Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Add Rule 48 Permitting the Exchange to Declare an Extreme Market Volatility Condition, 70915-70918 [E7-24083]
Download as PDF
<![CDATA[
Federal Register / Vol. 72, No. 239 / Thursday, December 13, 2007 / Notices
currently charged by the Exchange for
ISE Market Maker transactions in equity
options.10 Finally, the amount of the
execution fee and comparison fee for all
non-ISE Market Maker transactions shall
be $0.37 and $0.03 per contract,
respectively.11 Further, since options on
PGJ are multiply-listed, the Payment for
Order Flow fee shall apply to this
product. The Exchange believes the
proposed rule change will further the
Exchange’s goal of introducing new
products to the marketplace that are
competitively priced.
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under section 6(b)(4) of the Act 12 that
an exchange have an equitable
allocation of reasonable dues, fees and
other charges among its members and
other persons using its facilities.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change does not
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 not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
members or other interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change
establishes or changes a due, fee, or
other charge imposed by the Exchange,
it has become effective pursuant to
section 19(b)(3) of the Act 13 and Rule
19b–4(f)(2) 14 thereunder. At any time
within 60 days of the filing of such
proposed rule change, the Commission
may summarily abrogate such 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
mstockstill on PROD1PC66 with NOTICES
10 The
execution fee is currently between $.21
and $.12 per contract side, depending on the
Exchange Average Daily Volume, and the
comparison fee is currently $.03 per contract side.
11 The amount of the execution and comparison
fee for non-ISE Market Maker transactions executed
in the Exchange’s Facilitation and Solicitation
Mechanisms is $0.16 and $0.03 per contract,
respectively.
12 15 U.S.C. 78f(b)(4).
13 15 U.S.C. 78s(b)(3)(A).
14 17 CFR 19b–4(f)(2).
VerDate Aug<31>2005
17:10 Dec 12, 2007
Jkt 214001
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
• Send an E-mail to rulecomments@sec.gov. Please include File
No. SR–ISE–2007–114 on the subject
line.
70915
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–24088 Filed 12–12–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56920; File No. SR–NYSE–
2007–111]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Add Rule 48
Permitting the Exchange to Declare an
Extreme Market Volatility Condition
Paper Comments
December 6, 2007.
• 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–ISE–2007–114. 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 the ISE. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–ISE–2007–114 and should
be submitted on or before January 3,
2008.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
5, 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
NYSE. The NYSE 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.
15 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00100
Fmt 4703
Sfmt 4703
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The NYSE is proposing to add NYSE
Rule 48 to permit the Exchange to
declare an extreme market volatility
condition and suspend certain NYSE
requirements relating to the opening of
securities at the Exchange. The text of
the proposed rule change is available on
https://www.nyse.com, at 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
NYSE included statements concerning
1 15
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
E:\FR\FM\13DEN1.SGM
13DEN1
70916
Federal Register / Vol. 72, No. 239 / Thursday, December 13, 2007 / Notices
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 NYSE has
prepared summaries, set forth in
sections A, B, and C below, of the most
significant aspects of such statements.
mstockstill on PROD1PC66 with NOTICES
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 add
NYSE Rule 48 to provide the Exchange
with the ability to suspend the
requirement to disseminate price
indications and obtain Floor Official
approval prior to the opening when
extremely high market volatility could
negatively affect the operation of the
market by causing Floor-wide delays in
the opening of securities on the
Exchange. The Exchange believes that
this rule change is necessary to ensure
the fair and orderly operation of the
Exchange market.
Background. NYSE Rule 123D(1)
states that specialists are responsible for
ensuring that registered securities open
as close to the scheduled opening of
trading on the Exchange as possible and
that the opening be fair and orderly.
When arranging the opening price of a
security, specialists must make a
professional assessment of market
conditions at the time, including
considering the balance of supply and
demand as reflected by orders in the
market, any price disparity from the
prior close, and such other market
conditions that would affect the opening
price of a security.
While the specialist has ultimate
responsibility under the rule for
opening a security, in certain situations
arising out of unusual market
conditions, specialists must obtain prior
Floor Official approval of the price at
which they will open trading in the
security. For example, the rule provides
that specialists should consult with a
Floor Official as soon as it becomes
apparent that an unusual trading
situation exists. The rule further
provides that a specialist should consult
with a Floor Governor if it is anticipated
that the opening price may be at a
significant disparity from the prior
close.
In the event of a large pre-opening
order imbalance or before a stock opens
at a large price change, specialists must
publicly disseminate a price indication
at least once (and possibly more than
once, depending on pre-opening
VerDate Aug<31>2005
17:10 Dec 12, 2007
Jkt 214001
interest) before opening a security. For
securities priced under $10, such
indications are mandatory if the price
change is one dollar or more; for
securities between $10 and $99.99,
indications are required for price
movements of the lesser of 10% or three
dollars; and for securities over $100,
indications are required for price
movements of five dollars or more.
NYSE Rule 123D(1) requires supervision
and approval by a Floor Official for all
such indications.
In addition to these requirements,
NYSE Rule 79A.30 requires specialists
to obtain prior Floor Official approval if
a security is going to open at one or
more dollars away from the closing
price at the Exchange when the closing
price was under $20 a share, or two
dollars or more away from the closing
price at the Exchange when the closing
price was $20 per share or more.
Proposed New Rule 48. The
requirements described above are
designed to ensure that in unusual
situations, there is an impartial
professional assessment of the proposed
opening price and that advice for
specialists is available when a
significant disparity in supply and
demand exists. The Exchange continues
to believe that these requirements are, in
most cases, desirable and enhance the
fair and orderly operation of the market.
Recently, the equities markets worldwide have experienced unprecedented
levels of volatility, which has caused
unprecedented levels of pre-opening
interest and volatility in the United
States markets around the opening of
the markets. When these extreme levels
of volatility occur Floor-wide, the preopening requirements described above,
instead of facilitating the fair and
orderly operation of the markets, can
have the paradoxical effect of impeding
the fair and orderly operation of the
market. For example, Exchange systems
currently are programmed such that
only NYSE operations staff can publish
the mandatory pre-opening indications
to the Consolidated Tape. On a regular
trading day, when such notices occur in
only a subset of its listed securities, the
Exchange has sufficient resources to
ensure the timely publication of such
notices. But on days when the Exchange
experiences extremely high Floor-wide
market volatility that would stress the
Exchange’s staffing resources, the
Exchange wants to ensure that openings
are not delayed due to difficulties in
timely publishing the mandatory
indications.
Similarly, as noted above, in unusual
market situations, Floor Officials, and in
certain circumstances, Senior Floor
Officials, Floor Governors, and
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
Executive Floor Governors, need to be
involved on a security-by-security basis
before a stock can open at the Exchange.
In the event of an extreme, Floor-wide
market volatility condition, the
Exchange is concerned that Floor
Officials would not be able to timely
review each security that faces an
unusual market condition. In such case,
the operation of the Exchange could be
significantly impaired and investors
adversely impacted because securities
cannot be opened on a timely basis.
For example, on Friday, August 17,
2007, due to a confluence of factors,
including the impact of the sub-prime
mortgage crisis on market volatility and
the Federal Reserve Board’s
announcement that it had approved a 50
basis point reduction in the primary
credit rate, the securities markets
experienced an extreme level of market
volatility that affected securities across
industry lines. At the Exchange, because
of the overwhelming imbalance of preopening orders and price variations
from the prior day’s close, specialists
were required to disseminate price
indications and consult with and obtain
prior Floor Official approval before
opening trading in large numbers of
stocks. Because of the number of
securities impacted by that extreme
market volatility, this process could not
be completed for approximately 300
securities before the scheduled opening
of trading. As a result, the Exchange
experienced Floor-wide delays in the
opening of securities that impaired the
ability of the Exchange to operate
efficiently. This Floor-wide delay also
impacted those customers that had
already submitted orders to the
Exchange for execution and who had to
wait until trading opened before such
orders could be executed.
As proposed, in the event of
extremely high market volatility that
would have a Floor-wide impact on the
ability of specialists to arrange for the
timely opening of trading at the
Exchange under the normal rules, NYSE
Rule 48 would permit a qualified
Exchange officer to declare an extreme
market volatility condition. For
purposes of the rule, a ‘‘qualified
Exchange officer’’ means the Chief
Executive Officer of NYSE Euronext,
Inc. or his or her designee, or the Chief
Executive Officer of NYSE Regulation,
Inc., or his or her designee. While either
may declare the extreme market
volatility condition, each must make a
reasonable effort to consult with the
other prior to taking such action.
The proposed rule is intended to be
invoked only in those situations where
the potential for extreme market
volatility would likely impair Floor-
E:\FR\FM\13DEN1.SGM
13DEN1
mstockstill on PROD1PC66 with NOTICES
Federal Register / Vol. 72, No. 239 / Thursday, December 13, 2007 / Notices
wide operations at the Exchange by
impeding the fair and orderly opening
of securities. Accordingly, the proposed
rule sets forth a number of factors that
the qualified Exchange officer would
have to consider before declaring such
a condition, including: volatility during
the previous day’s trading session;
trading in foreign markets before the
open; substantial activity in the futures
market before the open; the volume of
pre-opening indications of interest;
evidence of pre-opening significant
order imbalances across the market;
government announcements; news and
corporate events; and any such other
market conditions that could impact
Floor-wide trading conditions.
Once the qualified Exchange officer
has reviewed such factors and
determined that an extreme market
volatility condition exists, the qualified
Exchange officer must make reasonable
efforts to consult with Commission staff
before making such a declaration. The
qualified Exchange officer must also
document the basis for making such a
declaration. If the qualified Exchange
officer is unable to reach Commission
staff before the opening, he or she may
declare such a condition, but must, as
promptly as practicable in the
circumstances, inform Commission staff
of such declaration, and the basis for
making such declaration.
Because the declaration of an extreme
market volatility condition concerns the
opening of securities at the Exchange,
the proposed rule further provides that
such condition must be declared before
the scheduled opening of securities at
the Exchange. Moreover, such
declaration would be in effect only for
the opening of that trading session (or
reopenings during the same trading day
following the imposition of a mandatory
halt pursuant to NYSE Rule 80B).
Should market conditions that led to the
declaration continue on subsequent
days, the Exchange would have to
review on a day-by-day basis the factors
necessitating such a declaration and on
each day make a reasonable effort to
consult with Commission staff as
described above.
The Exchange notes that even when
the dissemination and Floor Official
(including Senior Floor Official and
above) approval requirements are
suspended, specialists would remain
responsible for the fair and orderly
opening of securities. Exchange rules
already provide that when Floor Official
approval is sought for certain actions,
the specialist remains ultimately
responsible for arranging the opening of
securities at the Exchange. This
obligation would remain unchanged.
Even in the absence of price indications
VerDate Aug<31>2005
17:10 Dec 12, 2007
Jkt 214001
and a Floor Official’s independent,
impartial review of the opening,
specialists will still be charged with
ensuring that an opening price reflects
market conditions and all participants
have had a reasonable opportunity to
participate. In the event of an extreme
market volatility condition, the
Exchange represents that it will review
actions by the specialist at the opening
to ensure that they have met their
affirmative market maintenance
obligations with respect to arranging a
fair and orderly opening of securities at
the Exchange.
The Exchange notes also that, if
proposed Rule 48 were invoked, it
would not affect situations where the
opening of a security was delayed for
reasons unrelated to extreme market
volatility, such as where there is
material news pending that justifies a
regulatory halt under NYSE Rule 123D.
In such cases, notwithstanding the
invocation of proposed Rule 48, the
specialist in the affected security would
be expected to follow regular
procedures for opening the security
(that is, as if proposed Rule 48 had not
been invoked).
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the requirement under section 6(b)(5) 5
of the Act 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 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
Because the foregoing proposed rule
change: (1) Does not significantly affect
the protection of investors or the public
interest; (2) does not impose any
5 15
PO 00000
U.S.C. 78f(b)(5).
Frm 00102
Fmt 4703
Sfmt 4703
70917
significant burden on competition; and
(3) by its terms does not become
operative for 30 days after the date of
this 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) 6 of the Act and Rule
19b–4(f)(6) thereunder.7 As required
under Rule 19b–4(f)(6)(iii),8 the
Exchange provided the Commission
with 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 the
filing of the proposed rule change.
A proposed rule change filed under
Rule 19b–4(f)(6) 9 normally may not
become operative prior to 30 days after
the date of filing. However, Rule 19b–
4(f)(6)(iii) 10 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. The
NYSE requests that the Commission
waive the 30-day operative delay, as
specified in Rule 19b–4(f)(6)(iii).11 The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest because such waiver
would allow the Exchange to
immediately implement proposed Rule
48, allowing the Exchange to utilize
these new procedures to open trading in
a security in a timely manner in extreme
market volatility conditions that may
occur within 30 days after the filing of
this proposed rule change.12
Accordingly, the Commission
designates that the proposed rule
change effective and operative upon
filing with the Commission.
At any time within 60 days of the
filing of such proposed rule change, the
Commission may summarily abrogate
such 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
6 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
8 17 CFR 240.19b–4(f)(6)(iii).
9 17 CFR 240.19b–4(f)(6).
10 17 CFR 240.19b–4(f)(6)(iii).
11 Id.
12 For purposes only of waiving the operative
delay for this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
7 17
E:\FR\FM\13DEN1.SGM
13DEN1
70918
Federal Register / Vol. 72, No. 239 / Thursday, December 13, 2007 / Notices
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
BILLING CODE 8011–01–P
• 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–NYSE–2007–111 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.
mstockstill on PROD1PC66 with NOTICES
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–24083 Filed 12–12–07; 8:45 am]
All submissions should refer to File
Number SR–NYSE–2007–111. 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 the NYSE. 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–2007–111 and
should be submitted on or before
January 3, 2008.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56924; File No. SR–
NYSEArca–2007–98]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and Order
Granting Accelerated Approval of
Proposed Rule Change, as Modified by
Amendment Nos. 1 and 2, Relating to
the Definition of and Listing Standards
for Equity-Linked Notes under NYSE
Arca Equities Rules 5.1(b)(14) and
5.2(j)(2)
December 7, 2007.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’),2 and Rule 19b–4 thereunder,3
notice is hereby given that on
September 25, 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
Commission (‘‘Commission’’) the
proposed rule changes as described in
Items I and II below, which items have
been prepared by the Exchange. On
October 23, 2007, the Exchange
submitted Amendment No. 1 to the
proposed rule change. On December 5,
2007, the Exchange submitted
Amendment No. 2 to the proposed rule
change. The Commission is publishing
this notice to solicit comments on the
proposed rule change, as amended, from
interested persons, and is granting
accelerated approval to the proposed
rule change.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange, through its whollyowned subsidiary NYSE Arca Equities,
proposes to amend its rules governing
NYSE Arca, LLC (also referred to as the
‘‘NYSE Arca Marketplace’’), which is
the equities trading facility of NYSE
Arca Equities. The Exchange is
proposing to amend NYSE Arca Equities
Rules 5.1(b)(14), the Exchange’s
definition of Equity-Linked Notes
(‘‘ELNs’’), and 5.2(j)(2), the Exchange’s
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
VerDate Aug<31>2005
17:10 Dec 12, 2007
Jkt 214001
PO 00000
Frm 00103
Fmt 4703
Sfmt 4703
listing standards for ELNs, to provide
for greater flexibility in the listing
criteria for ELNs.
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 III below. The
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 Exchange proposes to amend
NYSE Arca Equities Rules 5.1(b)(14), the
Exchange’s definition of ELNs, and
5.2(j)(2), the Exchange’s listing
standards for ELNs, to provide for
greater flexibility in the listing criteria
for ELNs, as set forth below.4 The
Exchange notes that the Commission
has approved similar proposals by the
American Stock Exchange LLC
(‘‘Amex’’).5
4 NYSE Arca Equities Rule 5.2(j)(2) was approved
by the Commission in September 1996, and was
amended once in 2004. See Securities Exchange Act
Release Nos. 37648 (September 5, 1996), 61 FR
48195 (September 12, 1996) (SR–PSE–96–23) and
50319 (September 7, 2004), 69 FR 55204 (September
13, 2004) (SR–PCX–2004–75).
5 Amex’s initial listing standards for ELNs are set
forth in Section 107A of the Amex Company Guide,
which was approved by the Commission in March
1990, and Section 107B of the Amex Company
Guide, which was approved by the Commission in
May 1993. These sections have been amended
several times. The filings that are relevant to the
topics discussed in this filing are as follows. See
Securities Exchange Act Release Nos. 27753 (March
1, 1990), 55 FR 8626 (March 8, 1990) (SR–Amex–
89–29) (‘‘Amex March 1990 Release’’); 32343 (May
20, 1993), 58 FR 30833 (May 27, 1993) (SR–Amex–
92–42) (‘‘Amex May 1993 Release’’); 34549 (August
18, 1994), 59 FR 43873 (August 25, 1994) (SR–
Amex–93–46) (‘‘Amex August 1994 Release’’);
36990 (March 20, 1996), 61 FR 13545 (March 27,
1996) (SR–Amex–95–44) (‘‘Amex March 1996
Release’’); 37783 (October 4, 1996), 61 FR 53246
(October 10, 1996) (SR–Amex–96–31) (‘‘Amex
October 1996 Release’’); 47055 (December 19, 2002),
67 FR 79669 (December 30, 2002) (SR–Amex–2002–
110) (‘‘Amex December 2002 Release’’); and 55733
(May 10, 2007), 72 FR 27602 (May 16, 2007) (SR–
Amex–2007–34) (‘‘Amex May 2007 Release’’)
(collectively ‘‘Amex Releases’’).
E:\FR\FM\13DEN1.SGM
13DEN1
]]>Agencies
[Federal Register Volume 72, Number 239 (Thursday, December 13, 2007)]
[Notices]
[Pages 70915-70918]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-24083]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56920; File No. SR-NYSE-2007-111]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Add Rule 48 Permitting the Exchange to Declare an Extreme Market
Volatility Condition
December 6, 2007.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on December 5, 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 NYSE. The
NYSE 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 NYSE is proposing to add NYSE Rule 48 to permit the Exchange to
declare an extreme market volatility condition and suspend certain NYSE
requirements relating to the opening of securities at the Exchange. The
text of the proposed rule change is available on https://www.nyse.com,
at 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 NYSE included statements
concerning
[[Page 70916]]
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 NYSE 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 add NYSE Rule 48 to provide the
Exchange with the ability to suspend the requirement to disseminate
price indications and obtain Floor Official approval prior to the
opening when extremely high market volatility could negatively affect
the operation of the market by causing Floor-wide delays in the opening
of securities on the Exchange. The Exchange believes that this rule
change is necessary to ensure the fair and orderly operation of the
Exchange market.
Background. NYSE Rule 123D(1) states that specialists are
responsible for ensuring that registered securities open as close to
the scheduled opening of trading on the Exchange as possible and that
the opening be fair and orderly. When arranging the opening price of a
security, specialists must make a professional assessment of market
conditions at the time, including considering the balance of supply and
demand as reflected by orders in the market, any price disparity from
the prior close, and such other market conditions that would affect the
opening price of a security.
While the specialist has ultimate responsibility under the rule for
opening a security, in certain situations arising out of unusual market
conditions, specialists must obtain prior Floor Official approval of
the price at which they will open trading in the security. For example,
the rule provides that specialists should consult with a Floor Official
as soon as it becomes apparent that an unusual trading situation
exists. The rule further provides that a specialist should consult with
a Floor Governor if it is anticipated that the opening price may be at
a significant disparity from the prior close.
In the event of a large pre-opening order imbalance or before a
stock opens at a large price change, specialists must publicly
disseminate a price indication at least once (and possibly more than
once, depending on pre-opening interest) before opening a security. For
securities priced under $10, such indications are mandatory if the
price change is one dollar or more; for securities between $10 and
$99.99, indications are required for price movements of the lesser of
10% or three dollars; and for securities over $100, indications are
required for price movements of five dollars or more. NYSE Rule 123D(1)
requires supervision and approval by a Floor Official for all such
indications.
In addition to these requirements, NYSE Rule 79A.30 requires
specialists to obtain prior Floor Official approval if a security is
going to open at one or more dollars away from the closing price at the
Exchange when the closing price was under $20 a share, or two dollars
or more away from the closing price at the Exchange when the closing
price was $20 per share or more.
Proposed New Rule 48. The requirements described above are designed
to ensure that in unusual situations, there is an impartial
professional assessment of the proposed opening price and that advice
for specialists is available when a significant disparity in supply and
demand exists. The Exchange continues to believe that these
requirements are, in most cases, desirable and enhance the fair and
orderly operation of the market.
Recently, the equities markets world-wide have experienced
unprecedented levels of volatility, which has caused unprecedented
levels of pre-opening interest and volatility in the United States
markets around the opening of the markets. When these extreme levels of
volatility occur Floor-wide, the pre-opening requirements described
above, instead of facilitating the fair and orderly operation of the
markets, can have the paradoxical effect of impeding the fair and
orderly operation of the market. For example, Exchange systems
currently are programmed such that only NYSE operations staff can
publish the mandatory pre-opening indications to the Consolidated Tape.
On a regular trading day, when such notices occur in only a subset of
its listed securities, the Exchange has sufficient resources to ensure
the timely publication of such notices. But on days when the Exchange
experiences extremely high Floor-wide market volatility that would
stress the Exchange's staffing resources, the Exchange wants to ensure
that openings are not delayed due to difficulties in timely publishing
the mandatory indications.
Similarly, as noted above, in unusual market situations, Floor
Officials, and in certain circumstances, Senior Floor Officials, Floor
Governors, and Executive Floor Governors, need to be involved on a
security-by-security basis before a stock can open at the Exchange. In
the event of an extreme, Floor-wide market volatility condition, the
Exchange is concerned that Floor Officials would not be able to timely
review each security that faces an unusual market condition. In such
case, the operation of the Exchange could be significantly impaired and
investors adversely impacted because securities cannot be opened on a
timely basis.
For example, on Friday, August 17, 2007, due to a confluence of
factors, including the impact of the sub-prime mortgage crisis on
market volatility and the Federal Reserve Board's announcement that it
had approved a 50 basis point reduction in the primary credit rate, the
securities markets experienced an extreme level of market volatility
that affected securities across industry lines. At the Exchange,
because of the overwhelming imbalance of pre-opening orders and price
variations from the prior day's close, specialists were required to
disseminate price indications and consult with and obtain prior Floor
Official approval before opening trading in large numbers of stocks.
Because of the number of securities impacted by that extreme market
volatility, this process could not be completed for approximately 300
securities before the scheduled opening of trading. As a result, the
Exchange experienced Floor-wide delays in the opening of securities
that impaired the ability of the Exchange to operate efficiently. This
Floor-wide delay also impacted those customers that had already
submitted orders to the Exchange for execution and who had to wait
until trading opened before such orders could be executed.
As proposed, in the event of extremely high market volatility that
would have a Floor-wide impact on the ability of specialists to arrange
for the timely opening of trading at the Exchange under the normal
rules, NYSE Rule 48 would permit a qualified Exchange officer to
declare an extreme market volatility condition. For purposes of the
rule, a ``qualified Exchange officer'' means the Chief Executive
Officer of NYSE Euronext, Inc. or his or her designee, or the Chief
Executive Officer of NYSE Regulation, Inc., or his or her designee.
While either may declare the extreme market volatility condition, each
must make a reasonable effort to consult with the other prior to taking
such action.
The proposed rule is intended to be invoked only in those
situations where the potential for extreme market volatility would
likely impair Floor-
[[Page 70917]]
wide operations at the Exchange by impeding the fair and orderly
opening of securities. Accordingly, the proposed rule sets forth a
number of factors that the qualified Exchange officer would have to
consider before declaring such a condition, including: volatility
during the previous day's trading session; trading in foreign markets
before the open; substantial activity in the futures market before the
open; the volume of pre-opening indications of interest; evidence of
pre-opening significant order imbalances across the market; government
announcements; news and corporate events; and any such other market
conditions that could impact Floor-wide trading conditions.
Once the qualified Exchange officer has reviewed such factors and
determined that an extreme market volatility condition exists, the
qualified Exchange officer must make reasonable efforts to consult with
Commission staff before making such a declaration. The qualified
Exchange officer must also document the basis for making such a
declaration. If the qualified Exchange officer is unable to reach
Commission staff before the opening, he or she may declare such a
condition, but must, as promptly as practicable in the circumstances,
inform Commission staff of such declaration, and the basis for making
such declaration.
Because the declaration of an extreme market volatility condition
concerns the opening of securities at the Exchange, the proposed rule
further provides that such condition must be declared before the
scheduled opening of securities at the Exchange. Moreover, such
declaration would be in effect only for the opening of that trading
session (or reopenings during the same trading day following the
imposition of a mandatory halt pursuant to NYSE Rule 80B). Should
market conditions that led to the declaration continue on subsequent
days, the Exchange would have to review on a day-by-day basis the
factors necessitating such a declaration and on each day make a
reasonable effort to consult with Commission staff as described above.
The Exchange notes that even when the dissemination and Floor
Official (including Senior Floor Official and above) approval
requirements are suspended, specialists would remain responsible for
the fair and orderly opening of securities. Exchange rules already
provide that when Floor Official approval is sought for certain
actions, the specialist remains ultimately responsible for arranging
the opening of securities at the Exchange. This obligation would remain
unchanged. Even in the absence of price indications and a Floor
Official's independent, impartial review of the opening, specialists
will still be charged with ensuring that an opening price reflects
market conditions and all participants have had a reasonable
opportunity to participate. In the event of an extreme market
volatility condition, the Exchange represents that it will review
actions by the specialist at the opening to ensure that they have met
their affirmative market maintenance obligations with respect to
arranging a fair and orderly opening of securities at the Exchange.
The Exchange notes also that, if proposed Rule 48 were invoked, it
would not affect situations where the opening of a security was delayed
for reasons unrelated to extreme market volatility, such as where there
is material news pending that justifies a regulatory halt under NYSE
Rule 123D. In such cases, notwithstanding the invocation of proposed
Rule 48, the specialist in the affected security would be expected to
follow regular procedures for opening the security (that is, as if
proposed Rule 48 had not been invoked).
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the requirement under section 6(b)(5) \5\ of the Act 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.
---------------------------------------------------------------------------
\5\ 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
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this 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) \6\ of the Act and Rule 19b-4(f)(6) thereunder.\7\
As required under Rule 19b-4(f)(6)(iii),\8\ the Exchange provided the
Commission with 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 the filing of
the proposed rule change.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78s(b)(3)(A). 6
\7\ 17 CFR 240.19b-4(f)(6).
\8\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \9\ normally
may not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \10\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. The NYSE requests that the
Commission waive the 30-day operative delay, as specified in Rule 19b-
4(f)(6)(iii).\11\ The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest because such waiver would allow the Exchange to
immediately implement proposed Rule 48, allowing the Exchange to
utilize these new procedures to open trading in a security in a timely
manner in extreme market volatility conditions that may occur within 30
days after the filing of this proposed rule change.\12\ Accordingly,
the Commission designates that the proposed rule change effective and
operative upon filing with the Commission.
---------------------------------------------------------------------------
\9\ 17 CFR 240.19b-4(f)(6).
\10\ 17 CFR 240.19b-4(f)(6)(iii).
\11\ Id. 11
\12\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of such proposed rule
change, the Commission may summarily abrogate such 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
[[Page 70918]]
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-NYSE-2007-111 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-2007-111. 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 the NYSE. 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-2007-111 and should be
submitted on or before January 3, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-24083 Filed 12-12-07; 8:45 am]
BILLING CODE 8011-01-P
