Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To Amend NYSE Arca Equities, Inc.’s Clearly Erroneous Executions Rule To Include an Appeal Fee for the Archipelago Exchange, 55537-55539 [06-8036]
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Federal Register / Vol. 71, No. 184 / Friday, September 22, 2006 / Notices
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–NASD–2006–102 on the
subject line.
[Release No. 34–54319A; File No. SR–
NASD–2006–060]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing of
Proposed Rule Change To Require
Members To File Regulatory Notices
With NASD Electronically
change as described in Items I, II, and
III below, which Items have been
prepared by NYSE Arca. 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
SECURITIES AND EXCHANGE
COMMISSION
September 18, 2006.
Correction:
In FR Document No. E6–13812,
beginning on page 48959 for Tuesday
• Send paper comments in triplicate
August 22, 2006, the first sentence
to Nancy M. Morris, Secretary,
under ‘‘Statutory Basis’’ in column 1
Securities and Exchange Commission,
should read as follows:
100 F Street, NE., Washington, DC
NASD believes that the proposed rule
20549–1090.
change is consistent with the provisions
of Section 15A(b)(6) of the Act,1 which
All submissions should refer to File
requires, among other things, that NASD
Number SR–NASD–2006–102. This file
rules must be designed to prevent
number should be included on the
subject line if e-mail is used. To help the fraudulent and manipulative acts and
practices, to promote just and equitable
Commission process and review your
principles of trade, and, in general, to
comments more efficiently, please use
protect investors and the public interest,
only one method. The Commission will
in that the proposed rule change will
post all comments on the Commission’s
permit the expeditious filing of
Internet Web site (https://www.sec.gov/
specified required regulatory notices
rules/sro.shtml). Copies of the
and other required submissions by
submission, all subsequent
requiring firms to file such reports and
amendments, all written statements
documents with NASD electronically.
with respect to the proposed rule
For the Commission, by the Division of
change that are filed with the
Market Regulation, pursuant to delegated
Commission, and all written
authority.2
communications relating to the
Jill M. Peterson,
proposed rule change between the
Assistant Secretary.
Commission and any person, other than [FR Doc. 06–8040 Filed 9–21–06; 8:45 am]
those that may be withheld from the
BILLING CODE 8010–01–M
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
SECURITIES AND EXCHANGE
the Commission’s Public Reference
COMMISSION
Room. Copies of such filing also will be
[Release No. 34–54466; File No. SR–
available for inspection and copying at
NYSEArca–2006–48]
the principal office of NASD. All
comments received will be posted
Self-Regulatory Organizations; NYSE
without change; the Commission does
Arca, Inc.; Notice of Filing of Proposed
not edit personal identifying
Rule Change To Amend NYSE Arca
Equities, Inc.’s Clearly Erroneous
information from submissions. You
Executions Rule To Include an Appeal
should submit only information that
you wish to make available publicly. All Fee for the Archipelago Exchange
submissions should refer to File
September 18, 2006.
Number SR–NASD–2006–102 and
Pursuant to Section 19(b)(1) of the
should be submitted on or before
Securities Exchange Act of 1934
October 13, 2006.
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
sroberts on PROD1PC70 with NOTICES
Paper Comments
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.11
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06–8001 Filed 9–21–06; 8:45 am]
BILLING CODE 8010–01–P
11 17
VerDate Aug<31>2005
20:37 Sep 21, 2006
notice is hereby given that on August
11, 2006, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
1 15
U.S.C. 78o–3(b)(6).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
2 17
CFR 200.30–3(a)(12).
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Sfmt 4703
NYSE Arca proposes to amend NYSE
Arca Equities Rule 7.10 governing
clearly erroneous executions (‘‘CEE’’) on
the Archipelago Exchange, the equities
trading facility of NYSE Arca Equities,
Inc. (‘‘NYSE Arca Equities’’).
Specifically, the Exchange proposes to
assess a fee associated with the
appellate mechanism of NYSE Arca
Equities Rule 7.10.
The text of the proposed rule change
is available on NYSE Arca’s Web site
(https://www.nysearca.com), at NYSE
Arca’s principal office, 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,
NYSE Arca 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. NYSE
Arca 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 amended NYSE Arca
Equities Rule 7.10 (Clearly Erroneous
Executions) to include subsections
(c)(2)–(4), which amendment became
effective May 16, 2005. NYSE Arca
Equities Rules 7.10(c)(2)–(4) provide for
an appeals panel that includes the
Exchange’s Chief Regulatory Officer
(‘‘CRO’’), or a designee of the CRO, and
two representatives from Equity Trading
Permit (‘‘ETP’’) Holders (together with
the CRO, the ‘‘CEE Panel’’) to review the
determination of clearly erroneous
executions that are made by an NYSE
Arca Equities officer under NYSE Arca
Equities Rule 7.10(c)(1).
As part of its continuing efforts to
enhance the appeal process, the
Exchange proposes to add NYSE Arca
E:\FR\FM\22SEN1.SGM
22SEN1
sroberts on PROD1PC70 with NOTICES
55538
Federal Register / Vol. 71, No. 184 / Friday, September 22, 2006 / Notices
Equities Rule 7.10(c)(5).3 Under the
proposed rule, if the CEE Panel votes to
uphold the decision made pursuant to
NYSE Arca Equities Rule 7.10(c)(1), the
Exchange would assess a $500.00 fee
against the ETP Holder(s) who initiated
the request for appeal. The Exchange’s
experience with the appeal process
strongly indicates that some ETP
Holders are improperly taking
advantage of the appeal opportunity
provided under the rule. The Exchange
believes that assessing a $500.00 fee
against the ETP Holder(s) who appeals
a decision made under NYSE Arca
Equities Rule 7.10(c)(1) that is
subsequently upheld by the CEE Panel
would discourage frivolous and abusive
practices of the appeal process.
Since NYSE Arca Equities Rules
7.10(c)(2)–(4) were adopted, the
Exchange has found that some ETP
Holders have taken advantage of the
process by categorically appealing all
decisions in which they are involved,
including decisions that involve a de
minimis value. According to the
Exchange, in effect, these ETP Holders
file appeals simply to ‘‘get a second bite
at the apple.’’ More specifically, in the
months of August and September 2005,
three ETP Holders were responsible for
filing approximately 52% of all appeals
filed at the Exchange. In addition, on
July 26, 2005, an ETP Holder appealed
an Exchange ruling to bust a 34-share
transaction.
Furthermore, under NYSE Arca
Equities Rule 7.10(c)(1), an ETP Holder
may request that an NYSE Arca Equities
officer review any transaction the ETP
Holder regards as erroneous.
Accordingly, an officer renders an
official determination whether the
transaction is erroneous and, if so,
whether it should be canceled or
modified. The initial determination
made by the NYSE Arca Equities officer
is done at no charge to the ETP Holder,
and the Exchange believes that any
further examination of the execution
should incur a modest fee, in the event
the original decision is upheld, to
reduce the number of frivolous and
abusive appeals.4
The Exchange notes that the appeal
process draws upon the resources of not
only the Exchange but also of the ETP
Holders who volunteer as appeal
panelists pursuant to NYSE Arca
Equities Rule 7.10(c)(2)(A). Specifically,
an appeal requires the efforts of two
NYSE Arca Equities employees to
3 Telephone Call between David Hsu, Special
Counsel, Division of Market Regulation,
Commission, and Melanie Grace, Associate General
Counsel, NYSE Group, Inc., on September 8, 2006.
4 Id.
VerDate Aug<31>2005
20:37 Sep 21, 2006
Jkt 208001
accept and process the appeal (i.e.,
contact members in the pool of appeal
panelists to determine their availability
to serve on the CEE Panel, write up the
circumstances of the trade(s) leading up
to the appeal, moderate the actual
appeal that is conducted by conference
call, contact the parties to the appeal
after the CEE Panel reaches a decision
and document the process and
decision). From start to finish, the
appeal process may take up to 11⁄2 hours
to complete.
Moreover, the CEE Panel is largely
dependent on ETP Holder participation.
Each panel member is a volunteer and
dedicates his or her own time to the CEE
Panel, which often meets during the
busiest periods in a trading day. The
Exchange believes that constant abuse of
this process would likely foster
volunteer frustration and may lead
panelists to withdraw entirely from
participating in the process.
The Exchange believes that appeals
such as those described above represent
an unintended use of the appeal process
and demonstrate that abuses can
proliferate when ETP Holders incur no
downside risk to filing repeated appeals,
whether valid or otherwise, and, in
effect, are given a free second bite at the
apple. Therefore, the Exchange believes
that it is necessary to limit the abuse of
the process and reduce the number of
frivolous and de minimis appeals by
assigning a modest fee for all appeals
that are upheld.5
When the Exchange amended NYSE
Arca Equities 7.10(c)(2) to provide for
an appeals process, the Exchange did
not intend for the CEE Panel to serve as
a redundant decision making
mechanism, and it did not anticipate
that the CEE Panel would be called
upon to meet as frequently as it does
today. Additionally, while the Exchange
does not have statistical data
surrounding other self-regulatory
organizations’ appeal processes, the
Exchange understands that usage of
their appellate mechanism is done
sparingly and is not exploited by their
members.
The Exchange did not anticipate these
effects when it proposed NYSE Arca
Equities Rule 7.10(c)(2)–(4). As a result,
the Exchange deems it necessary to
propose a fee of $500 against each ETP
Holder who appeals a decision made
under NYSE Arca Equities Rule
7.10(c)(1) and such decision is
confirmed by the CEE Panel.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) 6 of the Act,
in general, and furthers the objectives of
Section 6(b)(5) 7 in particular in that it
is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principals of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities,
and to remove impediments to and
perfect the mechanisms of a free and
open market and a national market
system.
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 purpose of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding, or
(ii) as to which the Exchange consents,
the Commission will:
(A) By order approve the proposed
rule change or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form
(https://www.sec.gov/rules/sro.shtml); or
• Send an e-mail to rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2006–48 on the subject line.
6 15
5 Id.
PO 00000
Frm 00123
7 15
Fmt 4703
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E:\FR\FM\22SEN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
22SEN1
Federal Register / Vol. 71, No. 184 / Friday, September 22, 2006 / Notices
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–NYSEArca–2006–48. 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 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–NYSEArca–2006–48 and
should be submitted on or before
October 13, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.8
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06–8036 Filed 9–21–06; 8:45 am]
SECURITIES AND EXCHANGE
COMMISISON
sroberts on PROD1PC70 with NOTICES
[Release No. 34–54454; File No. SR–OC–
2006–02]
Self-Regulatory Organizations;
OneChicago, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating to Listing
Standards of Security Futures
Products
Pursuant to Section 19(b)(7) of the
Securities Exchange Act of 1934
I. Self-Regulatory Organization’s
Description of the Proposed Rule
Change
OneChicago proposes to amend its
listing standards for a security futures
product. The text of the proposed rule
change is available at the principal
office of the Exchange 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
BILLING CODE 8010–01–P
September 15, 2006.
(‘‘Act’’) 1 and Rule 19b–7 thereunder,2
notice is hereby given that on
September 6, 2006, OneChicago, LLC
(‘‘OneChicago’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change 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.
OneChicago has also filed the
proposed rule change with the
Commodity Futures Trading
Commission (‘‘CFTC’’). OneChicago
filed a written certification with the
CFTC under Section 5c(c) of the
Commodity Exchange Act 3 on
September 5, 2006.
1. Purpose
Currently, under OneChicago Rule
906(b)(2), the Exchange will not open a
new delivery month for trading in a
security future unless the issuer of the
underlying security satisfies applicable
reporting requirements of the Act or
corrects any failure within 30 days after
the date the report was due to be filed,
and the underlying security is listed on
a national securities exchange or is
principally traded through the facilities
of a national securities association and
1 15
U.S.C. 78s(b)(7).
CFR 240.19b–7.
3 7 U.S.C. 7a–2(c).
2 17
8 17
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
20:37 Sep 21, 2006
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Frm 00124
Fmt 4703
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55539
is designated as an NMS security. The
Exchange proposes to delete
OneChicago Rule 906(b)(2)(A), which
requires that the issuer of a security
underlying a single stock futures
(‘‘SSF’’) satisfy applicable reporting
requirements of the Act or correct any
failure within 30 days after the date the
report was due to be filed. OneChicago
believes that the proposed rule change
is consistent with listing standards in
the options market and in the best
interest of market participants.
The Exchange believes that the
current OneChicago Rule 906(b)(2)(A)
limits an investor’s ability to hedge her
underlying stock positions at a time
when she may be most in need to
protect her investment. The failure of a
public company to comply with its
reporting requirements under the Act
could cause a significant movement in
the price of that company’s stock. The
Exchange believes restricting the
Exchange from opening new contract
months may leave investors without the
means to hedge their positions with
SSFs.
The Exchange believes that the
proposed rule change is consistent with
options listing standards. In December
2005, the Commission approved a rule
change for the Chicago Board Options
Exchange, Incorporated (‘‘CBOE’’) that
deleted Interpretation and Policy .01(e)
to CBOE Rule 5.4, which contained
language similar to that in OneChicago
Rule 906(b)(2)(A).4 The Pacific
Exchange, Inc. (n/k/a NYSE Arca, Inc.)
(‘‘PCX’’) also filed a similar rule change
with the Commission, which was
effective immediately.5 Under Section
6(h)(3)(C) of the Act, listing standards
for security futures are to be no less
restrictive than comparable option
listing standards.6 Since a similar rule
change was made to the options listing
standards of CBOE and PCX,
OneChicago believes that the proposed
rule change is comparable to, and no
less restrictive than, option listing
standards.
The Exchange will monitor the listing
status of the security underlying a SSF
and, pursuant to OneChicago Rule
906(b), not open a new delivery month
for trading in a SSF when the
underlying security is delisted from
trading.
4 Securities Exchange Act Release No. 52779
(November 16, 2005), 70 FR 70902 (November 23,
2005).
5 Securities Exchange Act Release No. 52911
(December 7, 2005), 70 FR 74078 (December 14,
2005).
6 15 U.S.C. 78f(h)(3)(C).
E:\FR\FM\22SEN1.SGM
22SEN1
]]>Agencies
[Federal Register Volume 71, Number 184 (Friday, September 22, 2006)]
[Notices]
[Pages 55537-55539]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-8036]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54466; File No. SR-NYSEArca-2006-48]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To Amend NYSE Arca Equities, Inc.'s Clearly
Erroneous Executions Rule To Include an Appeal Fee for the Archipelago
Exchange
September 18, 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 August 11, 2006, NYSE Arca, Inc. (``NYSE Arca'' 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 NYSE Arca. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NYSE Arca proposes to amend NYSE Arca Equities Rule 7.10 governing
clearly erroneous executions (``CEE'') on the Archipelago Exchange, the
equities trading facility of NYSE Arca Equities, Inc. (``NYSE Arca
Equities''). Specifically, the Exchange proposes to assess a fee
associated with the appellate mechanism of NYSE Arca Equities Rule
7.10.
The text of the proposed rule change is available on NYSE Arca's
Web site (https://www.nysearca.com), at NYSE Arca's principal office,
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, NYSE Arca 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. NYSE Arca 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 amended NYSE Arca Equities Rule 7.10 (Clearly
Erroneous Executions) to include subsections (c)(2)-(4), which
amendment became effective May 16, 2005. NYSE Arca Equities Rules
7.10(c)(2)-(4) provide for an appeals panel that includes the
Exchange's Chief Regulatory Officer (``CRO''), or a designee of the
CRO, and two representatives from Equity Trading Permit (``ETP'')
Holders (together with the CRO, the ``CEE Panel'') to review the
determination of clearly erroneous executions that are made by an NYSE
Arca Equities officer under NYSE Arca Equities Rule 7.10(c)(1).
As part of its continuing efforts to enhance the appeal process,
the Exchange proposes to add NYSE Arca
[[Page 55538]]
Equities Rule 7.10(c)(5).\3\ Under the proposed rule, if the CEE Panel
votes to uphold the decision made pursuant to NYSE Arca Equities Rule
7.10(c)(1), the Exchange would assess a $500.00 fee against the ETP
Holder(s) who initiated the request for appeal. The Exchange's
experience with the appeal process strongly indicates that some ETP
Holders are improperly taking advantage of the appeal opportunity
provided under the rule. The Exchange believes that assessing a $500.00
fee against the ETP Holder(s) who appeals a decision made under NYSE
Arca Equities Rule 7.10(c)(1) that is subsequently upheld by the CEE
Panel would discourage frivolous and abusive practices of the appeal
process.
---------------------------------------------------------------------------
\3\ Telephone Call between David Hsu, Special Counsel, Division
of Market Regulation, Commission, and Melanie Grace, Associate
General Counsel, NYSE Group, Inc., on September 8, 2006.
---------------------------------------------------------------------------
Since NYSE Arca Equities Rules 7.10(c)(2)-(4) were adopted, the
Exchange has found that some ETP Holders have taken advantage of the
process by categorically appealing all decisions in which they are
involved, including decisions that involve a de minimis value.
According to the Exchange, in effect, these ETP Holders file appeals
simply to ``get a second bite at the apple.'' More specifically, in the
months of August and September 2005, three ETP Holders were responsible
for filing approximately 52% of all appeals filed at the Exchange. In
addition, on July 26, 2005, an ETP Holder appealed an Exchange ruling
to bust a 34-share transaction.
Furthermore, under NYSE Arca Equities Rule 7.10(c)(1), an ETP
Holder may request that an NYSE Arca Equities officer review any
transaction the ETP Holder regards as erroneous. Accordingly, an
officer renders an official determination whether the transaction is
erroneous and, if so, whether it should be canceled or modified. The
initial determination made by the NYSE Arca Equities officer is done at
no charge to the ETP Holder, and the Exchange believes that any further
examination of the execution should incur a modest fee, in the event
the original decision is upheld, to reduce the number of frivolous and
abusive appeals.\4\
---------------------------------------------------------------------------
\4\ Id.
---------------------------------------------------------------------------
The Exchange notes that the appeal process draws upon the resources
of not only the Exchange but also of the ETP Holders who volunteer as
appeal panelists pursuant to NYSE Arca Equities Rule 7.10(c)(2)(A).
Specifically, an appeal requires the efforts of two NYSE Arca Equities
employees to accept and process the appeal (i.e., contact members in
the pool of appeal panelists to determine their availability to serve
on the CEE Panel, write up the circumstances of the trade(s) leading up
to the appeal, moderate the actual appeal that is conducted by
conference call, contact the parties to the appeal after the CEE Panel
reaches a decision and document the process and decision). From start
to finish, the appeal process may take up to 1\1/2\ hours to complete.
Moreover, the CEE Panel is largely dependent on ETP Holder
participation. Each panel member is a volunteer and dedicates his or
her own time to the CEE Panel, which often meets during the busiest
periods in a trading day. The Exchange believes that constant abuse of
this process would likely foster volunteer frustration and may lead
panelists to withdraw entirely from participating in the process.
The Exchange believes that appeals such as those described above
represent an unintended use of the appeal process and demonstrate that
abuses can proliferate when ETP Holders incur no downside risk to
filing repeated appeals, whether valid or otherwise, and, in effect,
are given a free second bite at the apple. Therefore, the Exchange
believes that it is necessary to limit the abuse of the process and
reduce the number of frivolous and de minimis appeals by assigning a
modest fee for all appeals that are upheld.\5\
---------------------------------------------------------------------------
\5\ Id.
---------------------------------------------------------------------------
When the Exchange amended NYSE Arca Equities 7.10(c)(2) to provide
for an appeals process, the Exchange did not intend for the CEE Panel
to serve as a redundant decision making mechanism, and it did not
anticipate that the CEE Panel would be called upon to meet as
frequently as it does today. Additionally, while the Exchange does not
have statistical data surrounding other self-regulatory organizations'
appeal processes, the Exchange understands that usage of their
appellate mechanism is done sparingly and is not exploited by their
members.
The Exchange did not anticipate these effects when it proposed NYSE
Arca Equities Rule 7.10(c)(2)-(4). As a result, the Exchange deems it
necessary to propose a fee of $500 against each ETP Holder who appeals
a decision made under NYSE Arca Equities Rule 7.10(c)(1) and such
decision is confirmed by the CEE Panel.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \6\ of the
Act, in general, and furthers the objectives of Section 6(b)(5) \7\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principals of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanisms of a free and open
market and a national market system.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding, or (ii) as to
which the Exchange consents, the Commission will:
(A) By order approve the proposed rule change or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2006-48 on the subject line.
[[Page 55539]]
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-NYSEArca-2006-48. 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 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 fromsubmissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NYSEArca-2006-48 and should be submitted on or before
October 13, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06-8036 Filed 9-21-06; 8:45 am]
BILLING CODE 8010-01-P
