Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rules Related to Complex Order Trading, 67685-67687 [E6-19737]
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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).
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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 (https://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 (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 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).
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Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Notices
19b–4(f)(6) thereunder,4 which renders
the proposal 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
NYSE Arca proposes to amend its
rules governing Complex Order Trading
in order to allow the pricing and trading
of complex orders in one cent
increments. The Exchange also proposes
to eliminate certain obsolete rules
related to the PCX Plus System (‘‘PCX
Plus’’) Complex Trading Engine
(‘‘CTE’’). The text of the proposed rule
change is available on the Exchange’s
Web site at https://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.
pwalker on PROD1PC61 with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this filing is to amend
NYSE Arca Rule 6.91 which governs
CTE. NYSE Arca proposes to adopt
certain rules regarding the pricing of
complex orders that are in effect at the
International Securities Exchange
(‘‘ISE’’).5 The Exchange also proposes to
eliminate certain obsolete rules related
to PCX Plus CTE.
Administrative Changes. NYSE Arca
recently completed the introduction of
the OX Trading System (‘‘OX’’) for
options. Prior to OX the Exchange used
PCX Plus. The Exchange developed
rules for trading complex orders, some
of which were specific to PCX Plus, in
particular those that dealt with PCX
Plus CTE. PCX Plus CTE is no longer
used to execute orders. Therefore, the
4 17
CFR 240.19b–4(f)(6).
5 See ISE Rule 722(b)(1)–(2).
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Jkt 211001
Exchange proposes to eliminate obsolete
rules that applied only to CTE. NYSE
Arca will file new rules with the
Commission prior to trading complex
orders on OX. The Exchange anticipates
the introduction of complex order
trading on OX sometime in the first
quarter of 2007.
The Exchange also proposes
amending NYSE Arca Rule 6.91(a)
which deals with the definition of
certain order types. NYSE Arca Rule
6.62(j) defines ‘‘Combination orders.’’
Proposed NYSE Arca Rule 6.91(a)(10)
now will reference NYSE Arca Rule
6.62(j) so that this may be included with
the definition of other complex order
types for ease of reference.
Pricing of Complex Orders. Presently,
individual orders comprising complex
orders on NYSE Arca must be executed
in minimum price variations (‘‘MPV’’)
equivalent to those in NYSE Arca Rule
6.72(a). Those increments are $.05 for
options that are priced less than $3.00
and $.10 for options priced above
$3.00.6 Complex orders are, by
definition, complex trades involving
intricate trading strategies. These orders,
which are made up of two or more
option orders (the ‘‘legs’’ of the order) or
an option order tied to a corresponding
equity order, are typically priced on a
net debit/credit basis. The net debit/
credit price is derived from either the
difference in, or combined total of, the
individual legs of the order. Pricing on
a net debit/credit basis allows for the
pricing of the entire order, as opposed
to having to price the individual legs.
Pricing the order as a single trade allows
the order to trade at a price that can be
more reflective of the actual value of the
order, which can often be difficult when
using separate prices.7 Since all legs of
a complex order are typically done by
the same trader or customer, the trade
is often better priced than would be if
done as separate trades.8 Often,
however, when attempting to execute a
trade on a net debit/credit basis, market
participants are prevented from actually
trading at the true value, because they
must price the individual legs in
standard MPVs as set forth in NYSE
Arca Rule 6.72(a). The requirement that
the legs of a complex order must trade
in standard MPVs, even when the order
itself is priced at a net debit/credit,
6 The Exchange has proposed changes to NYSE
Arca Rule 6.72 as part of SR–NYSEArca–2006–73,
which was filed on October 9, 2006, and is pending
approval. The proposed rule change will create a
Penny Pilot Program which will allow penny
pricing in certain classes of options on NYSE Arca.
7 Telephone conversation between Glen Gsell,
NYSE Arca, and Molly Kim, Division of Market
Regulation, Commission, on November 13, 2006.
8 Id.
PO 00000
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defeats the purpose behind net debit/
credit pricing of complex orders; that
being, orders traded on a debit/credit
basis can provide the opportunity for
more efficient pricing of option trades.
Therefore, NYSE Arca proposes to add
a new Commentary .01 to NYSE Arca
Rule 6.91 to allow the option leg(s) of
complex orders, as defined in NYSE
Arca Rule 6.91(a), to be executed in one
cent increments, regardless of the
minimum increment otherwise
applicable to the individual option
leg(s) of the order. Providing additional
price points at which the individual legs
of an order can be priced may facilitate
complex order execution on NYSE Arca
and provide better prices for all
participants.
In conjunction with the change above,
the Exchange proposes to add a new
Commentary .02 to NYSE Arca Rule
6.91 that requires any leg of a complex
order that takes priority over established
customer orders in the Consolidated
Book to be better priced by at least one
MPV as provided in NYSE Arca Rule
6.72. The Exchange believes that these
proposed rule changes related to the
pricing of complex orders are consistent
with rules for complex order trading on
the ISE.9
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) 10 of the Act, in general, and
furthers the objectives of Section
6(b)(5),11 in particular, in that it is
designed to facilitate transactions in
securities, to promote just and equitable
principles of trade, to enhance
competition, and to protect investors
and the public interest. In particular,
trading complex orders in one cent
increments will provide market
participants and public customers with
more pricing options, which could lead
to tighter spreads and increased
liquidity at NYSE Arca.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change will 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
Written comments on the proposed
rule change were neither solicited nor
received.
9 See
note 5 supra.
U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
10 15
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Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(iii) of the Act 12 and Rule
19b–4(f)(6) thereunder,13 because it: (i)
Does not significantly affect the
protection of investors or the public
interest; (ii) does not impose any
significant burden on competition; and
(iii) by its terms, does not become
operative for 30 days after the date of
the filing, or such shorter time as the
Commission may designate if consistent
with the protection of investors and the
public interest.14
NYSE Arca requests that the
Commission waive the 30-day operative
period under Rule 19b–4(f)(6)(iii).15 The
Commission believes that it is
consistent with the protection of
investors and the public interest to
waive the 30-day operative delay,
because waiving the operative delay
will allow NYSE Arca investors to
immediately trade and price complex
orders in one cent increments on NYSE
Arca.16
At any time within 60 days of the
filing of such 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.17
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
12 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
14 As required by Rule 19b–4(f)(6)(iii) of the Act,
NYSE Arca provided the Commission with written
notice of its intent to file the proposed rule change,
along with a brief description of the text of the
proposed rule change, at least five business days
prior to the date of the filing of the proposed rule
change.
15 17 CFR 240.19b–4(f)(6)(iii).
16 For purposes only of waiving the 30-day
operative delay of this proposal, the Commission
has considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
17 See Section 19(b)(3)(C) of the Act, 15 U.S.C.
78s(b)(3)(C).
No. SR–NYSEArca–2006–81 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
[Release No. 34–54760; File No. SR–Phlx–
2006–76]
• 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 No.
SR–NYSEArca–2006–81. 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 NYSE Arca. 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–2006–81 and
should be submitted on or before
December 13, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.18
Nancy M. Morris,
Secretary.
[FR Doc. E6–19737 Filed 11–21–06; 8:45 am]
BILLING CODE 8011–01–P
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13 17
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67687
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Adopt Rule 185A,
Intermarket Sweep Orders—Temporary
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
13, 2006, the Philadelphia Stock
Exchange, Inc. (‘‘Phlx’’ 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 Phlx. The
Exchange filed the proposal as a ‘‘noncontroversial’’ rule change pursuant to
Section 19(b)(3)(A) of the Act 3 and Rule
19b–4(f)(6) thereunder,4 which rendered
the proposal 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 Phlx proposes to adopt Phlx Rule
185A, Intermarket Sweep Orders—
Temporary, which describes: (1) The
obligations of the Exchange sending
orders to other market centers, and (2)
the obligations of XLE Participants
sending Intermarket Sweep Orders
(‘‘ISOs’’) 5 or IOC Cross Orders that are
marked as meeting the requirement to
route to other market centers 6 (both
types of orders hereinafter are referred
to as ‘‘Incoming Sweep Orders’’).
Specifically, before Rule 611 of
Regulation NMS 7 is operative on the
Exchange (the ‘‘Trading Phase Date’’),8
Phlx would use away market obligations
instead of immediate-or-cancel
intermarket sweep orders. An away
market obligation is an immediate or
cancel limit order for an NMS stock
generated by Phlx in connection with
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
5 See Phlx Rule 185(b)(2)(C).
6 See Phlx Rule 185(c)(2)(D).
7 17 CFR 242.611.
8 The Trading Phase Date is February 5, 2007.
SeeSecurities Exchange Act Release No. 53829 (May
18, 2006), 71 FR 30038 (May 24, 2006) (File No. S7–
10–04).
2 17
18 17
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 71, Number 225 (Wednesday, November 22, 2006)]
[Notices]
[Pages 67685-67687]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-19737]
-----------------------------------------------------------------------
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
[[Page 67686]]
19b-4(f)(6) thereunder,\4\ which renders the proposal 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)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NYSE Arca proposes to amend its rules governing Complex Order
Trading in order to allow the pricing and trading of complex orders in
one cent increments. The Exchange also proposes to eliminate certain
obsolete rules related to the PCX Plus System (``PCX Plus'') Complex
Trading Engine (``CTE''). The text of the proposed rule change is
available on the Exchange's Web site at https://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
The purpose of this filing is to amend NYSE Arca Rule 6.91 which
governs CTE. NYSE Arca proposes to adopt certain rules regarding the
pricing of complex orders that are in effect at the International
Securities Exchange (``ISE'').\5\ The Exchange also proposes to
eliminate certain obsolete rules related to PCX Plus CTE.
---------------------------------------------------------------------------
\5\ See ISE Rule 722(b)(1)-(2).
---------------------------------------------------------------------------
Administrative Changes. NYSE Arca recently completed the
introduction of the OX Trading System (``OX'') for options. Prior to OX
the Exchange used PCX Plus. The Exchange developed rules for trading
complex orders, some of which were specific to PCX Plus, in particular
those that dealt with PCX Plus CTE. PCX Plus CTE is no longer used to
execute orders. Therefore, the Exchange proposes to eliminate obsolete
rules that applied only to CTE. NYSE Arca will file new rules with the
Commission prior to trading complex orders on OX. The Exchange
anticipates the introduction of complex order trading on OX sometime in
the first quarter of 2007.
The Exchange also proposes amending NYSE Arca Rule 6.91(a) which
deals with the definition of certain order types. NYSE Arca Rule
6.62(j) defines ``Combination orders.'' Proposed NYSE Arca Rule
6.91(a)(10) now will reference NYSE Arca Rule 6.62(j) so that this may
be included with the definition of other complex order types for ease
of reference.
Pricing of Complex Orders. Presently, individual orders comprising
complex orders on NYSE Arca must be executed in minimum price
variations (``MPV'') equivalent to those in NYSE Arca Rule 6.72(a).
Those increments are $.05 for options that are priced less than $3.00
and $.10 for options priced above $3.00.\6\ Complex orders are, by
definition, complex trades involving intricate trading strategies.
These orders, which are made up of two or more option orders (the
``legs'' of the order) or an option order tied to a corresponding
equity order, are typically priced on a net debit/credit basis. The net
debit/credit price is derived from either the difference in, or
combined total of, the individual legs of the order. Pricing on a net
debit/credit basis allows for the pricing of the entire order, as
opposed to having to price the individual legs. Pricing the order as a
single trade allows the order to trade at a price that can be more
reflective of the actual value of the order, which can often be
difficult when using separate prices.\7\ Since all legs of a complex
order are typically done by the same trader or customer, the trade is
often better priced than would be if done as separate trades.\8\ Often,
however, when attempting to execute a trade on a net debit/credit
basis, market participants are prevented from actually trading at the
true value, because they must price the individual legs in standard
MPVs as set forth in NYSE Arca Rule 6.72(a). The requirement that the
legs of a complex order must trade in standard MPVs, even when the
order itself is priced at a net debit/credit, defeats the purpose
behind net debit/credit pricing of complex orders; that being, orders
traded on a debit/credit basis can provide the opportunity for more
efficient pricing of option trades. Therefore, NYSE Arca proposes to
add a new Commentary .01 to NYSE Arca Rule 6.91 to allow the option
leg(s) of complex orders, as defined in NYSE Arca Rule 6.91(a), to be
executed in one cent increments, regardless of the minimum increment
otherwise applicable to the individual option leg(s) of the order.
Providing additional price points at which the individual legs of an
order can be priced may facilitate complex order execution on NYSE Arca
and provide better prices for all participants.
---------------------------------------------------------------------------
\6\ The Exchange has proposed changes to NYSE Arca Rule 6.72 as
part of SR-NYSEArca-2006-73, which was filed on October 9, 2006, and
is pending approval. The proposed rule change will create a Penny
Pilot Program which will allow penny pricing in certain classes of
options on NYSE Arca.
\7\ Telephone conversation between Glen Gsell, NYSE Arca, and
Molly Kim, Division of Market Regulation, Commission, on November
13, 2006.
\8\ Id.
---------------------------------------------------------------------------
In conjunction with the change above, the Exchange proposes to add
a new Commentary .02 to NYSE Arca Rule 6.91 that requires any leg of a
complex order that takes priority over established customer orders in
the Consolidated Book to be better priced by at least one MPV as
provided in NYSE Arca Rule 6.72. The Exchange believes that these
proposed rule changes related to the pricing of complex orders are
consistent with rules for complex order trading on the ISE.\9\
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\9\ See note 5 supra.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) \10\ of the Act, in general, and furthers the
objectives of Section 6(b)(5),\11\ in particular, in that it is
designed to facilitate transactions in securities, to promote just and
equitable principles of trade, to enhance competition, and to protect
investors and the public interest. In particular, trading complex
orders in one cent increments will provide market participants and
public customers with more pricing options, which could lead to tighter
spreads and increased liquidity at NYSE Arca.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change will 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
Written comments on the proposed rule change were neither solicited
nor received.
[[Page 67687]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-4(f)(6) thereunder,\13\
because it: (i) Does not significantly affect the protection of
investors or the public interest; (ii) does not impose any significant
burden on competition; and (iii) by its terms, does not become
operative for 30 days after the date of the filing, or such shorter
time as the Commission may designate if consistent with the protection
of investors and the public interest.\14\
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ As required by Rule 19b-4(f)(6)(iii) of the Act, NYSE Arca
provided the Commission with written notice of its intent to file
the proposed rule change, along with a brief description of the text
of the proposed rule change, at least five business days prior to
the date of the filing of the proposed rule change.
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NYSE Arca requests that the Commission waive the 30-day operative
period under Rule 19b-4(f)(6)(iii).\15\ The Commission believes that it
is consistent with the protection of investors and the public interest
to waive the 30-day operative delay, because waiving the operative
delay will allow NYSE Arca investors to immediately trade and price
complex orders in one cent increments on NYSE Arca.\16\
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\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ For purposes only of waiving the 30-day operative delay of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such 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.\17\
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\17\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change 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-NYSEArca-2006-81 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 No. SR-NYSEArca-2006-81. 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 NYSE Arca. 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-2006-81 and should be submitted on or before
December 13, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-19737 Filed 11-21-06; 8:45 am]
BILLING CODE 8011-01-P
