Self-Regulatory Organizations; New York Stock Exchange LLC; Order Approving Proposed Rule Change as Modified by Amendment Nos. 1 and 2 Thereto Relating to NYSE Rule 116 (“Stop” Constitutes Guarantee) and NYSE Rule 123B (Exchange Automated Order Routing Systems), 9370-9371 [E7-3556]
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9370
Federal Register / Vol. 72, No. 40 / Thursday, March 1, 2007 / Notices
consistent with the protection of
investors and the public interest
because such waiver would permit the
Exchange to immediately update its
rules to reflect that the compliance date
for Regulation NMS has been changed to
March 5, 2007. For this reason, the
Commission designates the proposed
rule change to be operative upon filing
with the Commission.13
At any time within 60 days of the
filing of such proposed rule change the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors
or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
rmajette on PROD1PC67 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–NASDAQ–2007–005 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–NASDAQ–2007–005. 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 the 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–2007–005 and
should be submitted on or before March
22, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.14
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–3554 Filed 2–28–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55337; File No. SR–NYSE–
2006–04]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Order
Approving Proposed Rule Change as
Modified by Amendment Nos. 1 and 2
Thereto Relating to NYSE Rule 116
(‘‘Stop’’ Constitutes Guarantee) and
NYSE Rule 123B (Exchange Automated
Order Routing Systems)
February 23, 2007.
I. Introduction
On February 9, 2006, the New York
Stock Exchange LLC (f/k/a New York
Stock Exchange, Inc.) (‘‘NYSE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’)1 and Rule 19b–4
thereunder,2 a proposal to amend NYSE
Rule 116 (‘‘Stop’’ Constitutes Guarantee)
and NYSE Rule 123B (Exchange
Automated Order Routing Systems)
regarding a specialist’s ability to ‘‘stop’’
stock and report such a transaction. On
April 5, 2006, NYSE filed Amendment
No. 1 to the proposed rule change. On
September 8, 2006, NYSE filed
Amendment No. 2 to the proposed rule
change. The proposed rule change was
published for comment in the Federal
Register on October 18, 2006.3 The
Commission received one comment
14 17
13 For
the purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
VerDate Aug<31>2005
15:01 Feb 28, 2007
Jkt 211001
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 54592
(October 12, 2006), 71 FR 61524.
1 15
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Frm 00069
Fmt 4703
Sfmt 4703
regarding the proposal.4 This order
approves the proposed rule change, as
modified by Amendment Nos. 1 and 2.
II. Description of the Proposal
NYSE Rule 116 provides that an
agreement by a member to ‘‘stop’’ stock
at a specified price constitutes a
guarantee of a purchase or sale by the
member of the security at that price.
Paragraph .30 in the Rule’s
Supplementary Material provides three
circumstances in which a specialist may
stop stock, including: (i) At the opening
or reopening of trading in a stock; (ii)
when a broker in the trading crowd is
representing another order at the stop
price; or (iii) when requested to by
another member.5 The practice of
stopping stock by specialists on the
Exchange refers to a guarantee by a
specialist that an order he or she
receives will be executed at no worse a
price than the contra side price in the
market at the time the order was
stopped, with the understanding that
the order may in fact receive a better
price.
The Exchange proposes to remove the
provisions in NYSE Rule 116.30 that
permit a specialist to ‘‘stop’’ stock.
According to the Exchange, the practice
of specialists stopping stock makes less
sense in the Hybrid Market, primarily
due to the dynamics of increased speed
of trading and automated functioning of
the market. The Exchange further stated
that the procedures in NYSE Rule
116.30(3) for granting stops are not an
efficient mechanism for seeking price
improvement an automated market due
to the time required to perform the
current manual procedures.
III. Comment Summary
The Commission received one
comment letter on the proposal,6 to
which NYSE has filed a response letter.7
In the comment letter, the commenter
argued the proposal is not in the public
interest because the Hybrid Market, and
specifically NYSE’s Auction Market and
Auction Limit Orders, do not provide
investors with the price improvement
opportunities that the NYSE’s auction
market did. The commenter stated that
he believed that specialists in the
Hybrid Market have been relieved of
4 See letter from George Rutherfurd, Consultant,
dated April 24, 2006 to Commission’s rulecomments e-mail.
5 A specialist may only stop stock when requested
to by another member if certain other conditions are
met. See Exchange Rule 116.30(3).
6 See note 4 supra.
7 See letter from Mary Yeager, Assistant Secretary,
NYSE, to Nancy M. Morris, Secretary, Commission,
dated January 19, 2007.
E:\FR\FM\01MRN1.SGM
01MRN1
Federal Register / Vol. 72, No. 40 / Thursday, March 1, 2007 / Notices
their responsibility to obtain price
improvement for orders.
In its response letter, NYSE noted that
specialists are not currently obligated to
stop stock and further noted that, in
fact, specialists infrequently choose to
stop stock. NYSE reiterated its belief
that there are many opportunities for
price improvement in the Hybrid
Market and stated that specialists were
not ‘‘being relieved of their
responsibility to obtain price
improvement.’’ The Exchange argued
that it was eliminating a practice that its
data showed was rarely used. The
Exchange also argued that retaining the
manual process for the specialist to stop
stock would increase specialist risk if
used.
The commenter also asserted that
NYSE could easily reprogram its
systems to replicate electronically the
manual practice of stopping stock. In
response, NYSE disagreed, indicating
that there are difficulties inherent in
maintaining the stopping stock
functionality amid systems designed to
enable increased automatic executions.
Further, NYSE argued that the decision
to remove systemic support for stopped
orders was based in part on data that
showed that specialists do not stop
stock frequently.
rmajette on PROD1PC67 with NOTICES
IV. Discussion
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange 8 and, in particular, the
requirements of Section 6 of the Act.9
Specifically, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(5) of the Act,10 which
requires, among other things, that the
rules of a national securities exchange
be 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.
According to the Exchange, the
practice of stopping stock by specialists
is rarely used. Therefore, the Exchange
8 In
approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
9 15 U.S.C. 78f.
10 15 U.S.C. 78f(b)(5).
VerDate Aug<31>2005
15:01 Feb 28, 2007
Jkt 211001
decided that it would not develop an
electronic, systemic process to support
this little used, voluntary function. The
Exchange also argued that retaining a
manual process to stop stock in the
Hybrid Market would be inefficient.
Accordingly, the Commission finds that
eliminating specialists’ ability to stop
stock is reasonable and consistent with
the Act.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,11 that the
proposed rule change (SR–NYSE–2006–
04), as modified by Amendment Nos. 1
and 2, be, and it hereby is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–3556 Filed 2–28–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55338; File No. SR–Phlx–
2007–04]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Relating to Listing LEAPS
Pursuant to the $2.50 Strike Price
Program
February 23, 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
21, 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 substantially prepared by Phlx.
The Exchange has filed the proposal as
a ‘‘non-controversial’’ rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6) thereunder,4
which renders it effective upon filing
with the Commission. The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested persons.
11 15
U.S.C. 78s(b)(2).
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).
4 17 CFR 240.19b–4(f)(6).
12 17
PO 00000
Frm 00070
Fmt 4703
Sfmt 4703
9371
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Phlx proposes to clarify that LEAPS 5
can be listed at $2.50 strike price
intervals pursuant to the $2.50 Strike
Price Program set forth in Commentary
.05 to Phlx Rule 1012 (Series of Options
Open for Trading). There is no new rule
text.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Phlx included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. The Exchange has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposal is to
clarify that LEAPS can be listed at $2.50
strike price intervals pursuant to the
$2.50 Strike Price Program.
The current $2.50 Strike Price
Program is set forth in Commentary .05
to Phlx Rule 1012. The $2.50 Strike
Price Program permits the Exchange to
list options with $2.50 strike price
intervals for selected options trading at
strike prices greater than $25 but less
than $75. In addition, each options
exchange is permitted to list options
with $2.50 strike price intervals on any
option class that another options
exchange selects under the $2.50 Strike
Price Program.
Initially adopted in 1995 as a pilot
program, the pilot $2.50 Strike Price
Program allowed options exchanges to
list options with $2.50 strike price
intervals for options trading at strike
prices greater than $25 but less than $50
on a total of up to 100 option classes.6
In 1998, the pilot program was
permanently approved and expanded to
allow the options exchanges to select up
to 200 option classes for the $2.50 Strike
5 LEAPS are Long-term Equity Anticipation
Securities or long-term options series. See Phlx
Rules 1079, 1012, and 1101A.
6 See Securities Exchange Act Release No. 35993
(July 19, 1995), 60 FR 38073 (July 25, 1995) (SR–
Phlx–95–08, SR–Amex–95–12, SR–PSE–95–07, SR–
CBOE–95–19, and SR–NYSE–95–12).
E:\FR\FM\01MRN1.SGM
01MRN1
]]>Agencies
[Federal Register Volume 72, Number 40 (Thursday, March 1, 2007)]
[Notices]
[Pages 9370-9371]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-3556]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55337; File No. SR-NYSE-2006-04]
Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Approving Proposed Rule Change as Modified by Amendment Nos. 1 and 2
Thereto Relating to NYSE Rule 116 (``Stop'' Constitutes Guarantee) and
NYSE Rule 123B (Exchange Automated Order Routing Systems)
February 23, 2007.
I. Introduction
On February 9, 2006, the New York Stock Exchange LLC (f/k/a New
York Stock Exchange, Inc.) (``NYSE'' or ``Exchange'') filed with the
Securities and Exchange Commission (``SEC'' or ``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule 19b-4 thereunder,\2\ a proposal to amend NYSE
Rule 116 (``Stop'' Constitutes Guarantee) and NYSE Rule 123B (Exchange
Automated Order Routing Systems) regarding a specialist's ability to
``stop'' stock and report such a transaction. On April 5, 2006, NYSE
filed Amendment No. 1 to the proposed rule change. On September 8,
2006, NYSE filed Amendment No. 2 to the proposed rule change. The
proposed rule change was published for comment in the Federal Register
on October 18, 2006.\3\ The Commission received one comment regarding
the proposal.\4\ This order approves the proposed rule change, as
modified by Amendment Nos. 1 and 2.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 54592 (October 12,
2006), 71 FR 61524.
\4\ See letter from George Rutherfurd, Consultant, dated April
24, 2006 to Commission's rule-comments e-mail.
---------------------------------------------------------------------------
II. Description of the Proposal
NYSE Rule 116 provides that an agreement by a member to ``stop''
stock at a specified price constitutes a guarantee of a purchase or
sale by the member of the security at that price. Paragraph .30 in the
Rule's Supplementary Material provides three circumstances in which a
specialist may stop stock, including: (i) At the opening or reopening
of trading in a stock; (ii) when a broker in the trading crowd is
representing another order at the stop price; or (iii) when requested
to by another member.\5\ The practice of stopping stock by specialists
on the Exchange refers to a guarantee by a specialist that an order he
or she receives will be executed at no worse a price than the contra
side price in the market at the time the order was stopped, with the
understanding that the order may in fact receive a better price.
---------------------------------------------------------------------------
\5\ A specialist may only stop stock when requested to by
another member if certain other conditions are met. See Exchange
Rule 116.30(3).
---------------------------------------------------------------------------
The Exchange proposes to remove the provisions in NYSE Rule 116.30
that permit a specialist to ``stop'' stock. According to the Exchange,
the practice of specialists stopping stock makes less sense in the
Hybrid Market, primarily due to the dynamics of increased speed of
trading and automated functioning of the market. The Exchange further
stated that the procedures in NYSE Rule 116.30(3) for granting stops
are not an efficient mechanism for seeking price improvement an
automated market due to the time required to perform the current manual
procedures.
III. Comment Summary
The Commission received one comment letter on the proposal,\6\ to
which NYSE has filed a response letter.\7\ In the comment letter, the
commenter argued the proposal is not in the public interest because the
Hybrid Market, and specifically NYSE's Auction Market and Auction Limit
Orders, do not provide investors with the price improvement
opportunities that the NYSE's auction market did. The commenter stated
that he believed that specialists in the Hybrid Market have been
relieved of
[[Page 9371]]
their responsibility to obtain price improvement for orders.
---------------------------------------------------------------------------
\6\ See note 4 supra.
\7\ See letter from Mary Yeager, Assistant Secretary, NYSE, to
Nancy M. Morris, Secretary, Commission, dated January 19, 2007.
---------------------------------------------------------------------------
In its response letter, NYSE noted that specialists are not
currently obligated to stop stock and further noted that, in fact,
specialists infrequently choose to stop stock. NYSE reiterated its
belief that there are many opportunities for price improvement in the
Hybrid Market and stated that specialists were not ``being relieved of
their responsibility to obtain price improvement.'' The Exchange argued
that it was eliminating a practice that its data showed was rarely
used. The Exchange also argued that retaining the manual process for
the specialist to stop stock would increase specialist risk if used.
The commenter also asserted that NYSE could easily reprogram its
systems to replicate electronically the manual practice of stopping
stock. In response, NYSE disagreed, indicating that there are
difficulties inherent in maintaining the stopping stock functionality
amid systems designed to enable increased automatic executions.
Further, NYSE argued that the decision to remove systemic support for
stopped orders was based in part on data that showed that specialists
do not stop stock frequently.
IV. Discussion
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange \8\ and, in
particular, the requirements of Section 6 of the Act.\9\ Specifically,
the Commission finds that the proposed rule change is consistent with
Section 6(b)(5) of the Act,\10\ which requires, among other things,
that the rules of a national securities exchange be 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.
---------------------------------------------------------------------------
\8\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
According to the Exchange, the practice of stopping stock by
specialists is rarely used. Therefore, the Exchange decided that it
would not develop an electronic, systemic process to support this
little used, voluntary function. The Exchange also argued that
retaining a manual process to stop stock in the Hybrid Market would be
inefficient. Accordingly, the Commission finds that eliminating
specialists' ability to stop stock is reasonable and consistent with
the Act.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\11\ that the proposed rule change (SR-NYSE-2006-04), as modified
by Amendment Nos. 1 and 2, be, and it hereby is approved.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-3556 Filed 2-28-07; 8:45 am]
BILLING CODE 8010-01-P
