Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Rule 36 (Communication Between Exchange and Members' Offices), 6025-6028 [E7-2085]
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Federal Register / Vol. 72, No. 26 / Thursday, February 8, 2007 / 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 NYSE 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.
NYSE has requested accelerated
approval of this proposed rule change
prior to the 30th day after the date of
publication of the notice of the filing
thereof. The Commission has
determined that a 15-day comment
period is appropriate in this case.
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:
jlentini on PROD1PC65 with NOTICES
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–NYSE–2006–68.
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 the filing also will be
available for inspection and copying at
the principal office of the Exchange. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–NYSE–2006–68 and should
be submitted on or before February 23,
2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.14
Nancy M. Morris,
Secretary.
[FR Doc. E7–2061 Filed 2–7–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55218; File No. SR–NYSE–
2007–05]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change and
Amendment No. 1 Thereto Relating to
Rule 36 (Communication Between
Exchange and Members’ Offices)
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 January
Paper Comments
25, 2007, the New York Stock Exchange
• Send paper comments in triplicate
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
to Nancy M. Morris, Secretary,
with the Securities and Exchange
Securities and Exchange Commission,
Commission (‘‘Commission’’) the
100 F Street, NE., Washington, DC
proposed rule change as described in
20549–1090.
Items I and II below, which Items have
All submissions should refer to File
been substantially prepared by the
Number SR–NYSE–2006–68. This file
Exchange. On January 31, 2007, the
number should be included on the
Exchange filed Amendment No. 1 to the
subject line if e-mail is used. To help the
proposed rule change. The Exchange
Commission process and review your
filed the proposed rule change pursuant
comments more efficiently, please use
to Section 19(b)(3)(A) of the Act 3 and
only one method. The Commission will
Rule 19b–4(f)(6) thereunder,4 which
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
14 17 CFR 200.30–3(a)(12).
rules/sro.shtml). Copies of the
1 15 U.S.C. 78s(b)(1).
submission, all subsequent
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
amendments, all written statements
4 17 CFR 240.19b–4(f)(6).
with respect to the proposed rule
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6025
renders the proposal effective upon
filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as amended, from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
This proposal seeks to extend the
portable phone pilot (the ‘‘Pilot’’) for an
additional year, until January 31, 2008.
The Pilot amends NYSE Rule 36
(Communication Between Exchange and
Members’ Offices) to allow a Floor
broker and Registered Competitive
Market Maker (‘‘RCMM’’) to use an
Exchange authorized and provided
portable telephone on the Exchange
Floor, provided certain conditions are
met. The current Pilot expires on
January 31, 2007.5
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. 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
Background
The Commission originally approved
the Pilot to be implemented as a sixmonth pilot 6 beginning no later than
June 23, 2003.7 Since the inception of
the Pilot, the Exchange has extended the
Pilot seven times, with the current Pilot
expiring on January 31, 2007.8
5 See Securities Exchange Act Release No. 54276
(August 4, 2006), 71 FR 45885 (August 10, 2006)
(SR–NYSE–2006–55).
6 See Securities Exchange Act Release No. 47671
(April 11, 2003), 68 FR 19048 (April 17, 2003) (SR–
NYSE–2002–11) (‘‘Original Order’’).
7 See Securities Exchange Act Release No. 47992
(June 5, 2003), 68 FR 35047 (June 11, 2003) (SR–
NYSE–2003–19) (delaying the implementation date
for portable phones from on or about May 1, 2003
to no later than June 23, 2003).
8 See Securities Exchange Act Release Nos. 48919
(December 12, 2003), 68 FR 70853 (December 19,
2003) (SR–NYSE–2003–38) (extending the Pilot for
an additional six months ending on June 16, 2004);
49954 (July 1, 2004), 69 FR 41323 (July 8, 2004)
(SR–NYSE–2004–30) (extending the Pilot for an
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Federal Register / Vol. 72, No. 26 / Thursday, February 8, 2007 / Notices
With respect to regulatory actions
concerning the Pilot, as previously
disclosed, there was an investigation
into possible insider trading in an NYSE
listed security involving the trading
activity of two RCMMs and the use of
an Exchange authorized and provided
portable phone by one of the RCMMs in
or about January 2005, which was
closed on December 21, 2006, with no
action by NYSE Regulation, Inc. (‘‘NYSE
Regulation’’).9
No administrative or technical
problems, other than routine telephone
maintenance issues, have resulted from
the Pilot over the past few months.10
The Exchange is now filing to extend
the Pilot for an additional year, until
January 31, 2008.
NYSE Rule 36
jlentini on PROD1PC65 with NOTICES
Rule 36 governs the establishment of
telephone or electronic communications
between the Exchange’s Trading Floor
and any other location. Prior to the
Pilot, Rule 36 prohibited the use of
portable telephone communication
between the Trading Floor and any offFloor location.
The Exchange is proposing to extend
the Pilot for an additional year,
permitting Floor brokers and RCMMs to
use Exchange authorized and issued
portable telephones on the Floor. Thus,
with the approval of the Exchange, a
Floor broker would continue to be
permitted to engage in direct voice
communication from the point of sale to
an off-Floor location, such as a member
firm’s trading desk or the office of one
of the broker’s customers. Such
communications would permit the Floor
broker to accept orders consistent with
additional five months ending on November 30,
2004); 50777 (December 1, 2004), 69 FR 71090
(December 8, 2004) (SR–NYSE–2004–67) (extending
the Pilot for an additional four months ending
March 31, 2005); 51464 (March 31, 2005), 70 FR
17746 (April 7, 2005) (SR–NYSE–2005–20)
(extending the Pilot for an additional four months
ending July 31, 2005); 52188 (August 1, 2005), 70
FR 46252 (August 9, 2005) (SR–NYSE–2005–53)
(extending the Pilot for an additional four months
ending January 31, 2006); 53277 (February 13,
2006), 71 FR 8877 (February 21, 2006) (SR–NYSE–
2006–03) (extending the Pilot for an additional six
months ending July 31, 2006); and 54276, note 5
supra. Also, since the inception, the Exchange has
incorporated RCMMs into the Pilot and
subsequently amended the Pilot to allow RCMMs to
use an Exchange authorized and provided portable
telephone on the Exchange Floor to call to and
receive calls from their booths on the Floor. See
Securities Exchange Act Release Nos. 53213
(February 2, 2006), 71 FR 7103 (February 10, 2006)
(SR–NYSE–2005–80) and 54215 (July 26, 2006), 71
FR 43551 (August 1, 2006) (SR–NYSE–2006–51).
9 See Securities Exchange Act Release No. 53277,
note 8 supra.
10 The Exchange has received records of incoming
telephone calls from June 30, 2006, through
December 31, 2006, for Floor brokers and RCMMs
and will continue to receive monthly updates.
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Exchange rules, provide status and oral
execution reports as to orders
previously received, as well as ‘‘market
look’’ observations as have historically
been routinely transmitted from a Floor
broker’s booth location.11
The Pilot also allows RCMMs to use
an Exchange authorized portable phone
solely to call and receive calls from their
booths on the Floor, to communicate
with their or their member
organizations’ off-Floor office, and to
communicate with the off-Floor office of
their clearing member organization to
enter off-Floor orders and to discuss
matters related to the clearance and
settlement of transactions, provided the
off-Floor office uses a wired telephone
line for these discussions. RCMMs are
currently not allowed to use a portable
phone to conduct any agency business
until issues involving the use of
portable phones by RCMMs acting in
the capacity of agent have been fully
reviewed and resolved by NYSE
Regulation in consultation with the
Commission.12 For both RCMMs and
Floor brokers, use of a portable
telephone on the Exchange Floor other
than one authorized and issued by the
Exchange will continue to be
prohibited.
Both incoming and outgoing calls
would continue to be allowed, provided
the requirements of all other Exchange
rules have been met. A Floor broker
would not be permitted to represent and
execute any order received as a result of
such voice communication unless the
order was first properly recorded by the
member and entered into the Exchange’s
Front End Systemic Capture (FESC)
electronic database (NYSE Rule 123
(e)).13 In addition, Exchange rules
require that any Floor broker receiving
orders from the public over portable
phones must be properly qualified to
engage in such direct access business
under Exchange Rules 342 and 345,
among others.14
11 Floor brokers receiving orders from the public
over portable phones must be properly qualified to
engage in such ‘‘direct access’’ business under
Exchange Rules 342 and 345, among others. See
also note 14, infra.
12 Allowing RCMMs acting as Floor brokers to use
portable phones would involve further discussions
with the Commission and would be the subject of
a separate filing with the Commission.
13 See Securities Exchange Act Release No. 43689
(December 7, 2000), 65 FR 79145 (December 18,
2000) (SR–NYSE–98–25). See also Securities
Exchange Act Release No. 44943 (October 16, 2001),
66 FR 53820 (October 24, 2001) (SR–NYSE–2001–
39) (discussing certain exceptions to FESC, such as
orders to offset an error, or a bona fide arbitrage,
which may be entered within 60 seconds after a
trade is executed).
14 For more information regarding Exchange
requirements for conducting a public business on
the Exchange Floor, see Information Memos 01–41
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Specialists are subject to separate
restrictions in Rule 36 on their ability to
engage in voice communications from
the specialist post to an off-Floor
location.15 The Pilot would not apply to
specialists, who would continue to be
prohibited from speaking from the post
to upstairs trading desks or customers.16
The Exchange believes that the
approval of the Pilot’s continuation for
an additional year will enable the
Exchange to continue to provide more
direct, efficient access to its trading
crowds and customers, increase the
speed of transmittal of orders and the
execution of trades, and provide an
enhanced level of service to customers
in an increasingly competitive
environment.17 The Exchange further
believes that by enabling customers to
speak directly to a Floor broker in a
trading crowd on an Exchange
authorized and issued portable
telephone and by allowing RCMMs to
communicate with their upstairs office’s
land line, the land line of their clearing
member organization’s upstairs office,
and their booth personnel at the booth,
the proposed rule change will expedite
and make more direct the free flow of
information.
Pilot Program Results
Since the Pilot’s inception, there have
been approximately 681 portable phone
subscribers.18 In addition, with regard to
portable phone usage, for a sample week
of 12/11/2006–12/15/2006, an average
of 7,040 calls/day originated from
portable phones issued to Floor brokers
and RCMMs. An average of 2,109 calls/
day were received on portable phones.
(November 21, 2001), 01–18 (July 11, 2001)
(available on https://www.nyse.com/regulation/
regulation.html), and 91–25 (July 8, 1991). See also
note 12 supra.
15 See Securities Exchange Act Release No. 46560
(September 26, 2002), 67 FR 62088 (October 3,
2002) (SR–NYSE–00–31) (discussing restrictions on
specialists’ communications from the post).
16 NYSE Rule 36.30 provides that, with the
approval of the Exchange, a specialist unit may
maintain a telephone line at its stock trading post
location to the off-Floor offices of the specialist unit
or the unit’s clearing firm. Such telephone
connection shall not be used for the purpose of
transmitting to the Floor orders for the purchase or
sale of securities but may be used to enter options
or futures hedging orders through the unit’s offFloor office or the unit’s clearing firm or through
a member (on the Floor) of an options or futures
exchange.
17 See Securities Exchange Act Release No. 43493
(October 30, 2000), 65 FR 67022 (November 8, 2000)
(SR–CBOE–00–04), cited by Securities Exchange
Act Release No. 43836 (January 11, 2001), 66 FR
6727 (January 22, 2001) (discussing and approving
the Chicago Board Options Exchange’s and the
Pacific Exchange’s proposals to remove current
prohibitions against Floor Brokers’ use of cellular
or cordless phones to make calls to persons located
off the trading floor).
18 This data includes both Floor brokers and
RCMMs.
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Federal Register / Vol. 72, No. 26 / Thursday, February 8, 2007 / Notices
Of the calls originated from portable
phones, an average of 3,958 calls/day
were internal calls to the booth and
3,081 calls/day were external calls by
RCMMs to the upstairs offices of their
member organization and their clearing
member organization and external calls
of Floor brokers. Thus, approximately
56% of the calls originating from
portable phones were internal calls to
the booth by Floor brokers and RCMMs.
With regard to received calls, of the
2,109 average calls/days received, an
average of 127 calls/day were external
calls by RCMMs to the upstairs offices
of their member organization and their
clearing member organization and
external calls of Floor brokers and an
average of 1,982 calls/day were internal
calls received from the booth. Thus,
approximately 94% of all received calls
were internally generated and 6% were
external calls by RCMMs to the upstairs
offices of their member organization and
their clearing member organization and
external calls of Floor brokers.
The Exchange believes that the Pilot
appears to be successful in that there is
a reasonable degree of usage of portable
phones. During the period of June 30,
2006, through January 31, 2007, there
have been no other regulatory,
administrative or other technical
problems identified with their usage.
The Exchange further believes that the
Pilot appears to facilitate
communication on the Floor for both
Floor brokers and RCMMs without any
corresponding drawbacks. Therefore,
the Exchange believes it is appropriate
to extend the Pilot for an additional
year, expiring on January 31, 2008.
jlentini on PROD1PC65 with NOTICES
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 19 that an
Exchange have rules that are designed to
promote just and equitable principles of
trade, 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. The
amendment to Rule 36 supports the
mechanism of free and open markets by
providing for increased means by which
communications to and from the Floor
of the Exchange may take place.
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.
19 15
U.S.C. 78f(b)(5).
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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
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 20 and Rule 19b–
4(f)(6) thereunder.21 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.22
The Exchange requests that the
Commission waive the 30-day operative
period under Rule 19b–4(f)(6)(iii) of the
Act.23 The Exchange believes that the
continuation of the Pilot is in the public
interest as it will avoid inconvenience
and interruption to the public. The
Commission believes that it is
consistent with the protection of
investors and the public interest to
waive the 30-day operative delay and
make this proposed rule change
immediately effective.24 The
Commission believes that the waiver of
the 30-day operative delay will allow
the Exchange to continue, without
interruption, the existing operation of
its Pilot until January 31, 2008.
The Commission notes that proper
surveillance is an essential component
of any telephone access policy to an
exchange trading floor. Surveillance
procedures should help to ensure that
20 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
22 For purposes of calculating the 60-day period
within which the Commission may summarily
abrogate the proposed rule change under Section
19(b)(3)(C) of the Act, the Commission considers
the period to commence on January 31, 2007, the
date NYSE filed Amendment No. 1 to the proposed
rule change. See 15 U.S.C. 78s(b)(3)(C).
23 17 CFR 240.19b–4(f)(6)(iii).
24 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).
21 17
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6027
Floor brokers and RCMMs use portable
phones as authorized by NYSE Rule 36
and that orders are being handled in
compliance with NYSE rules.25 The
Commission expects the Exchange to
actively review these procedures and
address any potential concerns that
have arisen during the Pilot. In this
regard, the Commission notes that the
Exchange should address whether
telephone records are adequate for
surveillance purposes.
The Commission also requests that
the Exchange report any problems,
surveillance, or enforcement matters
associated with the Floor brokers’ and
RCMMs’ use of an Exchange authorized
and provided portable telephone on the
Exchange Floor. As stated in the
Original Order, the NYSE should also
address whether additional surveillance
would be needed because of the
derivative nature of the ETFs.
Furthermore, in any future additional
filings on the Pilot, the Commission
would expect that the NYSE submit
information documenting the usage of
the phones, any problems that have
occurred, including, among other
things, any regulatory actions or
concerns, and any advantages or
disadvantages that have resulted.26
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 Exchange
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–NYSE–2007–05 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–2007–05. This file
number should be included on the
subject line if e-mail is used. To help the
25 See note 14 supra and accompanying text for
other NYSE requirements that Floor brokers be
properly qualified before doing public customer
business.
26 In any request for a permanent approval of the
Pilot, the Commission would expect the
information to distinguish between Floor brokers’
and RCMMs’ usage of the phones.
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Federal Register / Vol. 72, No. 26 / Thursday, February 8, 2007 / Notices
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room. Copies of such filing also will be
available for inspection and copying at
the principal office of the 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–2007–05 and should
be submitted on or before March 1,
2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.27
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–2085 Filed 2–7–07; 8:45 am]
BILLING CODE 8010–01–P
DEPARTMENT OF STATE
[Public Notice 5686]
jlentini on PROD1PC65 with NOTICES
Bureau of Educational and Cultural
Affairs (ECA) Request for Grant
Proposals: Fulbright Student Program
Announcement Type: New
Cooperative Agreement.
Funding Opportunity Number: ECA/
A/E–08–01.
Catalog of Federal Domestic
Assistance Number: 19.400.
Key Dates:
Application Deadline: May 3, 2007.
Executive Summary: The Office of
Academic Exchange Programs (ECA/A/
E) of the Bureau of Educational and
Cultural Affairs, U.S. Department of
State announces an open competition
for one or more assistance awards to
provide administrative services for the
Fulbright Student Program in Fiscal
Year 2008. Public and private non-profit
organizations or consortia of eligible
27 17
CFR 200.30–3(a)(12).
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15:58 Feb 07, 2007
Jkt 211001
organizations meeting the provisions
described in Internal Revenue Code
section 501(c)(3) may submit proposals
to cooperate with the Bureau in the
administration and implementation of
one or more of the following program
components:
• For U.S. students: the Fulbright
U.S. Student Program.
• For foreign students administered
by world geographic region: the
Fulbright Foreign Student Program.
• For foreign students administered
globally: the International Fulbright
Science and Technology Award, the
Fulbright Foreign Language Teaching
Assistant Program, pre-academic
training, orientation programs, and
enrichment activities.
It is anticipated that the total amount
of funding available for all FY 2008
administrative costs to support the
program components listed above will
be $10,000,000 and will involve
management of 4,090 new students.
I. Funding Opportunity Description
Authority
Overall grant making authority for
this program is contained in the Mutual
Educational and Cultural Exchange Act
of 1961, Public Law 87–256, as
amended, also known as the FulbrightHays Act. The purpose of the Act is ‘‘to
enable the Government of the United
States to increase mutual understanding
between the people of the United States
and the people of other countries . . .;
to strengthen the ties which unite us
with other nations by demonstrating the
educational and cultural interests,
developments, and achievements of the
people of the United States and other
nations . . . and thus to assist in the
development of friendly, sympathetic
and peaceful relations between the
United States and the other countries of
the world.’’ The funding authority for
the program above is provided through
legislation.
Purpose
The Fulbright Program is the U.S.
government’s premier program for
international academic exchange and
one of our nation’s most important
investments in improving international
relations between the U.S. and other
countries through the development of
future leaders in virtually every area of
endeavor. It was created by the U.S.
Congress after World War II to exchange
U.S. and foreign students, scholars and
teachers to provide them opportunities
to experience firsthand the political,
economic and cultural institutions in
each other’s countries and thus help
establish a basis for international
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mutual understanding and peaceful
interaction. It now extends to over 150
countries worldwide and awards
approximately 7,000 new and renewal
grants to American and foreign
participants each year. The Fulbright
Program focuses on leadership
development and counts among its
270,000 alumni world leaders in every
profession and field of endeavor.
A hallmark of the Fulbright Program
is binationalism. The United States and
foreign governments, U.S. and foreign
educational and other public and
private institutions are all partners in
this exchange. Program priorities are
developed between the U.S. and foreign
partners and in many countries of the
world, financial contributions from
governments or public/private sources
match or exceed those of the United
States.
Administration of the Fulbright
Program is programmatically and
administratively complex. It must
accommodate a variety of circumstances
in every geographic region of the world
and be responsive to and supportive of
many different constituencies in the
United States and abroad, each with its
own sets of goals and concerns. The
integrity of the Program requires
maintenance of the highest and most
consistent standards of academic and
professional quality in the selection of
candidates and the implementation of
projects. While the Program is active in
many countries, it is important that it
maintain a single world-wide identity.
Overall policy guidelines and selection
criteria for all Fulbright programs are
determined by the Presidentially
appointed J. William Fulbright Foreign
Scholarship Board, while responsibility
for conducting the program is assigned
to the Bureau of Educational and
Cultural Affairs of the Department of
State.
Description of the Fulbright Student
Program
The Fulbright Student Program offers
scholarships to recent U.S. and foreign
college and university graduates,
advanced graduate students including
those pursuing doctoral degrees, and
creative artists to study and conduct
research abroad and in the United
States. A basic premise of the Fulbright
program remains the selection of all
participants through an open and
transparent merit-based competition.
U.S. Student Program
Only one cooperative agreement will
be awarded for all administrative
services for the Fulbright U.S. Student
Program. Under the U.S. Fulbright
program, graduating college seniors or
E:\FR\FM\08FEN1.SGM
08FEN1
]]>Agencies
[Federal Register Volume 72, Number 26 (Thursday, February 8, 2007)]
[Notices]
[Pages 6025-6028]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-2085]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55218; File No. SR-NYSE-2007-05]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
and Amendment No. 1 Thereto Relating to Rule 36 (Communication Between
Exchange and Members' Offices)
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 January 25, 2007, the New York Stock Exchange LLC (``NYSE'' or the
``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 substantially prepared by the Exchange.
On January 31, 2007, the Exchange filed Amendment No. 1 to the proposed
rule change. The Exchange filed the proposed rule change pursuant to
Section 19(b)(3)(A) of the Act \3\ and Rule 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, as amended, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
This proposal seeks to extend the portable phone pilot (the
``Pilot'') for an additional year, until January 31, 2008. The Pilot
amends NYSE Rule 36 (Communication Between Exchange and Members'
Offices) to allow a Floor broker and Registered Competitive Market
Maker (``RCMM'') to use an Exchange authorized and provided portable
telephone on the Exchange Floor, provided certain conditions are met.
The current Pilot expires on January 31, 2007.\5\
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\5\ See Securities Exchange Act Release No. 54276 (August 4,
2006), 71 FR 45885 (August 10, 2006) (SR-NYSE-2006-55).
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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. 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
Background
The Commission originally approved the Pilot to be implemented as a
six-month pilot \6\ beginning no later than June 23, 2003.\7\ Since the
inception of the Pilot, the Exchange has extended the Pilot seven
times, with the current Pilot expiring on January 31, 2007.\8\
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\6\ See Securities Exchange Act Release No. 47671 (April 11,
2003), 68 FR 19048 (April 17, 2003) (SR-NYSE-2002-11) (``Original
Order'').
\7\ See Securities Exchange Act Release No. 47992 (June 5,
2003), 68 FR 35047 (June 11, 2003) (SR-NYSE-2003-19) (delaying the
implementation date for portable phones from on or about May 1, 2003
to no later than June 23, 2003).
\8\ See Securities Exchange Act Release Nos. 48919 (December
12, 2003), 68 FR 70853 (December 19, 2003) (SR-NYSE-2003-38)
(extending the Pilot for an additional six months ending on June 16,
2004); 49954 (July 1, 2004), 69 FR 41323 (July 8, 2004) (SR-NYSE-
2004-30) (extending the Pilot for an additional five months ending
on November 30, 2004); 50777 (December 1, 2004), 69 FR 71090
(December 8, 2004) (SR-NYSE-2004-67) (extending the Pilot for an
additional four months ending March 31, 2005); 51464 (March 31,
2005), 70 FR 17746 (April 7, 2005) (SR-NYSE-2005-20) (extending the
Pilot for an additional four months ending July 31, 2005); 52188
(August 1, 2005), 70 FR 46252 (August 9, 2005) (SR-NYSE-2005-53)
(extending the Pilot for an additional four months ending January
31, 2006); 53277 (February 13, 2006), 71 FR 8877 (February 21, 2006)
(SR-NYSE-2006-03) (extending the Pilot for an additional six months
ending July 31, 2006); and 54276, note 5 supra. Also, since the
inception, the Exchange has incorporated RCMMs into the Pilot and
subsequently amended the Pilot to allow RCMMs to use an Exchange
authorized and provided portable telephone on the Exchange Floor to
call to and receive calls from their booths on the Floor. See
Securities Exchange Act Release Nos. 53213 (February 2, 2006), 71 FR
7103 (February 10, 2006) (SR-NYSE-2005-80) and 54215 (July 26,
2006), 71 FR 43551 (August 1, 2006) (SR-NYSE-2006-51).
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[[Page 6026]]
With respect to regulatory actions concerning the Pilot, as
previously disclosed, there was an investigation into possible insider
trading in an NYSE listed security involving the trading activity of
two RCMMs and the use of an Exchange authorized and provided portable
phone by one of the RCMMs in or about January 2005, which was closed on
December 21, 2006, with no action by NYSE Regulation, Inc. (``NYSE
Regulation'').\9\
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\9\ See Securities Exchange Act Release No. 53277, note 8 supra.
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No administrative or technical problems, other than routine
telephone maintenance issues, have resulted from the Pilot over the
past few months.\10\ The Exchange is now filing to extend the Pilot for
an additional year, until January 31, 2008.
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\10\ The Exchange has received records of incoming telephone
calls from June 30, 2006, through December 31, 2006, for Floor
brokers and RCMMs and will continue to receive monthly updates.
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NYSE Rule 36
Rule 36 governs the establishment of telephone or electronic
communications between the Exchange's Trading Floor and any other
location. Prior to the Pilot, Rule 36 prohibited the use of portable
telephone communication between the Trading Floor and any off-Floor
location.
The Exchange is proposing to extend the Pilot for an additional
year, permitting Floor brokers and RCMMs to use Exchange authorized and
issued portable telephones on the Floor. Thus, with the approval of the
Exchange, a Floor broker would continue to be permitted to engage in
direct voice communication from the point of sale to an off-Floor
location, such as a member firm's trading desk or the office of one of
the broker's customers. Such communications would permit the Floor
broker to accept orders consistent with Exchange rules, provide status
and oral execution reports as to orders previously received, as well as
``market look'' observations as have historically been routinely
transmitted from a Floor broker's booth location.\11\
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\11\ Floor brokers receiving orders from the public over
portable phones must be properly qualified to engage in such
``direct access'' business under Exchange Rules 342 and 345, among
others. See also note 14, infra.
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The Pilot also allows RCMMs to use an Exchange authorized portable
phone solely to call and receive calls from their booths on the Floor,
to communicate with their or their member organizations' off-Floor
office, and to communicate with the off-Floor office of their clearing
member organization to enter off-Floor orders and to discuss matters
related to the clearance and settlement of transactions, provided the
off-Floor office uses a wired telephone line for these discussions.
RCMMs are currently not allowed to use a portable phone to conduct any
agency business until issues involving the use of portable phones by
RCMMs acting in the capacity of agent have been fully reviewed and
resolved by NYSE Regulation in consultation with the Commission.\12\
For both RCMMs and Floor brokers, use of a portable telephone on the
Exchange Floor other than one authorized and issued by the Exchange
will continue to be prohibited.
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\12\ Allowing RCMMs acting as Floor brokers to use portable
phones would involve further discussions with the Commission and
would be the subject of a separate filing with the Commission.
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Both incoming and outgoing calls would continue to be allowed,
provided the requirements of all other Exchange rules have been met. A
Floor broker would not be permitted to represent and execute any order
received as a result of such voice communication unless the order was
first properly recorded by the member and entered into the Exchange's
Front End Systemic Capture (FESC) electronic database (NYSE Rule 123
(e)).\13\ In addition, Exchange rules require that any Floor broker
receiving orders from the public over portable phones must be properly
qualified to engage in such direct access business under Exchange Rules
342 and 345, among others.\14\
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\13\ See Securities Exchange Act Release No. 43689 (December 7,
2000), 65 FR 79145 (December 18, 2000) (SR-NYSE-98-25). See also
Securities Exchange Act Release No. 44943 (October 16, 2001), 66 FR
53820 (October 24, 2001) (SR-NYSE-2001-39) (discussing certain
exceptions to FESC, such as orders to offset an error, or a bona
fide arbitrage, which may be entered within 60 seconds after a trade
is executed).
\14\ For more information regarding Exchange requirements for
conducting a public business on the Exchange Floor, see Information
Memos 01-41 (November 21, 2001), 01-18 (July 11, 2001) (available on
https://www.nyse.com/regulation/regulation.html), and 91-25 (July 8,
1991). See also note 12 supra.
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Specialists are subject to separate restrictions in Rule 36 on
their ability to engage in voice communications from the specialist
post to an off-Floor location.\15\ The Pilot would not apply to
specialists, who would continue to be prohibited from speaking from the
post to upstairs trading desks or customers.\16\
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\15\ See Securities Exchange Act Release No. 46560 (September
26, 2002), 67 FR 62088 (October 3, 2002) (SR-NYSE-00-31) (discussing
restrictions on specialists' communications from the post).
\16\ NYSE Rule 36.30 provides that, with the approval of the
Exchange, a specialist unit may maintain a telephone line at its
stock trading post location to the off-Floor offices of the
specialist unit or the unit's clearing firm. Such telephone
connection shall not be used for the purpose of transmitting to the
Floor orders for the purchase or sale of securities but may be used
to enter options or futures hedging orders through the unit's off-
Floor office or the unit's clearing firm or through a member (on the
Floor) of an options or futures exchange.
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The Exchange believes that the approval of the Pilot's continuation
for an additional year will enable the Exchange to continue to provide
more direct, efficient access to its trading crowds and customers,
increase the speed of transmittal of orders and the execution of
trades, and provide an enhanced level of service to customers in an
increasingly competitive environment.\17\ The Exchange further believes
that by enabling customers to speak directly to a Floor broker in a
trading crowd on an Exchange authorized and issued portable telephone
and by allowing RCMMs to communicate with their upstairs office's land
line, the land line of their clearing member organization's upstairs
office, and their booth personnel at the booth, the proposed rule
change will expedite and make more direct the free flow of information.
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\17\ See Securities Exchange Act Release No. 43493 (October 30,
2000), 65 FR 67022 (November 8, 2000) (SR-CBOE-00-04), cited by
Securities Exchange Act Release No. 43836 (January 11, 2001), 66 FR
6727 (January 22, 2001) (discussing and approving the Chicago Board
Options Exchange's and the Pacific Exchange's proposals to remove
current prohibitions against Floor Brokers' use of cellular or
cordless phones to make calls to persons located off the trading
floor).
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Pilot Program Results
Since the Pilot's inception, there have been approximately 681
portable phone subscribers.\18\ In addition, with regard to portable
phone usage, for a sample week of 12/11/2006-12/15/2006, an average of
7,040 calls/day originated from portable phones issued to Floor brokers
and RCMMs. An average of 2,109 calls/day were received on portable
phones.
[[Page 6027]]
Of the calls originated from portable phones, an average of 3,958
calls/day were internal calls to the booth and 3,081 calls/day were
external calls by RCMMs to the upstairs offices of their member
organization and their clearing member organization and external calls
of Floor brokers. Thus, approximately 56% of the calls originating from
portable phones were internal calls to the booth by Floor brokers and
RCMMs.
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\18\ This data includes both Floor brokers and RCMMs.
---------------------------------------------------------------------------
With regard to received calls, of the 2,109 average calls/days
received, an average of 127 calls/day were external calls by RCMMs to
the upstairs offices of their member organization and their clearing
member organization and external calls of Floor brokers and an average
of 1,982 calls/day were internal calls received from the booth. Thus,
approximately 94% of all received calls were internally generated and
6% were external calls by RCMMs to the upstairs offices of their member
organization and their clearing member organization and external calls
of Floor brokers.
The Exchange believes that the Pilot appears to be successful in
that there is a reasonable degree of usage of portable phones. During
the period of June 30, 2006, through January 31, 2007, there have been
no other regulatory, administrative or other technical problems
identified with their usage. The Exchange further believes that the
Pilot appears to facilitate communication on the Floor for both Floor
brokers and RCMMs without any corresponding drawbacks. Therefore, the
Exchange believes it is appropriate to extend the Pilot for an
additional year, expiring on January 31, 2008.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \19\ that an Exchange have rules that
are designed to promote just and equitable principles of trade, 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. The amendment to Rule 36 supports
the mechanism of free and open markets by providing for increased means
by which communications to and from the Floor of the Exchange may take
place.
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\19\ 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.
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
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 \20\ and Rule 19b-
4(f)(6) thereunder.\21\ 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.\22\
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\20\ 15 U.S.C. 78s(b)(3)(A).
\21\ 17 CFR 240.19b-4(f)(6).
\22\ For purposes of calculating the 60-day period within which
the Commission may summarily abrogate the proposed rule change under
Section 19(b)(3)(C) of the Act, the Commission considers the period
to commence on January 31, 2007, the date NYSE filed Amendment No. 1
to the proposed rule change. See 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------
The Exchange requests that the Commission waive the 30-day
operative period under Rule 19b-4(f)(6)(iii) of the Act.\23\ The
Exchange believes that the continuation of the Pilot is in the public
interest as it will avoid inconvenience and interruption to the public.
The Commission believes that it is consistent with the protection of
investors and the public interest to waive the 30-day operative delay
and make this proposed rule change immediately effective.\24\ The
Commission believes that the waiver of the 30-day operative delay will
allow the Exchange to continue, without interruption, the existing
operation of its Pilot until January 31, 2008.
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\23\ 17 CFR 240.19b-4(f)(6)(iii).
\24\ 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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The Commission notes that proper surveillance is an essential
component of any telephone access policy to an exchange trading floor.
Surveillance procedures should help to ensure that Floor brokers and
RCMMs use portable phones as authorized by NYSE Rule 36 and that orders
are being handled in compliance with NYSE rules.\25\ The Commission
expects the Exchange to actively review these procedures and address
any potential concerns that have arisen during the Pilot. In this
regard, the Commission notes that the Exchange should address whether
telephone records are adequate for surveillance purposes.
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\25\ See note 14 supra and accompanying text for other NYSE
requirements that Floor brokers be properly qualified before doing
public customer business.
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The Commission also requests that the Exchange report any problems,
surveillance, or enforcement matters associated with the Floor brokers'
and RCMMs' use of an Exchange authorized and provided portable
telephone on the Exchange Floor. As stated in the Original Order, the
NYSE should also address whether additional surveillance would be
needed because of the derivative nature of the ETFs. Furthermore, in
any future additional filings on the Pilot, the Commission would expect
that the NYSE submit information documenting the usage of the phones,
any problems that have occurred, including, among other things, any
regulatory actions or concerns, and any advantages or disadvantages
that have resulted.\26\
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\26\ In any request for a permanent approval of the Pilot, the
Commission would expect the information to distinguish between Floor
brokers' and RCMMs' usage of the phones.
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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 Exchange 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 rule-comments@sec.gov. Please include File
Number SR-NYSE-2007-05 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-2007-05. This file
number should be included on the subject line if e-mail is used. To
help the
[[Page 6028]]
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Room. Copies of such filing also will be
available for inspection and copying at the principal office of the
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-2007-05 and
should be submitted on or before March 1, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-2085 Filed 2-7-07; 8:45 am]
BILLING CODE 8010-01-P
