Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Accelerated Approval of Proposed Rule Change and Amendment No.1 Thereto Relating to Amendments to Rule 12 to Provide Guidance Regarding New and Pending Arbitration Claims in Light of the Consolidation of NYSE Regulation into NASD DR, 46693-46694 [E7-16396]

Download as PDF Federal Register / Vol. 72, No. 161 / Tuesday, August 21, 2007 / Notices 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 the BSE. 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–BSE–2007–40 and should be submitted on or before September 11, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.8 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–16393 Filed 8–20–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56258; File No. SR– NYSEArca–2007–59] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Accelerated Approval of Proposed Rule Change and Amendment No.1 Thereto Relating to Amendments to Rule 12 to Provide Guidance Regarding New and Pending Arbitration Claims in Light of the Consolidation of NYSE Regulation into NASD DR August 15, 2007. rmajette on PROD1PC64 with NOTICES I. Introduction On June 26, 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 a proposed rule change amending NYSE Arca Rule 12. On July 13, 2007, NYSE Arca filed Amendment No. 1 to the proposed rule 8 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Aug<31>2005 15:08 Aug 20, 2007 Jkt 211001 change.3 On July 23, 2007, the Commission published for comment the proposed rule change, as amended, in the Federal Register.4 The Commission received no comments on the proposal. This order approves the proposed rule change, as amended, on an accelerated basis. II. Description of the Proposal The purpose of the rule change is to provide guidance regarding both new and pending NYSE Arca Rule 12 arbitration claims in light of the consolidation of the member firm regulation function of NYSE Regulation, Inc. (‘‘NYSE Regulation’’) with the National Association of Securities Dealers, Inc. (‘‘NASD’’).5 On July 30, 2007,6 NYSE Regulation ceased to provide an arbitration program, and its arbitration department (‘‘NYSE Arbitration’’) was consolidated with that of NASD Dispute Resolution, Inc. (‘‘NASD DR’’). Furthermore, NYSE Arbitration Rules 600 through 639, and Rule 347, only apply to NYSE arbitration cases pending prior to August 6, 2007, and, thereafter, the NASD DR Codes of Arbitration Procedure apply to any new cases previously subject to NYSE rules.7 Because the consolidation has already occurred, the effective date of this rule change will be when the Commission approves this proposed rule change (SR–NYSEArca–2007–59) (‘‘Effective Date’’). As a result, on and after July 30, 2007, all arbitration claims filed prior to the Effective Date, and previously subject to Rule 12 or NYSE Regulation rules, will be administered by NASD DR 8 pursuant to a Regulatory Services 3 In Amendment No. 1, which supplemented the original filing, the Exchange clarified the applicability of Rule 12 as it was in effect on or prior to January 31, 2007. 4 See Securities Exchange Act Release No. 556071 (July 13, 2007), 72 FR 40184 (July 23, 2007). 5 On July 26, 2007, the Commission approved a proposed rule change filed by NASD to amend NASD’s Certificate of Incorporation to reflect its name change to Financial Industry Regulatory Authority Inc., or FINRA, in connection with the consolidation of the member firm regulatory functions of NASD and NYSE Regulation. See Securities Exchange Act Release No. 56146 (July 26, 2007), 72 FR 42190 (Aug. 1, 2007) (SR–NASD– 2007–053). 6 The consolidation of the member firm regulatory functions did not occur until July 30, 2007, when definitive agreements were signed by the NYSE and NASD. Id. 7 See Securities Exchange Act Release No. 56208 (Aug. 6, 2007), 72 FR 45077 (Aug. 10, 2007) (SR– NYSE–2007–48) (approval order). 8 NASD DR now administers NYSE Arbitration, which is governed by NYSE Regulation Rules 600 through 639. NASD DR also administers NYSE Arca arbitration, which is governed by Rule 12 and Arca Equities Rule 12. NASD DR is in the process of changing its name to FINRA DR; however, this change has not been finalized. Once this name PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 46693 Agreement with the New York Stock Exchange LLC (‘‘NYSE’’). The amendments to Rule 12 provide that: (i) All arbitrations filed with NYSE Arca after January 31, 2007 and prior to the Effective Date, shall continue to be governed by the Code of Arbitration contained in the 600 series of the NYSE Rules; (ii) arbitrations filed on or prior to January 31, 2007 shall continue to be governed by NYSE Arca Rule 12 as it was in effect on or prior to January 31, 2007; and (iii) from and after the Effective Date, disputes between NYSE Arca Option Trading Permit (‘‘OTP’’) holders and NYSE Arca OTP firms, associated persons, and/or their customers will be arbitrated under the NASD DR Codes of Arbitration Procedure. Rule 12(a) will provide detailed guidance concerning claims involving OTP Holders and/or OTP Firms and/or associated persons that are asserted on and after the Effective Date. First, any dispute, claim or controversy between or among OTP Holders and/or OTP Firms and/or associated persons shall be arbitrated pursuant to the NASD DR Codes of Arbitration Procedure. Second, any dispute, claim or controversy between a customer or a non-member and an OTP Holder and/or OTP Firm, and/or associated person arising in connection with the business of such OTP Holder and/or OTP Firm and/or in connection with the activities of an associated person, shall be arbitrated pursuant to NASD DR Codes of Arbitration Procedure as provided by any duly executed and enforceable written agreement, or upon the demand of the customer or non-member. This obligation to arbitrate shall extend only to those matters that are permitted to be arbitrated under NASD DR Codes of Arbitration Procedure. Rule 12(b) will explicitly retain NYSE Arca’s enforcement authority related to arbitration. Rule 12(c) also will provide that any OTP Holder and/or OTP Firm, and/or associated person of any OTP Holder and/or OTP Firm, that fails to honor an award of arbitrators rendered under the NASD DR Codes of Arbitration Procedure, or under the auspices of any other self-regulatory organization, shall be subject to disciplinary proceedings in accordance with NYSE Arca Rule 10. Rule 12(d) change is completed, NYSE and NYSE Arca anticipate amending references to NASD in its rules from NASD to FINRA. In the meantime, this rule reflects the current name. Telephone conversation among James F. Duffy, General Counsel, NYSE Regulation; Lourdes Gonzalez, Assitant Chief Counsel—Sales Practices, Commission; and Michael Hershaft, Special Counsel, Commission (Aug. 14, 2007). E:\FR\FM\21AUN1.SGM 21AUN1 46694 Federal Register / Vol. 72, No. 161 / Tuesday, August 21, 2007 / Notices IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act 11 that the proposed rule change, as modified by Amendment No. 1 (SR–NYSEArca– 2007–59), be, and hereby is, approved on an accelerated basis. III. Discussion and Commission Findings rmajette on PROD1PC64 with NOTICES also will specify that the submission of any matter to arbitration as provided for under the Rule shall in no way limit or preclude any right, action or determination by NYSE Arca that it would otherwise be authorized to adopt, administer or enforce. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–16396 Filed 8–20–07; 8:45 am] After careful review, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of Section 6(b)(5) 9 of the Act, which requires, among other things, that the rules of an Exchange be designed to promote just and equitable principles of trade and to protect investors and the public interest. The Commission believes that the proposed rule change will streamline the arbitration process and, after a transitional period, provide for a unified and more efficient arbitration forum with one set of arbitration rules and administrative procedures. This will allow resources to be devoted to maintaining and improving the NASD DR program, rather than splitting resources among duplicative programs. The Commission also believes the proposed rule change will provide for a clear and orderly transition. As a result, the proposed rule change will better protect investors and the public interest.10 The Commission finds good cause to approve the proposed rule change, as amended, prior to the thirtieth day after the proposal was published for comment in the Federal Register. This approval allows the proposed rule change to take effect without delay. Because the proposed rule change will provide for a clear and orderly transition from NYSE Arca arbitration to NASD DR, accelerated approval is necessary to provide clarity to investors regarding the appropriate forums for pending and future arbitration claims. In light of the recent consolidation, accelerated approval of the proposed rule change also will allow NASD DR and NYSE Regulation to ensure that their arbitration programs are fully consolidated in a timely and efficient manner, without any further delay or uncertainty. For these reasons, the Commission finds good cause, consistent with Section 19(b)(2) of the Act, to grant accelerated approval to the proposed rule change. 9 15 U.S.C. 78f(b)(5). approving the 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). 10 In VerDate Aug<31>2005 15:08 Aug 20, 2007 Jkt 211001 BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56259; File No. SR– NYSEArca–2007–60] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Accelerated Approval of Proposed Rule Change and Amendment No.1 Thereto Relating to Amendments to Arca Equities Rule 12 to Provide Guidance Regarding New and Pending Arbitration Claims in Light of the Consolidation of NYSE Regulation into NASD DR August 15, 2007. I. Introduction On June 26, 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 a proposed rule change amending NYSE Arca Equities Rule 12. On July 13, 2007, NYSE Arca filed Amendment No. 1 to the proposed rule change.3 On July 23, 2007, the Commission published for comment the proposed rule change, as amended, in the Federal Register.4 The Commission received no comments on the proposal. This order approves the proposed rule change, as amended, on an accelerated basis. II. Description of the Proposal The purpose of the rule change is to provide guidance regarding both new and pending NYSE Arca Equities Rule 12 arbitration claims in light of the consolidation of the member firm 11 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 In Amendment No. 1, which supplemented the original filing, the Exchange clarified the applicability of NYSE Arca Equities Rule 12 as it was in effect on or prior to January 31, 2007. 4 See Securities Exchange Act Release No. 556070 (July 13, 2007), 72 FR 40188 (July 23, 2007). 12 17 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 regulation function of NYSE Regulation, Inc. (‘‘NYSE Regulation’’) with the National Association of Securities Dealers, Inc. (‘‘NASD’’).5 On July 30, 2007,6 NYSE Regulation ceased to provide an arbitration program, and its arbitration department (‘‘NYSE Arbitration’’) was consolidated with that of NASD Dispute Resolution, Inc. (‘‘NASD DR’’). Furthermore, NYSE Arbitration Rules 600 through 639, and Rule 347, only apply to NYSE arbitration cases pending prior to August 6, 2007, and, thereafter, the NASD DR Codes of Arbitration Procedure apply to any new cases previously subject to NYSE rules.7 Because the consolidation has already occurred, the effective date of this rule change will be when the Commission approves this proposed rule change (SR–NYSEArca–2007–60) (‘‘Effective Date’’). As a result, on and after July 30, 2007, all arbitration claims filed prior to the Effective Date, and previously subject to NYSE Arca Equities Rule 12 or NYSE Regulation rules, will be administered by NASD DR 8 pursuant to a Regulatory Services Agreement with the New York Stock Exchange LLC (‘‘NYSE’’). The amendments to NYSE Arca Equities Rule 12 provide that: (i) All arbitrations filed with NYSE Arca Equities after January 31, 2007 and prior to the Effective Date, shall continue to be governed by the Code of Arbitration contained in the 600 series of the NYSE Rules; (ii) arbitrations filed on or prior to January 31, 2007 shall continue to be governed by NYSE Arca Equities Rule 5 On July 26, 2007, the Commission approved a proposed rule change filed by NASD to amend NASD’s Certificate of Incorporation to reflect its name change to Financial Industry Regulatory Authority Inc., or FINRA, in connection with the consolidation of the member firm regulatory functions of NASD and NYSE Regulation. See Securities Exchange Act Release No. 56146 (July 26, 2007), 72 FR 42190 (Aug. 1, 2007) (SR–NASD– 2007–053). 6 The consolidation of the member firm regulatory functions did not occur until July 30, 2007, when definitive agreements were signed by the NYSE and NASD. Id. 7 See Securities Exchange Act Release No. 56208 (Aug. 6, 2007), 72 FR 45077 (Aug. 10, 2007) (SR– NYSE–2007–48) (approval order). 8 NASD DR now administers NYSE Arbitration, which is governed by NYSE Regulation Rules 600 through 639. NASD DR also administers NYSE Arca arbitration, which is governed by Rule 12 and Arca Equities Rule 12. NASD DR is in the process of changing its name to FINRA DR; however, this change has not been finalized. Once this name change is completed, NYSE and NYSE Arca anticipate amending references to NASD in its rules from NASD to FINRA. In the meantime, this rule reflects the current name. Telephone conversation among James F. Duffy, General Counsel, NYSE Regulation; Lourdes Gonzalez, Assitant Chief Counsel—Sales Practices, Commission; and Michael Hershaft, Special Counsel, Commission (Aug. 14, 2007). E:\FR\FM\21AUN1.SGM 21AUN1

Agencies

[Federal Register Volume 72, Number 161 (Tuesday, August 21, 2007)]
[Notices]
[Pages 46693-46694]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-16396]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56258; File No. SR-NYSEArca-2007-59]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Accelerated Approval of Proposed Rule Change and Amendment No.1 Thereto 
Relating to Amendments to Rule 12 to Provide Guidance Regarding New and 
Pending Arbitration Claims in Light of the Consolidation of NYSE 
Regulation into NASD DR

 August 15, 2007.

I. Introduction

    On June 26, 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\ a proposed rule change 
amending NYSE Arca Rule 12. On July 13, 2007, NYSE Arca filed Amendment 
No. 1 to the proposed rule change.\3\ On July 23, 2007, the Commission 
published for comment the proposed rule change, as amended, in the 
Federal Register.\4\ The Commission received no comments on the 
proposal. This order 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\ In Amendment No. 1, which supplemented the original filing, 
the Exchange clarified the applicability of Rule 12 as it was in 
effect on or prior to January 31, 2007.
    \4\ See Securities Exchange Act Release No. 556071 (July 13, 
2007), 72 FR 40184 (July 23, 2007).
---------------------------------------------------------------------------

II. Description of the Proposal

    The purpose of the rule change is to provide guidance regarding 
both new and pending NYSE Arca Rule 12 arbitration claims in light of 
the consolidation of the member firm regulation function of NYSE 
Regulation, Inc. (``NYSE Regulation'') with the National Association of 
Securities Dealers, Inc. (``NASD'').\5\ On July 30, 2007,\6\ NYSE 
Regulation ceased to provide an arbitration program, and its 
arbitration department (``NYSE Arbitration'') was consolidated with 
that of NASD Dispute Resolution, Inc. (``NASD DR''). Furthermore, NYSE 
Arbitration Rules 600 through 639, and Rule 347, only apply to NYSE 
arbitration cases pending prior to August 6, 2007, and, thereafter, the 
NASD DR Codes of Arbitration Procedure apply to any new cases 
previously subject to NYSE rules.\7\
---------------------------------------------------------------------------

    \5\ On July 26, 2007, the Commission approved a proposed rule 
change filed by NASD to amend NASD's Certificate of Incorporation to 
reflect its name change to Financial Industry Regulatory Authority 
Inc., or FINRA, in connection with the consolidation of the member 
firm regulatory functions of NASD and NYSE Regulation. See 
Securities Exchange Act Release No. 56146 (July 26, 2007), 72 FR 
42190 (Aug. 1, 2007) (SR-NASD-2007-053).
    \6\ The consolidation of the member firm regulatory functions 
did not occur until July 30, 2007, when definitive agreements were 
signed by the NYSE and NASD. Id.
    \7\ See Securities Exchange Act Release No. 56208 (Aug. 6, 
2007), 72 FR 45077 (Aug. 10, 2007) (SR-NYSE-2007-48) (approval 
order).
---------------------------------------------------------------------------

    Because the consolidation has already occurred, the effective date 
of this rule change will be when the Commission approves this proposed 
rule change (SR-NYSEArca-2007-59) (``Effective Date''). As a result, on 
and after July 30, 2007, all arbitration claims filed prior to the 
Effective Date, and previously subject to Rule 12 or NYSE Regulation 
rules, will be administered by NASD DR \8\ pursuant to a Regulatory 
Services Agreement with the New York Stock Exchange LLC (``NYSE'').
---------------------------------------------------------------------------

    \8\ NASD DR now administers NYSE Arbitration, which is governed 
by NYSE Regulation Rules 600 through 639. NASD DR also administers 
NYSE Arca arbitration, which is governed by Rule 12 and Arca 
Equities Rule 12. NASD DR is in the process of changing its name to 
FINRA DR; however, this change has not been finalized. Once this 
name change is completed, NYSE and NYSE Arca anticipate amending 
references to NASD in its rules from NASD to FINRA. In the meantime, 
this rule reflects the current name. Telephone conversation among 
James F. Duffy, General Counsel, NYSE Regulation; Lourdes Gonzalez, 
Assitant Chief Counsel--Sales Practices, Commission; and Michael 
Hershaft, Special Counsel, Commission (Aug. 14, 2007).
---------------------------------------------------------------------------

    The amendments to Rule 12 provide that: (i) All arbitrations filed 
with NYSE Arca after January 31, 2007 and prior to the Effective Date, 
shall continue to be governed by the Code of Arbitration contained in 
the 600 series of the NYSE Rules; (ii) arbitrations filed on or prior 
to January 31, 2007 shall continue to be governed by NYSE Arca Rule 12 
as it was in effect on or prior to January 31, 2007; and (iii) from and 
after the Effective Date, disputes between NYSE Arca Option Trading 
Permit (``OTP'') holders and NYSE Arca OTP firms, associated persons, 
and/or their customers will be arbitrated under the NASD DR Codes of 
Arbitration Procedure.
    Rule 12(a) will provide detailed guidance concerning claims 
involving OTP Holders and/or OTP Firms and/or associated persons that 
are asserted on and after the Effective Date. First, any dispute, claim 
or controversy between or among OTP Holders and/or OTP Firms and/or 
associated persons shall be arbitrated pursuant to the NASD DR Codes of 
Arbitration Procedure. Second, any dispute, claim or controversy 
between a customer or a non-member and an OTP Holder and/or OTP Firm, 
and/or associated person arising in connection with the business of 
such OTP Holder and/or OTP Firm and/or in connection with the 
activities of an associated person, shall be arbitrated pursuant to 
NASD DR Codes of Arbitration Procedure as provided by any duly executed 
and enforceable written agreement, or upon the demand of the customer 
or non-member. This obligation to arbitrate shall extend only to those 
matters that are permitted to be arbitrated under NASD DR Codes of 
Arbitration Procedure.
    Rule 12(b) will explicitly retain NYSE Arca's enforcement authority 
related to arbitration. Rule 12(c) also will provide that any OTP 
Holder and/or OTP Firm, and/or associated person of any OTP Holder and/
or OTP Firm, that fails to honor an award of arbitrators rendered under 
the NASD DR Codes of Arbitration Procedure, or under the auspices of 
any other self-regulatory organization, shall be subject to 
disciplinary proceedings in accordance with NYSE Arca Rule 10. Rule 
12(d)

[[Page 46694]]

also will specify that the submission of any matter to arbitration as 
provided for under the Rule shall in no way limit or preclude any 
right, action or determination by NYSE Arca that it would otherwise be 
authorized to adopt, administer or enforce.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as amended, is consistent with the requirements of Section 
6(b)(5) \9\ of the Act, which requires, among other things, that the 
rules of an Exchange be designed to promote just and equitable 
principles of trade and to protect investors and the public interest. 
The Commission believes that the proposed rule change will streamline 
the arbitration process and, after a transitional period, provide for a 
unified and more efficient arbitration forum with one set of 
arbitration rules and administrative procedures. This will allow 
resources to be devoted to maintaining and improving the NASD DR 
program, rather than splitting resources among duplicative programs. 
The Commission also believes the proposed rule change will provide for 
a clear and orderly transition. As a result, the proposed rule change 
will better protect investors and the public interest.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b)(5).
    \10\ In approving the 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).
---------------------------------------------------------------------------

    The Commission finds good cause to approve the proposed rule 
change, as amended, prior to the thirtieth day after the proposal was 
published for comment in the Federal Register. This approval allows the 
proposed rule change to take effect without delay. Because the proposed 
rule change will provide for a clear and orderly transition from NYSE 
Arca arbitration to NASD DR, accelerated approval is necessary to 
provide clarity to investors regarding the appropriate forums for 
pending and future arbitration claims. In light of the recent 
consolidation, accelerated approval of the proposed rule change also 
will allow NASD DR and NYSE Regulation to ensure that their arbitration 
programs are fully consolidated in a timely and efficient manner, 
without any further delay or uncertainty.
    For these reasons, the Commission finds good cause, consistent with 
Section 19(b)(2) of the Act, to grant accelerated approval to the 
proposed rule change.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\11\ that the proposed rule change, as modified by Amendment No. 1 (SR-
NYSEArca-2007-59), be, and hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

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

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-16396 Filed 8-20-07; 8:45 am]
BILLING CODE 8010-01-P