Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Extension of the Crossing Session III and IV Pilot, 7804-7806 [E7-2848]
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7804
Federal Register / Vol. 72, No. 33 / Tuesday, February 20, 2007 / Notices
each business day by the Trustee;39 (5)
accrued interest per Share; (6) the
Basket Amount for the Japanese Yen;
and (7) the last sale price of the Shares
as traded in the U.S. market, subject to
a 20-minute delay, as it is provided free
of charge.40 Further, the Exchange
represents that real-time information for
prices for futures and options on the
Japanese Yen traded on CME and Phlx
are available from information service
providers, and that CME and Phlx
provide delayed futures and options
information free of charge on their
respective Web sites. The Commission
believes that the wide availability of
such information, as described above,
will facilitate transparency with respect
to the Shares and diminish the risk of
manipulation or unfair informational
advantage.
C. Listing and Trading
The Commission finds that the
Exchange’s proposed rules and
procedures for the listing and trading of
the proposed Shares are consistent with
the Act. Shares will trade as equity
securities subject to NYSE rules
including, among others, rules
governing trading halts, responsibilities
of the specialist, account opening, and
customer suitability requirements. In
addition, the Shares will be subject to
NYSE listing and delisting rules and
procedures governing the trading of
ICUs on the NYSE. The Commission
believes that listing and delisting
criteria for the Shares should help to
maintain a minimum level of liquidity
and therefore minimize the potential for
manipulation of the Shares. Finally, the
Commission believes that the
Information Memo the Exchange will
distribute will inform members and
member organizations about the terms,
characteristics, and risks in trading the
Shares, including their prospectus
delivery obligations.
D. Acceleration
hsrobinson on PROD1PC76 with NOTICES
The Commission finds good cause for
approving the proposed rule change, as
amended, prior to the 30th day after the
date of publication of the notice of filing
thereof in the Federal Register. The
Commission has previously granted
approval to a NYSE proposal to adopt
NYSE Rules 1300A and 1301A that
govern the trading of Currency Trust
39 According to the Exchange, the Sponsor has
represented to the Exchange that the NAV for the
Trust will be available to all market participants at
the same time. The Exchange further represents that
therefore, no market participant will have a time
advantage in using such data.
40 As noted above, the last sale price of the Shares
in the secondary market will be disseminated over
the Consolidated Tape.
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Shares, and a proposal to list and trade
Euro Shares pursuant to such rules.41
The Shares proposed to be listed and
traded in this proposed rule change, are
substantially similar in structure and
operation to the Euro Shares, will be
listed and traded pursuant to the same
rules, and do not raise any new issues.
Therefore, the Commission finds good
cause, consistent with Section 19(b)(2)
of the Act,42 to approve the proposal, as
amended, on an accelerated basis.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act 43 that the
proposed rule change (SR–NYSE–2007–
03), as amended, is approved on an
accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.44
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–2844 Filed 2–16–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55281; File No. SR–NYSE–
2007–07]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
Extension of the Crossing Session III
and IV Pilot
February 12, 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
26, 2007, the New York Stock Exchange
LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been substantially prepared by the
Exchange. 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, which renders it
41 See Securities Exchange Act Release No. 52843,
(November 28, 2005), 70 FR 72486 (December 5,
2005), (SR–NYSE–2005–65) (order granting
accelerated approval, after a 15-day comment
period, to a NYSE proposal to list and trade Euro
Shares, which represent units of fractional
undivided beneficial interest in and ownership of
the Euro Currency Trust).
42 15 U.S.C. 78s(b)(2).
43 15 U.S.C. 78s(b)(2).
44 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
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effective upon filing with the
Commission.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The NYSE proposes to extend until
February 1, 2008 the following pilot
programs (‘‘Pilots’’): Crossing Session
III, for the execution of guaranteed price
coupled orders by member
organizations to fill the balance of
customer orders at a price that was
guaranteed to a customer prior to the
close of the Exchange’s 9:30 a.m. to 4:00
p.m. trading session; and Crossing
Session IV, whereby an unfilled balance
of an order may be filled at a price such
that the entire order is filled at no worse
price than the Volume Weighted
Average Price (‘‘VWAP’’) for the subject
security. The text of the proposed rule
change is available at the NYSE, the
Commission’s Public Reference Room,
and https://www.nyse.com.
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
NYSE 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 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
In SR–NYSE–2002–40,5 the
Commission approved an order
establishing two new crossing sessions
(Crossing Sessions III and IV) in the
Exchange’s Off-Hours Trading Facility
(‘‘OHTF’’) as a pilot program (‘‘Pilot’’),
expiring on December 1, 2004.
Subsequently, the Commission
published two notices of filing and
immediate effectiveness of a proposed
rule change extending the Pilot until
4 17
CFR 240.19b–4(f)(6).
Securities Exchange Act Release No. 48857
(December 1, 2003), 68 FR 68440 (December 8,
2003).
5 See
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Federal Register / Vol. 72, No. 33 / Tuesday, February 20, 2007 / Notices
February 1, 2006 6 and until February 1,
2007.7
This proposal extends the Pilot until
February 1, 2008.8 Crossing Sessions III
and IV are described below.
Background
The purpose of the original proposed
rule change was to add two additional
‘‘Crossing Sessions’’ (Crossing Sessions
III and IV) to the Exchange’s OHTF.
Before the proposed rule change, the
OHTF consisted of Crossing Sessions I
and II. Crossing Session I permits the
execution, at the Exchange’s closing
price, of single-stock, single-sided
closing price orders and crosses of
single-stock, and closing price buy and
sell orders. Crossing Session II permits
the execution of crosses of multiplestock (‘‘basket’’) aggregate priced buy
and sell orders. For Crossing Session II,
trade reporting is accomplished by
reporting to the Consolidated Tape the
total number of shares and the total
market value of the aggregate-price
trades. There is no indication of the
individual component stocks involved
in the aggregate-price transactions.
Crossing Session III
The Exchange is proposing to extend
until February 1, 2008, the Pilot in
Crossing Session III. Crossing Session III
is described in Exchange Rule 907. This
Pilot would continue to allow for the
execution on the NYSE of ‘‘guaranteed
price coupled orders’’ whereby member
organizations could fill the unfilled
balance of a customer order at a price
which was guaranteed to the customer
prior to the close of the Exchange’s 9:30
a.m. to 4:00 p.m. trading session.
The Granting of ‘‘Upstairs Stops’’
hsrobinson on PROD1PC76 with NOTICES
In serving their institutional
customers, member firms may offer
them a guarantee that a large size order
will receive no worse than a particular
price. Such a practice is usually referred
to as an ‘‘upstairs stop’’ meaning that
the firm guarantees that its customer’s
order will be executed at no worse price
than the agreed-upon, guaranteed price,
with the member firm trading for its
6 See Securities Exchange Act Release No. 51091
(January 28, 2005), 70 FR 6484 (February 7, 2005)
(SR–NYSE–2005–01).
7 See Securities Exchange Act Release No. 53275
(February 13, 2006), 71 FR 8626 (February 17, 2006)
(SR-NYSE–2006–02).
8 The NYSE confirmed that the Pilots will
continue to function in the same manner that they
operated prior to the one-year extension. Telephone
conversation between Jean Walsh, Principal Rule
Counsel, Office of General Counsel, NYSE, and Tim
Fox, Special Counsel, Division of Market
Regulation, Commission and Johnna B. Dumler,
Attorney, Division, Commission on February 8,
2007.
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16:14 Feb 16, 2007
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7805
own account, if necessary, to effectuate
the guarantee.
Typically, a member firm will seek to
execute as much of the order as possible
during the trading day at or below the
‘‘stop’’ price (in the case of a buy order)
or at or above the ‘‘stop’’ price (in the
case of a sell order). Any portion of the
order not filled during the trading day
will be completed after hours, with the
firm either buying from, or selling to, its
customer at a price which ensures that
the entire order is executed at a price
which is no worse than the ‘‘stop’’ price.
Member firms typically execute the
unfilled balance of the order, after the
U.S. Consolidated Tape is closed, in the
London over-the-counter market, where
trades are not reported in real time. The
purpose of this is simply to minimize
the possibility that other market
participants may ascertain the firm’s, or
the customer’s inventory position, and
possibly trade in the subject security to
the detriment of the firm that granted
the ‘‘upstairs stop.’’ It is more
transparent to print the trade in the
NYSE primary market during U.S.
Consolidated Tape hours.
Crossing Session IV at a price that
ensures that the entire order is executed
at a price that is no worse than the
guaranteed price or the VWAP;
(vi) Orders may be entered in Crossing
Session III or Crossing Session IV
between 4 p.m. and 6:30 p.m., and must
be identified as either a Crossing
Session III or Crossing Session IV order;
(vii) Member firms will receive an
immediate report of execution upon
entering an order into Crossing Session
III or Crossing Session IV; (viii) Orders
may be entered into Crossing Session III
for execution at prices outside the
trading range in the subject security
during the 9:30 a.m. to 4 p.m. trading
session;
(ix) Orders may not be entered into
Crossing Session III or Crossing Session
IV in a security that is subject to a
trading halt at the close of the regular
9:30 a.m. to 4 p.m. trading session; and
(x) At 6:30 p.m., the Exchange will
print trades reported through Crossing
Session III as guaranteed price coupled
orders or in Crossing Session IV as
VWAP executions.
Crossing Session IV
The Exchange is also proposing to
extend the Pilot in Crossing Session IV
(which is also described in NYSE Rule
907), until February 1, 2008. Crossing
Session IV is a facility whereby member
organizations may fill the unfilled
balance of a customer’s order at a price
such that the overall order is filled at a
price that is no worse than the VWAP
for the subject security on that trading
day. The member organization would be
required to document its VWAP
agreement with the customer and the
basis upon which the VWAP price
would be determined.
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 9 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.
Operation of Crossing Sessions
As described in NYSE InformationMemos 04–30 and 05–57 and NYSE
Rule 907, Crossing Sessions III and IV
would continue to operate as follows:
(i) The original order as to which an
‘‘upstairs stop’’ or ‘‘VWAP’’ has been
granted may be of any size;
(ii) The customer must have received
a ‘‘stop’’ (guaranteed price) or VWAP for
the entire order;
(iii) The member firm must record all
details of the order, including the price
it has guaranteed its customer or that
the entire order will be filled at no
worse than the VWAP;
(iv) An order or the unfilled balance
of an order that would be executed in
Crossing Session III or Crossing Session
IV may be of any size;
(v) The customer’s order must be
executed in Crossing Session III or
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2. Statutory Basis
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
9 15
E:\FR\FM\20FEN1.SGM
U.S.C. 78f(b)(5).
20FEN1
7806
Federal Register / Vol. 72, No. 33 / Tuesday, February 20, 2007 / Notices
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) 10 and Rule 19b–4(f)(6)
thereunder.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.
NYSE has asked the Commission to
waive the five-day pre-filing notice
requirement and the 30-day operative
delay. The Commission believes such
waivers are consistent with the
protection of investors and the public
interest because they would allow the
Pilots to operate without interruption.12
For this reason, the Commission
designates the proposal to be operative
upon filing with the Commission.
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:
hsrobinson on PROD1PC76 with NOTICES
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–2007–07 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–2007–07. 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
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
12 For purposes only of waiving the 30-day preoperative period, the Commission has considered
the proposed rule’s impact on efficiency,
competition and capital formation. 15 U.S.C. 78c(f).
11 17
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16:14 Feb 16, 2007
Jkt 211001
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 will also 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–2007–07 and should
be submitted on or before March 13,
2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–2848 Filed 2–16–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55282; File No. SR–Phlx–
2007–03]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Relating to Eliminating the
Telephone System Line Extension
Charge
February 12, 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
11, 2007, the Philadelphia Stock
Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III, below, which Items
have been substantially prepared by the
Phlx. The Phlx filed the proposed rule
change pursuant to Section 19(b)(3)(A)
of the Act 3 and Rule 19b–4(f)(2)
thereunder,4 which renders the proposal
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(2).
1 15
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comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Phlx, pursuant to Section 19(b)(1)
of the Act 5 and Rule 19b–4 thereunder,6
proposes to eliminate from Appendix A
of the Exchange’s fee schedule the
telephone system line extension charge
of $22.50 per month per extension. Any
member, participant, and member or
participant organization may, however,
keep their telephone system line
extensions without being charged. The
Exchange proposes to make effective
beginning January 2007 the elimination
of the telephone system line extension
charge.7
The text of the proposed rule change
is available at the Phlx, the
Commission’s Public Reference Room,
and https://www.Phlx.com.
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
Phlx included statements concerning
the purpose of, and basis for, the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. The Phlx 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
Currently, the Exchange assesses a fee
of $22.50 per month per extension for
telephone system line extensions on the
options and foreign currency trading
floors. The Exchange recently
eliminated this fee for members and
member organizations on the equity
trading floor in connection with the
5 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
7 The monthly telephone system line extension
charge for the month of January is not scheduled
to be billed until the beginning of February 2007.
The Exchange generally issues its invoices at the
beginning of the subsequent month, with such
invoices covering billing for the preceding month.
Therefore, the monthly telephone system line
extension charge for the month of January will be
deleted from the January 2007 invoice, which is
currently scheduled to be issued at the beginning
of February 2007. Telephone conversation between
Cynthia Hoekstra, Vice President, Phlx, and Molly
M. Kim, Special Counsel, Division of Market
Regulation, Commission, on February 7, 2007.
6 17
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]]>Agencies
[Federal Register Volume 72, Number 33 (Tuesday, February 20, 2007)]
[Notices]
[Pages 7804-7806]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-2848]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55281; File No. SR-NYSE-2007-07]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Extension of the Crossing Session III and IV Pilot
February 12, 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 26, 2007, the New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been substantially prepared by the Exchange.
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, which
renders it effective upon filing with the Commission.\4\ The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\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
The NYSE proposes to extend until February 1, 2008 the following
pilot programs (``Pilots''): Crossing Session III, for the execution of
guaranteed price coupled orders by member organizations to fill the
balance of customer orders at a price that was guaranteed to a customer
prior to the close of the Exchange's 9:30 a.m. to 4:00 p.m. trading
session; and Crossing Session IV, whereby an unfilled balance of an
order may be filled at a price such that the entire order is filled at
no worse price than the Volume Weighted Average Price (``VWAP'') for
the subject security. The text of the proposed rule change is available
at the NYSE, the Commission's Public Reference Room, and https://
www.nyse.com.
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 NYSE 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
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
In SR-NYSE-2002-40,\5\ the Commission approved an order
establishing two new crossing sessions (Crossing Sessions III and IV)
in the Exchange's Off-Hours Trading Facility (``OHTF'') as a pilot
program (``Pilot''), expiring on December 1, 2004. Subsequently, the
Commission published two notices of filing and immediate effectiveness
of a proposed rule change extending the Pilot until
[[Page 7805]]
February 1, 2006 \6\ and until February 1, 2007.\7\
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\5\ See Securities Exchange Act Release No. 48857 (December 1,
2003), 68 FR 68440 (December 8, 2003).
\6\ See Securities Exchange Act Release No. 51091 (January 28,
2005), 70 FR 6484 (February 7, 2005) (SR-NYSE-2005-01).
\7\ See Securities Exchange Act Release No. 53275 (February 13,
2006), 71 FR 8626 (February 17, 2006) (SR-NYSE-2006-02).
---------------------------------------------------------------------------
This proposal extends the Pilot until February 1, 2008.\8\ Crossing
Sessions III and IV are described below.
---------------------------------------------------------------------------
\8\ The NYSE confirmed that the Pilots will continue to function
in the same manner that they operated prior to the one-year
extension. Telephone conversation between Jean Walsh, Principal Rule
Counsel, Office of General Counsel, NYSE, and Tim Fox, Special
Counsel, Division of Market Regulation, Commission and Johnna B.
Dumler, Attorney, Division, Commission on February 8, 2007.
---------------------------------------------------------------------------
Background
The purpose of the original proposed rule change was to add two
additional ``Crossing Sessions'' (Crossing Sessions III and IV) to the
Exchange's OHTF. Before the proposed rule change, the OHTF consisted of
Crossing Sessions I and II. Crossing Session I permits the execution,
at the Exchange's closing price, of single-stock, single-sided closing
price orders and crosses of single-stock, and closing price buy and
sell orders. Crossing Session II permits the execution of crosses of
multiple-stock (``basket'') aggregate priced buy and sell orders. For
Crossing Session II, trade reporting is accomplished by reporting to
the Consolidated Tape the total number of shares and the total market
value of the aggregate-price trades. There is no indication of the
individual component stocks involved in the aggregate-price
transactions.
Crossing Session III
The Exchange is proposing to extend until February 1, 2008, the
Pilot in Crossing Session III. Crossing Session III is described in
Exchange Rule 907. This Pilot would continue to allow for the execution
on the NYSE of ``guaranteed price coupled orders'' whereby member
organizations could fill the unfilled balance of a customer order at a
price which was guaranteed to the customer prior to the close of the
Exchange's 9:30 a.m. to 4:00 p.m. trading session.
The Granting of ``Upstairs Stops''
In serving their institutional customers, member firms may offer
them a guarantee that a large size order will receive no worse than a
particular price. Such a practice is usually referred to as an
``upstairs stop'' meaning that the firm guarantees that its customer's
order will be executed at no worse price than the agreed-upon,
guaranteed price, with the member firm trading for its own account, if
necessary, to effectuate the guarantee.
Typically, a member firm will seek to execute as much of the order
as possible during the trading day at or below the ``stop'' price (in
the case of a buy order) or at or above the ``stop'' price (in the case
of a sell order). Any portion of the order not filled during the
trading day will be completed after hours, with the firm either buying
from, or selling to, its customer at a price which ensures that the
entire order is executed at a price which is no worse than the ``stop''
price.
Member firms typically execute the unfilled balance of the order,
after the U.S. Consolidated Tape is closed, in the London over-the-
counter market, where trades are not reported in real time. The purpose
of this is simply to minimize the possibility that other market
participants may ascertain the firm's, or the customer's inventory
position, and possibly trade in the subject security to the detriment
of the firm that granted the ``upstairs stop.'' It is more transparent
to print the trade in the NYSE primary market during U.S. Consolidated
Tape hours.
Crossing Session IV
The Exchange is also proposing to extend the Pilot in Crossing
Session IV (which is also described in NYSE Rule 907), until February
1, 2008. Crossing Session IV is a facility whereby member organizations
may fill the unfilled balance of a customer's order at a price such
that the overall order is filled at a price that is no worse than the
VWAP for the subject security on that trading day. The member
organization would be required to document its VWAP agreement with the
customer and the basis upon which the VWAP price would be determined.
Operation of Crossing Sessions
As described in NYSE Information-Memos 04-30 and 05-57 and NYSE
Rule 907, Crossing Sessions III and IV would continue to operate as
follows:
(i) The original order as to which an ``upstairs stop'' or ``VWAP''
has been granted may be of any size;
(ii) The customer must have received a ``stop'' (guaranteed price)
or VWAP for the entire order;
(iii) The member firm must record all details of the order,
including the price it has guaranteed its customer or that the entire
order will be filled at no worse than the VWAP;
(iv) An order or the unfilled balance of an order that would be
executed in Crossing Session III or Crossing Session IV may be of any
size;
(v) The customer's order must be executed in Crossing Session III
or Crossing Session IV at a price that ensures that the entire order is
executed at a price that is no worse than the guaranteed price or the
VWAP;
(vi) Orders may be entered in Crossing Session III or Crossing
Session IV between 4 p.m. and 6:30 p.m., and must be identified as
either a Crossing Session III or Crossing Session IV order;
(vii) Member firms will receive an immediate report of execution
upon entering an order into Crossing Session III or Crossing Session
IV; (viii) Orders may be entered into Crossing Session III for
execution at prices outside the trading range in the subject security
during the 9:30 a.m. to 4 p.m. trading session;
(ix) Orders may not be entered into Crossing Session III or
Crossing Session IV in a security that is subject to a trading halt at
the close of the regular 9:30 a.m. to 4 p.m. trading session; and
(x) At 6:30 p.m., the Exchange will print trades reported through
Crossing Session III as guaranteed price coupled orders or in Crossing
Session IV as VWAP executions.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \9\ 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.
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\9\ 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
[[Page 7806]]
as the Commission may designate, it has become effective pursuant to
Section 19(b)(3)(A) \10\ and Rule 19b-4(f)(6) thereunder.\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.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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NYSE has asked the Commission to waive the five-day pre-filing
notice requirement and the 30-day operative delay. The Commission
believes such waivers are consistent with the protection of investors
and the public interest because they would allow the Pilots to operate
without interruption.\12\ For this reason, the Commission designates
the proposal to be operative upon filing with the Commission.
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\12\ For purposes only of waiving the 30-day pre-operative
period, 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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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 e-mail to rule-comments@sec.gov. Please include File
Number SR-NYSE-2007-07 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-2007-07. 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 will also 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-2007-07 and should be submitted on or before March
13, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-2848 Filed 2-16-07; 8:45 am]
BILLING CODE 8011-01-P
