Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Procedures for Executing Complex Options Orders in Open Outcry, 67684-67685 [E6-19735]

Download as PDF 67684 Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Notices conditions imposed by the Commission in NYSE’s case. The Commission further believes that requiring a debt security that trades pursuant to the proposed rule change to be rated by NRSROs, as MultipleMarkets suggests, is not necessary or appropriate in the public interest, as the decision whether to impose such a requirement is a matter typically left to the business discretion of the individual markets.68 Similarly, with respect to the commenter’s concern about NYSE’s proposed use of a third-party data vendor to supply information regarding the actions of corporate bond issuers, selection of a particular vendor is generally within the business judgment of the Exchange.69 Finally, the Commission does not believe that there are any blue sky issues that would preclude approval of this proposal. Currently, any security listed on the Exchange is exempt from state blue sky laws. A debt security that is delisted by the Exchange and, instead, traded on an unlisted basis could lose its blue sky exemption. However, NYSE has represented that it would not involuntarily delist the debt security of any issuer (provided that the security otherwise met all applicable listing requirements).70 Therefore, this proposal will not cause undue hardship for any issuer that relies on the Exchange’s listing of its debt security to obtain a blue sky exemption. V. Conclusion For the foregoing reasons, the Commission finds that the proposed rule change, as amended, is consistent with the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange. It is therefore ordered, pursuant to Section 19(b)(2) of the Exchange Act,71 that the proposed rule change (SR– NYSE–2004–69), as amended, is approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.72 Nancy M. Morris, Secretary. [FR Doc. E6–19723 Filed 11–21–06; 8:45 am] pwalker on PROD1PC61 with NOTICES BILLING CODE 8011–01–P 68 See Multiple-Markets Letter at 5. id. The Commission notes that it is not sanctioning a particular vendor by approving the proposed rule change. 70 See NYSE Response Letter 2 at 1. 71 15 U.S.C. 78s(b)(2). 72 17 CFR 200.30–3(a)(12). 69 See VerDate Aug<31>2005 22:25 Nov 21, 2006 Jkt 211001 SECURITIES AND EXCHANGE COMMISSION the most significant aspects of such statements. [Release No. 34–54759; File No. SR– NYSEArca–2006–80] A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Procedures for Executing Complex Options Orders in Open Outcry November 15, 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 November 3, 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 the Exchange. The Exchange has filed the proposal as one effecting a change in an existing orderentry or trading system pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(5) thereunder,4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend NYSE Arca Rule 6.75 concerning the procedures for executing complex options orders in open outcry. The text of the proposed rule change is available on the Exchange’s Web site at http:// www.nysearca.com, at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(5). 2 17 PO 00000 Frm 00144 Fmt 4703 Sfmt 4703 1. Purpose NYSE Arca Rule 6.75 sets forth the priority and order allocation procedures with respect to orders executed by open outcry. Commentary .01 to NYSE Arca Rule 6.75 sets forth the procedures for executing combination, spread, ratio, and straddle orders (otherwise known as ‘‘complex orders’’) in open outcry. When the Exchange introduced its new electronic trading platform for options, the OX Trading System (‘‘OX’’), the Exchange did not amend the open outcry procedures for complex orders.5 The Exchange is providing clarifying rule amendments to NYSE Arca Rule 6.75 and Commentary .01 to NYSE Arca Rule 6.75 so that the procedures reflect references to the current systems on the floor now that OX is fully implemented. Specifically, the Exchange wishes to clarify that the ‘‘Book’’ referenced in NYSE Arca Rule 6.75(h)(4) and Commentary .01(b)–(d) to NYSE Arca Rule 6.75 has been phased out and has been replaced by the Consolidated Book of OX.6 In the past, the ‘‘Book’’ had contained only customer limit orders and was maintained by the floor’s Order Book Official. Today, the floor utilizes the Consolidated Book of OX, and, importantly, the Consolidated Book contains not only customer limit orders but also broker-dealer and firm limit orders. Given this more comprehensive representation of orders in the Consolidated Book, the Exchange wishes to clarify how OTP Holders 7 and OTP Firms 8 are to interact with the Consolidated Book when representing a complex order. When executing a complex order at a net debit or credit, which can be satisfied at the electronically disseminated bids and offers of the series involved in the order, the Floor Broker must determine if there are customer orders in the Consolidated 5 See Securities Exchange Act Release No. 54238 (July 28, 2006), 71 FR 44758 (August 7, 2006) (SR– NYSEArca–2006–13) (approving establishment of OX platform). 6 See NYSE Arca Rule 6.1(b)(37). The term ‘‘Consolidated Book’’ means the Exchange’s electronic book of limit orders for the accounts of Public Customers and broker-dealers, and Quotes with Size. The term ‘‘Quote with Size’’ means a quotation to buy or sell a specific number of option contracts at a specific price that a Market Maker has entered into PCX Plus through an electronic interface. NYSE Arca Rule 6.1(b)(33). 7 See NYSE Arca Rule 1.1(q). 8 See NYSE Arca Rule 1.1(r). E:\FR\FM\22NON1.SGM 22NON1 Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Notices Book at the best price in each series.9 The Floor Broker will consult the Trading Official at the post to make the determination.10 The Trading Official will check the system to see if there are customer orders on any or all sides of the transaction and inform the broker but will disclose neither the size of the customer order(s) nor the ranking of the customer order(s). In the event that there is any customer order priced at the best price in the corresponding series in the Consolidated Book, all orders at that price, customer and non-customer, will be deemed to have priority and will have to be satisfied prior to executing the complex orders. For each execution of a complex order that takes priority over non-customer bids and offers displayed in the Consolidated Book, the Trading Official at the post shall record the transaction by completing an Unusual Activity Report. A log of such reports will be maintained by the Floor Surveillance Unit. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with section 6(b) of the Act 11 in general and furthers the objectives of section 6(b)(5) 12 in particular in that it is designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition pwalker on PROD1PC61 with NOTICES 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. 9 See NYSE Arca Rule 6.43(a). A ‘‘Floor Broker’’ is an individual (either an OTP Holder or OTP Firm or a nominee of an OTP Holder or OTP Firm) who is registered with the Exchange for the purpose, while on the Exchange Floor, of accepting and executing option orders received from OTP Holders and OTP Firms. 10 See NYSE Arca Rule 6.1(b)(34). A ‘‘Trading Official’’ is an Exchange employee or officer, who is designated by the Chief Executive Officer (or its designee) or by the Chief Regulatory Officer (or its designee) of the Exchange. Trading Officials have the ability to recommend and enforce rules and regulations relating to trading access, order, decorum, health, safety, and welfare on the Exchange. 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(4). VerDate Aug<31>2005 22:25 Nov 21, 2006 Jkt 211001 C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments on the proposed change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has become effective upon filing pursuant to section 19(b)(3)(A)(iii) of the Act 13 and Rule 19b–4(f)(5) 14 thereunder because it effects a change in an existing order-entry or trading system of a selfregulatory organization that (i) does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) does not have the effect of limiting the access to or availability of the system. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 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–NYSEArca–2006–80 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–NYSEArca–2006–80. 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 offices 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–2006–80 and should be submitted on or before December 13, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.15 Nancy M. Morris, Secretary. [FR Doc. E6–19735 Filed 11–21–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54758; File No. SR– NYSEArca–2006–81] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rules Related to Complex Order Trading November 15, 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 November 3, 2006, the NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 15 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 1 15 13 15 14 17 PO 00000 U.S.C. 78s(b)(3)(A)(iii). CFR 19b–4(f)(5). Frm 00145 Fmt 4703 Sfmt 4703 67685 E:\FR\FM\22NON1.SGM 22NON1

Agencies

[Federal Register Volume 71, Number 225 (Wednesday, November 22, 2006)]
[Notices]
[Pages 67684-67685]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-19735]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54759; File No. SR-NYSEArca-2006-80]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change Relating to the 
Procedures for Executing Complex Options Orders in Open Outcry

November 15, 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 November 3, 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 the Exchange. The Exchange has filed the 
proposal as one effecting a change in an existing order-entry or 
trading system pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and 
Rule 19b-4(f)(5) thereunder,\4\ which renders the proposed rule change 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(5).
---------------------------------------------------------------------------

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

    The Exchange proposes to amend NYSE Arca Rule 6.75 concerning the 
procedures for executing complex options orders in open outcry. The 
text of the proposed rule change is available on the Exchange's Web 
site at http://www.nysearca.com, at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NYSE Arca Rule 6.75 sets forth the priority and order allocation 
procedures with respect to orders executed by open outcry. Commentary 
.01 to NYSE Arca Rule 6.75 sets forth the procedures for executing 
combination, spread, ratio, and straddle orders (otherwise known as 
``complex orders'') in open outcry. When the Exchange introduced its 
new electronic trading platform for options, the OX Trading System 
(``OX''), the Exchange did not amend the open outcry procedures for 
complex orders.\5\ The Exchange is providing clarifying rule amendments 
to NYSE Arca Rule 6.75 and Commentary .01 to NYSE Arca Rule 6.75 so 
that the procedures reflect references to the current systems on the 
floor now that OX is fully implemented.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 54238 (July 28, 
2006), 71 FR 44758 (August 7, 2006) (SR-NYSEArca-2006-13) (approving 
establishment of OX platform).
---------------------------------------------------------------------------

    Specifically, the Exchange wishes to clarify that the ``Book'' 
referenced in NYSE Arca Rule 6.75(h)(4) and Commentary .01(b)-(d) to 
NYSE Arca Rule 6.75 has been phased out and has been replaced by the 
Consolidated Book of OX.\6\ In the past, the ``Book'' had contained 
only customer limit orders and was maintained by the floor's Order Book 
Official. Today, the floor utilizes the Consolidated Book of OX, and, 
importantly, the Consolidated Book contains not only customer limit 
orders but also broker-dealer and firm limit orders. Given this more 
comprehensive representation of orders in the Consolidated Book, the 
Exchange wishes to clarify how OTP Holders \7\ and OTP Firms \8\ are to 
interact with the Consolidated Book when representing a complex order.
---------------------------------------------------------------------------

    \6\ See NYSE Arca Rule 6.1(b)(37). The term ``Consolidated 
Book'' means the Exchange's electronic book of limit orders for the 
accounts of Public Customers and broker-dealers, and Quotes with 
Size. The term ``Quote with Size'' means a quotation to buy or sell 
a specific number of option contracts at a specific price that a 
Market Maker has entered into PCX Plus through an electronic 
interface. NYSE Arca Rule 6.1(b)(33).
    \7\ See NYSE Arca Rule 1.1(q).
    \8\ See NYSE Arca Rule 1.1(r).
---------------------------------------------------------------------------

    When executing a complex order at a net debit or credit, which can 
be satisfied at the electronically disseminated bids and offers of the 
series involved in the order, the Floor Broker must determine if there 
are customer orders in the Consolidated

[[Page 67685]]

Book at the best price in each series.\9\ The Floor Broker will consult 
the Trading Official at the post to make the determination.\10\ The 
Trading Official will check the system to see if there are customer 
orders on any or all sides of the transaction and inform the broker but 
will disclose neither the size of the customer order(s) nor the ranking 
of the customer order(s). In the event that there is any customer order 
priced at the best price in the corresponding series in the 
Consolidated Book, all orders at that price, customer and non-customer, 
will be deemed to have priority and will have to be satisfied prior to 
executing the complex orders. For each execution of a complex order 
that takes priority over non-customer bids and offers displayed in the 
Consolidated Book, the Trading Official at the post shall record the 
transaction by completing an Unusual Activity Report. A log of such 
reports will be maintained by the Floor Surveillance Unit.
---------------------------------------------------------------------------

    \9\ See NYSE Arca Rule 6.43(a). A ``Floor Broker'' is an 
individual (either an OTP Holder or OTP Firm or a nominee of an OTP 
Holder or OTP Firm) who is registered with the Exchange for the 
purpose, while on the Exchange Floor, of accepting and executing 
option orders received from OTP Holders and OTP Firms.
    \10\ See NYSE Arca Rule 6.1(b)(34). A ``Trading Official'' is an 
Exchange employee or officer, who is designated by the Chief 
Executive Officer (or its designee) or by the Chief Regulatory 
Officer (or its designee) of the Exchange. Trading Officials have 
the ability to recommend and enforce rules and regulations relating 
to trading access, order, decorum, health, safety, and welfare on 
the Exchange.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
section 6(b) of the Act \11\ in general and furthers the objectives of 
section 6(b)(5) \12\ in particular in that it is designed to promote 
just and equitable principles of trade, to prevent fraudulent and 
manipulative acts, to remove impediments to and perfect the mechanism 
of a free and open market and a national market system and, in general, 
to protect investors and the public interest.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    Written comments on the proposed change were neither solicited nor 
received.

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

    The foregoing proposed rule change has become effective upon filing 
pursuant to section 19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-
4(f)(5) \14\ thereunder because it effects a change in an existing 
order-entry or trading system of a self-regulatory organization that 
(i) does not significantly affect the protection of investors or the 
public interest; (ii) does not impose any significant burden on 
competition; and (iii) does not have the effect of limiting the access 
to or availability of the system. At any time within 60 days of the 
filing of the proposed rule change, the Commission may summarily 
abrogate such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 19b-4(f)(5).
---------------------------------------------------------------------------

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-NYSEArca-2006-80 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-NYSEArca-2006-80. 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 offices 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-2006-80 and should be submitted on or before 
December 13, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
[FR Doc. E6-19735 Filed 11-21-06; 8:45 am]
BILLING CODE 8011-01-P