Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Obvious Errors in Option Transactions, 9052-9054 [E7-3494]

Download as PDF 9052 Federal Register / Vol. 72, No. 39 / Wednesday, February 28, 2007 / Notices Amex securities may instruct Nasdaq to open their quotes either at the price of the firm’s quote when the quote was closed by the participant during the previous trading day or at a price and size entered by the participant between 7 a.m. and 9:24:59 a.m. This opening process is consistent with the opening process for NYSE/ Amex securities that was utilized for such securities in Nasdaq’s ITS/CAES system pursuant to NASD Rule 4707(d) with the exception that the NMC System opens at 7 a.m. rather than 7:30 a.m. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,6 in general, and with Section 6(b)(5) of the Act,7 in particular, in that the proposal 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 regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, 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 proposed rule change clarifies certain terms in Nasdaq’s rules. B. Self-Regulatory Organization’s Statement on Burden on Competition Nasdaq does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. sroberts on PROD1PC70 with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing 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 after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to Section 6 15 7 15 U.S.C. 78f. U.S.C. 78f(b)(5). VerDate Aug<31>2005 16:08 Feb 27, 2007 Jkt 211001 19(b)(3)(A) of the Act 8 and Rule 19b– 4(f)(6) thereunder.9 At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate the 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. A proposed rule change filed under Section 19b–4 of the Act normally does not become operative prior to 30 days after the date of the filing.10 However, Rule 19b–4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. Nasdaq has requested that the Commission waive the 30-day operative delay contained in Rule 19b–4(f)(6)(iii) under the Act.11 Because the filing would conform the opening of trading in NYSE/Amex securities to the opening of trading in Nasdaq securities, thus streamlining the Nasdaq’s opening process, the Commission believes waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission designates the proposal to be effective and operative upon filing with the Commission.12 IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASDAQ–2007–008 in the subject line. 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b–4(f)(6). 10 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 19b–4(f)(6)(iii) requires that a self-regulatory organization submit to 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 business days prior to the filing of the proposed rule change, or such shorter time as designated by the Commission. The Commission has decided to waive the five-day pre-filing notice requirement. 11 Id. 12 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). PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 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–NASDAQ–2007–008. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of Nasdaq. 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–NASDAQ–2007–008 and should be submitted on or before March 21, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.13 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–3493 Filed 2–27–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55330; File No. SR– NYSEArca–2007–06] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Obvious Errors in Option Transactions February 21, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 13 17 E:\FR\FM\28FEN1.SGM CFR 200.30–3(a)(12). 28FEN1 Federal Register / Vol. 72, No. 39 / Wednesday, February 28, 2007 / Notices (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 18, 2007, 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 the proposed rule change as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A) 3 of the Act 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 from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend NYSE Arca Rule 6.87, which contains procedures for trade nullification and price adjustments on obvious errors in option transactions. The text of the proposed rule change is available at the Exchange, the Commission’s Public Reference Room, and http:// www.nysearca.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 Exchange included statements concerning the purpose of and basis for the proposed rule change, and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NYSE Arca has substantially 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 sroberts on PROD1PC70 with NOTICES 1. Purpose The purpose of this filing is to amend Rule 6.87 in order to offer an extra level of protection for Customers 5 who are a party to a transaction involving an obvious error during the opening. Under existing rules, OTP Holders that have 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6). 5 ‘‘Customer’’ as defined in NYSE Arca Rule 6.1(b)(29) and NYSEArca 6.1A(a)(4) shall mean a non-broker dealer. 2 17 VerDate Aug<31>2005 16:08 Feb 27, 2007 Jkt 211001 9053 executed a trade on behalf of a Customer have a twenty (20) minute period from the time of execution to notify the Exchange and request a review of the trade for either nullification or price adjustment. The current twenty minute window, for nullification purposes, would not be changed by this proposal. However, under the proposed rule change, OTP Holders representing Customers would now have an extended period of time to request an obvious error review for adjustment purposes. OTP Holders would now be able to make a request to Trading Officials 6 to make price adjustments on transactions that occur on the opening, until 4:30 p.m. (ET) on the day that the transaction occurs. The intention of this filing is to protect Customers who fail to discover an obvious error within twenty minutes of execution from being forced to accept an execution that results from an obvious error during the opening auction. An obvious pricing error is deemed to have occurred when the execution price of a transaction is higher or lower than the theoretical price for the series by an amount equal to at least the amount shown below: option series, the Trading Official would look to the away competing exchange with the most liquidity in the option class over the two preceding months. The transaction would be adjusted to the competing exchanges’ disseminated theoretical price at the time the trade occurred. With respect to sell transactions the last bid price, just prior to the trade, would be used. With respect to buy transactions the last offer price, just prior to the trade would be used.8 Price adjustments would be made up to the equivalent number of contracts that the competing exchange was listing as its disseminated size at the time the trade occurred. For transactions during the opening auction between a Customer and a nonMarket Maker,9 after the twenty minute notification period has elapsed but before 4:30 p.m. (ET) on the same trading day, an OTP Holder, on behalf of its Customer, could request an obvious error review. In determining how to adjust the transaction to the theoretical price, the Trading Official would look to the away competing exchange with the most liquidity in the option class over the two preceding months. The transaction would be adjusted to the competing exchanges’ Minimum Theoretical price disseminated theoretical price at the amount time the trade occurred. With respect to Below $2 ................................... $0.25 sell transactions the last bid price, just $2 to $5 .................................... 0.40 prior to the trade, would be used. With Above $5 to $10 ....................... 0.50 respect to buy transactions the last offer Above $10 to $20 ..................... 0.80 price, just prior to the trade would be Above $20 ................................ 1.00 used.10 Price adjustments would be made up to the equivalent number of The theoretical price of an option is, contracts that the competing exchange for series that are traded on at least one was listing as its disseminated size at other exchange, the last bid price with the time the trade occurred. respect to an erroneous sell transaction The rule changes proposed in this and the last offer price with respect to filing are similar to those presented by an erroneous buy transaction, just prior the Chicago Board Options Exchange to the trade, disseminated by the (‘‘CBOE’’) in SR–CBOE–2005–63.11 In competing options exchange that has that filing, the CBOE amended CBOE the most liquidity in the option class over the previous two calendar months. Rule 6.25 to include substantially similar provisions that NYSE Arca is If there are no quotes for comparison, the theoretical price shall be determined presenting at this time. The Exchange notes that the Commission did receive by designated Trading Officials. one comment letter from Citadel For transactions during the opening Investment Group L.L.C. (the ‘‘Citadel auction between a Customer and a Market Maker,7 after the twenty minute 8 The Exchange believes that the proposed basis notification period has elapsed since the for determining the theoretical price for trade containing the obvious error transactions occurring during the opening does not occurred but before 4:30 p.m. (ET) on implicate NYSE Arca users’ trade through liability, the same trading day, the OTP Holder, because the Linkage Plan provides for an exception on behalf of its Customer, could request to trade through liability for transactions occurring on the opening. an obvious error review for possible 9 For the purpose of this rule ‘‘non-Market adjustment to the theoretical price. In Maker’’ could include (but is not limited to) an determining the theoretical price of an away specialist, an off-floor firm or another 6 ‘‘Trading Official’’ as defined in NYSE Arca Rule 6.1(b)(34). 7 ‘‘Market Maker’’ as defined in NYSE Arca Rule 6.32 or 6.32A. PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 Customer. 10 See, supra note 8. 11 See Securities Exchange Act Release No. 54004 (June 16, 2006), 71 FR 36139 (June 23, 2006) (approval order for SR–CBOE–2005–63). E:\FR\FM\28FEN1.SGM 28FEN1 9054 Federal Register / Vol. 72, No. 39 / Wednesday, February 28, 2007 / Notices Letter’’) regarding the CBOE proposal.12 In its approval notice, the Commission stated that ‘‘the Citadel Letter does not raise any issues that would preclude approval of the proposed rule change.’’ NYSE Arca feels that any similar issues contained in the Citadel Letter that may be raised in regard to proposed rule changes contained in this filing would not preclude approval. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,13 in general, and furthers the objectives of Section 6(b)(5) of the Act,14 in particular, because 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 would 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 sroberts on PROD1PC70 with NOTICES Because the 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 after the date of filing (or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest), the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 15 and 12 See letter dated May 17, 2006 to Mr. Jonathan Katz, Secretary, Commission, from Mr. Matthew Hinerfeld, Deputy General Counsel, Citadel Investment Group, L.L.C. on behalf of Citadel Derivatives Group LLC. 13 15 U.S.C. 78f(b). 14 15 U.S.C. 78f(b)(5). 15 15 U.S.C. 78s(b)(3)(A). VerDate Aug<31>2005 16:08 Feb 27, 2007 Jkt 211001 subparagraph (f)(6) of Rule 19b–4 thereunder.16 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 the furtherance of the purposes of the Act. you wish to make available publicly. All submissions should refer to File Number SR–NYSEArca–2007–06 and should be submitted on or before March 21, 2007. 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: BILLING CODE 8010–01–P Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2007–06 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–2007–06. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of 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 16 17 PO 00000 CFR 240.19b–4(f)(6). Frm 00096 Fmt 4703 Sfmt 4703 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.17 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–3494 Filed 2–27–07; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55333; File No. SR–Phlx– 2007–13] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to 100 Share Away Markets in Non-Nasdaq Securities on XLE February 22, 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 February 20, 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 and II, below, which Items have been prepared by the Phlx. The Exchange has designated the proposed rule change as constituting a ‘‘noncontroversial’’ rule change under 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 from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Phlx proposes to modify XLE, Phlx’s equity trading system, so as to prevent XLE from trading through 100 share away quotations in non-Nasdaq securities. In addition, XLE will be modified to route to 100 share away quotations in non-Nasdaq securities. Accordingly, Phlx Rule 1(cc)(3) will be modified to include 100 share away quotations in the definition of Protected 17 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)(6). 1 15 E:\FR\FM\28FEN1.SGM 28FEN1

Agencies

[Federal Register Volume 72, Number 39 (Wednesday, February 28, 2007)]
[Notices]
[Pages 9052-9054]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-3494]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55330; File No. SR-NYSEArca-2007-06]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change Relating to 
Obvious Errors in Option Transactions

February 21, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 9053]]

(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 18, 2007, 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 the proposed rule change as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) \3\ of the Act 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 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

    The Exchange proposes to amend NYSE Arca Rule 6.87, which contains 
procedures for trade nullification and price adjustments on obvious 
errors in option transactions. The text of the proposed rule change is 
available at the Exchange, the Commission's Public Reference Room, and 
http://www.nysearca.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 Exchange included statements 
concerning the purpose of and basis for the proposed rule change, and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. NYSE Arca has substantially prepared summaries, set 
forth in Sections A, B, and C below, of the most significant aspects of 
such statements.

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

1. Purpose
    The purpose of this filing is to amend Rule 6.87 in order to offer 
an extra level of protection for Customers \5\ who are a party to a 
transaction involving an obvious error during the opening. Under 
existing rules, OTP Holders that have executed a trade on behalf of a 
Customer have a twenty (20) minute period from the time of execution to 
notify the Exchange and request a review of the trade for either 
nullification or price adjustment. The current twenty minute window, 
for nullification purposes, would not be changed by this proposal. 
However, under the proposed rule change, OTP Holders representing 
Customers would now have an extended period of time to request an 
obvious error review for adjustment purposes. OTP Holders would now be 
able to make a request to Trading Officials \6\ to make price 
adjustments on transactions that occur on the opening, until 4:30 p.m. 
(ET) on the day that the transaction occurs. The intention of this 
filing is to protect Customers who fail to discover an obvious error 
within twenty minutes of execution from being forced to accept an 
execution that results from an obvious error during the opening 
auction.
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    \5\ ``Customer'' as defined in NYSE Arca Rule 6.1(b)(29) and 
NYSEArca 6.1A(a)(4) shall mean a non-broker dealer.
    \6\ ``Trading Official'' as defined in NYSE Arca Rule 
6.1(b)(34).
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    An obvious pricing error is deemed to have occurred when the 
execution price of a transaction is higher or lower than the 
theoretical price for the series by an amount equal to at least the 
amount shown below:

------------------------------------------------------------------------
                                                               Minimum
                     Theoretical price                          amount
------------------------------------------------------------------------
Below $2...................................................        $0.25
$2 to $5...................................................         0.40
Above $5 to $10............................................         0.50
Above $10 to $20...........................................         0.80
Above $20..................................................         1.00
------------------------------------------------------------------------

    The theoretical price of an option is, for series that are traded 
on at least one other exchange, the last bid price with respect to an 
erroneous sell transaction and the last offer price with respect to an 
erroneous buy transaction, just prior to the trade, disseminated by the 
competing options exchange that has the most liquidity in the option 
class over the previous two calendar months. If there are no quotes for 
comparison, the theoretical price shall be determined by designated 
Trading Officials.
    For transactions during the opening auction between a Customer and 
a Market Maker,\7\ after the twenty minute notification period has 
elapsed since the trade containing the obvious error occurred but 
before 4:30 p.m. (ET) on the same trading day, the OTP Holder, on 
behalf of its Customer, could request an obvious error review for 
possible adjustment to the theoretical price. In determining the 
theoretical price of an option series, the Trading Official would look 
to the away competing exchange with the most liquidity in the option 
class over the two preceding months. The transaction would be adjusted 
to the competing exchanges' disseminated theoretical price at the time 
the trade occurred. With respect to sell transactions the last bid 
price, just prior to the trade, would be used. With respect to buy 
transactions the last offer price, just prior to the trade would be 
used.\8\ Price adjustments would be made up to the equivalent number of 
contracts that the competing exchange was listing as its disseminated 
size at the time the trade occurred.
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    \7\ ``Market Maker'' as defined in NYSE Arca Rule 6.32 or 6.32A.
    \8\ The Exchange believes that the proposed basis for 
determining the theoretical price for transactions occurring during 
the opening does not implicate NYSE Arca users' trade through 
liability, because the Linkage Plan provides for an exception to 
trade through liability for transactions occurring on the opening.
---------------------------------------------------------------------------

    For transactions during the opening auction between a Customer and 
a non-Market Maker,\9\ after the twenty minute notification period has 
elapsed but before 4:30 p.m. (ET) on the same trading day, an OTP 
Holder, on behalf of its Customer, could request an obvious error 
review. In determining how to adjust the transaction to the theoretical 
price, the Trading Official would look to the away competing exchange 
with the most liquidity in the option class over the two preceding 
months. The transaction would be adjusted to the competing exchanges' 
disseminated theoretical price at the time the trade occurred. With 
respect to sell transactions the last bid price, just prior to the 
trade, would be used. With respect to buy transactions the last offer 
price, just prior to the trade would be used.\10\ Price adjustments 
would be made up to the equivalent number of contracts that the 
competing exchange was listing as its disseminated size at the time the 
trade occurred.
---------------------------------------------------------------------------

    \9\ For the purpose of this rule ``non-Market Maker'' could 
include (but is not limited to) an away specialist, an off-floor 
firm or another Customer.
    \10\ See, supra note 8.
---------------------------------------------------------------------------

    The rule changes proposed in this filing are similar to those 
presented by the Chicago Board Options Exchange (``CBOE'') in SR-CBOE-
2005-63.\11\ In that filing, the CBOE amended CBOE Rule 6.25 to include 
substantially similar provisions that NYSE Arca is presenting at this 
time. The Exchange notes that the Commission did receive one comment 
letter from Citadel Investment Group L.L.C. (the ``Citadel

[[Page 9054]]

Letter'') regarding the CBOE proposal.\12\ In its approval notice, the 
Commission stated that ``the Citadel Letter does not raise any issues 
that would preclude approval of the proposed rule change.'' NYSE Arca 
feels that any similar issues contained in the Citadel Letter that may 
be raised in regard to proposed rule changes contained in this filing 
would not preclude approval.
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 54004 (June 16, 
2006), 71 FR 36139 (June 23, 2006) (approval order for SR-CBOE-2005-
63).
    \12\ See letter dated May 17, 2006 to Mr. Jonathan Katz, 
Secretary, Commission, from Mr. Matthew Hinerfeld, Deputy General 
Counsel, Citadel Investment Group, L.L.C. on behalf of Citadel 
Derivatives Group LLC.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\13\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\14\ in particular, because 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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b).
    \14\ 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 would 
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 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 after the date of filing (or such shorter time as the Commission 
may designate if consistent with the protection of investors and the 
public interest), the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \15\ and subparagraph (f)(6) 
of Rule 19b-4 thereunder.\16\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    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 the furtherance of the purposes of the Act.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2007-06 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-2007-06. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of NYSE Arca. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSEArca-2007-06 and should be submitted on or before 
March 21, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-3494 Filed 2-27-07; 8:45 am]
BILLING CODE 8010-01-P