Electronic Comments
The Exchange believes that the basis
under the Act for this proposed rule
change is the requirement under section
6(b)(5) 5 that an exchange have rules that
are designed to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system and, in general, to protect
investors and the public interest.
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
No. SR–NYSE–2006–07 on the subject
line.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes that the
proposed rule change, as amended,
would not 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 not solicited, and
does not intend to solicit, comments
regarding the proposed rule change, as
amended. The Exchange has not
received any unsolicited written
comments from members or other
interested parties.
sroberts on PROD1PC70 with 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 Exchange consents,
the Commission shall:
(A) By order approve such proposed
rule change, or
5 15
U.S.C. 78f(b)(5).
VerDate Aug<31>2005
16:06 May 15, 2006
Jkt 208001
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:
28401
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.6
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–7453 Filed 5–15–06; 8:45 am]
BILLING CODE 8010–01–P
SOCIAL SECURITY ADMINISTRATION
Program: Cooperative Agreements for
Work Incentives Planning and
Assistance Projects; Program
Announcement No. SSA–OESP–06–1
Social Security Administration.
Announcement of the
availability of fiscal year 2006
cooperative agreement funds and
request for applications.
AGENCY:
ACTION:
SUMMARY: The Social Security
Administration (SSA) announces its
Paper Comments
intention to competitively award
cooperative agreements to establish
• Send paper comments in triplicate
community-based work incentives
to Nancy M. Morris, Secretary,
planning and assistance projects in
Securities and Exchange Commission,
every State, the District of Columbia,
Station Place, 100 F Street, NE.,
Puerto Rico, Guam, the Northern
Washington, DC 20549–1090.
Mariana Islands, American Samoa, and
the U.S. Virgin Islands. (Throughout
All submissions should refer to File
this announcement, the term ‘‘’State’’’
Number SR–SR–NYSE–2006–07. This
will be used to refer to all U.S. States,
file number should be included on the
subject line if e-mail is used. To help the the District of Columbia, Puerto Rico,
Guam, the Northern Mariana Islands,
Commission process and review your
American Samoa, and the U.S. Virgin
comments more efficiently, please use
only one method. The Commission will Islands.)
The purpose of these projects is to
post all comments on the Commissions
disseminate accurate information to
Internet Web site (https://www.sec.gov/
beneficiaries with disabilities (including
rules/sro.shtml). Copies of the
transition-to-work aged youth) about
submission, all subsequent
work incentives programs and issues
amendments, all written statements
related to such programs, to enable them
with respect to the proposed rule
to make informed choices about
change that are filed with the
working and whether or when to assign
Commission, and all written
their Ticket to Work, as well as how
communications relating to the
available work incentives can facilitate
proposed rule change between the
their transition into the workforce. The
Commission and any person, other than ultimate goal of the work incentives
those that may be withheld from the
planning and assistance projects is to
public in accordance with the
assist SSA beneficiaries with disabilities
provisions of 5 U.S.C. 552, will be
succeed in their return to work efforts.
available for inspection and copying in
DATES: The closing date for receipt of
the Commission’s Public Reference
cooperative agreement applications
Room. Copies of such filing also will be under this announcement is July 1,
available for inspection and copying at
2006. Prospective applicants are also
the principal office of the NYSE. All
asked to submit, preferably by May 30,
comments received will be posted
2006, an e-mail, a fax, post card, or
without change; the Commission does
letter of intent that includes (1) the
not edit personal identifying
program announcement number (SSA–
information from submissions. You
OESP–06–1) and title (Work Incentives
should submit only information that
Planning and Assistance Program); (2)
you wish to make available publicly. All the name of the agency or organization
submissions should refer to File
that is applying; and (3) the name,
Number SR–NYSE–2006–07 and should mailing address, e-mail address,
be submitted on or before June 6, 2006.
telephone number, and fax number for
the organization’s contact person. This
6 17 CFR 200.30–3(a)(12).
notice of intent is not binding, and does
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16MYN1
]]>Agencies
[Federal Register Volume 71, Number 94 (Tuesday, May 16, 2006)]
[Notices]
[Pages 28399-28401]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-7453]
-----------------------------------------------------------------------
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 ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 16, 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 NYSE. On April 27,
2006, NYSE filed Amendment No. 1 to the proposed rule change.\3\ 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\ In Amendment No. 1, the Exchange made technical corrections
to the rule text of the proposed rule change.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to amend NYSE Rule 104 (Dealings by
Specialists) to permit specialists to effect destabilizing dealer
account transactions when matching the 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].
* * * * *
Dealings by Specialists
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
[[Page 28400]]
another participating market center through ITS, at or below the price
at which he holds orders to buy that stock, such orders which remain
unexecuted on the Floor must be filled by the specialist by selling the
stock for his own account, at the same price at which be effected his
principal transaction through ITS subject to the same conditions as set
forth in (ii)(a) and (b) above and provided further that effecting such
a principal transaction on the Floor, at that price, would not be
precluded by the short selling rules, or would not result in a sale to
a stabilizing bid.
(iv) Notwithstanding the provisions of (5)(i)(A) and (B) above, a
specialist may effect a principal purchase of a specialty security to
establish or increase a position at a price above the last sale in the
same session at a price that matches the then current national best bid
or, in the case of a sale, that matches the then current national best
offer.
(6)(i) Transactions on the Exchange by a specialist for his own
account in liquidating or decreasing his position in a specialty stock
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 positions to the immediate and
reasonably anticipated needs of the round-lot and the odd-lot market
and in this connection:
(A) The specialist may liquidate a position by selling stock on a
direct minus tick or by purchasing stock on a direct plus tick only if
such transactions are reasonably necessary in relation to the
specialist's overall position in the stocks in which he is
registered[;] , and the specialist has obtained the prior approval of a
Floor Official;
(B) The specialist may liquidate a position by selling a security
on a direct or zero minus tick or by purchasing a security on a direct
or zero plus tick without the need to obtain Floor Official approval if
such transaction is effected at a price that matches the then current
national best bid or offer;
[(B)] (C) The specialist should maintain a fair and orderly market
during liquidation and, after reliquifying, should re-enter the market
to offset imbalances between supply and demand. The selling of stock on
a direct minus tick or a zero minus tick, or the purchasing of stock on
a direct plus tick or a zero plus tick should be effected in
conjunction with the specialist's re-entry in the market on the
opposite side of the market from the liquidating transaction where the
imbalance of supply and demand indicates that immediately succeeding
transactions may result in a lower price (following the specialist's
sale of stock on a direct minus tick or a zero minus tick) or a higher
price (following the specialist's purchase of stock on a direct plus
tick or a zero plus tick). During any period of volatile or unusual
market conditions resulting in a significant price movement in the
subject security, the specialist's transactions in re-entering the
market following a liquidating transaction effected by selling stock on
a direct minus tick or zero minus tick, or purchasing stock on a direct
plus tick or zero plus tick, should, at a minimum, reflect the
specialist's usual level of dealer participation in the subject
security. During such periods of unusual price movement in a security,
any series of such transactions which may be effected in a brief period
of time should be accompanied by the specialist's re-entry in the
market and effecting transactions which reflect a significant degree of
dealer participation;
[(C)] (D) Transactions by a specialist for his or her dealer
account in liquidating or decreasing a position in a specialty security
must yield parity to and may not claim precedence based on size over a
customer order in the crowd upon the request of the member representing
such order, where such request has been documented as a term of the
order, to the extent of the volume of such order that has been included
in the quote prior to the transaction. However, this provision shall
not apply to automatic executions involving the specialist dealer
account.
(ii) Notwithstanding the provisions of subparagraph (6)(i)(A)
above, whenever a specialist effects a principal purchase (sale) of a
specialty stock, in another participating market center through ITS, at
or above (at or below) the price at which he holds orders to sell (buy)
that stock, such orders which remain unexecuted on the Floor must be
filled by the specialist by buying (selling) the stock for his own
account, at the same price at which he effected his principal
transaction through ITS subject to the same conditions as set forth in
subparagraphs (5)(ii) and (iii) above.
[No change to remainder of Rule]
* * * * *
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, as
amended. 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
NYSE Rule 104 governs specialists' dealings in their specialty
stocks. In particular, NYSE Rules 104.10(5) and (6) describe certain
types of transactions that are not to be effected unless they are
reasonably necessary to render the specialist's position adequate to
the needs of the market. In effect, these restrictions generally
require specialists' transactions for their own accounts to be
``stabilizing'' (i.e., against the trend of the market) and prohibit
specialists from making transactions that are ``destabilizing'' (i.e.,
with the market trend by buying on plus ticks and selling on minus
ticks), except with the approval of a Floor Official.
The Exchange is proposing to allow specialists to effect
proprietary transactions on a destabilizing basis for their own account
when such trades are effected at a price that matches the current
national best bid or offer (``NBBO''). In certain circumstances today,
such as trading in exchange traded funds (``ETFs''), specialists are
not currently restricted under NYSE Rule 104 from effecting proprietary
destabilizing transactions that bring an ETF into parity with the value
of the index on which the ETF is based. The Exchange believes that this
recognizes that specialists are not leading the market through
proprietary transactions in these instances, but rather following the
market as set by the independent judgment of other market
participants.\4\
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\4\ See Securities Exchange Act Release No. 49087 (January 15,
2004), 69 FR 3622 (January 26, 2004) (SR-Amex-2002-116) (``[T]he
Commission believes that because ETFs are priced derivatively, an
Exchange specialist would not be able to manipulate the pricing of
an ETF.'').
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Similarly, the Exchange believes that amending NYSE Rules 104.10(5)
and (6) to permit specialists to effect a destabilizing proprietary
trade in an equity security at a price established independent of the
specialist should not be viewed as leading the market. The Exchange
states that the standard of each specialist proprietary trade meeting
the test of reasonable necessity would continue to apply to any such
destabilizing trade.
[[Page 28401]]
In addition, the Exchange notes that the time required to obtain
Floor Official approval for such transactions can have the effect of
delaying trading and could result in inferior execution prices for
customer orders.
Finally, the Exchange believes that removing these restrictions
should enhance the specialist's ability to make competitive markets
since the trades would be done at prices matching the then current
national best bid or offer.
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) \5\ that
an exchange have rules that are designed to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system and, in general, to
protect investors and the public interest.
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\5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change, as amended,
would not 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 not solicited, and does not intend to solicit,
comments regarding the proposed rule change, as amended. The Exchange
has not received any unsolicited written comments from members or other
interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall:
(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, 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 No. SR-NYSE-2006-07 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-SR-NYSE-2006-07. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commissions Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of the NYSE. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NYSE-2006-07 and should be submitted on or before June
6, 2006.
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\6\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-7453 Filed 5-15-06; 8:45 am]
BILLING CODE 8010-01-P
