Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Amendment No. 3 to and Order Granting Accelerated Approval of Proposed Rule Change, as Amended, Relating to the Establishment of NYSE Bonds, 14631-14636 [E7-5610]
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Federal Register / Vol. 72, No. 59 / Wednesday, March 28, 2007 / Notices
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form https://www.sec.gov/
rules/sro.shtml; or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–ISE–2007–20 on the subject
line.
Paper Comments
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55496; File No. SR–NYSE–
2006–37]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Amendment No. 3 to and
Order Granting Accelerated Approval
of Proposed Rule Change, as
Amended, Relating to the
Establishment of NYSE Bonds
March 20, 2007.
I. Introduction
On May 16, 2006, the New York Stock
Exchange LLC (‘‘NYSE’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change pursuant to
Section 19(b)(1) of the Securities
All submissions should refer to File
Exchange Act of 1934 (‘‘Exchange
Number SR–ISE–2007–20. This file
Act’’) 1 and Rule 19b–4 thereunder,2 to
number should be included on the
establish a new bond trading platform,
subject line if e-mail is used. To help the NYSE Bonds, to replace its existing
Commission process and review your
bond trading system, the Automated
comments more efficiently, please use
Bond System (‘‘ABS’’). The Exchange
only one method. The Commission will filed Amendments No. 1 and 2 to the
post all comments on the Commission’s proposed rule change on August 4, 2006
Internet Web site (https://www.sec.gov/
and October 10, 2006, respectively. The
rules/sro.shtml). Copies of the
proposed rule change, as amended, was
submission, all subsequent
published for comment in the Federal
amendments, all written statements
Register on October 24, 2006.3 The
Commission received two comments on
with respect to the proposed rule
the proposal.4 On March 15, 2007, the
change that are filed with the
Exchange filed Amendment No. 3 to the
Commission, and all written
proposal.5 On March 16, 2007, the
communications relating to the
NYSE submitted a response to the
proposed rule change between the
6
Commission and any person, other than comment letters. This order provides
notice of Amendment No. 3 to the
those that may be withheld from the
proposed rule change and approves the
public in accordance with the
proposed rule change as amended on an
provisions of 5 U.S.C. 552, will be
accelerated basis.
available for inspection and copying in
II. Description of the Proposal
the Commission’s Public Reference
Room. Copies of such filing also will be
NYSE proposes to amend its Rule 86
available for inspection and copying at
to replace its existing bond trading
the principal office of the ISE. All
system, ABS, with a bond trading
comments received will be posted
platform based on technology used to
without change; the Commission does
operate the NYSE Arca Marketplace.7
not edit personal identifying
1 15 U.S.C. 78s(b)(1).
information from submissions. You
2 17 CFR 240.19b–4.
should submit only information that
3 See Securities Exchange Act
you wish to make available publicly. All (October 17, 2006), 71 FR 62338.Release No. 54615
submissions should refer to File
4 See Letters from Mary C.M. Kuan, Vice
Number SR–ISE–2007–20 and should be President and Assistant General Counsel, Securities
Industry and Financial Markets Association
submitted on or before April 18, 2007.
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• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–5588 Filed 3–27–07; 8:45 am]
BILLING CODE 8010–01–P
12 17
CFR 200.30–3(a)(12).
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(‘‘SIFMA’’) to Nancy Morris, Secretary,
Commission, dated November 14, 2006 (‘‘SIFMA
Letter’’) and from Ron L. Klein, Chairman and CEO,
General Associates, Inc., dated December 13, 2006
(‘‘Klein Letter’’).
5 For a discussion of Amendment No. 3, see
Section V, infra. Amendment No. 3 replaced and
superseded Amendment No. 2 in its entirety.
6 See Letter from Mary Yeager, Assistant
Secretary, NYSE, to Nancy M. Morris, Secretary,
Commission, dated March 16, 2007 (‘‘NYSE
Response Letter’’).
7 The NYSE Arca Marketplace is the successor to
the Archipelago Exchange. See Securities Exchange
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14631
The new name of the NYSE bond
trading platform would be ‘‘NYSE
Bonds.’’ NYSE also proposes to amend
other Exchange rules to conform to
revised NYSE Rule 86.
Any security traded on NYSE Bonds
would have to be listed, or otherwise
admitted to dealing, on the Exchange.
NYSE has represented that all debt
securities currently trading on ABS
would be transferred to NYSE Bonds.8
Additional debt securities that meet the
listing standards in NYSE Listed
Company Manual Sections 102.03,
103.05, 703.19, or 703.21, or that are
deemed ‘‘exempted securities’’ under
Section 3(a)(12) of the Exchange Act,9
could trade on NYSE Bonds. In
addition, NYSE intends to trade
unregistered corporate bonds pursuant
to an exemption from Section 12(a) of
the Exchange Act and a related rule
change recently approved by the
Commission.10
NYSE Bonds would be an electronic
order-driven matching system. Initially,
the System would allow limit orders
and reserve orders. Visible interest
would be executed on a price/time
priority basis. However, undisplayed
reserve interest in NYSE Bonds would
always yield to displayed interest at a
particular price.11 Outside of an auction
(described below), orders marketable at
the time of entry would be matched and
executed, except if the price exceeded
the ‘‘price collar’’ established for the
bond at the time of entry. An order that
is priced beyond the price collar
threshold would be rejected by the
system; an order that is not marketable
at the time of entry would post to the
NYSE Bonds order ‘‘book.’’ 12 If an order
were entered at a better price than the
then-best priced contra-side order on
the NYSE Bonds book, the system
would match the incoming order against
Act Release No. 53615 (April 7, 2006), 71 FR 19226
(April 13, 2006) (SR–PCX–2006–24).
8 Such debt securities include, but are not limited
to the following: corporate bonds (including
convertible bonds), international bank bonds,
foreign government bonds, U.S. government bonds,
government agency bonds, municipal bonds, and
debt-based structured products. Any security that
would trade on NYSE Bonds is referred to as a
‘‘bond’’ for the purposes of NYSE rules.
9 15 U.S.C. 78c(a)(12).
10 See Securities Exchange Act Release No. 54766
(November 16, 2006), 71 FR 67657 (November 22,
2006) (File No. S7–06–05) (permitting NYSE
member organizations to trade bonds on the
Exchange that are not registered under Section 12(b)
of the Exchange Act, but are issued by NYSE-listed
companies or their wholly owned subsidiaries and
that meet other conditions); Securities Exchange
Act Release No. 54767 (November 16, 2006), 71 FR
67680 (November 22, 2006) (SR–NYSE–2004–69)
(collectively, the ‘‘Unlisted Corporate Bonds
Orders’’).
11 See proposed NYSE Rule 86(j)(3)(B).
12 See proposed NYSE Rule 86(e).
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the booked order at the booked order’s
price, thereby providing price
improvement to the incoming order.
Bonds generally would be traded in
denominations of $1,000.13
NYSE Bonds would have three
trading sessions: (1) The Opening Bond
Trading Session (4 a.m. until 9:30 a.m.
Eastern Time (‘‘ET’’)); (2) the Core Bond
Trading Session (9:30 a.m. until 4 p.m.
ET); and (3) the Late Bond Trading
Session (4 p.m. until 8 p.m. ET). A
User 14 entering an order into NYSE
Bonds would be required to designate
the time in force of the order. A day
order, if not executed, would expire at
the end of any of the three daily trading
sessions for which it was designated. A
good-‘til-cancelled order would remain
in effect until it was either cancelled or
executed, but would be available for
execution only during the Core Bond
Trading Session. Unless the User
indicated otherwise, the system’s
default assumption would be that all
orders are day orders.
At the commencement of both the
Opening Bond Trading Session and the
Core Bond Trading Session, the
Exchange would conduct a bond
auction. Users would be able to submit
orders for execution Opening Bond
Auction and the Core Bond Auction
beginning at 3:30 a.m. ET. Orders
designated for the Opening Bond
Trading Session would queue until 4
a.m. ET, at which time the Opening
Bond Auction would take place and
orders designated for the Core Bond
Trading Session would queue until 9:30
a.m. ET, at which time the Core Bond
Auction would take place.15 During a
bond auction, the system would attempt
to match and execute orders at the
Indicative Match Price (‘‘IMP’’). The
IMP is defined as: (1) The price at which
the maximum volume of bonds are
executable; (2) if there are two or more
prices at which the maximum volume of
bonds are executable, the price that is
closest to the closing price in that bond
on the previous trading day, or if the
bond did not trade on the previous day,
the price that is closest to the closing
price on the last day that the bond
traded; (3) if bond orders to buy and
bond orders to sell are not marketable,
the highest priced bid; or (4) if there
were no bids but only offers, the lowest
13 A User submitting an order priced in a
denomination less than $1,000 would be required
to specify the original principal amount of the
bond. See proposed Rule 86(d).
14 See proposed NYSE Rule 86(b)(2)(M) (defining
‘‘User’’ as any Subscriber, Sponsored Participant, or
Authorized Trader that is authorized to obtain
access to NYSE Bonds).
15 See proposed NYSE Rule 86(i).
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offer price.16 Beginning at 3:30 a.m. ET
and various times thereafter, the IMP of
the Opening Bond Auction and/or the
Core Bond Auction and any
Imbalance 17 associated therewith
would be disseminated by the
Exchange.
A single order to sell coupled with a
single order to buy would be sufficient
to establish a bond auction, provided
the orders were marketable.18 If no
marketable orders were entered into the
system prior to the commencement of a
bond auction, the auction would not
occur, and the existing orders would be
available only for ordinary trading in
the designated bond trading session(s).
Orders that were designated for a
particular bond trading session and
eligible to participate in the related
bond auction, but not executed in such
bond auction, would also be available
for ordinary trading in the trading
session. Orders designated for but not
executed in the Opening Bond Trading
Session would be eligible to be matched
and executed in the Core Bond Auction
at the IMP. Orders eligible for the
Opening Bond Auction or the Core
Bond Auction could be cancelled at any
point until two minutes prior to the
commencement of the respective bond
auction.
To post an order on NYSE Bonds, a
User would be required to enter the
following information: CUSIP number;
quantity; order type (i.e., limit or
reserve); price (up to three decimals);
account type indicator (‘‘P’’ for
principle or ‘‘A’’ for agent); time in
force; and whether the order is buy, sell,
or sell/short.19 An order could not be
modified but could be cancelled at any
time before it is executed, except that a
User could not cancel an order eligible
for execution in a regularly scheduled
bond auction inside of two minutes
prior to the beginning of the bond
auction.
The proposal contemplates the
halting, suspension, and closing of bond
trading on NYSE Bonds (a ‘‘Bond Halt’’)
16 See
proposed NYSE Rule (b)(2)(G).
proposed NYSE Rule 86(b)(2)(F) (defining
‘‘Imbalance ’’ as the number of buy or sell orders
that cannot be matched with other orders at the IMP
at any given time).
18 See proposed NYSE Rule 86(l) (prescribing
procedures NYSE Bonds Bond Auctions).
19 The staff of the Division of Market Regulation
of the Commission previously has stated that it
would not recommend that the Commission take
enforcement action if short sales in exchange-listed
bonds and debentures are effected without
complying with Rule 10a–1 under the Exchange
Act, 17 CFR 240.10a–1. See Securities Exchange Act
Release No. 30772 (June 3, 1992), 57 FR 24415 (June
9, 1992) (File No. S7–13–92) (‘‘Bond Short Sale NoAction Position’’). The Exchange deems this
determination by the Commission Staff to apply to
Exchange Rule 440B (Short Sales).
17 See
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in certain circumstances.20 During a
Bond Halt, orders could enter the
system and queue according to price/
time priority but would not execute.
When the Bond Halt is concluded,
trading would resume with a Bond Halt
Auction, at which time orders would
match and execute at the IMP under
similar terms to the other bond auctions.
Like the other bond auctions, no
executions would occur unless
marketable orders were available prior
to the commencement of the Bond Halt
Auction. Orders eligible for execution in
the Bond Halt Auction could be
cancelled at any point prior to the
beginning of the Bond Halt Auction. At
the conclusion of the Bond Halt
Auction, ordinary trading would resume
in the trading session in progress at the
conclusion of the halt.
A member organization wishing to
trade on NYSE Bonds (‘‘Subscriber’’)
would be required to enter into a
written agreement with the Exchange.21
A non-member (‘‘Sponsored
Participant’’) 22 could gain access to
NYSE Bonds only by entering into a
written agreement with a Subscriber
(i.e., a ‘‘Sponsoring Member
Organization’’) 23 and the Exchange. In
the sponsorship agreement, the
Sponsoring Member Organization
would acknowledge, among other
things, that any order entered by the
Sponsored Participant and any
execution resulting from such order
would be binding in all respects on the
Sponsoring Member Organization.24
The Sponsoring Member Organization
would be responsible for any and all
actions taken by its Sponsored
Participant. The Sponsored Participant,
in turn, would agree, among other
things, to comply with the rules of the
Exchange and the rules and procedures
with regard to NYSE Bonds, as if it were
a member of the Exchange.25 The
Sponsored Participant also would be
required to: (1) Take reasonable security
precautions to prevent unauthorized
access to NYSE Bonds; (2) establish and
maintain an up-to-date list of persons
permitted to access NYSE Bonds on
behalf of the Sponsored Participant (i.e.,
‘‘Authorized Traders’’) 26; and (3)
provide that list to the Sponsoring
Member Organization. Moreover, the
Sponsoring Member Organization
would be required to undertake certain
responsibilities related to a Sponsored
20 See
proposed NYSE Rule 86(k).
proposed NYSE Rule 86(o)(a).
22 See proposed NYSE Rule 86(b)(2)(K).
23 See proposed NYSE Rule 86(b)(2)(J).
24 See proposed NYSE Rule 86(o)(b)(2)(B)(i).
25 See proposed NYSE Rule 86(o)(b)(2)(C).
26 See proposed NYSE Rule 86(b)(2)(L).
21 See
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Participant’s Authorized Traders,
including: (1) Maintaining a list of
Authorized Traders; (2) establishing
procedures to ensure that Authorized
Traders comply with Exchange rules
and to ensure the safety of and access
to the equipment used to access NYSE
Bonds; and (3) suspending an
individual’s status as an Authorized
Trader when such individual’s action
has caused the Sponsoring Member
Organization to fail to comply with
Exchange rules.27
The proposed NYSE Bonds rules also
include provisions for the handling of a
‘‘Clearly Erroneous Execution,’’ defined
as an execution involving an obvious
error in any term of an order
participating in such execution, such as
price, unit of trading, or identification of
the bond.28 Subject to the approval of
the Exchange, a Clearly Erroneous
Execution could be nullified if no party
to the trade objects.29 The Exchange also
has proposed to establish procedures for
reviewing a transaction if one of the
parties does not agree to the
cancellation. A User could request a
review via telephone, facsimile, or
e-mail. Upon receipt of such request, the
Exchange would notify the counterparty
as soon as practicable. Any request for
review would generally be required to
be submitted within 30 minutes of the
trade; however, the Exchange could
consider a request after 30 minutes on
a case-by-case basis in a manner that
promotes a fair and orderly market and
does not unfairly discriminate against
Users of NYSE Bonds. Each party to the
transaction would be required to
provide, within 30 minutes of the
request for review, any supporting
written information as may be
reasonably requested by the Exchange to
aid in the resolution of the matter.
Unless both parties to the disputed
transaction agreed to withdraw the
initial request for review, an Officer of
the Exchange or a designee (the
‘‘Reviewer’’) would review the
transaction and determine whether it
were clearly erroneous, with a view
towards maintaining a fair and orderly
market and the protection of investors
and the public interest. In Amendment
No. 3, the Exchange proposed factors
that the Reviewer could consider in the
determination of a Clearly Erroneous
Execution.30 If the Reviewer determines
27 See
proposed NYSE Rule 86(o)(b)(4).
proposed NYSE Rule 86(b)(2)(H).
29 See proposed NYSE Rule 86(m)(1).
30 Such factors include execution price(s); volume
and volatility of a bond; news released for the issuer
or the bond and/or the related security; the
existence of trading halts; corporate action(s);
general market conditions; rating of the bond;
interest and or coupon rate; maturity date; yield
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28 See
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that the transaction in dispute is
erroneous, the transaction would be
declared null and void, or one or more
of the terms of the transaction would be
modified. The parties would be
promptly notified of the determination.
A request for review of the initial
determination by the Clearly Erroneous
Execution Panel (‘‘CEE Panel’’) 31 may
be made within 30 minutes after the
party making the appeal is given notice
of the determination. However, the CEE
Panel would not review a determination
of the Reviewer if the Reviewer
determined that the number of affected
transactions was such that immediate
finality would be necessary to maintain
a fair and orderly market and to protect
investors and the public interest. All
determinations by the CEE Panel would
constitute final action by the Exchange.
In addition, the proposal would allow
the Exchange to review transactions
affected by a system disruption, system
malfunction, or equipment changeover
to decide if any such transactions were
erroneous.32 In the event of any system
disruption, system malfunction, or
equipment changeover in the use or
operation of any electronic
communications and trading facilities of
the Exchange, an Officer of the
Exchange or a designee, on his or her
own initiative, could review a
transaction arising out of the use or
operation of such facilities during such
period and declare it unchanged, nullify
it, or modify the terms of the trade.
Absent extraordinary circumstances,
any such action of the Exchange would
need to be taken within 30 minutes of
detection of the system disruption,
system malfunction, equipment
changeover, or an erroneous transaction
resulting from such system problem. If
an erroneous transaction occurred as a
result of a system problem and the
Exchange determines to revise the trade,
the counterparties to the erroneous
transaction would be notified of the
curves; last sale, if available within a reasonable
time frame; executions inconsistent with the trading
pattern of a bond; current day’s trading high/low;
recent day’s and week’s trading high/low;
executions outside the 52 week high/low; effect of
a single large order creating several prints at various
prices; and quotes and executions of other market
centers. See proposed NYSE Rule 86(m)(2)(E).
31 The CEE Panel would be comprised of the
Chief Executive Officer of NYSE Regulation or a
designee, and representatives from two Subscribers
to NYSE Bonds. The Exchange would designate at
least ten Subscribers to NYSE Bonds to act as
representatives to be called upon to serve on the
CEE Panel, as needed. In no case would a CEE Panel
include a person related to a party to the trade in
question. To the extent reasonably possible, the
Exchange would call upon the designated
representatives to participate on a CEE Panel on an
equally frequent basis. See proposed NYSE Rule
86(m)(4)(A) and (B).
32 See proposed NYSE Rule 86(m)(5).
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14633
action as soon as practicable. A User
aggrieved by such action could appeal
such action to the CEE Panel in
accordance with the provisions
described above.
Most orders matched on NYSE Bonds
would be locked-in trades and would be
submitted to a registered clearing
agency with accrued interest calculated
according to the defined eligibility
characteristics of the particular bond.33
Settlement of corporate bond trades
would be ‘‘regular way,’’ i.e., three-day
settlement. At a later date, the Exchange
intends to publish a real-time bond data
feed, and intends to make such data
available for purchase by nonsubscribing market participants, thirdparty data vendors, and other interested
parties who agree to the Exchange’s
terms. In addition to disseminating the
NYSE Bonds order book, the data feed
would also include the last sale price
and size as executions occur. The
Exchange also proposed several
technical changes to other NYSE rules
to remove certain obsolete references
and otherwise conform the terms of
certain other rules to revised NYSE Rule
86.
III. Summary of Comments and NYSE’s
Response
As noted above, the Commission
received two comment letters on the
proposal. The Klein Letter expressed
support for the NYSE’s proposal. The
other commenter, SIFMA, expressed
some support for NYSE’s proposal but
also raised certain concerns. The
Exchange responded to the concerns
raised in the SIFMA Letter.
SIFMA questioned whether the
Exchange’s plans to assess a fee for the
market data generated by NYSE Bonds
would confer an unfair competitive
33 The Exchange submits completed trades to one
of the subsidiaries of the Depository Trust Clearing
Corporation (‘‘DTCC’’) for clearance and settlement.
The National Securities Clearing Corporation
(‘‘NSCC’’), a subsidiary of DTCC, provides clearance
and settlement services for government agency,
corporate, and municipal bonds that trade on ABS.
While the Government Securities Division of the
Fixed Income Clearing Corporation (‘‘FICC’’),
another subsidiary of DTCC, provides clearance and
settlement services for transactions in U.S.
government bonds, the Exchange does not currently
have an agreement with FICC for such settlement
and clearance. Presently, U.S. government bonds
that trade on ABS are traded ex-clearing (i.e., the
parties to the transaction arrange for manual
clearing and settlement). The Exchange plans to
submit trades on a locked-in basis to FICC for
clearance and settlement in 2007. Until such time
as the Exchange has established such an agreement
with the FICC, the U.S. government bonds that
trade on NYSE Bonds would continue to trade exclearing as they do today on ABS. Trades that
would not be locked-in would be those in bonds
that are not set up for the Exchange’s registered
clearing agency, or bonds having a face value other
than $1,000.
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advantage as the exclusive processor of
quote and trade data of NYSE Bonds,
which it believed may lead to
unreasonable prices for such data.34 In
addition, SIFMA raised concern
regarding the Exchange’s intention to
limit the use and redistribution of its
market data.35 NYSE responded that
SIFMA’s concerns were premature in
that the Exchange has not yet filed a
proposal with the Commission under
Rule 19b–4 under the Exchange Act to
modify the fees that it charges for NYSE
Bonds data.36
SIFMA also expressed concerns
relating to the jurisdiction of NASD for
transactions on NYSE Bonds.37
Specifically, SIFMA requested clarity on
whether Users of NYSE Bonds would
have any trade reporting obligations to
NASD for bonds that trade on NYSE
pursuant to Exchange Rules 1400 and
1401. SIFMA also raised a more general
concern that NASD may assert
jurisdiction over trading activities
effected on a national securities
exchange, including NYSE Bonds.
NYSE argued that the concerns were
without merit because NASD recently
established a two-year pilot program 38
that exempted unlisted bonds trading on
the NYSE subject to the Exchange’s
trade reporting requirements from
TRACE reporting requirements.39
Moreover, NYSE clarified that NYSE
Regulation will undertake primary
responsibility for regulating NYSE
Bonds and that NASD will retain
responsibility for regulating the overthe-counter corporate bond market.
Finally, SIFMA expressed concern
about the lack of definitive quantitative
standards in the proposed trade
nullification rule for NYSE Bonds.40
The Exchange included in Amendment
No. 3 relevant factors that may be
considered when the Exchange
determines whether an execution is
clearly erroneous.41
Commission finds that approval of the
proposal is consistent with Section
6(b)(5) of the Exchange Act 43 in that it
is designed to facilitate transactions in
securities; 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.
NYSE Bonds will replace ABS as the
facility for trading bonds on the
Exchange. The Commission believes
that an exchange’s determination to
implement new trading technology is
generally consistent with the Exchange
Act. As described above, the proposal
includes provisions regarding order
entry, priority, trading sessions and
auctions, manner of execution, clearing,
trade halt procedures, and trade
nullification. The Commission finds
that these provisions are reasonably
designed to promote the efficient
functioning of NYSE Bonds and are
generally consistent with the Exchange
Act.44 Other aspects of the proposal are
described in more detail below.
IV. Discussion
After careful review, the Commission
finds that the proposed rule change is
consistent with the Exchange Act and
the rules and regulations promulgated
thereunder applicable to a national
securities exchange.42 Specifically, the
Price Collars
The Exchange would reject an
incoming order that is otherwise
34 See
SIFMA Letter at 2–3.
35 Id.
36 See
NYSE Response Letter at 2.
SIFMA Letter at 3–4.
38 See Securities Exchange Act Release No. 54678
(November 16, 2006), 71 FR 67673 (November 22,
2006) (SR–NASD–2006–110).
39 See NYSE Response Letter at 3.
40 See SIFMA Letter at 4.
41 See proposed NYSE Rule 86(m)(2)(E).
42 In approving this proposal, the Commission has
considered the proposed rule’s impact on
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37 See
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Sponsored Access to NYSE Bonds
Only members that enter into a
service agreement with the Exchange
may access NYSE Bonds. In addition,
the Exchange would permit a nonmember that enters into an agreement
with a subscribing member and the
Exchange to access NYSE Bonds as a
‘‘Sponsored Participant.’’ These
sponsored access provisions are
substantially similar to those that have
been adopted by other national
securities exchanges and previously
approved by the Commission.45
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
43 15 U.S.C. 78f(b)(5).
44 However, the Commission notes that the
Exchange did not in this filing propose any fee
changes in connection with the NYSE Bonds
system. Therefore, the Commission in this order is
not making any findings regarding any fee that the
Exchange charges or may in the future propose to
charge in connection with the use of the NYSE
Bonds system.
45 See NYSE Arca Equities, Inc. (‘‘NYSE Arca
Equities’’) Rule 7.29(b); Securities Exchange Act
Release No. 44983 (October 25, 2001), 66 FR 55225
(November 1, 2001) (SR–PCX–00–25) (establishing
sponsored participant provision for equity trading
on the NYSE Arca Marketplace).
PO 00000
Frm 00120
Fmt 4703
Sfmt 4703
marketable if the price of the order
violated the price collar for that bond.
The Commission believes that the
proposed price collars are reasonably
designed to protect investors and
promote the public interest by
preventing executions that are
substantially away from the prevailing
market price. These provisions are
similar to others employed by NYSE
Arca and Nasdaq, which previously
have been approved by the
Commission.46
Applicability of Section 11(a) and (b) of
the Exchange Act
Section 11(a) of the Exchange Act 47
prohibits a member of a national
securities exchange from effecting
transactions on that exchange for its
own account, the account of an
associated person, or an account over
which it or its associated person
exercises investment discretion, unless
an exception applies. The Commission
notes that this general prohibition
would not generally impact trading on
NYSE Bonds because Rule 11a1–4(T)
under the Exchange Act 48 deems
transactions in bonds on a national
securities exchange for a member’s own
account to be consistent with Section
11(a). However, for those securities
trading on NYSE Bonds for which this
exemption may not be available, such as
certain structured products, the
Exchange has represented that
transactions effected on NYSE Bonds
meet the requirements of Rule 11a2–
2(T) under the Exchange Act.49
Similarly, the Commission notes that
Section 11(b) of the Exchange Act 50 and
Rule 11b–1 thereunder,51 which pertain
to specialists and market-makers, would
not be implicated because there would
be no specialists or market makers on
NYSE Bonds.
46 See, e.g., NYSE Arca Equities Rule 1.1(r)(A)
(NYSE Arca Market Order Auction and Closing
Auction), Securities Exchange Act Release No.
52361 (August 30, 2005), 70 FR 53704 (September
9, 2005) (SR–PCX–2005–58); Nasdaq Rule
4752(d)(2)(E) (Nasdaq Opening Process), Securities
Exchange Act Release No. 50405 (September 16,
2004), 69 FR 57118 (September 23, 2004) (SR–
NASD–2004–071); and Nasdaq Rule 4754(b)(2)(E)
(Nasdaq Closing Cross), Securities Exchange Act
Release No. 49406 (March 11, 2004), 69 FR 12879
(March 18, 2004) (SR–NASD–2003–173).
47 15 U.S.C. 78k(a).
48 17 CFR 240.11a1–4(T).
49 The Commission notes that, to the extent that
any security trading on NYSE Bonds is an NMS
security, see 17 CFR 242.600(b)(46), the
Commission is not making any finding herein as to
whether NYSE Bonds is compliant with the
requirements of Regulation NMS under the
Exchange Act.
50 15 U.S.C. 78k(b).
51 17 CFR 240.11b–1.
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Federal Register / Vol. 72, No. 59 / Wednesday, March 28, 2007 / Notices
Applicability of Rule 10a–1 Under the
Exchange Act
In its filing, NYSE states that: ‘‘The
staff of the Division of Market
Regulation of the Securities and
Exchange Commission has stated that it
would not recommend that the
Commission take enforcement action if
short sales in exchange-listed bonds and
debentures are effected without
complying with SEC Rule 10a–1.’’ 52 By
this filing, the Exchange seeks
continued effect of this position. The
staff maintains this position. However,
the Commission notes that the staff’s
position does not apply to convertible
bonds.53 Accordingly, convertible bonds
would continue to be excluded from
applicability of this position.
sroberts on PROD1PC70 with NOTICES
V. Accelerated Approval
Pursuant to Section 19(b)(2) of the
Exchange Act,54 the Commission may
not approve any proposed rule change
prior to the 30th day after the date of
publication of notice of the filing
thereof, unless the Commission finds
good cause for so doing and publishes
its reasons for so finding. In
Amendment No. 3, the Exchange,
among other things:
• Revised proposed NYSE Rule 86(b)
to indicate that, if other NYSE rules
relating to bonds conflict with the
provisions of proposed NYSE Rule 86,
Rule 86 would control;
• Eliminated references to the
‘‘Floor’’ of the Exchange to make clear
that NYSE Bonds is a fully electronic
trading platform;
• Noted that dealers trading
municipal bonds must report such
transactions to the Municipal Securities
Rulemaking Board (‘‘MSRB’’) in
accordance with MSRB Rule G–14;
• Revised proposed NYSE Rule
86(b)(2)(E) to indicate that, unless
otherwise designated, an order will be
treated as a day order;
• Revised proposed NYSE Rule
86(b)(2)(G) to indicate that, if no bids
are submitted to a Bond Auction, the
52 See Bond Short Sale No-Action Position, supra
note 19 (footnote omitted) (stating that, ‘‘From and
after the date of this release until the Commission
takes final action on the proposed amendment to
Rule 10a–1(b), the staff of the Division will not
recommend that the Commission take enforcement
action under Rule 10a–1 if short sales in exchangelisted bonds and debentures are effected without
complying with the Rule’’).
53 See id. (noting that convertible bonds are
defined as ‘‘equity securities’’ in the Exchange Act
and that ‘‘Exchange Act Section 3(a)(11), 15 U.S.C.
78c(a)(11), defines the term ‘equity security’ to
include ‘any stock or similar security, or any
security convertible, with or without consideration,
into such a security * * *.’ Short selling of
convertible bonds * * * may have an impact on the
price of related exchange-traded equity securities’’).
54 15 U.S.C. 78s(b)(2).
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17:09 Mar 27, 2007
Jkt 211001
Indicative Match Price will be the
lowest offer price;
• Revised proposed NYSE Rule 86(e)
to clarify that the price collars will only
apply during ordinary trading and not
during the queuing of bond orders or
during bond auctions;
• Revised proposed NYSE Rule 86(h)
to clarify that orders designated only for
the Opening Bond Trading Session that
do not execute in the Opening Bond
Auction or Opening Bond Trading
Session will be eligible to participate in
the Core Bond Auction and would be
cancelled if not executed in the Core
Bond Auction;
• Modified proposed NYSE Rule 86(i)
to clarify that orders may be entered
into NYSE Bonds until 8 p.m. ET and
to otherwise clarify the operation of the
three proposed bond trading sessions;
• Revised proposed NYSE Rule 86(l)
to indicate that, beginning at 3:30 a.m.
ET, the IMP for the Opening Bond
Auction and the Core Bond Auction,
and any associated Imbalance, will be
published by the Exchange. In addition,
the changes to proposed NYSE Rule
86(l) further explain the functionalities
of the Bond Auctions;
• Clarified in proposed NYSE Rule
86(m) the possible outcomes after
review of potentially erroneous
transactions by the Reviewer and by the
Clearly Erroneous Execution Panel. In
addition, the Exchange added factors
that may be considered in the
determination of a Clearly Erroneous
Execution;
• Revised proposed NYSE Rule
86(n)(2)(G) to indicate that orders that
are eligible for execution in the Bond
Halt Auction may be cancelled at any
time;
• Revised portions of proposed NYSE
Rule 86(o) related to a sponsored access
to NYSE Bonds to conform substantially
to related provisions of other national
securities exchanges, including NYSE
Arca; 55
• Represented that transactions
effected on NYSE Bonds meet the
requirements of Rule 11a2–2(T) under
the Exchange Act and included an
accompanying discussion;
• Represented that NYSE Regulation
can effectively regulate NYSE Bonds;
and
• Made other minor clarifying and
technical changes to the proposal.
The Commission believes that these
changes do not raise any significant or
novel regulatory issues. Accordingly,
the Commission hereby finds good
cause for approving the proposed rule
change, as modified by Amendment No.
3, prior to the 30th day after publishing
55 See
PO 00000
notice of the amended proposal in the
Federal Register.
VI. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning Amendment No.
3, including whether Amendment No. 3
is consistent with the Exchange Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSE–2006–37 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–2006–37. 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 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–2006–37 and should
be submitted on or before April 18,
2007.
NYSE Arca Equities Rule 7.29.
Frm 00121
Fmt 4703
Sfmt 4703
14635
E:\FR\FM\28MRN1.SGM
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14636
Federal Register / Vol. 72, No. 59 / Wednesday, March 28, 2007 / Notices
VII. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,56
that the proposed rule change (SR–
NYSE–2006–37), as amended, be, and it
hereby is, approved on an accelerated
basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.57
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–5610 Filed 3–27–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55513; File No. SR–Phlx–
2007–28]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change Relating to the Dissemination
of Currency Spot Values
March 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 March 22,
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 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.
sroberts on PROD1PC70 with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Phlx proposes to disseminate a
modified spot rate for its U.S. dollarsettled foreign currency options
(‘‘FCOs’’). The text of the proposed rule
change is available on the Phlx’s Web
site (https://www.phlx.com), at the
principal office of Phlx, and at the
Commission’s Public Reference Room.
56 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).
57 17
VerDate Aug<31>2005
17:09 Mar 27, 2007
Jkt 211001
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. 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 proposed rule
change is to permit the Exchange to
disseminate over the facilities of the
Consolidated Tape Association a
modified spot rate for U.S. dollar-settled
FCOs on the British pound and the euro,
which the Exchange has listed since
January 8, 2007.5
The modified spot rate will be
calculated by the Exchange, based on
spot prices (bids and asks) it receives
from Thomson Financial LLC
(‘‘Thomson’’).6 For each currency, the
Exchange will determine the midpoint
between the bid and the ask and will
modify that rate by multiplying it by
100. For example, if 1.3200 U.S. dollars
buys 1 euro, a modifier of 100 would be
used so that the modified spot rate
would become 132.00. If 1.3358 U.S.
dollars buys 1 euro, the modified spot
rate, using the same 100 modifier,
would become 133.58. This proposed
rule change is merely for purposes of
dissemination of the modified spot rate
over the facilities of the Consolidated
Tape Association and does not amend
or affect the Exchange’s existing rules
governing U.S. dollar-settled FCOs.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
5 See Securities Exchange Act Release No. 54989
(December 21, 2006), 71 FR 78506 (December 29,
2006) (approving File No. SR-Phlx-2006–34).
6 Currently, the Thomson spot prices are based on
the bid/ask prices supplied to its agent Tenfore
System Ltd. (‘‘Tenfore’’) by contributors reporting to
Tenfore. Tenfore contributors comprise 19 different
banks, brokers and FX real time dealing portals.
Contributors provide bid/ask prices to Tenfore
which, in turn, forwards them to Thomson upon
receipt. Thomson forwards those bid/ask prices to
Phlx upon receipt from Tenfore. At any given time
the Thomson spot rate consists of the most current
bid/ask prices provided by any contributor to
Tenfore and forwarded by Tenfore to Thomson.
PO 00000
Frm 00122
Fmt 4703
Sfmt 4703
of the Act 7 in general, and furthers the
objectives of Section 6(b)(5) of the Act 8
in particular, in that it is 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, by
providing investors in U.S. dollarsettled FCOs the ability to more easily
track the value of the underlying
currencies in the spot market and
therefore make informed trading
decisions.
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
No written comments were either
solicited or received.
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 9 and
subparagraph (f)(6) of Rule 19b–4
thereunder.10
A proposed rule change filed under
Rule 19b–4(f)(6) normally may not
become operative prior to 30 days after
the date of filing.11 However, Rule 19b–
4(f)(6)(iii) 12 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
7 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
9 15 U.S.C. 78s(b)(3)(A).
10 17 CFR 240.19b–4(f)(6).
11 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 date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. Phlx has satisfied the five-day prefiling requirement.
12 Id.
8 15
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]]>Agencies
[Federal Register Volume 72, Number 59 (Wednesday, March 28, 2007)]
[Notices]
[Pages 14631-14636]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-5610]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55496; File No. SR-NYSE-2006-37]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Amendment No. 3 to and Order Granting Accelerated
Approval of Proposed Rule Change, as Amended, Relating to the
Establishment of NYSE Bonds
March 20, 2007.
I. Introduction
On May 16, 2006, the New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Exchange Act'') \1\ and Rule
19b-4 thereunder,\2\ to establish a new bond trading platform, NYSE
Bonds, to replace its existing bond trading system, the Automated Bond
System (``ABS''). The Exchange filed Amendments No. 1 and 2 to the
proposed rule change on August 4, 2006 and October 10, 2006,
respectively. The proposed rule change, as amended, was published for
comment in the Federal Register on October 24, 2006.\3\ The Commission
received two comments on the proposal.\4\ On March 15, 2007, the
Exchange filed Amendment No. 3 to the proposal.\5\ On March 16, 2007,
the NYSE submitted a response to the comment letters.\6\ This order
provides notice of Amendment No. 3 to the proposed rule change and
approves the proposed rule change as amended on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 54615 (October 17,
2006), 71 FR 62338.
\4\ See Letters from Mary C.M. Kuan, Vice President and
Assistant General Counsel, Securities Industry and Financial Markets
Association (``SIFMA'') to Nancy Morris, Secretary, Commission,
dated November 14, 2006 (``SIFMA Letter'') and from Ron L. Klein,
Chairman and CEO, General Associates, Inc., dated December 13, 2006
(``Klein Letter'').
\5\ For a discussion of Amendment No. 3, see Section V, infra.
Amendment No. 3 replaced and superseded Amendment No. 2 in its
entirety.
\6\ See Letter from Mary Yeager, Assistant Secretary, NYSE, to
Nancy M. Morris, Secretary, Commission, dated March 16, 2007 (``NYSE
Response Letter'').
---------------------------------------------------------------------------
II. Description of the Proposal
NYSE proposes to amend its Rule 86 to replace its existing bond
trading system, ABS, with a bond trading platform based on technology
used to operate the NYSE Arca Marketplace.\7\ The new name of the NYSE
bond trading platform would be ``NYSE Bonds.'' NYSE also proposes to
amend other Exchange rules to conform to revised NYSE Rule 86.
---------------------------------------------------------------------------
\7\ The NYSE Arca Marketplace is the successor to the
Archipelago Exchange. See Securities Exchange Act Release No. 53615
(April 7, 2006), 71 FR 19226 (April 13, 2006) (SR-PCX-2006-24).
---------------------------------------------------------------------------
Any security traded on NYSE Bonds would have to be listed, or
otherwise admitted to dealing, on the Exchange. NYSE has represented
that all debt securities currently trading on ABS would be transferred
to NYSE Bonds.\8\ Additional debt securities that meet the listing
standards in NYSE Listed Company Manual Sections 102.03, 103.05,
703.19, or 703.21, or that are deemed ``exempted securities'' under
Section 3(a)(12) of the Exchange Act,\9\ could trade on NYSE Bonds. In
addition, NYSE intends to trade unregistered corporate bonds pursuant
to an exemption from Section 12(a) of the Exchange Act and a related
rule change recently approved by the Commission.\10\
---------------------------------------------------------------------------
\8\ Such debt securities include, but are not limited to the
following: corporate bonds (including convertible bonds),
international bank bonds, foreign government bonds, U.S. government
bonds, government agency bonds, municipal bonds, and debt-based
structured products. Any security that would trade on NYSE Bonds is
referred to as a ``bond'' for the purposes of NYSE rules.
\9\ 15 U.S.C. 78c(a)(12).
\10\ See Securities Exchange Act Release No. 54766 (November 16,
2006), 71 FR 67657 (November 22, 2006) (File No. S7-06-05)
(permitting NYSE member organizations to trade bonds on the Exchange
that are not registered under Section 12(b) of the Exchange Act, but
are issued by NYSE-listed companies or their wholly owned
subsidiaries and that meet other conditions); Securities Exchange
Act Release No. 54767 (November 16, 2006), 71 FR 67680 (November 22,
2006) (SR-NYSE-2004-69) (collectively, the ``Unlisted Corporate
Bonds Orders'').
---------------------------------------------------------------------------
NYSE Bonds would be an electronic order-driven matching system.
Initially, the System would allow limit orders and reserve orders.
Visible interest would be executed on a price/time priority basis.
However, undisplayed reserve interest in NYSE Bonds would always yield
to displayed interest at a particular price.\11\ Outside of an auction
(described below), orders marketable at the time of entry would be
matched and executed, except if the price exceeded the ``price collar''
established for the bond at the time of entry. An order that is priced
beyond the price collar threshold would be rejected by the system; an
order that is not marketable at the time of entry would post to the
NYSE Bonds order ``book.'' \12\ If an order were entered at a better
price than the then-best priced contra-side order on the NYSE Bonds
book, the system would match the incoming order against
[[Page 14632]]
the booked order at the booked order's price, thereby providing price
improvement to the incoming order. Bonds generally would be traded in
denominations of $1,000.\13\
---------------------------------------------------------------------------
\11\ See proposed NYSE Rule 86(j)(3)(B).
\12\ See proposed NYSE Rule 86(e).
\13\ A User submitting an order priced in a denomination less
than $1,000 would be required to specify the original principal
amount of the bond. See proposed Rule 86(d).
---------------------------------------------------------------------------
NYSE Bonds would have three trading sessions: (1) The Opening Bond
Trading Session (4 a.m. until 9:30 a.m. Eastern Time (``ET'')); (2) the
Core Bond Trading Session (9:30 a.m. until 4 p.m. ET); and (3) the Late
Bond Trading Session (4 p.m. until 8 p.m. ET). A User \14\ entering an
order into NYSE Bonds would be required to designate the time in force
of the order. A day order, if not executed, would expire at the end of
any of the three daily trading sessions for which it was designated. A
good-`til-cancelled order would remain in effect until it was either
cancelled or executed, but would be available for execution only during
the Core Bond Trading Session. Unless the User indicated otherwise, the
system's default assumption would be that all orders are day orders.
---------------------------------------------------------------------------
\14\ See proposed NYSE Rule 86(b)(2)(M) (defining ``User'' as
any Subscriber, Sponsored Participant, or Authorized Trader that is
authorized to obtain access to NYSE Bonds).
---------------------------------------------------------------------------
At the commencement of both the Opening Bond Trading Session and
the Core Bond Trading Session, the Exchange would conduct a bond
auction. Users would be able to submit orders for execution Opening
Bond Auction and the Core Bond Auction beginning at 3:30 a.m. ET.
Orders designated for the Opening Bond Trading Session would queue
until 4 a.m. ET, at which time the Opening Bond Auction would take
place and orders designated for the Core Bond Trading Session would
queue until 9:30 a.m. ET, at which time the Core Bond Auction would
take place.\15\ During a bond auction, the system would attempt to
match and execute orders at the Indicative Match Price (``IMP''). The
IMP is defined as: (1) The price at which the maximum volume of bonds
are executable; (2) if there are two or more prices at which the
maximum volume of bonds are executable, the price that is closest to
the closing price in that bond on the previous trading day, or if the
bond did not trade on the previous day, the price that is closest to
the closing price on the last day that the bond traded; (3) if bond
orders to buy and bond orders to sell are not marketable, the highest
priced bid; or (4) if there were no bids but only offers, the lowest
offer price.\16\ Beginning at 3:30 a.m. ET and various times
thereafter, the IMP of the Opening Bond Auction and/or the Core Bond
Auction and any Imbalance \17\ associated therewith would be
disseminated by the Exchange.
---------------------------------------------------------------------------
\15\ See proposed NYSE Rule 86(i).
\16\ See proposed NYSE Rule (b)(2)(G).
\17\ See proposed NYSE Rule 86(b)(2)(F) (defining ``Imbalance ''
as the number of buy or sell orders that cannot be matched with
other orders at the IMP at any given time).
---------------------------------------------------------------------------
A single order to sell coupled with a single order to buy would be
sufficient to establish a bond auction, provided the orders were
marketable.\18\ If no marketable orders were entered into the system
prior to the commencement of a bond auction, the auction would not
occur, and the existing orders would be available only for ordinary
trading in the designated bond trading session(s). Orders that were
designated for a particular bond trading session and eligible to
participate in the related bond auction, but not executed in such bond
auction, would also be available for ordinary trading in the trading
session. Orders designated for but not executed in the Opening Bond
Trading Session would be eligible to be matched and executed in the
Core Bond Auction at the IMP. Orders eligible for the Opening Bond
Auction or the Core Bond Auction could be cancelled at any point until
two minutes prior to the commencement of the respective bond auction.
---------------------------------------------------------------------------
\18\ See proposed NYSE Rule 86(l) (prescribing procedures NYSE
Bonds Bond Auctions).
---------------------------------------------------------------------------
To post an order on NYSE Bonds, a User would be required to enter
the following information: CUSIP number; quantity; order type (i.e.,
limit or reserve); price (up to three decimals); account type indicator
(``P'' for principle or ``A'' for agent); time in force; and whether
the order is buy, sell, or sell/short.\19\ An order could not be
modified but could be cancelled at any time before it is executed,
except that a User could not cancel an order eligible for execution in
a regularly scheduled bond auction inside of two minutes prior to the
beginning of the bond auction.
---------------------------------------------------------------------------
\19\ The staff of the Division of Market Regulation of the
Commission previously has stated that it would not recommend that
the Commission take enforcement action if short sales in exchange-
listed bonds and debentures are effected without complying with Rule
10a-1 under the Exchange Act, 17 CFR 240.10a-1. See Securities
Exchange Act Release No. 30772 (June 3, 1992), 57 FR 24415 (June 9,
1992) (File No. S7-13-92) (``Bond Short Sale No-Action Position'').
The Exchange deems this determination by the Commission Staff to
apply to Exchange Rule 440B (Short Sales).
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The proposal contemplates the halting, suspension, and closing of
bond trading on NYSE Bonds (a ``Bond Halt'') in certain
circumstances.\20\ During a Bond Halt, orders could enter the system
and queue according to price/time priority but would not execute. When
the Bond Halt is concluded, trading would resume with a Bond Halt
Auction, at which time orders would match and execute at the IMP under
similar terms to the other bond auctions. Like the other bond auctions,
no executions would occur unless marketable orders were available prior
to the commencement of the Bond Halt Auction. Orders eligible for
execution in the Bond Halt Auction could be cancelled at any point
prior to the beginning of the Bond Halt Auction. At the conclusion of
the Bond Halt Auction, ordinary trading would resume in the trading
session in progress at the conclusion of the halt.
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\20\ See proposed NYSE Rule 86(k).
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A member organization wishing to trade on NYSE Bonds
(``Subscriber'') would be required to enter into a written agreement
with the Exchange.\21\ A non-member (``Sponsored Participant'') \22\
could gain access to NYSE Bonds only by entering into a written
agreement with a Subscriber (i.e., a ``Sponsoring Member
Organization'') \23\ and the Exchange. In the sponsorship agreement,
the Sponsoring Member Organization would acknowledge, among other
things, that any order entered by the Sponsored Participant and any
execution resulting from such order would be binding in all respects on
the Sponsoring Member Organization.\24\ The Sponsoring Member
Organization would be responsible for any and all actions taken by its
Sponsored Participant. The Sponsored Participant, in turn, would agree,
among other things, to comply with the rules of the Exchange and the
rules and procedures with regard to NYSE Bonds, as if it were a member
of the Exchange.\25\ The Sponsored Participant also would be required
to: (1) Take reasonable security precautions to prevent unauthorized
access to NYSE Bonds; (2) establish and maintain an up-to-date list of
persons permitted to access NYSE Bonds on behalf of the Sponsored
Participant (i.e., ``Authorized Traders'') \26\; and (3) provide that
list to the Sponsoring Member Organization. Moreover, the Sponsoring
Member Organization would be required to undertake certain
responsibilities related to a Sponsored
[[Page 14633]]
Participant's Authorized Traders, including: (1) Maintaining a list of
Authorized Traders; (2) establishing procedures to ensure that
Authorized Traders comply with Exchange rules and to ensure the safety
of and access to the equipment used to access NYSE Bonds; and (3)
suspending an individual's status as an Authorized Trader when such
individual's action has caused the Sponsoring Member Organization to
fail to comply with Exchange rules.\27\
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\21\ See proposed NYSE Rule 86(o)(a).
\22\ See proposed NYSE Rule 86(b)(2)(K).
\23\ See proposed NYSE Rule 86(b)(2)(J).
\24\ See proposed NYSE Rule 86(o)(b)(2)(B)(i).
\25\ See proposed NYSE Rule 86(o)(b)(2)(C).
\26\ See proposed NYSE Rule 86(b)(2)(L).
\27\ See proposed NYSE Rule 86(o)(b)(4).
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The proposed NYSE Bonds rules also include provisions for the
handling of a ``Clearly Erroneous Execution,'' defined as an execution
involving an obvious error in any term of an order participating in
such execution, such as price, unit of trading, or identification of
the bond.\28\ Subject to the approval of the Exchange, a Clearly
Erroneous Execution could be nullified if no party to the trade
objects.\29\ The Exchange also has proposed to establish procedures for
reviewing a transaction if one of the parties does not agree to the
cancellation. A User could request a review via telephone, facsimile,
or e-mail. Upon receipt of such request, the Exchange would notify the
counterparty as soon as practicable. Any request for review would
generally be required to be submitted within 30 minutes of the trade;
however, the Exchange could consider a request after 30 minutes on a
case-by-case basis in a manner that promotes a fair and orderly market
and does not unfairly discriminate against Users of NYSE Bonds. Each
party to the transaction would be required to provide, within 30
minutes of the request for review, any supporting written information
as may be reasonably requested by the Exchange to aid in the resolution
of the matter.
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\28\ See proposed NYSE Rule 86(b)(2)(H).
\29\ See proposed NYSE Rule 86(m)(1).
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Unless both parties to the disputed transaction agreed to withdraw
the initial request for review, an Officer of the Exchange or a
designee (the ``Reviewer'') would review the transaction and determine
whether it were clearly erroneous, with a view towards maintaining a
fair and orderly market and the protection of investors and the public
interest. In Amendment No. 3, the Exchange proposed factors that the
Reviewer could consider in the determination of a Clearly Erroneous
Execution.\30\ If the Reviewer determines that the transaction in
dispute is erroneous, the transaction would be declared null and void,
or one or more of the terms of the transaction would be modified. The
parties would be promptly notified of the determination.
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\30\ Such factors include execution price(s); volume and
volatility of a bond; news released for the issuer or the bond and/
or the related security; the existence of trading halts; corporate
action(s); general market conditions; rating of the bond; interest
and or coupon rate; maturity date; yield curves; last sale, if
available within a reasonable time frame; executions inconsistent
with the trading pattern of a bond; current day's trading high/low;
recent day's and week's trading high/low; executions outside the 52
week high/low; effect of a single large order creating several
prints at various prices; and quotes and executions of other market
centers. See proposed NYSE Rule 86(m)(2)(E).
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A request for review of the initial determination by the Clearly
Erroneous Execution Panel (``CEE Panel'') \31\ may be made within 30
minutes after the party making the appeal is given notice of the
determination. However, the CEE Panel would not review a determination
of the Reviewer if the Reviewer determined that the number of affected
transactions was such that immediate finality would be necessary to
maintain a fair and orderly market and to protect investors and the
public interest. All determinations by the CEE Panel would constitute
final action by the Exchange.
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\31\ The CEE Panel would be comprised of the Chief Executive
Officer of NYSE Regulation or a designee, and representatives from
two Subscribers to NYSE Bonds. The Exchange would designate at least
ten Subscribers to NYSE Bonds to act as representatives to be called
upon to serve on the CEE Panel, as needed. In no case would a CEE
Panel include a person related to a party to the trade in question.
To the extent reasonably possible, the Exchange would call upon the
designated representatives to participate on a CEE Panel on an
equally frequent basis. See proposed NYSE Rule 86(m)(4)(A) and (B).
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In addition, the proposal would allow the Exchange to review
transactions affected by a system disruption, system malfunction, or
equipment changeover to decide if any such transactions were
erroneous.\32\ In the event of any system disruption, system
malfunction, or equipment changeover in the use or operation of any
electronic communications and trading facilities of the Exchange, an
Officer of the Exchange or a designee, on his or her own initiative,
could review a transaction arising out of the use or operation of such
facilities during such period and declare it unchanged, nullify it, or
modify the terms of the trade. Absent extraordinary circumstances, any
such action of the Exchange would need to be taken within 30 minutes of
detection of the system disruption, system malfunction, equipment
changeover, or an erroneous transaction resulting from such system
problem. If an erroneous transaction occurred as a result of a system
problem and the Exchange determines to revise the trade, the
counterparties to the erroneous transaction would be notified of the
action as soon as practicable. A User aggrieved by such action could
appeal such action to the CEE Panel in accordance with the provisions
described above.
---------------------------------------------------------------------------
\32\ See proposed NYSE Rule 86(m)(5).
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Most orders matched on NYSE Bonds would be locked-in trades and
would be submitted to a registered clearing agency with accrued
interest calculated according to the defined eligibility
characteristics of the particular bond.\33\ Settlement of corporate
bond trades would be ``regular way,'' i.e., three-day settlement. At a
later date, the Exchange intends to publish a real-time bond data feed,
and intends to make such data available for purchase by non-subscribing
market participants, third-party data vendors, and other interested
parties who agree to the Exchange's terms. In addition to disseminating
the NYSE Bonds order book, the data feed would also include the last
sale price and size as executions occur. The Exchange also proposed
several technical changes to other NYSE rules to remove certain
obsolete references and otherwise conform the terms of certain other
rules to revised NYSE Rule 86.
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\33\ The Exchange submits completed trades to one of the
subsidiaries of the Depository Trust Clearing Corporation (``DTCC'')
for clearance and settlement. The National Securities Clearing
Corporation (``NSCC''), a subsidiary of DTCC, provides clearance and
settlement services for government agency, corporate, and municipal
bonds that trade on ABS. While the Government Securities Division of
the Fixed Income Clearing Corporation (``FICC''), another subsidiary
of DTCC, provides clearance and settlement services for transactions
in U.S. government bonds, the Exchange does not currently have an
agreement with FICC for such settlement and clearance. Presently,
U.S. government bonds that trade on ABS are traded ex-clearing
(i.e., the parties to the transaction arrange for manual clearing
and settlement). The Exchange plans to submit trades on a locked-in
basis to FICC for clearance and settlement in 2007. Until such time
as the Exchange has established such an agreement with the FICC, the
U.S. government bonds that trade on NYSE Bonds would continue to
trade ex-clearing as they do today on ABS. Trades that would not be
locked-in would be those in bonds that are not set up for the
Exchange's registered clearing agency, or bonds having a face value
other than $1,000.
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III. Summary of Comments and NYSE's Response
As noted above, the Commission received two comment letters on the
proposal. The Klein Letter expressed support for the NYSE's proposal.
The other commenter, SIFMA, expressed some support for NYSE's proposal
but also raised certain concerns. The Exchange responded to the
concerns raised in the SIFMA Letter.
SIFMA questioned whether the Exchange's plans to assess a fee for
the market data generated by NYSE Bonds would confer an unfair
competitive
[[Page 14634]]
advantage as the exclusive processor of quote and trade data of NYSE
Bonds, which it believed may lead to unreasonable prices for such
data.\34\ In addition, SIFMA raised concern regarding the Exchange's
intention to limit the use and redistribution of its market data.\35\
NYSE responded that SIFMA's concerns were premature in that the
Exchange has not yet filed a proposal with the Commission under Rule
19b-4 under the Exchange Act to modify the fees that it charges for
NYSE Bonds data.\36\
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\34\ See SIFMA Letter at 2-3.
\35\ Id.
\36\ See NYSE Response Letter at 2.
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SIFMA also expressed concerns relating to the jurisdiction of NASD
for transactions on NYSE Bonds.\37\ Specifically, SIFMA requested
clarity on whether Users of NYSE Bonds would have any trade reporting
obligations to NASD for bonds that trade on NYSE pursuant to Exchange
Rules 1400 and 1401. SIFMA also raised a more general concern that NASD
may assert jurisdiction over trading activities effected on a national
securities exchange, including NYSE Bonds. NYSE argued that the
concerns were without merit because NASD recently established a two-
year pilot program \38\ that exempted unlisted bonds trading on the
NYSE subject to the Exchange's trade reporting requirements from TRACE
reporting requirements.\39\ Moreover, NYSE clarified that NYSE
Regulation will undertake primary responsibility for regulating NYSE
Bonds and that NASD will retain responsibility for regulating the over-
the-counter corporate bond market.
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\37\ See SIFMA Letter at 3-4.
\38\ See Securities Exchange Act Release No. 54678 (November 16,
2006), 71 FR 67673 (November 22, 2006) (SR-NASD-2006-110).
\39\ See NYSE Response Letter at 3.
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Finally, SIFMA expressed concern about the lack of definitive
quantitative standards in the proposed trade nullification rule for
NYSE Bonds.\40\ The Exchange included in Amendment No. 3 relevant
factors that may be considered when the Exchange determines whether an
execution is clearly erroneous.\41\
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\40\ See SIFMA Letter at 4.
\41\ See proposed NYSE Rule 86(m)(2)(E).
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IV. Discussion
After careful review, the Commission finds that the proposed rule
change is consistent with the Exchange Act and the rules and
regulations promulgated thereunder applicable to a national securities
exchange.\42\ Specifically, the Commission finds that approval of the
proposal is consistent with Section 6(b)(5) of the Exchange Act \43\ in
that it is designed to facilitate transactions in securities; 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.
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\42\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\43\ 15 U.S.C. 78f(b)(5).
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NYSE Bonds will replace ABS as the facility for trading bonds on
the Exchange. The Commission believes that an exchange's determination
to implement new trading technology is generally consistent with the
Exchange Act. As described above, the proposal includes provisions
regarding order entry, priority, trading sessions and auctions, manner
of execution, clearing, trade halt procedures, and trade nullification.
The Commission finds that these provisions are reasonably designed to
promote the efficient functioning of NYSE Bonds and are generally
consistent with the Exchange Act.\44\ Other aspects of the proposal are
described in more detail below.
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\44\ However, the Commission notes that the Exchange did not in
this filing propose any fee changes in connection with the NYSE
Bonds system. Therefore, the Commission in this order is not making
any findings regarding any fee that the Exchange charges or may in
the future propose to charge in connection with the use of the NYSE
Bonds system.
---------------------------------------------------------------------------
Sponsored Access to NYSE Bonds
Only members that enter into a service agreement with the Exchange
may access NYSE Bonds. In addition, the Exchange would permit a non-
member that enters into an agreement with a subscribing member and the
Exchange to access NYSE Bonds as a ``Sponsored Participant.'' These
sponsored access provisions are substantially similar to those that
have been adopted by other national securities exchanges and previously
approved by the Commission.\45\
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\45\ See NYSE Arca Equities, Inc. (``NYSE Arca Equities'') Rule
7.29(b); Securities Exchange Act Release No. 44983 (October 25,
2001), 66 FR 55225 (November 1, 2001) (SR-PCX-00-25) (establishing
sponsored participant provision for equity trading on the NYSE Arca
Marketplace).
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Price Collars
The Exchange would reject an incoming order that is otherwise
marketable if the price of the order violated the price collar for that
bond. The Commission believes that the proposed price collars are
reasonably designed to protect investors and promote the public
interest by preventing executions that are substantially away from the
prevailing market price. These provisions are similar to others
employed by NYSE Arca and Nasdaq, which previously have been approved
by the Commission.\46\
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\46\ See, e.g., NYSE Arca Equities Rule 1.1(r)(A) (NYSE Arca
Market Order Auction and Closing Auction), Securities Exchange Act
Release No. 52361 (August 30, 2005), 70 FR 53704 (September 9, 2005)
(SR-PCX-2005-58); Nasdaq Rule 4752(d)(2)(E) (Nasdaq Opening
Process), Securities Exchange Act Release No. 50405 (September 16,
2004), 69 FR 57118 (September 23, 2004) (SR-NASD-2004-071); and
Nasdaq Rule 4754(b)(2)(E) (Nasdaq Closing Cross), Securities
Exchange Act Release No. 49406 (March 11, 2004), 69 FR 12879 (March
18, 2004) (SR-NASD-2003-173).
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Applicability of Section 11(a) and (b) of the Exchange Act
Section 11(a) of the Exchange Act \47\ prohibits a member of a
national securities exchange from effecting transactions on that
exchange for its own account, the account of an associated person, or
an account over which it or its associated person exercises investment
discretion, unless an exception applies. The Commission notes that this
general prohibition would not generally impact trading on NYSE Bonds
because Rule 11a1-4(T) under the Exchange Act \48\ deems transactions
in bonds on a national securities exchange for a member's own account
to be consistent with Section 11(a). However, for those securities
trading on NYSE Bonds for which this exemption may not be available,
such as certain structured products, the Exchange has represented that
transactions effected on NYSE Bonds meet the requirements of Rule 11a2-
2(T) under the Exchange Act.\49\ Similarly, the Commission notes that
Section 11(b) of the Exchange Act \50\ and Rule 11b-1 thereunder,\51\
which pertain to specialists and market-makers, would not be implicated
because there would be no specialists or market makers on NYSE Bonds.
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\47\ 15 U.S.C. 78k(a).
\48\ 17 CFR 240.11a1-4(T).
\49\ The Commission notes that, to the extent that any security
trading on NYSE Bonds is an NMS security, see 17 CFR 242.600(b)(46),
the Commission is not making any finding herein as to whether NYSE
Bonds is compliant with the requirements of Regulation NMS under the
Exchange Act.
\50\ 15 U.S.C. 78k(b).
\51\ 17 CFR 240.11b-1.
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[[Page 14635]]
Applicability of Rule 10a-1 Under the Exchange Act
In its filing, NYSE states that: ``The staff of the Division of
Market Regulation of the Securities and Exchange Commission has stated
that it would not recommend that the Commission take enforcement action
if short sales in exchange-listed bonds and debentures are effected
without complying with SEC Rule 10a-1.'' \52\ By this filing, the
Exchange seeks continued effect of this position. The staff maintains
this position. However, the Commission notes that the staff's position
does not apply to convertible bonds.\53\ Accordingly, convertible bonds
would continue to be excluded from applicability of this position.
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\52\ See Bond Short Sale No-Action Position, supra note 19
(footnote omitted) (stating that, ``From and after the date of this
release until the Commission takes final action on the proposed
amendment to Rule 10a-1(b), the staff of the Division will not
recommend that the Commission take enforcement action under Rule
10a-1 if short sales in exchange-listed bonds and debentures are
effected without complying with the Rule'').
\53\ See id. (noting that convertible bonds are defined as
``equity securities'' in the Exchange Act and that ``Exchange Act
Section 3(a)(11), 15 U.S.C. 78c(a)(11), defines the term `equity
security' to include `any stock or similar security, or any security
convertible, with or without consideration, into such a security * *
*.' Short selling of convertible bonds * * * may have an impact on
the price of related exchange-traded equity securities'').
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V. Accelerated Approval
Pursuant to Section 19(b)(2) of the Exchange Act,\54\ the
Commission may not approve any proposed rule change prior to the 30th
day after the date of publication of notice of the filing thereof,
unless the Commission finds good cause for so doing and publishes its
reasons for so finding. In Amendment No. 3, the Exchange, among other
things:
---------------------------------------------------------------------------
\54\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
Revised proposed NYSE Rule 86(b) to indicate that, if
other NYSE rules relating to bonds conflict with the provisions of
proposed NYSE Rule 86, Rule 86 would control;
Eliminated references to the ``Floor'' of the Exchange to
make clear that NYSE Bonds is a fully electronic trading platform;
Noted that dealers trading municipal bonds must report
such transactions to the Municipal Securities Rulemaking Board
(``MSRB'') in accordance with MSRB Rule G-14;
Revised proposed NYSE Rule 86(b)(2)(E) to indicate that,
unless otherwise designated, an order will be treated as a day order;
Revised proposed NYSE Rule 86(b)(2)(G) to indicate that,
if no bids are submitted to a Bond Auction, the Indicative Match Price
will be the lowest offer price;
Revised proposed NYSE Rule 86(e) to clarify that the price
collars will only apply during ordinary trading and not during the
queuing of bond orders or during bond auctions;
Revised proposed NYSE Rule 86(h) to clarify that orders
designated only for the Opening Bond Trading Session that do not
execute in the Opening Bond Auction or Opening Bond Trading Session
will be eligible to participate in the Core Bond Auction and would be
cancelled if not executed in the Core Bond Auction;
Modified proposed NYSE Rule 86(i) to clarify that orders
may be entered into NYSE Bonds until 8 p.m. ET and to otherwise clarify
the operation of the three proposed bond trading sessions;
Revised proposed NYSE Rule 86(l) to indicate that,
beginning at 3:30 a.m. ET, the IMP for the Opening Bond Auction and the
Core Bond Auction, and any associated Imbalance, will be published by
the Exchange. In addition, the changes to proposed NYSE Rule 86(l)
further explain the functionalities of the Bond Auctions;
Clarified in proposed NYSE Rule 86(m) the possible
outcomes after review of potentially erroneous transactions by the
Reviewer and by the Clearly Erroneous Execution Panel. In addition, the
Exchange added factors that may be considered in the determination of a
Clearly Erroneous Execution;
Revised proposed NYSE Rule 86(n)(2)(G) to indicate that
orders that are eligible for execution in the Bond Halt Auction may be
cancelled at any time;
Revised portions of proposed NYSE Rule 86(o) related to a
sponsored access to NYSE Bonds to conform substantially to related
provisions of other national securities exchanges, including NYSE Arca;
\55\
---------------------------------------------------------------------------
\55\ See NYSE Arca Equities Rule 7.29.
---------------------------------------------------------------------------
Represented that transactions effected on NYSE Bonds meet
the requirements of Rule 11a2-2(T) under the Exchange Act and included
an accompanying discussion;
Represented that NYSE Regulation can effectively regulate
NYSE Bonds; and
Made other minor clarifying and technical changes to the
proposal.
The Commission believes that these changes do not raise any
significant or novel regulatory issues. Accordingly, the Commission
hereby finds good cause for approving the proposed rule change, as
modified by Amendment No. 3, prior to the 30th day after publishing
notice of the amended proposal in the Federal Register.
VI. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning Amendment No. 3, including whether Amendment No. 3
is consistent with the Exchange Act. Comments may be submitted by any
of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSE-2006-37 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-2006-37. 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 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-2006-37 and should be submitted on or before April 18, 2007.
[[Page 14636]]
VII. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\56\ that the proposed rule change (SR-NYSE-2006-37), as
amended, be, and it hereby is, approved on an accelerated basis.
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\56\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\57\
---------------------------------------------------------------------------
\57\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-5610 Filed 3-27-07; 8:45 am]
BILLING CODE 8010-01-P
