Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change to NYSE Rule 342.30, 71012-71013 [E6-20733]

Download as PDF 71012 Federal Register / Vol. 71, No. 235 / Thursday, December 7, 2006 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54847; File No. SR–NYSE– 2006–97] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change to NYSE Rule 342.30 November 30, 2006. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’),2 and Rule 19b–4 thereunder, notice is hereby given that on October 26, 2006, the New York Stock Exchange LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed amendments to its Rule 342.30, as described in Items I, II and III below, which items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The NYSE is filing with the Commission a proposed rule change that would amend Rule 342.30 (‘‘Annual Report and Certification’’) to require submission of the process report prepared in connection with the Chief Executive Officer (‘‘CEO’’) certification, as required under Rule 342.30(e)(iii), to the Board of Directors and Audit Committee (if such committee exists) of the member organization on or before April 1st of each year. sroberts on PROD1PC70 with NOTICES 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 the proposed rule change is available on the NYSE’s Web site (www.NYSE.com), at the NYSE’s principal office, and at the Commission’s Public Reference Room. The Exchange has prepared summaries, set forth in Sections A, B and C below, of the most significant aspects of such statements. 1 15 2 15 U.S.C. 78s(b)(1). U.S.C. 78a. VerDate Aug<31>2005 17:29 Dec 06, 2006 Jkt 211001 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change stated. The Exchange has, heretofore by interpretation, required such submission prior to CEO certification. 1. Purpose Subsection (a) of Rule 354 requires, in relevant part, that each member organization submit, by April 1st of each year, a copy of the Rule 342.30 Annual Report (also due to the Exchange by April 1st) to one or more of its control persons or, if the member organization has no control person, to the audit committee of its board of directors or its equivalent committee or group. In order to better harmonize the process report submission requirements of Rule 342.30(e)(iii) with the Annual Report submission requirements of Rule 354(a), it is proposed that Rule 342.30(e)(iii) be amended to require each member organization to submit the process report to its board of directors and audit committee (if such committee exists) on or before April 1st of each year, consistent with the timing requirements of Rule 354(a) with respect to submission of the Annual Report. This would promote timely submission of the process report to the board of directors and audit committee, while serving the practical purpose of allowing member organizations to submit it together with the Annual Report so that it may be reviewed as a single comprehensive package. The Exchange is filing with the Commission a proposed rule change that would amend Rule 342.30 to require that the report required pursuant to Rule 342.30(e)(iii) (herein referred to as the ‘‘process report’’) in connection with a member organization’s CEO certification be submitted to the member organization’s board of directors and audit committee (if such committee exists) on or before April 1st of each year. The purpose of the rule change is to better harmonize the requirements of Rule 342.30 with those of NYSE Rule 354 (‘‘Reports to Control Persons’’). Background Rule 342.30 Rule 342.30 requires each member organization to file with the Exchange, by April 1st of each year, a report (the ‘‘Annual Report’’) outlining its supervision and compliance efforts in prescribed regulatory areas during the preceding year and assessing the adequacy of its ongoing compliance processes and procedures. The Annual Report submitted to the Exchange is also required to include, pursuant to Rule 342.30(e), a certification by the CEO of each member organization confirming that the member organization has in place processes to: (A) Establish and maintain policies and procedures reasonably designed to achieve compliance with applicable Exchange rules and federal securities laws and regulations; (B) Modify such policies and procedures as business, regulatory and legislative changes and events dictate; and (C) Test the effectiveness of such policies and procedures on a periodic basis, the timing and extent of which is reasonably designed to ensure continuing compliance with Exchange and federal securities laws and regulations. Subsection (e)(iii) of Rule 342.30 requires that the above-stated processes be evidenced in a process report that is to be reviewed by the CEO, the Chief Compliance Officer, and such other officers as the organization may deem necessary to make the certification. Subsection (e)(iii) also requires that the process report be submitted to the member organization’s board of directors and audit committee (if such committee exists), although the timing of such submission is not explicitly PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 Rule 354 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b)(5) 3 of the Act which requires NYSE to have rules that are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest. In this regard, the proposed rule change promotes timely submission of substantive regulatory material to member organizations’ governing bodies by better coordinating the requirements of Rule 342.30(e)(iii) (Process Report) and Rule 354(a) (Submission of Annual Report to Control Persons). 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. 3 15 E:\FR\FM\07DEN1.SGM U.S.C. 78f(b)(5). 07DEN1 Federal Register / Vol. 71, No. 235 / Thursday, December 7, 2006 / Notices 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 self-regulatory organization 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. Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2006–97 and should be submitted on or before December 28, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.4 Florence E. Harmon, Deputy Secretary. [FR Doc. E6–20733 Filed 12–6–06; 8:45 am] BILLING CODE 8011–01–P 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 sroberts on PROD1PC70 with NOTICES • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSE–2006–97 on the subject line. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54834; File No. SR–Phlx– 2006–69] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change Relating to a Direct Registration System November 29, 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 October 31, 2006, the Philadelphia Stock Paper Comments Exchange, Inc. (‘‘Phlx’’) filed with the • Send paper comments in triplicate Securities and Exchange Commission to Nancy M. Morris, Secretary, (‘‘Commission’’) and on November 14, Securities and Exchange Commission, 2006, amended the proposed rule 100 F Street, NE., Washington, DC change described in Items I, II, and III 20549–1090. below, which items have been prepared All submissions should refer to File primarily by Phlx. The Commission is Number SR–NYSE–2006–97. This file publishing this notice to solicit number should be included on the comments on the proposed rule change subject line if e-mail is used. To help the from interested parties. Commission process and review your I. Self-Regulatory Organization’s comments more efficiently, please use only one method. The Commission will Statement of the Terms of Substance of post all comments on the Commission’s the Proposed Rule Change Internet Web site (http://www.sec.gov/ Phlx proposes to adopt new Rule 868 rules/sro.shtml). Copies of the to require certain listed securities to be submission, all subsequent eligible for a Direct Registration System amendments, all written statements (‘‘DRS’’) operated by a securities with respect to the proposed rule depository registered as a clearing change that are filed with the Commission, and all written 4 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). communications relating to the 2 17 CFR 240.19b–4. proposed rule change between the VerDate Aug<31>2005 17:29 Dec 06, 2006 Jkt 211001 PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 71013 agency under Section 17A of the Act starting on January 1, 2007. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Phlx 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. Phlx has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements.3 (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change (1) Purpose The purpose of proposed new Phlx Rule 868 4 is to reduce the cots, risks, and delays associated with the physical delivery of securities certificates by requiring that certain securities be eligible for DRS.5 Proposed Rule 868 would require that on or after January 1, 2007, all securities initially listing on Phlx must be eligible for DRS operated by a securities depository that is a clearing agency registered under Section 17A of the Act (‘‘securities depository’’). This provision would not extend to (i) securities of companies which already have securities listed on Phlx; (ii) securities of companies which immediately prior to such listing had securities listed on another national securities exchange; (iii) derivative products,6 or (iv) securities (other than stocks) which are book-entry-only. 3 The Commission has modified portions of the text of the summaries prepared by the Phlx. 4 The exact text of the Phlx proposed rule change is set forth in its filing, which can be found at http://www.phlx.com/exchange/rulefilngs/2006/S2006-69.pdf. 5 The Commission has approved similar rule changes filed by the New York Stock Exchange LLC, NASDAQ Stock Market LLC, the American Stock Exchange LLC, and the NYSE Arca, Inc. that require certain listed companies securities become DRS eligible. Securities Exchange Act Release Nos. 54289 (August 8, 2006), 71 FR 47278 (August 16, 2006) [File No. SR–NYSE–2006–29]; 54288 (August 8, 2006), 71 FR 47276 (August 16, 2006) [File No. SR–NASDAQ–2006–008]; 54290 (August 8, 2006), 71 FR 47262 (August 16, 2006) [File No. SR–Amex– 2006–40]; 54410 (September 7, 2006), 71 FR 54316 (September 14, 2006) [File No. SR–NYSE Arca– 2006–31]. 6 For purposes of proposed Rule 868, the term ‘‘derivative products’’ means standardized options issued by The Options Clearing Corporation (‘‘OCC’’) or other securities that are issued by OCC or another limited purpose entity or trust and that are based solely on the performance of an index or E:\FR\FM\07DEN1.SGM Continued 07DEN1

Agencies

[Federal Register Volume 71, Number 235 (Thursday, December 7, 2006)]
[Notices]
[Pages 71012-71013]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-20733]



[[Page 71012]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54847; File No. SR-NYSE-2006-97]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change to NYSE Rule 342.30

 November 30, 2006.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act''),\2\ and Rule 19b-4 thereunder, notice is hereby given 
that on October 26, 2006, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed amendments to its Rule 342.30, as 
described in Items I, II and III below, which items have been prepared 
by the Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NYSE is filing with the Commission a proposed rule change that 
would amend Rule 342.30 (``Annual Report and Certification'') to 
require submission of the process report prepared in connection with 
the Chief Executive Officer (``CEO'') certification, as required under 
Rule 342.30(e)(iii), to the Board of Directors and Audit Committee (if 
such committee exists) of the member organization on or before April 
1st of each year.

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 the proposed rule change is available on the NYSE's Web site 
(www.NYSE.com), at the NYSE's principal office, and at the Commission's 
Public Reference Room. The Exchange has prepared summaries, set forth 
in Sections A, B and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange is filing with the Commission a proposed rule change 
that would amend Rule 342.30 to require that the report required 
pursuant to Rule 342.30(e)(iii) (herein referred to as the ``process 
report'') in connection with a member organization's CEO certification 
be submitted to the member organization's board of directors and audit 
committee (if such committee exists) on or before April 1st of each 
year. The purpose of the rule change is to better harmonize the 
requirements of Rule 342.30 with those of NYSE Rule 354 (``Reports to 
Control Persons'').

Background

Rule 342.30

    Rule 342.30 requires each member organization to file with the 
Exchange, by April 1st of each year, a report (the ``Annual Report'') 
outlining its supervision and compliance efforts in prescribed 
regulatory areas during the preceding year and assessing the adequacy 
of its ongoing compliance processes and procedures. The Annual Report 
submitted to the Exchange is also required to include, pursuant to Rule 
342.30(e), a certification by the CEO of each member organization 
confirming that the member organization has in place processes to:
    (A) Establish and maintain policies and procedures reasonably 
designed to achieve compliance with applicable Exchange rules and 
federal securities laws and regulations;
    (B) Modify such policies and procedures as business, regulatory and 
legislative changes and events dictate; and
    (C) Test the effectiveness of such policies and procedures on a 
periodic basis, the timing and extent of which is reasonably designed 
to ensure continuing compliance with Exchange and federal securities 
laws and regulations.
    Subsection (e)(iii) of Rule 342.30 requires that the above-stated 
processes be evidenced in a process report that is to be reviewed by 
the CEO, the Chief Compliance Officer, and such other officers as the 
organization may deem necessary to make the certification. Subsection 
(e)(iii) also requires that the process report be submitted to the 
member organization's board of directors and audit committee (if such 
committee exists), although the timing of such submission is not 
explicitly stated. The Exchange has, heretofore by interpretation, 
required such submission prior to CEO certification.

Rule 354

    Subsection (a) of Rule 354 requires, in relevant part, that each 
member organization submit, by April 1st of each year, a copy of the 
Rule 342.30 Annual Report (also due to the Exchange by April 1st) to 
one or more of its control persons or, if the member organization has 
no control person, to the audit committee of its board of directors or 
its equivalent committee or group.
    In order to better harmonize the process report submission 
requirements of Rule 342.30(e)(iii) with the Annual Report submission 
requirements of Rule 354(a), it is proposed that Rule 342.30(e)(iii) be 
amended to require each member organization to submit the process 
report to its board of directors and audit committee (if such committee 
exists) on or before April 1st of each year, consistent with the timing 
requirements of Rule 354(a) with respect to submission of the Annual 
Report. This would promote timely submission of the process report to 
the board of directors and audit committee, while serving the practical 
purpose of allowing member organizations to submit it together with the 
Annual Report so that it may be reviewed as a single comprehensive 
package.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b)(5) \3\ of the Act which requires NYSE to have rules 
that are designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest. In this 
regard, the proposed rule change promotes timely submission of 
substantive regulatory material to member organizations' governing 
bodies by better coordinating the requirements of Rule 342.30(e)(iii) 
(Process Report) and Rule 354(a) (Submission of Annual Report to 
Control Persons).
---------------------------------------------------------------------------

    \3\ 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 purposes of the Act.

[[Page 71013]]

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 self-regulatory organization 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 (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2006-97 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

    All submissions should refer to File Number SR-NYSE-2006-97. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the NYSE. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSE-2006-97 and should be submitted on or before 
December 28, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
---------------------------------------------------------------------------

    \4\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E6-20733 Filed 12-6-06; 8:45 am]
BILLING CODE 8011-01-P