Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to Amendments to Registration Rules of NYSE Arca, Inc., 5783-5786 [E7-1999]

Download as PDF Federal Register / Vol. 72, No. 25 / Wednesday, February 7, 2007 / Notices III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) Impose any significant burden on competition; and (iii) Become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, it has become effective pursuant to Section 19(b)(3)(A) of the Act 9 and Rule 19b–4(f)(6) thereunder.10 The Exchange has asked the Commission to waive the 30-day operative delay. The Commission believes that such waiver is consistent with the protection of investors and the public interest because the proposed rule change should provide transparency and more clarity with respect to the trading hours eligibility of certain derivative securities products and should promote consistency in the trading halts of derivative securities. The Commission notes that this filing does not change the trading hours of the Derivative Securities Products listed in Rule 7.34, but codifies trading hour sessions that have been established through other rule changes or through the use of the Exchange’s generic listing standards pursuant to Rule 19b–4(e) under the Act. For these reasons, the Commission designates the proposed rule change as operative immediately.11 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 9 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires an exchange to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Commission has determined to waive the fiveday pre-filing notice requirement in this case. 11 For purposes only of accelerating the operative date of this proposal, the Commission has considered the rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). sroberts on PROD1PC70 with NOTICES 10 17 VerDate Aug<31>2005 21:36 Feb 06, 2007 Jkt 211001 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 e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2007–11 on the subject line. 5783 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55215; File No. SR– NYSEArca–2006–51] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to Amendments to Registration Rules of NYSE Arca, Inc. January 31, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 Paper Comments (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on • Send paper comments in triplicate November 14, 2006, NYSE Arca, Inc. to Nancy M. Morris, Secretary, (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed Securities and Exchange Commission, with the Securities and Exchange 100 F Street NE, Washington, DC Commission (‘‘Commission’’) the 20549–1090. proposed rule change as described in Items I, II, and III below, which Items All submissions should refer to File have been substantially prepared by the Number SR–NYSEArca–2007–11. This Exchange. The Exchange filed file number should be included on the subject line if e-mail is used. To help the Amendment No. 1 to the proposed rule change on January 12, 2007. The Commission process and review your Commission is publishing this notice to comments more efficiently, please use solicit comments on the proposed rule only one method. The Commission will change, as amended, from interested post all comments on the Commission’s persons. Internet Web site (https://www.sec.gov/ I. Self-Regulatory Organization’s rules/sro/shtml). Copies of the Statement of the Terms of Substance of submission, all subsequent the Proposed Rule Change amendments, all written statements The Exchange proposes to amend with respect to the proposed rule certain NYSE Arca Rules governing change that are filed with the registration of OTP Holders 3 and Commission, and all written employees of Option Trading Permit communications relating to the (‘‘OTP’’) Firms 4 in order to: (i) Clarify proposed rule change between the Commission and any person, other than registration procedures and make them consistent with the procedures of other those that may be withheld from the self-regulatory organizations (‘‘SROs’’), public in accordance with the and (ii) include an additional provisions of 5 U.S.C. 552, will be registration category in connection with available for inspection and copying in the Exchange’s new options trading the Commission’s Public Reference platform, OX.5 The text of the proposed Room. Copies of such filing will also be rule change is available at NYSE Arca, available for inspection and copying at the Commission’s Public Reference the principal office of the Exchange. All Room, and www.nysearca.com/ comments received will be posted regulation/filings.asp. without change; the Commission does II. Self-Regulatory Organization’s not edit personal identifying Statement of the Purpose of, and information from submissions. You Statutory Basis for, the Proposed Rule should submit only information that you wish to make available publicly. All Change In its filing with the Commission, the submissions should refer to File number Exchange included statements SR–NYSEArca–2007–11 and should be concerning the purpose of and basis for submitted by February 28, 2007. the proposed rule change and discussed For the Commission, by the Division of any comments it received on the Market Regulation, pursuant to delegated proposed rule change. The text of these authority.12 statements may be examined at the Florence E. Harmon, Deputy Secretary. [FR Doc. E7–1938 Filed 2–6–07; 8:45 am] BILLING CODE 8010–01–P 12 17 PO 00000 CFR 200.30–3(a)(12). Frm 00109 Fmt 4703 Sfmt 4703 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See NYSE Arca Rule 1.1(q). 4 See NYSE Arca Rule 1.1(r). 5 See Securities Exchange Act Release No. 54238 (July 28, 2006), 71 FR 44758 (August 7, 2006) (SR– NYSEArca–2006–13). 2 17 E:\FR\FM\07FEN1.SGM 07FEN1 5784 Federal Register / Vol. 72, No. 25 / Wednesday, February 7, 2007 / Notices 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. required under the waiver provisions in Rule 2.5(c). A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The Exchange proposes to amend Rule 2.5(c), which governs requests from OTP Firm applicants to waive applicable examinations requirements prescribed by the Exchange. Specifically, the Exchange proposes to add new waiver standards under which the Exchange has discretion to grant waivers so that the Exchange’s practices are generally consistent with the criterion set forth in NASD Rule 1070(d) and Supplementary Material .15(1)(b) to NYSE Rule 345 and to make other clarifications. In connection with changing the waiver standards, the Exchange also proposes to delete the remainder of Rule 2.5(c), which sets forth specific listed instances when the Exchange will waive required examinations. The purpose for deleting this language is because the Exchange proposes: (i) Waiver standards under which the Exchange has discretion to grant waivers rather than specific listed circumstances, which is consistent with the other SROs as noted above, and (ii) to make certain of these specific instances actual exceptions to the registration examination requirements in Rule 2.5(b)(10)(A), rather than circumstances under which the Exchange will consider a waiver. As explained above, the Exchange believes that such circumstances are clear cases when registration requirements need not apply, and does not believe that it is necessary to consider such circumstances on a case-by-case basis as required under the waiver provisions in Rule 2.5(c). 1. Purpose The Exchange proposes to amend NYSE Arca Rules 2.5, 2.23, 6.33, 6.34A and 9.27 (referred to herein as Rules 2.5, 2.23, 6.33, 6.34A and 9.27) in order to clarify registration procedures and ongoing compliance obligations for OTP Holders and OTP Firms and their registered persons. Further, the Exchange proposes to amend these rules so that they are consistent with industry practices and with the operation of the Central Registration Depository (‘‘CRD’’) system maintained by the National Association of Securities Dealers, Inc. (‘‘NASD’’). The proposed rule changes are similar to the rules of other SROs.6 Registration Category The Exchange proposes to amend Rule 2.5(b)(10)(A) to include the registration category, Market Maker Authorized Trader,7 for individuals who perform market making activity on behalf of an OTP Firm on the OX trading facility. This registration category is new at this time because Market Maker Authorized Traders did not exist at NYSE Arca until the adoption of the OX trading rules in July 2006.8 These individuals will be required to maintain registration requirements similar to existing Market Makers on the Exchange. sroberts on PROD1PC70 with NOTICES Exceptions to Required Registration Examinations The Exchange proposes to further amend Rule 2.5(b)(10)(A) to include certain exceptions to the registration examination requirements. Currently, similar, but not identical, exceptions are included as circumstances under which the Exchange will consider a waiver of the registration examination requirements under Rule 2.5(c), as described below. The Exchange believes that the added exceptions are clear cases when registration requirements need not apply, and does not believe that it is necessary to consider similar circumstances on a case-by-case basis as 6 See NASD Rules 1070(d) and 1120(a) and (b) and New York Stock Exchange LLC (‘‘NYSE’’) Rule 345A and Supplementary Material .15(1)(b) to NYSE Rule 345. 7 See NYSE Arca Rule 6.1A(9). 8 See note 5, supra. VerDate Aug<31>2005 21:36 Feb 06, 2007 Jkt 211001 Consideration of Requests for Waivers of Examination Requirements Filing of Registration Documentation With the Exchange The Exchange proposes to amend Rule 2.23, which governs registration procedures for employees of OTP Firms. Specifically, the Exchange proposes to amend the rule to provide manual registration procedures for registration categories (e.g., floor clerk) for which CRD does not provide electronic registration.9 9 In 2005, NYSE Arca (formerly Pacific Exchange, Inc.) became a participant of the CRD system for maintenance of certain registration categories with the Exchange. As part of this implementation, applicable rules of the Exchange were amended to address filing appropriate registration documentation electronically with the CRD system for employees of ETP Holders. These amended rules, however, inadvertently omitted certain registration procedures for positions not available on the CRD system. PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 Continuing Education Requirements Currently, employees of OTP Firms who wish to initiate and maintain registration with the Exchange must follow two separate rules—Rules 2.23 and 9.27. Rule 2.23 sets forth initial registration requirements, whereas Rule 9.27 sets forth the continuing education requirements that must be satisfied to maintain registration with the Exchange. In order to simplify compliance for employees of OTP Firms, the Exchange proposes to provide continuing registration requirements in the same rule as initial registration requirements. Specifically, the Exchange proposes to add continuing education requirements to new Rule 2.23(d) and certain definitions and clarifications with respect thereto to new Commentary .01– .06 to Rule 2.23. The continuing education requirements in proposed new Rule 2.23(d) and related Commentary .01–.06 to Rule 2.23 are substantially similar to those contained in current Rule 9.27(c) and (d) and related Commentary .01–.06 to Rule 9.27(c) and (d), except that the Exchange has made certain clarifications so that the continuing education requirements and related definitions and clarifications are more closely aligned with NASD Rule 1120 and NYSE Rule 345A and other cleanup changes, as set forth in detail below. Specifically, the Exchange proposes in Rule 2.23(d)(1) that the content of the Regulatory Element of the program shall be consistent with the standards set forth by the Exchange and other SROs, rather than just determined by the Exchange as is set forth in the current Rule 9.27(c). In addition, the Exchange proposes to add language in Rule 2.23(d)(2)(B)(i) providing that if an OTP Firm’s or an OTP Holder’s analysis establishes the need for supervisory training for persons with supervisory responsibilities, such training must be included in the OTP Firm’s or OTP Holder’s training plan. Such language is not included in the current Rule 9.27(d)(2)(A). The Exchange has not proposed for inclusion NASD’s continuing education requirements applicable to research analysts because the Exchange does not provide for research analyst registration. Additionally, unlike current NASD Rule 1120(a)(6), the Exchange is not proposing to permit OTP Firms or OTP Holders to self-administer the Regulatory Element of continuing education, as the Exchange does not have the resources or capability to offer an approval process or monitoring of such self-administered programs. OTP Firms and OTP Holders will be E:\FR\FM\07FEN1.SGM 07FEN1 sroberts on PROD1PC70 with NOTICES Federal Register / Vol. 72, No. 25 / Wednesday, February 7, 2007 / Notices responsible for ensuring continuing education information related to their associated persons is received by the firm in a timely manner and, as such, shall designate a person or persons to receive applicable information via electronic mail directly from the CRD system. OTP Firms and OTP Holders will not be required to submit to the Exchange the names of such designated persons, as is required by the current NASD rule. This is based on the fact that the Exchange does not have a contact management system comparable to that of NASD. With respect to the proposed new Commentary to Rule 2.23, the Exchange proposes to add a definition of ‘‘registered person’’ to Commentary .01 to Rule 2.23 as is currently set forth in Commentary .01 to Rule 9.27(c) and (d), except that the definition that the Exchange is proposing does not include the carve-out for ‘‘any such person whose activities are limited solely to the transaction of business on the facilities of the Exchange,’’ but rather includes a carve-out for ‘‘such persons who are not subject to the registration requirements for traders as set forth in Rule 2.5(b)(10)(A).’’ In addition, the Exchange proposes in Commentary .03 to Rule 2.23 to correct a mistake in the language in Commentary .03 to Rule 9.27(c) and (d) to provide that reassociated registered persons shall participate in the Regulatory Element at intervals based on their initial base date, rather than their new base date. Lastly, the Exchange proposes in Commentary .06 to Rule 2.23 to change the reference of ‘‘any registered member who is an OTP Holder,’’ which is currently in Commentary .06 to Rule 9.27(c) and (d), to ‘‘any registered person who is associated with an OTP Firm or OTP Holder’’ in order to be consistent with the language of other SROs. In connection with the addition of proposed new Rule 2.23(d) and Commentary .01–.06 to Rule 2.23 as set forth above, the Exchange proposes to delete the specific continuing education requirements in Rule 9.27(c) and (d) and the related Commentary .01–.06 to Rule 9.27(c) and (d). The purpose for deleting the continuing education requirements in Rule 9.27(c) and (d) is to avoid needless repetition and risk of inconsistencies. The Exchange proposes to include cross-reference language in Rule 9.27(c) that provides that registered persons shall follow the continuing education requirements set forth in Rule 2.23(d). In addition, the Exchange proposes to delete current Rule 2.23(i) with respect to transition to the CRD system because VerDate Aug<31>2005 21:36 Feb 06, 2007 Jkt 211001 registration with CRD is already provided for in Rule 2.23(a). Orientation Program for Certain Market Makers and Market Maker Authorized Traders The Exchange proposes to amend Rules 6.33 and 6.34A(b)(2) to provide that Market Maker and Market Maker Authorized Trader applicants to the Exchange who have previously successfully completed the required examination and have been absent from registration with the Exchange in such capacity for six months or more will be required to complete an orientation program prescribed by the Exchange. The Exchange proposes these rule changes because it believes that Market Makers and Market Maker Authorized Traders that have been absent from the Exchange for six months or more should be required to take a program to reacquaint them with the requirements of the Exchange due to the length of time that they have been absent from the Exchange. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with Section 6(b) of the Act,10 in general, and furthers the objectives of Section 6(b)(5) 11 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism 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 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. 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) 10 15 11 15 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00111 Fmt 4703 Sfmt 4703 5785 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 such proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2006–51 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–NYSEArca–2006–51. 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 E:\FR\FM\07FEN1.SGM 07FEN1 5786 Federal Register / Vol. 72, No. 25 / Wednesday, February 7, 2007 / Notices (Catalog of Federal Domestic Assistance Number 59002) For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–1999 Filed 2–6–07; 8:45 am] Cargo Containers Manufacturing (Dry Freight Containers/Connex Boxes). Steven C. Preston, Administrator. [FR Doc. E7–2007 Filed 2–6–07; 8:45 am] Number SR–NYSEArca–2006–51 and should be submitted on or before February 28, 2007. SUMMARY: The U.S. Small Business Administration (SBA) is denying a request for a waiver of the Nonmanufacturer Rule for Demountable Cargo Containers Manufacturing (Dry Freight Containers/Connex Boxes) based on our recent discovery of small business manufacturers for this class of products. Denying this waiver will require recipients of contracts set aside for small businesses, service-disabled veteran-owned small businesses, or SBA’s 8(a) Business Development Program to provide the products of small business manufacturers or processors on such contracts. DATES: This notice of denial is effective February 22, 2007. FOR FURTHER INFORMATI0N CONTACT: Edith Butler, Program Analyst, by telephone at (202) 619–0422; by FAX at (202) 481–1788; or by e-mail at edith.butler@sba.gov. BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION BILLING CODE 8010–01–P [Disaster Declaration # 10787] Missouri Disaster Number MO–00008 SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 10796] Missouri Disaster # MO–00009 Declaration of Economic Injury U.S. Small Business Administration. ACTION: Notice. sroberts on PROD1PC70 with NOTICES AGENCY: SUMMARY: This is a notice of an Economic Injury Disaster Loan (EIDL) declaration for the State of Missouri, dated 02/01/2007. Incident: Severe Winter Storms. Incident Period: 11/30/2006 through 12/02/2006. EFFECTIVE DATE: 02/01/2007. EIDL Loan Application Deadline Date: 11/01/2007. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the Administrator’s EIDL declaration, applications for economic injury disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties: Camden, Hickory, Morgan. Contiguous Counties: Missouri: Benton, Cooper, Dallas, Laclede, Miller, Moniteau, Pettis, Polk, Pulaski, Saint Clair. The Interest Rate is: 4.000. The number assigned to this disaster for economic injury is 107960. The State which received an EIDL Declaration # is Missouri. 12 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 21:36 Feb 06, 2007 Jkt 211001 U.S. Small Business Administration. ACTION: Amendment 1. AGENCY: SUMMARY: This is an amendment of the Presidential declaration of a major disaster for Public Assistance Only for the State of Missouri (FEMA–1676–DR), dated 01/15/2007. Incident: Severe Winter Storms and Flooding. Incident Period: 01/12/2007 through 01/22/2007. EFFECTIVE DATE: 01/22/2007. Physical Loan Application Deadline Date: 03/16/2007. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing And Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: The notice of the President’s major disaster declaration for Private Non-Profit organizations in the State of MISSOURI, dated 01/15/2007, is hereby amended to establish the incident period for this disaster as beginning 01/12/2007 and continuing through 01/22/2007. All other information in the original declaration remains unchanged. (Catalog of Federal Domestic Assistance Number 59008) Herbert L. Mitchell, Associate Administrator for Disaster Assistance. [FR Doc. E7–2008 Filed 2–6–07; 8:45 am] BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION Small Business Size Standards: Waiver of the Nonmanufacturer Rule U.S. Small Business Administration. ACTION: Notice of denial to waive the Nonmanufacturer Rule for Demountable AGENCY: PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 Section 8(a)(17) of the Small Business Act (Act), 15 U.S.C. § 637(a)(17), requires that recipients of Federal contracts set aside for small businesses, service-disabled veteran-owned small businesses, or SBA’s 8(a) Business Development Program provide the product of a small business manufacturer or processor, if the recipient is other than the actual manufacturer or processor of the product. This requirement is commonly referred to as the Nonmanufacturer Rule. The SBA regulations imposing this requirement are found at 13 CFR § 121.406(b). Section 8(a)(17)(b)(iv) of the Act authorizes SBA to waive the Nonmanufacturer Rule for any ‘‘class of products’’ for which there are no small business manufacturers or processors available to participate in the Federal market. As implemented in SBA’s regulations at 13 CFR § 121.1202(c), in order to be considered available to participate in the Federal market for a class of products, a small business manufacturer must have submitted a proposal for a contract solicitation or received a contract from the Federal government within the last 24 months. The SBA defines ‘‘class of products’’ based on a six digit coding system. The coding system is the Office of Management and Budget North American Industry Classification System (NAICS). The SBA received a request on December 7, 2006, to waive the Nonmanufacturer Rule for Demountable Cargo Containers Manufacturing (Dry Freight Containers/Connex Boxes). In SUPPLEMENTARY INFORMATION: E:\FR\FM\07FEN1.SGM 07FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 72, Number 25 (Wednesday, February 7, 2007)]
[Notices]
[Pages 5783-5786]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-1999]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55215; File No. SR-NYSEArca-2006-51]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change and Amendment No. 1 Thereto Relating to 
Amendments to Registration Rules of NYSE Arca, Inc.

January 31, 2007.
    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 14, 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 substantially prepared by the Exchange. The Exchange 
filed Amendment No. 1 to the proposed rule change on January 12, 2007. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend certain NYSE Arca Rules governing 
registration of OTP Holders \3\ and employees of Option Trading Permit 
(``OTP'') Firms \4\ in order to: (i) Clarify registration procedures 
and make them consistent with the procedures of other self-regulatory 
organizations (``SROs''), and (ii) include an additional registration 
category in connection with the Exchange's new options trading 
platform, OX.\5\ The text of the proposed rule change is available at 
NYSE Arca, the Commission's Public Reference Room, and 
www.nysearca.com/regulation/filings.asp.
---------------------------------------------------------------------------

    \3\ See NYSE Arca Rule 1.1(q).
    \4\ See NYSE Arca Rule 1.1(r).
    \5\ See Securities Exchange Act Release No. 54238 (July 28, 
2006), 71 FR 44758 (August 7, 2006) (SR-NYSEArca-2006-13).
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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

[[Page 5784]]

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 Exchange proposes to amend NYSE Arca Rules 2.5, 2.23, 6.33, 
6.34A and 9.27 (referred to herein as Rules 2.5, 2.23, 6.33, 6.34A and 
9.27) in order to clarify registration procedures and ongoing 
compliance obligations for OTP Holders and OTP Firms and their 
registered persons. Further, the Exchange proposes to amend these rules 
so that they are consistent with industry practices and with the 
operation of the Central Registration Depository (``CRD'') system 
maintained by the National Association of Securities Dealers, Inc. 
(``NASD''). The proposed rule changes are similar to the rules of other 
SROs.\6\
---------------------------------------------------------------------------

    \6\ See NASD Rules 1070(d) and 1120(a) and (b) and New York 
Stock Exchange LLC (``NYSE'') Rule 345A and Supplementary Material 
.15(1)(b) to NYSE Rule 345.
---------------------------------------------------------------------------

Registration Category

    The Exchange proposes to amend Rule 2.5(b)(10)(A) to include the 
registration category, Market Maker Authorized Trader,\7\ for 
individuals who perform market making activity on behalf of an OTP Firm 
on the OX trading facility. This registration category is new at this 
time because Market Maker Authorized Traders did not exist at NYSE Arca 
until the adoption of the OX trading rules in July 2006.\8\ These 
individuals will be required to maintain registration requirements 
similar to existing Market Makers on the Exchange.
---------------------------------------------------------------------------

    \7\ See NYSE Arca Rule 6.1A(9).
    \8\ See note 5, supra.
---------------------------------------------------------------------------

Exceptions to Required Registration Examinations

    The Exchange proposes to further amend Rule 2.5(b)(10)(A) to 
include certain exceptions to the registration examination 
requirements. Currently, similar, but not identical, exceptions are 
included as circumstances under which the Exchange will consider a 
waiver of the registration examination requirements under Rule 2.5(c), 
as described below. The Exchange believes that the added exceptions are 
clear cases when registration requirements need not apply, and does not 
believe that it is necessary to consider similar circumstances on a 
case-by-case basis as required under the waiver provisions in Rule 
2.5(c).

Consideration of Requests for Waivers of Examination Requirements

    The Exchange proposes to amend Rule 2.5(c), which governs requests 
from OTP Firm applicants to waive applicable examinations requirements 
prescribed by the Exchange. Specifically, the Exchange proposes to add 
new waiver standards under which the Exchange has discretion to grant 
waivers so that the Exchange's practices are generally consistent with 
the criterion set forth in NASD Rule 1070(d) and Supplementary Material 
.15(1)(b) to NYSE Rule 345 and to make other clarifications.
    In connection with changing the waiver standards, the Exchange also 
proposes to delete the remainder of Rule 2.5(c), which sets forth 
specific listed instances when the Exchange will waive required 
examinations. The purpose for deleting this language is because the 
Exchange proposes: (i) Waiver standards under which the Exchange has 
discretion to grant waivers rather than specific listed circumstances, 
which is consistent with the other SROs as noted above, and (ii) to 
make certain of these specific instances actual exceptions to the 
registration examination requirements in Rule 2.5(b)(10)(A), rather 
than circumstances under which the Exchange will consider a waiver. As 
explained above, the Exchange believes that such circumstances are 
clear cases when registration requirements need not apply, and does not 
believe that it is necessary to consider such circumstances on a case-
by-case basis as required under the waiver provisions in Rule 2.5(c).

Filing of Registration Documentation With the Exchange

    The Exchange proposes to amend Rule 2.23, which governs 
registration procedures for employees of OTP Firms. Specifically, the 
Exchange proposes to amend the rule to provide manual registration 
procedures for registration categories (e.g., floor clerk) for which 
CRD does not provide electronic registration.\9\
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    \9\ In 2005, NYSE Arca (formerly Pacific Exchange, Inc.) became 
a participant of the CRD system for maintenance of certain 
registration categories with the Exchange. As part of this 
implementation, applicable rules of the Exchange were amended to 
address filing appropriate registration documentation electronically 
with the CRD system for employees of ETP Holders. These amended 
rules, however, inadvertently omitted certain registration 
procedures for positions not available on the CRD system.
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Continuing Education Requirements

    Currently, employees of OTP Firms who wish to initiate and maintain 
registration with the Exchange must follow two separate rules--Rules 
2.23 and 9.27. Rule 2.23 sets forth initial registration requirements, 
whereas Rule 9.27 sets forth the continuing education requirements that 
must be satisfied to maintain registration with the Exchange.
    In order to simplify compliance for employees of OTP Firms, the 
Exchange proposes to provide continuing registration requirements in 
the same rule as initial registration requirements. Specifically, the 
Exchange proposes to add continuing education requirements to new Rule 
2.23(d) and certain definitions and clarifications with respect thereto 
to new Commentary .01-.06 to Rule 2.23.
    The continuing education requirements in proposed new Rule 2.23(d) 
and related Commentary .01-.06 to Rule 2.23 are substantially similar 
to those contained in current Rule 9.27(c) and (d) and related 
Commentary .01-.06 to Rule 9.27(c) and (d), except that the Exchange 
has made certain clarifications so that the continuing education 
requirements and related definitions and clarifications are more 
closely aligned with NASD Rule 1120 and NYSE Rule 345A and other clean-
up changes, as set forth in detail below.
    Specifically, the Exchange proposes in Rule 2.23(d)(1) that the 
content of the Regulatory Element of the program shall be consistent 
with the standards set forth by the Exchange and other SROs, rather 
than just determined by the Exchange as is set forth in the current 
Rule 9.27(c). In addition, the Exchange proposes to add language in 
Rule 2.23(d)(2)(B)(i) providing that if an OTP Firm's or an OTP 
Holder's analysis establishes the need for supervisory training for 
persons with supervisory responsibilities, such training must be 
included in the OTP Firm's or OTP Holder's training plan. Such language 
is not included in the current Rule 9.27(d)(2)(A).
    The Exchange has not proposed for inclusion NASD's continuing 
education requirements applicable to research analysts because the 
Exchange does not provide for research analyst registration. 
Additionally, unlike current NASD Rule 1120(a)(6), the Exchange is not 
proposing to permit OTP Firms or OTP Holders to self-administer the 
Regulatory Element of continuing education, as the Exchange does not 
have the resources or capability to offer an approval process or 
monitoring of such self-administered programs. OTP Firms and OTP 
Holders will be

[[Page 5785]]

responsible for ensuring continuing education information related to 
their associated persons is received by the firm in a timely manner 
and, as such, shall designate a person or persons to receive applicable 
information via electronic mail directly from the CRD system. OTP Firms 
and OTP Holders will not be required to submit to the Exchange the 
names of such designated persons, as is required by the current NASD 
rule. This is based on the fact that the Exchange does not have a 
contact management system comparable to that of NASD.
    With respect to the proposed new Commentary to Rule 2.23, the 
Exchange proposes to add a definition of ``registered person'' to 
Commentary .01 to Rule 2.23 as is currently set forth in Commentary .01 
to Rule 9.27(c) and (d), except that the definition that the Exchange 
is proposing does not include the carve-out for ``any such person whose 
activities are limited solely to the transaction of business on the 
facilities of the Exchange,'' but rather includes a carve-out for 
``such persons who are not subject to the registration requirements for 
traders as set forth in Rule 2.5(b)(10)(A).'' In addition, the Exchange 
proposes in Commentary .03 to Rule 2.23 to correct a mistake in the 
language in Commentary .03 to Rule 9.27(c) and (d) to provide that 
reassociated registered persons shall participate in the Regulatory 
Element at intervals based on their initial base date, rather than 
their new base date. Lastly, the Exchange proposes in Commentary .06 to 
Rule 2.23 to change the reference of ``any registered member who is an 
OTP Holder,'' which is currently in Commentary .06 to Rule 9.27(c) and 
(d), to ``any registered person who is associated with an OTP Firm or 
OTP Holder'' in order to be consistent with the language of other SROs.
    In connection with the addition of proposed new Rule 2.23(d) and 
Commentary .01-.06 to Rule 2.23 as set forth above, the Exchange 
proposes to delete the specific continuing education requirements in 
Rule 9.27(c) and (d) and the related Commentary .01-.06 to Rule 9.27(c) 
and (d). The purpose for deleting the continuing education requirements 
in Rule 9.27(c) and (d) is to avoid needless repetition and risk of 
inconsistencies. The Exchange proposes to include cross-reference 
language in Rule 9.27(c) that provides that registered persons shall 
follow the continuing education requirements set forth in Rule 2.23(d).
    In addition, the Exchange proposes to delete current Rule 2.23(i) 
with respect to transition to the CRD system because registration with 
CRD is already provided for in Rule 2.23(a).
Orientation Program for Certain Market Makers and Market Maker 
Authorized Traders
    The Exchange proposes to amend Rules 6.33 and 6.34A(b)(2) to 
provide that Market Maker and Market Maker Authorized Trader applicants 
to the Exchange who have previously successfully completed the required 
examination and have been absent from registration with the Exchange in 
such capacity for six months or more will be required to complete an 
orientation program prescribed by the Exchange.
    The Exchange proposes these rule changes because it believes that 
Market Makers and Market Maker Authorized Traders that have been absent 
from the Exchange for six months or more should be required to take a 
program to reacquaint them with the requirements of the Exchange due to 
the length of time that they have been absent from the Exchange.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act,\10\ in general, and furthers the objectives of 
Section 6(b)(5) \11\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 rule change were neither solicited 
nor received.

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 such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2006-51 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-NYSEArca-2006-51. 
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

[[Page 5786]]

Number SR-NYSEArca-2006-51 and should be submitted on or before 
February 28, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-1999 Filed 2-6-07; 8:45 am]
BILLING CODE 8010-01-P

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