Self-Regulatory Organizations; New York Stock Exchange LLC; Order Approving Proposed Rule Change Relating to NYSE Rule 2 (“Member,” “Membership,” “Member Firm,” etc.), 59129-59130 [E7-20535]
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Federal Register / Vol. 72, No. 201 / Thursday, October 18, 2007 / Notices
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,14 that the
proposed rule change (SR–NASD–2007–
056), be, and it hereby is, approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.15
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–20523 Filed 10–17–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56654; File No. SR–NYSE–
2007–67]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Order
Approving Proposed Rule Change
Relating to NYSE Rule 2 (‘‘Member,’’
‘‘Membership,’’ ‘‘Member Firm,’’ etc.)
October 12, 2007.
I. Introduction
On July 24, 2007, the New York Stock
Exchange LLC (‘‘NYSE’’ 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 to reflect changes in the
Exchange’s membership requirements as
a result of the consolidation of the
member firm regulatory functions of the
National Association of Securities
Dealers, Inc. (‘‘NASD’’) and NYSE
Regulation, Inc. (‘‘NYSE Regulation’’),
which resulted in a combined selfregulatory organization called Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’).3 The proposed rule change
was published for comment in the
Federal Register on August 7, 2007.4
The Commission received no comment
letters on the proposed rule change.
This order approves the proposed rule
change.
II. Description of the Proposal
In connection with the recently
approved plan to consolidate the
14 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 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 FINRA in connection with the
consolidation of the member firm regulatory
functions of NASD and NYSE Regulation, Inc. See
Securities Exchange Act Release No. 56146 (July 26,
2007).
4 See Securities Exchange Act Release No. 56173
(July 31, 2007), 72 FR 44205 (‘‘Notice’’).
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Jkt 214001
member regulation operations of NASD
and the NYSE Regulation into a single
organization (‘‘Transaction’’),5 NYSE
proposes to require all organizations
that currently are NYSE member
organizations but are not NASD
members (‘‘NYSE-only member
organizations’’), or are organizations
that propose to become NYSE member
organizations, to also be members of
FINRA. The Exchange notes that most
NYSE member organizations are already
also members of FINRA. According to
the Exchange, there are approximately
95 NYSE member organizations that are
not currently FINRA members and that
will be required to become FINRA
members in order to remain NYSE
member organizations and to utilize a
NYSE trading license.6 FINRA would
become the designated examining
authority (‘‘DEA’’) for all NYSE member
organizations.7
The Exchange proposes to amend the
definition of ‘‘member organization’’ in
NYSE Rule 2(b) to provide that
membership in FINRA is a condition to
becoming a member organization of
NYSE. NYSE intends to keep NYSE
Rule 308 (Acceptability Proceedings) in
order to retain for itself the discretion to
deem an applicant unacceptable for
NYSE membership.
NYSE-only member organizations
would have a 60-day grace period
within which they must apply for and
be approved for FINRA membership.
This grace period would run from the
later of the date of Commission approval
of either this proposed rule change or
NASD’s proposed rule change to amend
its membership rules to permit eligible
NYSE-only member organizations to
become FINRA members through an
expedited process.8
5 On July 26, 2007, the Commission approved
amendments to NASD’s By-Laws to implement
governance and related changes to accommodate
the consolidation of the member firm regulatory
functions of NASD and NYSE Regulation, Inc. See
Securities Exchange Act Release No. 56145 (July 26,
2007), 72 FR 42169 (August 1, 2007) (‘‘Release No.
34–56145’’). The date of closing of the Transaction
was July 30, 2007.
6 NYSE also has allowed an organization to be an
NYSE ‘‘regulation only’’ member without
purchasing a trading license, if the organization
qualifies and subjects itself to NYSE regulatory
jurisdiction. After the Transaction, NYSE will
continue to provide this status to an organization
that is or becomes a FINRA member and subjects
itself to NYSE jurisdiction, even though the
organization does not have a NYSE trading license.
7 Historically, NYSE was the DEA for virtually all
of its member organizations. As part of the
Transaction, it is contemplated that the
Commission will name FINRA as the DEA for all
the organizations for which NYSE was the DEA.
8 NASD filed a companion proposal, which the
Commission approved today, that specifies the
terms on which eligible NYSE-only member
organizations can become FINRA members on an
expedited basis. Pursuant to that proposal, NASD
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Fmt 4703
Sfmt 4703
59129
III. Discussion and Commission
Findings
After careful consideration, 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 9 and, in
particular, the requirements of Section 6
of the Act.10 Specifically, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act,11 which requires,
among other things, that the rules of a
national securities exchange be
designed to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling, and
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
The Commission notes that most
NYSE member organizations are also
members of FINRA. Thus, the proposed
rule change will primarily affect
approximately 95 NYSE-only member
organizations, in addition to those
organizations that propose to become
NYSE member organizations.
The Commission believes that the
proposed rule change would further the
consolidation of the member firm
regulation functions of NASD and NYSE
Regulation, as approved by the
Commission.12 The Commission notes
that the approximately 95 NYSE-only
member organizations that must become
FINRA members will be able to avail
themselves of the expedited FINRA
membership procedures and the waiver
of certain FINRA registration and
application fees.13 Further, the
Commission believes that the 60-day
grace period for eligible NYSE-only
would adopt Interpretive Material 1013–1 (‘‘IM–
1013–1’’), which establishes a membership waivein process for eligible NYSE-only member
organizations, and Interpretive Material Section
4(b)(1) and 4(e) to Schedule A of the By-Laws,
which exempts the applicants from the fee for each
initial Form U–4 for the registration of any
representative or principal associated with the firm
at the time it submits its application for FINRA
membership pursuant to IM–1013–1 and from the
FINRA membership application fee. See Securities
Exchange Act Release No. 56653 (SR–NASD–2007–
056) (‘‘Release No. 34–56653’’).
9 In approving this proposed rule change, as
amended, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
10 15 U.S.C. 78f.
11 15 U.S.C. 78f(b)(5).
12 See Release No. 34–56145, supra note 5.
13 See Release No. 34–56653, supra note 8.
E:\FR\FM\18OCN1.SGM
18OCN1
59130
Federal Register / Vol. 72, No. 201 / Thursday, October 18, 2007 / Notices
member organizations to become FINRA
members is reasonable.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,14 that the
proposed rule change (File No. SR–
NYSE–2007–67), be, and hereby is,
approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.15
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–20535 Filed 10–17–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56651; File No. SR–Phlx–
2007–71]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Order Granting
Accelerated Approval of Proposed
Rule Change as Modified by
Amendment No. 1 Thereto To Eliminate
Position and Exercise Limits on
Russell 2000 Index Options
October 12, 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
September 21, 2007, the Philadelphia
Stock Exchange, Inc. (‘‘Phlx’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been
substantially prepared by the Exchange.
On September 27, 2007, the Exchange
filed Amendment No. 1 to the proposed
rule change. This order provides notice
of the proposed rule change, as
modified by Amendment No. 1, and
approves the proposal on an accelerated
basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Rule 1079 (FLEX Index and Equity
Options) 3 and Rule 1001A (Position
14 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 Flexible Exchange Options (‘‘FLEX options’’) are
customized equity or index option contracts made
available by Phlx and other option exchanges that
allow certain terms of the option to be specified,
such as the underlying security, the type of the
option, the exercise price, the expiration date, and
the exercise style. See Phlx Rule 1079.
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Limits) to specify that full-value options
on the Russell 2000 Index (‘‘RUT’’) and
one tenth (1/10th) value options on the
Russell 2000 Index (‘‘RMN’’) shall
have no position limits, and that
reduced-value or mini-size contracts
shall be aggregated with full-value or
full-size contracts and counted by the
amount by which they equal a full-value
contract. The text of the proposed rule
change is available at Phlx, the
Commission’s Public Reference Room,
and https://www.phlx.com.
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 III below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend Phlx Rules 1079 and
1001A to eliminate the position limits
on RUT options and RMN options,
which are multiply-listed and heavily
traded options on the broad-based
Russell 2000 Index.4 The purpose of
the proposed rule change is also to
clarify that reduced-value or mini-size
options contracts shall be aggregated
with full-value or full-size options
contracts and shall be counted by the
amount by which they equal a full-value
contract.
The current position limits for RUT
options of 50,000 contracts, with no
more than 30,000 of such contracts in a
series in the nearest expiration month,
and 500,000 contracts for RMN options,
with 300,000 contracts in the nearest
expiration month, were established
when the Commission approved the
rule change that provided for the listing
and trading of RUT and RMN options on
the Exchange, and have remained
unchanged.5 These limits are similar to
4 As result of the rule changes proposed herein,
RUT options and RMN options would likewise have
no exercise limits. See Phlx Rules 1079(e) and
1002A.
5 See Securities Exchange Act Release No. 55305
(February 15, 2007), 72 FR 8240 (February 23, 2007)
(SR–Phlx–2006–65).
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Frm 00062
Fmt 4703
Sfmt 4703
the position limits established on other
exchanges trading options on the
Russell 2000 Index, which have
recently received Commission approval
to eliminate position limits on these
options.6
The Exchange believes that the
circumstances and considerations
relevant to the Commission approving
the elimination of position and exercise
limits for other heavily traded broadbased index options (e.g., options on the
Standard & Poor’s 500 Index (‘‘SPX’’),
the Standard & Poor’s 100 Index
(‘‘OEX’’), the Dow Jones Industrial
Average Index (‘‘DJX’’), and the Nasdaq100 Index (‘‘NDX’’)) equally apply to the
current proposal relating to RUT and
RMN position limits.7 In approving the
elimination of position limits for SPX,
OEX, DJX, and NDX options, the
Commission considered that the
enormous capitalization of each of these
indexes and the deep and liquid
markets for the securities underlying
each index significantly reduced
concerns of market manipulation or
disruption in the underlying markets.
The Commission also noted the active
trading volume for options on these
respective indexes.
Phlx believes that RUT shares
common factors with the SPX, OEX,
DJX, and NDX. As of the date of this
filing, the approximate market
capitalizations of the SPX, OEX, DJX,
and NDX were $13.95 trillion, $8.06
trillion, $4.4 trillion and $2.36 trillion,
respectively; the average daily trading
volume (‘‘ADTV’’) for all underlying
components of the indexes were 1.27
billion, 540 million, 240 million, and
400 million shares, respectively; and the
ADTV for options on the indexes were
610,000 contracts, 60,000 contracts,
34,000 contracts, and 58,000 contracts
respectively.8 Phlx believes that RUT
has very comparable characteristics. The
market capitalization for RUT is
approximately $1.73 trillion dollars, the
6 See Securities Exchange Act Release Nos. 56351
(September 4, 2007), 72 FR 51875 (September 11,
2007) (SR–Amex–2007–81); and 56350 (September
4, 2007), 72 FR 51878 (September 11, 2007) (SR–
CBOE–2007–79) (collectively, ‘‘RUT Approval
Orders’’).
7 See Securities Exchange Act Release Nos. 44994
(October 26, 2001), 66 FR 55722 (November 2, 2001)
(SR–CBOE–2001–22) (elimination of position and
exercise limits on SPX, OEX, and DJX options)
(‘‘SPX, OEX, and DJX Position Limit Elimination
Approval Order’’); and 52650 (October 21, 2005), 70
FR 62147 (October 28, 2005) (SR–CBOE–2005–41)
(elimination of position and exercise limits on NDX
options) (‘‘NDX Position Limit Elimination
Approval Order’’). The Exchange also notes that
there are no position and exercise limits for the
Chicago Board Options Exchange, Incorporated
(‘‘CBOE’’) volatility index options based on SPX,
DJX, and NDX.
8 ADTVs are calculated over the previous three
months of trading.
E:\FR\FM\18OCN1.SGM
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]]>Agencies
[Federal Register Volume 72, Number 201 (Thursday, October 18, 2007)]
[Notices]
[Pages 59129-59130]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-20535]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56654; File No. SR-NYSE-2007-67]
Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Approving Proposed Rule Change Relating to NYSE Rule 2 (``Member,''
``Membership,'' ``Member Firm,'' etc.)
October 12, 2007.
I. Introduction
On July 24, 2007, the New York Stock Exchange LLC (``NYSE'' 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 to reflect changes in the Exchange's membership
requirements as a result of the consolidation of the member firm
regulatory functions of the National Association of Securities Dealers,
Inc. (``NASD'') and NYSE Regulation, Inc. (``NYSE Regulation''), which
resulted in a combined self-regulatory organization called Financial
Industry Regulatory Authority, Inc. (``FINRA'').\3\ The proposed rule
change was published for comment in the Federal Register on August 7,
2007.\4\ The Commission received no comment letters on the proposed
rule change. This order approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 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 FINRA in connection with the
consolidation of the member firm regulatory functions of NASD and
NYSE Regulation, Inc. See Securities Exchange Act Release No. 56146
(July 26, 2007).
\4\ See Securities Exchange Act Release No. 56173 (July 31,
2007), 72 FR 44205 (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposal
In connection with the recently approved plan to consolidate the
member regulation operations of NASD and the NYSE Regulation into a
single organization (``Transaction''),\5\ NYSE proposes to require all
organizations that currently are NYSE member organizations but are not
NASD members (``NYSE-only member organizations''), or are organizations
that propose to become NYSE member organizations, to also be members of
FINRA. The Exchange notes that most NYSE member organizations are
already also members of FINRA. According to the Exchange, there are
approximately 95 NYSE member organizations that are not currently FINRA
members and that will be required to become FINRA members in order to
remain NYSE member organizations and to utilize a NYSE trading
license.\6\ FINRA would become the designated examining authority
(``DEA'') for all NYSE member organizations.\7\
---------------------------------------------------------------------------
\5\ On July 26, 2007, the Commission approved amendments to
NASD's By-Laws to implement governance and related changes to
accommodate the consolidation of the member firm regulatory
functions of NASD and NYSE Regulation, Inc. See Securities Exchange
Act Release No. 56145 (July 26, 2007), 72 FR 42169 (August 1, 2007)
(``Release No. 34-56145''). The date of closing of the Transaction
was July 30, 2007.
\6\ NYSE also has allowed an organization to be an NYSE
``regulation only'' member without purchasing a trading license, if
the organization qualifies and subjects itself to NYSE regulatory
jurisdiction. After the Transaction, NYSE will continue to provide
this status to an organization that is or becomes a FINRA member and
subjects itself to NYSE jurisdiction, even though the organization
does not have a NYSE trading license.
\7\ Historically, NYSE was the DEA for virtually all of its
member organizations. As part of the Transaction, it is contemplated
that the Commission will name FINRA as the DEA for all the
organizations for which NYSE was the DEA.
---------------------------------------------------------------------------
The Exchange proposes to amend the definition of ``member
organization'' in NYSE Rule 2(b) to provide that membership in FINRA is
a condition to becoming a member organization of NYSE. NYSE intends to
keep NYSE Rule 308 (Acceptability Proceedings) in order to retain for
itself the discretion to deem an applicant unacceptable for NYSE
membership.
NYSE-only member organizations would have a 60-day grace period
within which they must apply for and be approved for FINRA membership.
This grace period would run from the later of the date of Commission
approval of either this proposed rule change or NASD's proposed rule
change to amend its membership rules to permit eligible NYSE-only
member organizations to become FINRA members through an expedited
process.\8\
---------------------------------------------------------------------------
\8\ NASD filed a companion proposal, which the Commission
approved today, that specifies the terms on which eligible NYSE-only
member organizations can become FINRA members on an expedited basis.
Pursuant to that proposal, NASD would adopt Interpretive Material
1013-1 (``IM-1013-1''), which establishes a membership waive-in
process for eligible NYSE-only member organizations, and
Interpretive Material Section 4(b)(1) and 4(e) to Schedule A of the
By-Laws, which exempts the applicants from the fee for each initial
Form U-4 for the registration of any representative or principal
associated with the firm at the time it submits its application for
FINRA membership pursuant to IM-1013-1 and from the FINRA membership
application fee. See Securities Exchange Act Release No. 56653 (SR-
NASD-2007-056) (``Release No. 34-56653'').
---------------------------------------------------------------------------
III. Discussion and Commission Findings
After careful consideration, 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 \9\ and, in particular, the requirements of Section 6 of the
Act.\10\ Specifically, the Commission finds that the proposed rule
change is consistent with Section 6(b)(5) of the Act,\11\ which
requires, among other things, that the rules of a national securities
exchange be designed to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
regulating, clearing, settling, and processing information with respect
to, and facilitating transactions in securities, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest.
---------------------------------------------------------------------------
\9\ In approving this proposed rule change, as amended, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
\10\ 15 U.S.C. 78f.
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission notes that most NYSE member organizations are also
members of FINRA. Thus, the proposed rule change will primarily affect
approximately 95 NYSE-only member organizations, in addition to those
organizations that propose to become NYSE member organizations.
The Commission believes that the proposed rule change would further
the consolidation of the member firm regulation functions of NASD and
NYSE Regulation, as approved by the Commission.\12\ The Commission
notes that the approximately 95 NYSE-only member organizations that
must become FINRA members will be able to avail themselves of the
expedited FINRA membership procedures and the waiver of certain FINRA
registration and application fees.\13\ Further, the Commission believes
that the 60-day grace period for eligible NYSE-only
[[Page 59130]]
member organizations to become FINRA members is reasonable.
---------------------------------------------------------------------------
\12\ See Release No. 34-56145, supra note 5.
\13\ See Release No. 34-56653, supra note 8.
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\14\ that the proposed rule change (File No. SR-NYSE-2007-67), be,
and hereby is, approved.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(2).
\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\15\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-20535 Filed 10-17-07; 8:45 am]
BILLING CODE 8011-01-P
