Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving Proposed Rule Change and Amendment No. 1 Thereto Relating to Trading a Class of Options Without Designating a Lead Market Maker, 37557-37558 [E7-13311]

Download as PDF Federal Register / Vol. 72, No. 131 / Tuesday, July 10, 2007 / Notices 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of ISE. 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–ISE–2007–49 and should be submitted on or before July 31, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.10 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–13308 Filed 7–9–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56001; File No. SR– NYSEArca–2007–34] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving Proposed Rule Change and Amendment No. 1 Thereto Relating to Trading a Class of Options Without Designating a Lead Market Maker July 2, 2007. jlentini on PROD1PC65 with NOTICES On April 3, 2007, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 the proposed rule change to allow an options issue to trade without designating a Lead Market Maker (‘‘LMM’’). On May 2, 2007, NYSE Arca filed Amendment No. 1 to the proposed rule change. The proposed rule change, as amended, was published for comment in the Federal Register on May 29, 2007.3 The Commission received no comments regarding the proposal. This order approves the 10 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 55789 (May 21, 2007), 72 FR 29568. 1 15 VerDate Aug<31>2005 16:17 Jul 09, 2007 Jkt 211001 proposed rule change as modified by Amendment No. 1. The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.4 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,5 which requires that the rules of the an exchange be 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. The Exchange proposes to trade options classes without designating an LMM, yet still meet the requirements of the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (‘‘Linkage Plan’’).6 Because the Exchange believes that certain highly liquid, highly active options classes have sufficient participation by OTP Holders 7 and do not need an LMM to foster liquidity, the Exchange proposes to remove from NYSE Arca Rule 6.35 the requirement that an LMM be assigned to every option class.8 The Exchange also proposes other rule changes to accommodate the requirements of the Linkage Plan. Pursuant to the Linkage Plan, a Principal Acting as Agent (‘‘P/A’’) Order may be routed to another exchange only through the principal account of a market maker that is authorized to represent customer orders, ‘‘reflecting the terms of a related unexecuted Customer order for which the Market Maker is acting as agent.’’ 9 On NYSE Arca, the LMM currently is the 4 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 5 15 U.S.C. 78f(b)(5). 6 On July 28, 2000, the Commission approved the Options Intermarket Linkage (‘‘Linkage’’) proposed by American Stock Exchange LLC, Chicago Board Options Exchange, Incorporated, and International Securities Exchange, LLC. See Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000). Subsequently, Philadelphia Stock Exchange, Inc., Pacific Exchange, Inc. (n/k/a NYSE Arca), and Boston Stock Exchange, Inc. joined the Linkage Plan. See Securities Exchange Act Release Nos. 43573 (November 16, 2000), 65 FR 70851 (November 28, 2000); 43574 (November 16, 2000), 65 FR 70850 (November 28, 2000); and 49198 (February 5, 2004), 69 FR 7029 (February 12, 2004). 7 See NYSE Arca Rule 1.1(q) for the definition of ‘‘OTP Holder.’’ 8 In not designating an LMM in certain option issues, orders would be processed in price/time priority, meaning any market participant, regardless of status, may gain priority by improving the market. 9 See Section 2(16)(a) of the Linkage Plan. PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 37557 responsible Market Maker for outbound P/A Orders sent through the Intermarket Options Linkage (‘‘Linkage’’). The Exchange now proposes to allow for the designation of a Market Maker, assigned on a rotating basis, as the responsible Intermarket Linkage Market Maker (‘‘IMM’’) 10 for outbound P/A Orders. Currently, Market Makers on the Exchange other than LMMs are not permitted under the Exchange’s current rules to act as an agent on behalf of an order submitted to the Exchange.11 Therefore, the Exchange proposes to amend NYSE Arca Rule 6.38(a) to provide an exception for a Market Maker acting as an IMM for the purpose of settling P/A Orders sent to another exchange pursuant to NYSE Arca Rules 6.92 and 6.93. To enable the IMM to carry out its agency responsibilities with regard to P/A Orders submitted through the Linkage, the IMM would be required to submit prior written instructions to the Exchange for the routing of any P/A Orders through the Linkage. Although the Exchange intends to rely solely on the use of its outbound routing broker to access the quotes of other exchanges when the Exchange is not disseminating the national best bid or offer, there may be instances when the Exchange’s routing broker is not available because of system malfunctions. Therefore, the Exchange proposes that designated IMMs be responsible for outbound P/A Orders sent through the Linkage. The Exchange also proposes to amend NYSE Arca Rule 6.93 to clarify that the Exchange will be responsible for the receipt, processing, and execution of inbound Linkage orders received from other exchanges. Linkage orders sent to NYSE Arca are routed directly to the trading system for immediate automatic execution. Any remaining unexecuted order or portion of an order would be immediately returned by the Exchange to the originating away market. The Commission believes that the proposed rule change is reasonably designed in that it permits the Exchange to not utilize an LMM in option classes where the Exchange does not believe an LMM is required and promotes the 10 The IMM would be selected from the pool of all Market Makers who have been appointed in the particular class. Market Makers requesting appointment to an options class would need to agree to participate in the rotation of IMM assignment. 11 See NYSE Arca Rule 6.38(b)(1), which provides that Market Makers other than LMMs are restricted from acting as a principal and an agent in the same issue on the same business day. See also NYSE Arca Rule 6.38(b)(5), which provides Market Makers are restricted from acting as a floor broker in options covering the same underlying security to which its primary appointment extends. E:\FR\FM\10JYN1.SGM 10JYN1 37558 Federal Register / Vol. 72, No. 131 / Tuesday, July 10, 2007 / Notices principle of price/time priority on the Exchange. Further, the Commission believes that designating IMMs for the purpose of sending P/A Orders to away markets is not inconsistent with the Linkage Plan, because, among other things, the proposal will facilitate the sending of P/A Orders to other exchanges through Linkage in accordance with the requirements of the Linkage Plan’s definition of P/A Orders. In addition, the Commission also believes the proposal clarifies the Exchange’s role in the processing of orders it receives through Linkage. It is therefore ordered, pursuant to Section 19(b)(2) of the Act,12 that the proposed rule change (SR–NYSEArca– 2007–34), as modified by Amendment No. 1, be, and it hereby is, approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.13 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–13311 Filed 7–9–07; 8:45 am] BILLING CODE 8010–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #10917 and #10918] Iowa Disaster #IA–00009 This is a notice of an Administrative declaration of a disaster for the State of IOWA dated 06/28/2007. Incident: Severe Storms and Tornadoes. Incident Period: 06/01/2007 and continuing. SUMMARY: Effective Date: 06/28/2007. Physical Loan Application Deadline Date: 08/27/2007. Economic Injury (EIDL) Loan Application Deadline Date: 03/28/2008. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the Administrator’s disaster declaration, applications for disaster loans may be jlentini on PROD1PC65 with NOTICES 12 15 13 17 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). VerDate Aug<31>2005 16:17 Jul 09, 2007 Jkt 211001 Homeowners With Credit Available Elsewhere ......................... Homeowners Without Credit Available Elsewhere .................. Businesses With Credit Available Elsewhere ................................. Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere .................. Other (Including Non-Profit Organizations) With Credit Available Elsewhere ................................. Businesses And Non-Profit Organizations Without Credit Available Elsewhere ......................... A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416 SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the Administrator’s disaster declaration, applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by Percent the disaster: Primary County: Tallahatchie. 5.750 Contiguous Counties: Mississippi: Coahoma, Grenada, Leflore, Panola, 2.875 Quitman, Sunflower, Yalobusha. 8.000 The Interest Rates are: FOR FURTHER INFORMATION CONTACT: Percent 4.000 5.250 4.000 The number assigned to this disaster for physical damage is 10917 B and for economic injury is 10918 0. The States which received an EIDL Declaration # are Iowa and Illinois. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) U.S. Small Business Administration. ACTION: Notice. AGENCY: DATES: filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties: Louisa, Muscatine. Contiguous Counties: Iowa: Cedar, Des Moines, Henry, Johnson, Scott, Washington. Illinois: Mercer, Rock Island. The Interest Rates are: Dated: June 28, 2007. Steven C. Preston, Administrator. [FR Doc. E7–13284 Filed 7–9–07; 8:45 am] Homeowners With Credit Available Elsewhere ......................... Homeowners Without Credit Available Elsewhere .................. Businesses With Credit Available Elsewhere ................................. Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere .................. Other (Including Non-Profit Organizations) With Credit Available Elsewhere ................................. Businesses and Non-Profit Organizations Without Credit Available Elsewhere ......................... 5.750 2.875 8.000 4.000 5.250 4.000 BILLING CODE 8025–01–P The number assigned to this disaster for physical damage is 10915 B and for economic injury is 10916 0. The State which received an EIDL Declaration # is Mississippi. SMALL BUSINESS ADMINISTRATION (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) [Disaster Declaration #10915 and #10916] Mississippi Disaster #MS–00011 U.S. Small Business Administration. ACTION: Notice. AGENCY: BILLING CODE 8025–01–P SUMMARY: This is a notice of an Administrative declaration of a disaster for the State of Mississippi dated 06/28/ 2007. Incident: Severe Storms and Flooding. Incident Period: 06/19/2007. DATES: Effective Date: 06/28/2007. Physical Loan Application Deadline Date: 08/27/2007. Economic Injury (EIDL) Loan Application Deadline Date: 03/28/2008. ADDRESSES: Submit completed loan applications to:U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 Dated: June 28, 2007. Steven Preston, Administrator. [FR Doc. E7–13286 Filed 7–9–07; 8:45 am] SMALL BUSINESS ADMINISTRATION [ Disaster Declaration #10919 and #10920] Texas Disaster #TX–00254 U.S. Small Business Administration. ACTION: Notice. AGENCY: SUMMARY: This is a Notice of the Presidential declaration of a major disaster for the State of Texas (FEMA– 1709–DR), dated 06/29/2007. Incident: Severe Storms, Tornadoes, and Flooding. Incident Period: 06/16/2007 through 06/18/2007. E:\FR\FM\10JYN1.SGM 10JYN1

Agencies

[Federal Register Volume 72, Number 131 (Tuesday, July 10, 2007)]
[Notices]
[Pages 37557-37558]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-13311]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56001; File No. SR-NYSEArca-2007-34]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving 
Proposed Rule Change and Amendment No. 1 Thereto Relating to Trading a 
Class of Options Without Designating a Lead Market Maker

July 2, 2007.
    On April 3, 2007, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ the proposed rule change to 
allow an options issue to trade without designating a Lead Market Maker 
(``LMM''). On May 2, 2007, NYSE Arca filed Amendment No. 1 to the 
proposed rule change. The proposed rule change, as amended, was 
published for comment in the Federal Register on May 29, 2007.\3\ The 
Commission received no comments regarding the proposal. This order 
approves the proposed rule change as modified by Amendment No. 1.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55789 (May 21, 
2007), 72 FR 29568.
---------------------------------------------------------------------------

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\4\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\5\ which requires that the 
rules of the an exchange be 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.
---------------------------------------------------------------------------

    \4\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange proposes to trade options classes without designating 
an LMM, yet still meet the requirements of the Plan for the Purpose of 
Creating and Operating an Intermarket Option Linkage (``Linkage 
Plan'').\6\ Because the Exchange believes that certain highly liquid, 
highly active options classes have sufficient participation by OTP 
Holders \7\ and do not need an LMM to foster liquidity, the Exchange 
proposes to remove from NYSE Arca Rule 6.35 the requirement that an LMM 
be assigned to every option class.\8\
---------------------------------------------------------------------------

    \6\ On July 28, 2000, the Commission approved the Options 
Intermarket Linkage (``Linkage'') proposed by American Stock 
Exchange LLC, Chicago Board Options Exchange, Incorporated, and 
International Securities Exchange, LLC. See Securities Exchange Act 
Release No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000). 
Subsequently, Philadelphia Stock Exchange, Inc., Pacific Exchange, 
Inc. (n/k/a NYSE Arca), and Boston Stock Exchange, Inc. joined the 
Linkage Plan. See Securities Exchange Act Release Nos. 43573 
(November 16, 2000), 65 FR 70851 (November 28, 2000); 43574 
(November 16, 2000), 65 FR 70850 (November 28, 2000); and 49198 
(February 5, 2004), 69 FR 7029 (February 12, 2004).
    \7\ See NYSE Arca Rule 1.1(q) for the definition of ``OTP 
Holder.''
    \8\ In not designating an LMM in certain option issues, orders 
would be processed in price/time priority, meaning any market 
participant, regardless of status, may gain priority by improving 
the market.
---------------------------------------------------------------------------

    The Exchange also proposes other rule changes to accommodate the 
requirements of the Linkage Plan. Pursuant to the Linkage Plan, a 
Principal Acting as Agent (``P/A'') Order may be routed to another 
exchange only through the principal account of a market maker that is 
authorized to represent customer orders, ``reflecting the terms of a 
related unexecuted Customer order for which the Market Maker is acting 
as agent.'' \9\ On NYSE Arca, the LMM currently is the responsible 
Market Maker for outbound P/A Orders sent through the Intermarket 
Options Linkage (``Linkage''). The Exchange now proposes to allow for 
the designation of a Market Maker, assigned on a rotating basis, as the 
responsible Intermarket Linkage Market Maker (``IMM'') \10\ for 
outbound P/A Orders.
---------------------------------------------------------------------------

    \9\ See Section 2(16)(a) of the Linkage Plan.
    \10\ The IMM would be selected from the pool of all Market 
Makers who have been appointed in the particular class. Market 
Makers requesting appointment to an options class would need to 
agree to participate in the rotation of IMM assignment.
---------------------------------------------------------------------------

    Currently, Market Makers on the Exchange other than LMMs are not 
permitted under the Exchange's current rules to act as an agent on 
behalf of an order submitted to the Exchange.\11\ Therefore, the 
Exchange proposes to amend NYSE Arca Rule 6.38(a) to provide an 
exception for a Market Maker acting as an IMM for the purpose of 
settling P/A Orders sent to another exchange pursuant to NYSE Arca 
Rules 6.92 and 6.93. To enable the IMM to carry out its agency 
responsibilities with regard to P/A Orders submitted through the 
Linkage, the IMM would be required to submit prior written instructions 
to the Exchange for the routing of any P/A Orders through the Linkage. 
Although the Exchange intends to rely solely on the use of its outbound 
routing broker to access the quotes of other exchanges when the 
Exchange is not disseminating the national best bid or offer, there may 
be instances when the Exchange's routing broker is not available 
because of system malfunctions. Therefore, the Exchange proposes that 
designated IMMs be responsible for outbound P/A Orders sent through the 
Linkage.
---------------------------------------------------------------------------

    \11\ See NYSE Arca Rule 6.38(b)(1), which provides that Market 
Makers other than LMMs are restricted from acting as a principal and 
an agent in the same issue on the same business day. See also NYSE 
Arca Rule 6.38(b)(5), which provides Market Makers are restricted 
from acting as a floor broker in options covering the same 
underlying security to which its primary appointment extends.
---------------------------------------------------------------------------

    The Exchange also proposes to amend NYSE Arca Rule 6.93 to clarify 
that the Exchange will be responsible for the receipt, processing, and 
execution of inbound Linkage orders received from other exchanges. 
Linkage orders sent to NYSE Arca are routed directly to the trading 
system for immediate automatic execution. Any remaining unexecuted 
order or portion of an order would be immediately returned by the 
Exchange to the originating away market.
    The Commission believes that the proposed rule change is reasonably 
designed in that it permits the Exchange to not utilize an LMM in 
option classes where the Exchange does not believe an LMM is required 
and promotes the

[[Page 37558]]

principle of price/time priority on the Exchange. Further, the 
Commission believes that designating IMMs for the purpose of sending P/
A Orders to away markets is not inconsistent with the Linkage Plan, 
because, among other things, the proposal will facilitate the sending 
of P/A Orders to other exchanges through Linkage in accordance with the 
requirements of the Linkage Plan's definition of P/A Orders. In 
addition, the Commission also believes the proposal clarifies the 
Exchange's role in the processing of orders it receives through 
Linkage.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-NYSEArca-2007-34), as 
modified by Amendment No. 1, be, and it hereby is, approved.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-13311 Filed 7-9-07; 8:45 am]
BILLING CODE 8010-01-P