Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Rule 97, Limitation on Members' Trading Because of Block Positioning, 38643-38645 [E7-13593]
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Federal Register / Vol. 72, No. 134 / Friday, July 13, 2007 / Notices
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASD–2007–038 on the
subject line.
Paper Comments
pwalker on PROD1PC71 with NOTICES
• 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–NASD–2007–038. 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, 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 NASD. 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–NASD–2007–038 and
should be submitted on or before
August 3, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.8
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–13599 Filed 7–12–07; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
of the most significant aspects of such
statements.
[Release No. 34–56024; File No. SR–NYSE–
2007–61]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change Relating to
Rule 97, Limitation on Members’
Trading Because of Block Positioning
July 6, 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 July 6,
2007, the New York Stock Exchange
LLC (‘‘NYSE’’ 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 has designated
the proposed rule change as a ‘‘noncontroversial’’ rule change pursuant to
section 19(b)(3)(A) of the Act 3 and Rule
19b–4(f)(6) thereunder,4 which renders
the proposed rule change effective upon
filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
NYSE Rule 97 to permit members or
member organizations that hold long
positions as a result of block
transactions with customers to send
proprietary buy intermarket sweep
orders (‘‘ISOs’’) in the course of
facilitating another customer’s buy or
sell order. The text of the proposed rule
change is available on the NYSE’s Web
site (https://www.nyse.com), at the
NYSE, and at the Commission’s Public
Reference Room.
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. 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,
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
2 17
CFR 200.30–3(a)(12).
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1. Purpose
The Exchange is proposing to amend
NYSE Rule 97 in order to permit
member organizations that hold long
positions as a result of a block
transaction with a customer to execute
proprietary ISOs on a plus tick during
the last 20 minutes of the trading day if
they are required under Regulation
NMS 5 to send a buy ISO in the course
of facilitating another customer’s buy or
sell order during that time period.
NYSE Rule 97 governs block
facilitation transactions by NYSE
member organizations on behalf of
customers. The rule states that if, as a
result of facilitating one or more
customer sell order(s) in a stock during
the trading day, a member organization
ends up holding a long position in the
stock in a proprietary account, then
during the last 20 minutes of trading,
the member organization is prohibited
from buying such stock as principal on
a ‘‘plus tick’’ if the transaction would
take place at a price above the lowest
price at which it acquired the long
position. The Exchange states that the
underlying purpose of Rule 97 was to
address concerns that a member firm
might engage in manipulative practices
by attempting to ‘‘mark-up’’ the price of
a stock to enable the position acquired
in the course of block positioning to be
liquidated at a profit, or to maintain the
market at the price at which the position
was acquired.
Under Regulation NMS, member
organizations may not trade through a
protected quotation in another market,
but may satisfy their obligation to the
protected order by sending ISOs to the
protected market at the same time that
they send orders to the inferior-priced
market. Depending on the size of the
block that is being facilitated and the
size of the protected quotes, block
customers may—pursuant to Rules
600(b)(30)(ii) and 611(b)(6) of
Regulation NMS 6—decline to take and
process better priced executions that
result from the sending of the ISO
orders. This may occur, for example,
where the ISO amounts are de minimis
in relation to the size of the block being
facilitated. In those situations, the firm
would be required—based on the
customer’s instructions—to print the
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5 17
CFR 242.600 et seq.
CFR 242.600(b)(30)(ii) and 17 CFR
242.611(b)(6).
6 17
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Federal Register / Vol. 72, No. 134 / Friday, July 13, 2007 / Notices
block at the inferior price and send the
ISOs, which would be marked and
booked as principal (rather than as
agent).
The aforementioned may result in a
conflict between NYSE Rule 97 and
Regulation NMS. That is, if, during the
last 20 minutes of trading, a member
organization facilitates a customer order
that trades through protected bids or
offers, and in compliance with Rules
600(b)(30)(ii) and 611(b)(6) of
Regulation NMS, the member firm
simultaneously routes proprietary ISOs
to execute against the full displayed size
of any protected quotation in that
security (‘‘ISO facilitation’’), the ISO
facilitation could violate Rule 97 if the
ISO orders would trade on a plus tick
at a price above the lowest facilitation
price. In essence, the implementation of
Regulation NMS requires firms to
choose between violating Regulation
NMS or violating Rule 97.
To resolve this potential conflict, the
Exchange proposes adding an
exemption to Rule 97 so that when
facilitating a customer order that would
otherwise require the firm to either
violate Rule 97 or trade through
protected quotations, member
organizations can comply with their
Regulation NMS obligations without
also violating Rule 97.7 This exemption
would be available only when: (1) The
firm has acquired a proprietary position
as a result of a previous block
facilitation for a customer; (2) the
facilitation trade during the last 20
minutes of trading would cause the firm
to trade through a better priced offer on
another market, such that the firm is
obligated by Rule 611 of Regulation
NMS to send proprietary ISOs when it
facilitates the customer’s order; (3) the
customer has declined better-priced ISO
executions; and (4) the better-priced
offers in away markets are such that
NYSE Rule 97 would prohibit the firm
from sending a proprietary buy order. In
such cases, the firm would be permitted
to send the proprietary buy ISOs,
provided that the ISOs were limited in
quantity to the aggregate size of better
priced protected quotations in other
markets. For purposes of this
amendment, the Exchange further
proposes adopting the definitions of
Regulation NMS in connection with the
terms ‘‘protected quotation’’ and
‘‘intermarket sweep order.’’ 8 The
Exchange notes that the firm would still
be subject to the anti-manipulation
7 A similar issue arises under NYSE Rule 92,
which can also conflict with Regulation NMS Rule
611. See Securities Exchange Act Release No. 56017
(July 5, 2007) (SR–NYSE–2007–21).
8 See 17 CFR 242.600(b)(58) and (30).
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19:05 Jul 12, 2007
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provisions of the NYSE and
Commission rules and regulations.
The Exchange believes that the
exemption is appropriate in view of the
pending compliance date for Regulation
NMS and the fact that a firm’s intention
in these situations is not to manipulate
the market or to mark up its long
position, but rather to facilitate a
legitimate customer order. Under these
circumstances, the Exchange believes
that the amendment is in the public
interest, since it would facilitate
Regulation NMS compliance.
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 9 that an Exchange
have rules that are 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.
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 rule proposal was developed in
response to concerns expressed by
certain member organizations and the
Securities Industry and Financial
Markets Association (‘‘SIFMA’’), an
industry organization that represents the
interests of more than 650 securities
firms, banks and asset managers. During
the drafting of the rule filing and
proposed rule, SIFMA, on behalf of its
members, submitted materials for the
NYSE’s consideration in connection
with the relief requested. The Exchange
has incorporated these comments into
the final rule proposal, but the Exchange
has neither solicited nor received
written comments on the final proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change: (i)
Does not significantly affect the
protection of investors or the public
interest; (ii) does not impose any
significant burden on competition; and
(iii) does not become operative for 30
PO 00000
9 15
U.S.C. 78f(b)(5).
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days after the date of the 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 10 and Rule 19b–
4(f)(6) thereunder.11
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 12 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 13
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has
requested that the Commission waive
the 30-day operative delay. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest because it would
facilitate member compliance with their
respective intermarket sweep order
routing obligations under Rule 611 of
Regulation NMS.14 For these reasons,
the Commission designates that the
proposed rule change become operative
immediately.15
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
the rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
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
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). Pursuant to Rule 19b–
4(f)(6)(iii) under the Act, the Exchange is required
to give 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. The Exchange
has satisfied the five-day pre-filing requirement.
12 17 CFR 240.19b–4(f)(6).
13 17 CFR 240.19b–4(f)(6)(iii).
14 17 CFR 242.611(b)(6).
15 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
11 17
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Federal Register / Vol. 72, No. 134 / Friday, July 13, 2007 / Notices
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSE–2007–61 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–2007–61. 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, on official business days between
the hours of 10 a.m. and 3 p.m. Copies
of the filing also will be available for
inspection and copying at the principal
office of the Exchange. 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–
2007–61 and should be submitted on or
before August 3, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.16
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–13593 Filed 7–12–07; 8:45 am]
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16 17
19:05 Jul 12, 2007
https://www.Phlx.com/exchange/phlxrule-fil.html.
[Release No. 34–56030; File No. SR–Phlx–
2007–42]
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.
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Extend the Quarterly
Options Series Pilot Program
July 9, 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 June 27,
2007, the Philadelphia Stock Exchange,
Inc. (‘‘Exchange’’ or ‘‘Phlx’’) 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 has designated
this proposal as non-controversial under
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder,4 which
renders the proposed rule change
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Rules 1012 (Series of Options Open for
Trading) and 1101A (Terms of Option
Contracts) in order to extend for a
period of about one year an Exchange
pilot program (the ‘‘Phlx Pilot’’) to
permit the listing and trading of options
series that may be opened for trading on
any business day and that expire at the
close of business on the last business
day of a calendar quarter (‘‘Quarterly
Options’’ or ‘‘Quarterly Options
Series’’). The Phlx Pilot continues
through July 24, 2007.5
The text of the proposed rule change
is available at the Exchange, at the
Commission’s Public Reference Room,
and at the Exchange’s Web site at
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
5 See Securities Exchange Act Release No. 55301
(February 15, 2007), 72 FR 8238 (February 23, 2007)
(File No. SR–Phlx–2007–08) (‘‘Pilot Program
Release’’). The American Stock Exchange LLC,
Chicago Board Options Exchange, the International
Stock Exchange, Inc., and NYSE Arca, Inc. (f/k/a the
Pacific Stock Exchange, Inc.) have similar Quarterly
Options pilot programs that likewise continue
through July 2007.
2 17
CFR 200.30–3(a)(12).
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COMMISSION
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
In February 2007, the Exchange filed
a proposed rule change for immediate
effectiveness that allows the listing and
trading of Quarterly Options on the
Exchange under the Phlx Pilot.6 The
Exchange now proposes to extend the
Phlx Pilot for a period of about one year
so that the Exchange can continue to list
and trade Quarterly Options, within the
parameters specified in its Rules 1012
and 1101A, through July 10, 2008. The
terms of the Phlx Pilot will remain
unchanged.
In the Pilot Program Release, the
Commission indicated that if the
Exchange seeks extension, expansion, or
permanent approval of the Phlx Pilot, it
must submit a Phlx Pilot Report (the
‘‘Report’’).7 In connection with this
proposed rule change, the Exchange has
submitted a Report covering the period
February 21, 2007, through April 30,
2007. The Report reviews the
Exchange’s experience with the Phlx
Pilot and clearly supports the
Exchange’s belief that extension of the
Phlx Pilot is proper. Among other
6 See
id.
Pilot Program Release, supra note 5. The
Pilot Program Release indicates that the Report
must include, at a minimum: (1) Data and written
analysis on the open interest and trading volume in
the classes for which Quarterly Option Series were
opened; (2) an assessment of the appropriateness of
the options classes selected for the Phlx Pilot; (3)
an assessment of the impact of the Phlx Pilot on the
capacity of the Exchange, OPRA, and on market
data vendors (to the extent data from market data
vendors is available); (4) any capacity problems or
other problems that arose during the operation of
the Phlx Pilot and how the Exchange addressed
such problems; (5) any complaints that the
Exchange received during the operation of the Phlx
Pilot and how the Exchange addressed them; and
(6) any additional information that would assist in
assessing the operation of the Phlx Pilot.
7 See
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]]>Agencies
[Federal Register Volume 72, Number 134 (Friday, July 13, 2007)]
[Notices]
[Pages 38643-38645]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-13593]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56024; File No. SR-NYSE-2007-61]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to Rule 97, Limitation on Members' Trading Because of Block
Positioning
July 6, 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 July 6, 2007, the New York Stock Exchange LLC (``NYSE'' 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 has designated the proposed rule change as a ``non-
controversial'' rule change pursuant to section 19(b)(3)(A) of the Act
\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposed rule
change effective upon filing with the Commission. 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).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend NYSE Rule 97 to permit members or
member organizations that hold long positions as a result of block
transactions with customers to send proprietary buy intermarket sweep
orders (``ISOs'') in the course of facilitating another customer's buy
or sell order. The text of the proposed rule change is available on the
NYSE's Web site (https://www.nyse.com), at the NYSE, and at the
Commission's Public Reference Room.
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. 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 Exchange is proposing to amend NYSE Rule 97 in order to permit
member organizations that hold long positions as a result of a block
transaction with a customer to execute proprietary ISOs on a plus tick
during the last 20 minutes of the trading day if they are required
under Regulation NMS \5\ to send a buy ISO in the course of
facilitating another customer's buy or sell order during that time
period.
---------------------------------------------------------------------------
\5\ 17 CFR 242.600 et seq.
---------------------------------------------------------------------------
NYSE Rule 97 governs block facilitation transactions by NYSE member
organizations on behalf of customers. The rule states that if, as a
result of facilitating one or more customer sell order(s) in a stock
during the trading day, a member organization ends up holding a long
position in the stock in a proprietary account, then during the last 20
minutes of trading, the member organization is prohibited from buying
such stock as principal on a ``plus tick'' if the transaction would
take place at a price above the lowest price at which it acquired the
long position. The Exchange states that the underlying purpose of Rule
97 was to address concerns that a member firm might engage in
manipulative practices by attempting to ``mark-up'' the price of a
stock to enable the position acquired in the course of block
positioning to be liquidated at a profit, or to maintain the market at
the price at which the position was acquired.
Under Regulation NMS, member organizations may not trade through a
protected quotation in another market, but may satisfy their obligation
to the protected order by sending ISOs to the protected market at the
same time that they send orders to the inferior-priced market.
Depending on the size of the block that is being facilitated and the
size of the protected quotes, block customers may--pursuant to Rules
600(b)(30)(ii) and 611(b)(6) of Regulation NMS \6\--decline to take and
process better priced executions that result from the sending of the
ISO orders. This may occur, for example, where the ISO amounts are de
minimis in relation to the size of the block being facilitated. In
those situations, the firm would be required--based on the customer's
instructions--to print the
[[Page 38644]]
block at the inferior price and send the ISOs, which would be marked
and booked as principal (rather than as agent).
---------------------------------------------------------------------------
\6\ 17 CFR 242.600(b)(30)(ii) and 17 CFR 242.611(b)(6).
---------------------------------------------------------------------------
The aforementioned may result in a conflict between NYSE Rule 97
and Regulation NMS. That is, if, during the last 20 minutes of trading,
a member organization facilitates a customer order that trades through
protected bids or offers, and in compliance with Rules 600(b)(30)(ii)
and 611(b)(6) of Regulation NMS, the member firm simultaneously routes
proprietary ISOs to execute against the full displayed size of any
protected quotation in that security (``ISO facilitation''), the ISO
facilitation could violate Rule 97 if the ISO orders would trade on a
plus tick at a price above the lowest facilitation price. In essence,
the implementation of Regulation NMS requires firms to choose between
violating Regulation NMS or violating Rule 97.
To resolve this potential conflict, the Exchange proposes adding an
exemption to Rule 97 so that when facilitating a customer order that
would otherwise require the firm to either violate Rule 97 or trade
through protected quotations, member organizations can comply with
their Regulation NMS obligations without also violating Rule 97.\7\
This exemption would be available only when: (1) The firm has acquired
a proprietary position as a result of a previous block facilitation for
a customer; (2) the facilitation trade during the last 20 minutes of
trading would cause the firm to trade through a better priced offer on
another market, such that the firm is obligated by Rule 611 of
Regulation NMS to send proprietary ISOs when it facilitates the
customer's order; (3) the customer has declined better-priced ISO
executions; and (4) the better-priced offers in away markets are such
that NYSE Rule 97 would prohibit the firm from sending a proprietary
buy order. In such cases, the firm would be permitted to send the
proprietary buy ISOs, provided that the ISOs were limited in quantity
to the aggregate size of better priced protected quotations in other
markets. For purposes of this amendment, the Exchange further proposes
adopting the definitions of Regulation NMS in connection with the terms
``protected quotation'' and ``intermarket sweep order.'' \8\ The
Exchange notes that the firm would still be subject to the anti-
manipulation provisions of the NYSE and Commission rules and
regulations.
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\7\ A similar issue arises under NYSE Rule 92, which can also
conflict with Regulation NMS Rule 611. See Securities Exchange Act
Release No. 56017 (July 5, 2007) (SR-NYSE-2007-21).
\8\ See 17 CFR 242.600(b)(58) and (30).
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The Exchange believes that the exemption is appropriate in view of
the pending compliance date for Regulation NMS and the fact that a
firm's intention in these situations is not to manipulate the market or
to mark up its long position, but rather to facilitate a legitimate
customer order. Under these circumstances, the Exchange believes that
the amendment is in the public interest, since it would facilitate
Regulation NMS compliance.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \9\ that an Exchange have rules that
are 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.
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\9\ 15 U.S.C. 78f(b)(5).
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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 rule proposal was developed in response to concerns expressed
by certain member organizations and the Securities Industry and
Financial Markets Association (``SIFMA''), an industry organization
that represents the interests of more than 650 securities firms, banks
and asset managers. During the drafting of the rule filing and proposed
rule, SIFMA, on behalf of its members, submitted materials for the
NYSE's consideration in connection with the relief requested. The
Exchange has incorporated these comments into the final rule proposal,
but the Exchange has neither solicited nor received written comments on
the final proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change: (i) Does not significantly affect
the protection of investors or the public interest; (ii) does not
impose any significant burden on competition; and (iii) does not become
operative for 30 days after the date of the 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 \10\ and
Rule 19b-4(f)(6) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii)
under the Act, the Exchange is required to give 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.
The Exchange has satisfied the five-day pre-filing requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \12\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \13\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay. The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because it would facilitate member compliance with their respective
intermarket sweep order routing obligations under Rule 611 of
Regulation NMS.\14\ For these reasons, the Commission designates that
the proposed rule change become operative immediately.\15\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ 17 CFR 242.611(b)(6).
\15\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate the rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
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
[[Page 38645]]
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSE-2007-61 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-2007-61. 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, on official business
days between the hours of 10 a.m. and 3 p.m. Copies of the filing also
will be available for inspection and copying at the principal office of
the Exchange. 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-2007-61 and should be submitted on or before August 3, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-13593 Filed 7-12-07; 8:45 am]
BILLING CODE 8010-01-P
