Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Relating to Rule 6.37B and the Quoting Obligations of Lead Market Makers, 70639-70640 [E7-23972]
Download as PDF
Federal Register / Vol. 72, No. 238 / Wednesday, December 12, 2007 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–23970 Filed 12–11–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56908; File No. NYSEArca–
2007–121]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change Relating to Rule 6.37B
and the Quoting Obligations of Lead
Market Makers
December 5, 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 November
27, 2007, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
as described in Items I, II, and III below,
which Items have been substantially
prepared substantially by NYSE Arca.
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
NYSE Arca proposes to amend
Exchange Rule 6.37B in order to update
the quoting obligations of Lead Market
Makers (‘‘LMMs’’). The text of the
proposed rule change is available at
NYSE Arca, the Commission’s Public
Reference Room, and https://
www.nysearca.com.
mstockstill on PROD1PC66 with NOTICES
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NYSE Arca included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. NYSE
Arca has prepared summaries, set forth
in Sections A, B, and C below, of the
most significant aspects of such
statements.
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
VerDate Aug<31>2005
15:54 Dec 11, 2007
Jkt 214001
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this rule change is to
update the quoting obligations for
LMMs, contained in NYSE Arca Rule
6.37B.
In 2003, the Exchange established a
continuous quoting obligation for
LMMs,3 in conjunction with the
introduction of its electronic trading
system then known as PCX Plus.4 This
obligation called for an LMM to provide
continuous two sided-quotations
throughout the trading day in its
appointed issues. The quoting
obligation was subsequently amended
in 2005 5 so that an LMM needed only
to supply continuous quotations for
99% of the time that the Exchange is
open for trading in each issue.
Under the PCX Plus system, in
addition to LMMs, there were three
other categories of Market Makers:
Remote Market Makers, Floor Market
Makers, and Supplemental Market
Makers. Of these three, only Remote
Market Makers had a minimum
continuous quoting obligation. Given
that fact that not all Market Makers had
minimum quoting requirements,
coupled with the fact that the Exchange
had a relatively small number of
registered Remote Market Makers,6 the
Exchange believed that a 99%
continuous quoting obligation for LMMs
would serve as a mechanism to help
ensure that there would be adequate
liquidity in any issue, throughout the
trading day.
With the introduction of the
Exchange’s current electronic trading
platform, the OX system, in 2006, the
Exchange reclassified the Remote
Market Maker, Supplemental Market
Maker, and Floor Market Maker into one
classification, simply called Market
Maker. Under rules adopted by the
Exchange in conjunction with the
implementation of the OX system, all
Market Makers now have minimum
continuous quoting obligations.7 Due to
3 See Securities Exchange Act Release No. 47838
(May 13, 2003), 68 FR 27129 (May 19, 2003) (SR–
PCX–2002–36).
4 PCX Plus was replaced in 2006 by the OX
system, NYSE Arca’s present electronic trading
platform.
5 See Securities Exchange Act Release No. 51740
(May 25, 2005), 70 FR 32686 (June 3, 2005) (SR–
PCX–2005–64).
6 At the time PCX Plus was introduced in October
2003, in addition to LMMs, there were five
registered Remote Market Makers subject to
continuous quoting obligations.
7 NYSE Arca Rule 6.37B(c) states that a Market
Maker must provide continuous two sided
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
70639
the fact that all Market Makers now
have some minimum quoting
obligations, coupled with an increase in
the number of Market Makers providing
quotations on a continuous basis,8 the
Exchange no longer believes that it
necessary for an LMM to be held to a
99% quoting obligation in order for
there to be adequate liquidity in a given
issue. Therefore, the Exchange is
proposing to update Rule 6.37B(b) by
reducing an LMMs continuous quoting
obligation from 99% to 90%.
The Exchange also seeks to add
certain exemptions to Rule 6.37B.
Specifically, when determining whether
a LMM has met its 90% quoting
obligation, the Exchange would not
consider the duration of any periods
where a technical failure on the part of
the Exchange prevents the LMM from
providing continuous quotations. Also,
the Exchange would retain the
discretion to consider other exceptions
to this continuous electronic quote
obligation based on demonstrated legal
or regulatory requirements or other
mitigating circumstances. Finally, the
Exchange proposes to amend the review
period for this obligation, from a
quarterly basis to a monthly basis. The
shorter time period would allow the
Exchange to better monitor an LMMs
performance.
The Exchange does not believe that
lowering the LMM quoting obligation
would adversely affect the quality of the
Exchange’s markets or lead to a material
decrease in liquidity. Rather, the
Exchange believes its current market
structure with its high rate of
participation by LMMs and Market
Makers permits the lowering of the
quoting obligation without fear of losing
liquidity.9
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,10 in general, and furthers the
objectives of Section 6(b)(5) of the Act,11
in particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
quotations throughout the trading day in its
appointed issues for 60% of the time the Exchange
is open for trading in each issue.
8 As of October 31, 2007, in addition to Lead
Market Makers, there were fifty-five registered
Market Makers subject to continuous quoting
obligations.
9 Also, the Exchange notes that NYSE Arca Rule
6.37B(d), which states that in the interest of
maintaining a fair and orderly market, a Market
Maker may be called upon by a Trading Official to
maintain continuous quotes in one or more series
of an option issue, shall continue to apply.
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
E:\FR\FM\12DEN1.SGM
12DEN1
70640
Federal Register / Vol. 72, No. 238 / Wednesday, December 12, 2007 / Notices
cooperation and coordination with
persons engaged in facilitating
transactions in securities, and to remove
impediments to and perfect the
mechanisms of a free and open market
and a national market system.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which NYSE Arca consents, the
Commission will:
(A) By order approve such proposed
rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
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 the filing also will be available
for inspection and copying at the
principal office of NYSE Arca. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–NYSEArca–2007–121 and
should be submitted on or before
January 2, 2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–23972 Filed 12–11–07; 8:45 am]
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:
BILLING CODE 8011–01–P
Electronic Comments
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change Relating to Certain
Modifications to the Initial Listing
Standards for Index-Linked Securities
• 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–NYSEArca–2007–121 on
the subject line.
mstockstill on PROD1PC66 with NOTICES
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSEArca–2007–121. This
file number should be included on the
subject line if e-mail is used. To help the
VerDate Aug<31>2005
15:54 Dec 11, 2007
Jkt 214001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56907; File No. SR–
NYSEArca–2007–122]
December 5, 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 November
28, 2007, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or ‘‘Exchange’’), through its
wholly owned subsidiary, NYSE Arca
Equities, Inc. (‘‘NYSE Arca Equities’’),
filed with the Securities and Exchange
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00082
Fmt 4703
Sfmt 4703
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been substantially prepared by the
Exchange. 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 Arca Equities Rule 5.2(j)(6), the
Exchange’s listing standards for Equity
Index-Linked Securities, CommodityLinked Securities, and Currency-Linked
Securities (collectively, ‘‘Index-Linked
Securities’’).3 The text of the proposed
rule change is available at the Exchange,
the Commission’s Public Reference
Room, and https://www.nyse.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 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 proposes to amend one
of the requirements of NYSE Arca
Equities Rule 5.2(j)(6)(A), which sets
3 NYSE Arca Equities Rule 5.2(j)(6) defines Equity
Index-Linked Securities to be securities that
provide for the payment at maturity of a cash
amount based on the performance of an underlying
index or indexes of equity securities (an ‘‘Equity
Reference Asset’’). Commodity-Linked Securities
are securities that provide for the payment at
maturity of a cash amount based on the
performance of one or more physical commodities
or commodity futures, options or other commodity
derivatives or Commodity-Based Trust Shares (as
defined in NYSE Arca Equities Rule 8.201), or a
basket or index of any of the foregoing (a
‘‘Commodity Reference Asset’’). Currency-Linked
Securities are securities that provide for the
payment at maturity of a cash amount based on the
performance of one or more currencies, or options
or currency futures or other currency derivatives or
Currency Trust Shares (as defined in NYSE Arca
Equities Rule 8.202), or a basket or index of any of
the foregoing (a ‘‘Currency Reference Asset,’’ and
together with Equity Reference Asset and
Commodity Reference Asset, collectively, a
‘‘Reference Asset’’).
E:\FR\FM\12DEN1.SGM
12DEN1
Agencies
[Federal Register Volume 72, Number 238 (Wednesday, December 12, 2007)]
[Notices]
[Pages 70639-70640]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-23972]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56908; File No. NYSEArca-2007-121]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Relating to Rule 6.37B and the Quoting
Obligations of Lead Market Makers
December 5, 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 November 27, 2007, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') a
proposed rule change as described in Items I, II, and III below, which
Items have been substantially prepared substantially by NYSE Arca. 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NYSE Arca proposes to amend Exchange Rule 6.37B in order to update
the quoting obligations of Lead Market Makers (``LMMs''). The text of
the proposed rule change is available at NYSE Arca, the Commission's
Public Reference Room, and https://www.nysearca.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, NYSE Arca included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. NYSE Arca 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 this rule change is to update the quoting
obligations for LMMs, contained in NYSE Arca Rule 6.37B.
In 2003, the Exchange established a continuous quoting obligation
for LMMs,\3\ in conjunction with the introduction of its electronic
trading system then known as PCX Plus.\4\ This obligation called for an
LMM to provide continuous two sided-quotations throughout the trading
day in its appointed issues. The quoting obligation was subsequently
amended in 2005 \5\ so that an LMM needed only to supply continuous
quotations for 99% of the time that the Exchange is open for trading in
each issue.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 47838 (May 13,
2003), 68 FR 27129 (May 19, 2003) (SR-PCX-2002-36).
\4\ PCX Plus was replaced in 2006 by the OX system, NYSE Arca's
present electronic trading platform.
\5\ See Securities Exchange Act Release No. 51740 (May 25,
2005), 70 FR 32686 (June 3, 2005) (SR-PCX-2005-64).
---------------------------------------------------------------------------
Under the PCX Plus system, in addition to LMMs, there were three
other categories of Market Makers: Remote Market Makers, Floor Market
Makers, and Supplemental Market Makers. Of these three, only Remote
Market Makers had a minimum continuous quoting obligation. Given that
fact that not all Market Makers had minimum quoting requirements,
coupled with the fact that the Exchange had a relatively small number
of registered Remote Market Makers,\6\ the Exchange believed that a 99%
continuous quoting obligation for LMMs would serve as a mechanism to
help ensure that there would be adequate liquidity in any issue,
throughout the trading day.
---------------------------------------------------------------------------
\6\ At the time PCX Plus was introduced in October 2003, in
addition to LMMs, there were five registered Remote Market Makers
subject to continuous quoting obligations.
---------------------------------------------------------------------------
With the introduction of the Exchange's current electronic trading
platform, the OX system, in 2006, the Exchange reclassified the Remote
Market Maker, Supplemental Market Maker, and Floor Market Maker into
one classification, simply called Market Maker. Under rules adopted by
the Exchange in conjunction with the implementation of the OX system,
all Market Makers now have minimum continuous quoting obligations.\7\
Due to the fact that all Market Makers now have some minimum quoting
obligations, coupled with an increase in the number of Market Makers
providing quotations on a continuous basis,\8\ the Exchange no longer
believes that it necessary for an LMM to be held to a 99% quoting
obligation in order for there to be adequate liquidity in a given
issue. Therefore, the Exchange is proposing to update Rule 6.37B(b) by
reducing an LMMs continuous quoting obligation from 99% to 90%.
---------------------------------------------------------------------------
\7\ NYSE Arca Rule 6.37B(c) states that a Market Maker must
provide continuous two sided quotations throughout the trading day
in its appointed issues for 60% of the time the Exchange is open for
trading in each issue.
\8\ As of October 31, 2007, in addition to Lead Market Makers,
there were fifty-five registered Market Makers subject to continuous
quoting obligations.
---------------------------------------------------------------------------
The Exchange also seeks to add certain exemptions to Rule 6.37B.
Specifically, when determining whether a LMM has met its 90% quoting
obligation, the Exchange would not consider the duration of any periods
where a technical failure on the part of the Exchange prevents the LMM
from providing continuous quotations. Also, the Exchange would retain
the discretion to consider other exceptions to this continuous
electronic quote obligation based on demonstrated legal or regulatory
requirements or other mitigating circumstances. Finally, the Exchange
proposes to amend the review period for this obligation, from a
quarterly basis to a monthly basis. The shorter time period would allow
the Exchange to better monitor an LMMs performance.
The Exchange does not believe that lowering the LMM quoting
obligation would adversely affect the quality of the Exchange's markets
or lead to a material decrease in liquidity. Rather, the Exchange
believes its current market structure with its high rate of
participation by LMMs and Market Makers permits the lowering of the
quoting obligation without fear of losing liquidity.\9\
---------------------------------------------------------------------------
\9\ Also, the Exchange notes that NYSE Arca Rule 6.37B(d), which
states that in the interest of maintaining a fair and orderly
market, a Market Maker may be called upon by a Trading Official to
maintain continuous quotes in one or more series of an option issue,
shall continue to apply.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\11\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster
[[Page 70640]]
cooperation and coordination with persons engaged in facilitating
transactions in securities, and to remove impediments to and perfect
the mechanisms of a free and open market and a national market system.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which NYSE Arca consents, the Commission will:
(A) By order approve such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2007-121 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2007-121. 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 the filing also will be available for
inspection and copying at the principal office of NYSE Arca. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2007-121 and should
be submitted on or before January 2, 2008.
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-23972 Filed 12-11-07; 8:45 am]
BILLING CODE 8011-01-P