Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to NYSE Arca Rule 7.20 and 7.31, 17975-17976 [E7-6710]

Download as PDF Federal Register / Vol. 72, No. 68 / Tuesday, April 10, 2007 / Notices For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–6675 Filed 4–9–07; 8:45 am] Reference Room, and https:// www.nyse.com. BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55578; File No. SR– NYSEArca–2007–29] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to NYSE Arca Rule 7.20 and 7.31 April 4, 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 20, 2007, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Exchange filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6) thereunder, which renders it effective upon filing with the Commission.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. cprice-sewell on PROD1PC66 with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change NYSE Arca, through its wholly owned subsidiary, NYSE Arca Equities, Inc. (‘‘NYSE Arca Equities’’), is proposing to amend its rules governing NYSE Arca, LLC (‘‘NYSE Arca Marketplace’’), the equities trading facility of NYSE Arca Equities. With this filing, the Exchange proposes to clarify: (1) That Equity Trading Permit (‘‘ETP’’) Holders who are not registered Market Makers 5 are prohibited from entering Q Orders pursuant to NYSE Arca Equities Rule 7.20(a), and (2) when Q Orders will automatically repost pursuant to NYSE Arca Equities Rule 7.31(l). The text of the proposed rule change is available at the Exchange, the Commission’s Public 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). 5 See NYSE Arca Rule 1.1(u). 15:22 Apr 09, 2007 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Pursuant to NYSE Arca Equities Rule 7.23(a)(1) (Obligations of Market Makers), Market Makers are required to maintain continuous, two-sided Q Orders in those securities in which the Market Maker is registered to trade. NYSE Arca Equities Rule 7.31(k)(1)(A) provides that a Market Maker may instruct the NYSE Arca Marketplace before 6:28 a.m. (Pacific Time) to enter a Q Order on its behalf at price levels set forth in Rule 7.31(k)(1)(A).6 Furthermore, Rule 7.31(k) provides that upon execution, the Q Order entered pursuant to the Market Maker’s instructions will automatically repost with the original size at $10 below the original bid or $10 above the original offer, but never below $0.01. The amendment to Rule 7.31 reflected in this rule filing is consistent with the intent of the rule and how the system currently operates. Specifically, such automatic reposting will not occur if the Market Maker initially enters the Q Order without a reserve size, or if the Market Maker initially enters the Q Order with a reserve size and such reserve size is exhausted. The proposed amendment clarifies that under such circumstances, a Market Maker will be responsible for reposting a new Q Order in the security in order to remain in compliance with its continuous Q Order obligation pursuant to Rule 7.23(a)(1). In addition, due to the broad definition of ‘‘Q Order’’ in Rule 7.31(k)(1), ETP Holders, who are not registered Market Makers, have been 6 These price levels are: (1) At the last price and size entered by the Market Maker during the previous trading day, either including or excluding reserve size; (2) at a specified percentage from the best bid or offer; or (3) at the standard Q defined as $0.01 bid and 2 times the previous day’s close for the offer with specified display and reserve sizes. 14 17 VerDate Aug<31>2005 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the NYSE Arca included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The Exchange has prepared summaries set forth in Sections A, B, and C below of the most significant aspects of such statements. Jkt 211001 PO 00000 Frm 00160 Fmt 4703 Sfmt 4703 17975 improperly acting as Market Makers by entering Q Orders on the NYSE Arca Marketplace. In order to prevent this practice, the Corporation is clarifying the language in NYSE Arca Equities Rule 7.20(a) to prohibit specifically ETP Holders not registered as Market Makers from acting as Market Markers (i.e., submitting Q Orders) and make Rule 7.20(a) more consistent with the proposed changes to Rule 7.31(k)(l). 2. Statutory Basis The proposed rule change is consistent with Section 6(b) 7 of the Act, in general, and furthers the objectives of Section 6(b)(5) 8 in particular in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. B. Self Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) 9 and Rule 19b–4(f)(6) thereunder.10 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, 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). 8 15 E:\FR\FM\10APN1.SGM 10APN1 17976 Federal Register / Vol. 72, No. 68 / Tuesday, April 10, 2007 / Notices or otherwise in furtherance of the purposes of the Act. NYSE Arca has asked the Commission to waive the five-day pre-filing notice requirement and the 30-day operative delay. The Commission believes such waivers are consistent with the protection of investors and the public interest because they would permit the Exchange to codify the proposed clarifications without further delay.11 For this reason, the Commission designates the proposal to be operative upon filing with the Commission. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: cprice-sewell on PROD1PC66 with NOTICES Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2007–29 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2007–29. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro/shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the NYSE Arca. 11 For purposes only of waiving the 30-day preoperative period, the Commission has considered the proposed rule’s impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). VerDate Aug<31>2005 15:22 Apr 09, 2007 Jkt 211001 All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File number SR–NYSEArca–2007–29 and should be submitted on or before May 1, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–6710 Filed 4–9–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55579; File No. SR–OCC– 2007–02] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change Relating to Rate-Modified Foreign Currency Options April 4, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on March 5, 2007, The Options Clearing Corporation (‘‘OCC’’) 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 primarily by OCC. The Commission is publishing this notice and order to solicit comments on the proposed rule change from interested persons and to grant accelerated approval of the proposal. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change will allow OCC to clear and settle rate-modified foreign currency options (‘‘RateModified FCOs’’) which have been proposed and approved for trading by the International Securities Exchange (‘‘ISE’’).2 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 Securities Exchange Act Release No. 55575 (April 3, 2007) (File No. SR–ISE–2006–59). For notice of the proposal, see Securities Exchange Act Release No. 55336 (February 23, 2007), 72 FR 9364 (March 1, 2007). 1 15 PO 00000 Frm 00161 Fmt 4703 Sfmt 4703 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OCC 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. OCC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements.3 (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The purpose of this rule change is to accommodate a request from ISE that OCC clear and settle Rate-Modified FCOs. OCC’s By-Laws and Rules currently provide for the clearance and settlement of cash-settled foreign currency options (‘‘Cash-Settled FCOs’’).4 However, unlike the CashSettled FCOs currently covered by OCC’s By-Laws and Rules, the underlying interest for Rate-Modified FCOs is stated in terms of the exchange rate between a ‘‘currency pair,’’ one of which may be the U.S. dollar or both of which may be non-U.S. currencies, as modified by a ‘‘rate modifier’’ determined by ISE. The rate modifier for Rate-Modified FCOs is selected so that the underlying modified rate looks similar to an index. The exchange rates underlying RateModified FCOs may or may not be stated in the same way that they are conventionally quoted in the spot market. For example, exchange rates between the U.S. dollar and the euro are generally quoted as dollars per euro on the spot market, but the rate modifying a Rate-Modified FCO could be stated as euros per dollar. The number by which the exchange rate is multiplied to determine the modified rate for a particular class of options will be 1, 10 or 100 depending on the level of the exchange rate in question. For purposes of determining an exercise settlement amount, RateModified FCOs would use a multiplier 3 The Commission has modified parts of these statements. 4 The Commission recently approved a proposed rule change filed by OCC to accommodate CashSettled FCOs traded on the Philadelphia Stock Exchange (‘‘Phlx’’). Securities Exchange Act Release No. 54935 (December 13, 2006), 71 FR 76417 (December 20, 2006) (File No. SR–OCC–2006–10). The rule changes that were made with respect to the Phlx Cash-Settled FCOs will also apply to RateModified FCOs. E:\FR\FM\10APN1.SGM 10APN1

Agencies

[Federal Register Volume 72, Number 68 (Tuesday, April 10, 2007)]
[Notices]
[Pages 17975-17976]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-6710]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55578; File No. SR-NYSEArca-2007-29]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to NYSE 
Arca Rule 7.20 and 7.31

 April 4, 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 20, 2007, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been substantially prepared by the Exchange. The Exchange filed 
the proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ 
and Rule 19b-4(f)(6) thereunder, which renders it effective upon filing 
with the Commission.\4\ The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NYSE Arca, through its wholly owned subsidiary, NYSE Arca Equities, 
Inc. (``NYSE Arca Equities''), is proposing to amend its rules 
governing NYSE Arca, LLC (``NYSE Arca Marketplace''), the equities 
trading facility of NYSE Arca Equities. With this filing, the Exchange 
proposes to clarify: (1) That Equity Trading Permit (``ETP'') Holders 
who are not registered Market Makers \5\ are prohibited from entering Q 
Orders pursuant to NYSE Arca Equities Rule 7.20(a), and (2) when Q 
Orders will automatically repost pursuant to NYSE Arca Equities Rule 
7.31(l). The text of the proposed rule change is available at the 
Exchange, the Commission's Public Reference Room, and https://
www.nyse.com.
---------------------------------------------------------------------------

    \5\ See NYSE Arca Rule 1.1(u).
---------------------------------------------------------------------------

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

    In its filing with the Commission, the NYSE Arca included 
statements concerning the purpose of, and basis for, the proposed rule 
change and discussed any comments it received on the proposed rule 
change. The Exchange has prepared summaries set forth in Sections A, B, 
and C below of the most significant aspects of such statements.

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

1. Purpose
    Pursuant to NYSE Arca Equities Rule 7.23(a)(1) (Obligations of 
Market Makers), Market Makers are required to maintain continuous, two-
sided Q Orders in those securities in which the Market Maker is 
registered to trade. NYSE Arca Equities Rule 7.31(k)(1)(A) provides 
that a Market Maker may instruct the NYSE Arca Marketplace before 6:28 
a.m. (Pacific Time) to enter a Q Order on its behalf at price levels 
set forth in Rule 7.31(k)(1)(A).\6\ Furthermore, Rule 7.31(k) provides 
that upon execution, the Q Order entered pursuant to the Market Maker's 
instructions will automatically repost with the original size at $10 
below the original bid or $10 above the original offer, but never below 
$0.01.
---------------------------------------------------------------------------

    \6\ These price levels are: (1) At the last price and size 
entered by the Market Maker during the previous trading day, either 
including or excluding reserve size; (2) at a specified percentage 
from the best bid or offer; or (3) at the standard Q defined as 
$0.01 bid and 2 times the previous day's close for the offer with 
specified display and reserve sizes.
---------------------------------------------------------------------------

    The amendment to Rule 7.31 reflected in this rule filing is 
consistent with the intent of the rule and how the system currently 
operates. Specifically, such automatic reposting will not occur if the 
Market Maker initially enters the Q Order without a reserve size, or if 
the Market Maker initially enters the Q Order with a reserve size and 
such reserve size is exhausted. The proposed amendment clarifies that 
under such circumstances, a Market Maker will be responsible for 
reposting a new Q Order in the security in order to remain in 
compliance with its continuous Q Order obligation pursuant to Rule 
7.23(a)(1).
    In addition, due to the broad definition of ``Q Order'' in Rule 
7.31(k)(1), ETP Holders, who are not registered Market Makers, have 
been improperly acting as Market Makers by entering Q Orders on the 
NYSE Arca Marketplace. In order to prevent this practice, the 
Corporation is clarifying the language in NYSE Arca Equities Rule 
7.20(a) to prohibit specifically ETP Holders not registered as Market 
Makers from acting as Market Markers (i.e., submitting Q Orders) and 
make Rule 7.20(a) more consistent with the proposed changes to Rule 
7.31(k)(l).
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \7\ of the 
Act, in general, and furthers the objectives of Section 6(b)(5) \8\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) \9\ and Rule 19b-4(f)(6) 
thereunder.\10\ At any time within 60 days of the filing of the 
proposed rule change, the Commission may summarily abrogate such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors,

[[Page 17976]]

or otherwise in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    NYSE Arca has asked the Commission to waive the five-day pre-filing 
notice requirement and the 30-day operative delay. The Commission 
believes such waivers are consistent with the protection of investors 
and the public interest because they would permit the Exchange to 
codify the proposed clarifications without further delay.\11\ For this 
reason, the Commission designates the proposal to be operative upon 
filing with the Commission.
---------------------------------------------------------------------------

    \11\ For purposes only of waiving the 30-day pre-operative 
period, the Commission has considered the proposed rule's impact on 
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send e-mail to rule-comments@sec.gov. Please include File 
Number SR-NYSEArca-2007-29 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NYSEArca-2007-29. 
This file number should be included on the subject line if e-mail is 
used. To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (https://www.sec.gov/
rules/sro/shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room. Copies of such 
filing will also be available for inspection and copying at the 
principal office of the NYSE Arca. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File number SR-NYSEArca-2007-29 and should be submitted on or before 
May 1, 2007.

    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. E7-6710 Filed 4-9-07; 8:45 am]
BILLING CODE 8010-01-P
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