Federal Register / Vol. 71, No. 184 / Friday, September 22, 2006 / Notices 55537 

11 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78o–3(b)(6). 

2 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASD–2006–102 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–NASD–2006–102. 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 (http://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. Copies of such filing also will be 

available for inspection and copying at 

the principal office of NASD. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NASD–2006–102 and 

should be submitted on or before 

October 13, 2006. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 06–8001 Filed 9–21–06; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–54319A; File No. SR–

NASD–2006–060] 

Self-Regulatory Organizations; 

National Association of Securities 

Dealers, Inc.; Notice of Filing of 

Proposed Rule Change To Require 

Members To File Regulatory Notices 

With NASD Electronically 

September 18, 2006. 

Correction: 

In FR Document No. E6–13812, 

beginning on page 48959 for Tuesday 

August 22, 2006, the first sentence 

under ‘‘Statutory Basis’’ in column 1 

should read as follows: 

NASD believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,1 which 

requires, among other things, that NASD 

rules must be designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, and, in general, to 

protect investors and the public interest, 

in that the proposed rule change will 

permit the expeditious filing of 

specified required regulatory notices 

and other required submissions by 

requiring firms to file such reports and 

documents with NASD electronically. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.2

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 06–8040 Filed 9–21–06; 8:45 am] 

BILLING CODE 8010–01–M 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–54466; File No. SR–

NYSEArca–2006–48] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change To Amend NYSE Arca 

Equities, Inc.’s Clearly Erroneous 

Executions Rule To Include an Appeal 

Fee for the Archipelago Exchange 

September 18, 2006. 

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 August 

11, 2006, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared 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 NYSE 

Arca Equities Rule 7.10 governing 

clearly erroneous executions (‘‘CEE’’) on 

the Archipelago Exchange, the equities 

trading facility of NYSE Arca Equities, 

Inc. (‘‘NYSE Arca Equities’’). 

Specifically, the Exchange proposes to 

assess a fee associated with the 

appellate mechanism of NYSE Arca 

Equities Rule 7.10. 

The text of the proposed rule change 

is available on NYSE Arca’s Web site 

(http://www.nysearca.com), at NYSE 

Arca’s principal office, 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, 

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 Exchange amended NYSE Arca 

Equities Rule 7.10 (Clearly Erroneous 

Executions) to include subsections 

(c)(2)–(4), which amendment became 

effective May 16, 2005. NYSE Arca 

Equities Rules 7.10(c)(2)–(4) provide for 

an appeals panel that includes the 

Exchange’s Chief Regulatory Officer 

(‘‘CRO’’), or a designee of the CRO, and 

two representatives from Equity Trading 

Permit (‘‘ETP’’) Holders (together with 

the CRO, the ‘‘CEE Panel’’) to review the 

determination of clearly erroneous 

executions that are made by an NYSE 

Arca Equities officer under NYSE Arca 

Equities Rule 7.10(c)(1). 

As part of its continuing efforts to 

enhance the appeal process, the 

Exchange proposes to add NYSE Arca 


sroberts on PROD1PC70 with NOTICES
55538 Federal Register / Vol. 71, No. 184 / Friday, September 22, 2006 / Notices 

3Telephone Call between David Hsu, Special 

Counsel, Division of Market Regulation, 

Commission, and Melanie Grace, Associate General 

Counsel, NYSE Group, Inc., on September 8, 2006. 

4 Id. 5 Id. 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

Equities Rule 7.10(c)(5).3 Under the 

proposed rule, if the CEE Panel votes to 

uphold the decision made pursuant to 

NYSE Arca Equities Rule 7.10(c)(1), the 

Exchange would assess a $500.00 fee 

against the ETP Holder(s) who initiated 

the request for appeal. The Exchange’s 

experience with the appeal process 

strongly indicates that some ETP 

Holders are improperly taking 

advantage of the appeal opportunity 

provided under the rule. The Exchange 

believes that assessing a $500.00 fee 

against the ETP Holder(s) who appeals 

a decision made under NYSE Arca 

Equities Rule 7.10(c)(1) that is 

subsequently upheld by the CEE Panel 

would discourage frivolous and abusive 

practices of the appeal process. 

Since NYSE Arca Equities Rules 

7.10(c)(2)–(4) were adopted, the 

Exchange has found that some ETP 

Holders have taken advantage of the 

process by categorically appealing all 

decisions in which they are involved, 

including decisions that involve a de 

minimis value. According to the 

Exchange, in effect, these ETP Holders 

file appeals simply to ‘‘get a second bite 

at the apple.’’ More specifically, in the 

months of August and September 2005, 

three ETP Holders were responsible for 

filing approximately 52% of all appeals 

filed at the Exchange. In addition, on 

July 26, 2005, an ETP Holder appealed 

an Exchange ruling to bust a 34-share 

transaction. 

Furthermore, under NYSE Arca 

Equities Rule 7.10(c)(1), an ETP Holder 

may request that an NYSE Arca Equities 

officer review any transaction the ETP 

Holder regards as erroneous. 

Accordingly, an officer renders an 

official determination whether the 

transaction is erroneous and, if so, 

whether it should be canceled or 

modified. The initial determination 

made by the NYSE Arca Equities officer 

is done at no charge to the ETP Holder, 

and the Exchange believes that any 

further examination of the execution 

should incur a modest fee, in the event 

the original decision is upheld, to 

reduce the number of frivolous and 

abusive appeals.4

The Exchange notes that the appeal 

process draws upon the resources of not 

only the Exchange but also of the ETP 

Holders who volunteer as appeal 

panelists pursuant to NYSE Arca 

Equities Rule 7.10(c)(2)(A). Specifically, 

an appeal requires the efforts of two 

NYSE Arca Equities employees to 

accept and process the appeal (i.e., 

contact members in the pool of appeal 

panelists to determine their availability 

to serve on the CEE Panel, write up the 

circumstances of the trade(s) leading up 

to the appeal, moderate the actual 

appeal that is conducted by conference 

call, contact the parties to the appeal 

after the CEE Panel reaches a decision 

and document the process and 

decision). From start to finish, the 

appeal process may take up to 11⁄2 hours 

to complete. 

Moreover, the CEE Panel is largely 

dependent on ETP Holder participation. 

Each panel member is a volunteer and 

dedicates his or her own time to the CEE 

Panel, which often meets during the 

busiest periods in a trading day. The 

Exchange believes that constant abuse of 

this process would likely foster 

volunteer frustration and may lead 

panelists to withdraw entirely from 

participating in the process. 

The Exchange believes that appeals 

such as those described above represent 

an unintended use of the appeal process 

and demonstrate that abuses can 

proliferate when ETP Holders incur no 

downside risk to filing repeated appeals, 

whether valid or otherwise, and, in 

effect, are given a free second bite at the 

apple. Therefore, the Exchange believes 

that it is necessary to limit the abuse of 

the process and reduce the number of 

frivolous and de minimis appeals by 

assigning a modest fee for all appeals 

that are upheld.5

When the Exchange amended NYSE 

Arca Equities 7.10(c)(2) to provide for 

an appeals process, the Exchange did 

not intend for the CEE Panel to serve as 

a redundant decision making 

mechanism, and it did not anticipate 

that the CEE Panel would be called 

upon to meet as frequently as it does 

today. Additionally, while the Exchange 

does not have statistical data 

surrounding other self-regulatory 

organizations’ appeal processes, the 

Exchange understands that usage of 

their appellate mechanism is done 

sparingly and is not exploited by their 

members. 

The Exchange did not anticipate these 

effects when it proposed NYSE Arca 

Equities Rule 7.10(c)(2)–(4). As a result, 

the Exchange deems it necessary to 

propose a fee of $500 against each ETP 

Holder who appeals a decision made 

under NYSE Arca Equities Rule 

7.10(c)(1) and such decision is 

confirmed by the CEE Panel. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 6 of the Act, 

in general, and furthers the objectives of 

Section 6(b)(5) 7 in particular in that it 

is designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principals of 

trade, to foster 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 purpose 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 the Exchange consents, 

the Commission will: 

(A) By order approve the 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 

(http://www.sec.gov/rules/sro.shtml); or 

• Send an e-mail to rule-comments@ 

sec.gov. Please include File Number SR–

NYSEArca–2006–48 on the subject line. 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 71, No. 184 / Friday, September 22, 2006 / Notices 55539 

8 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(7). 

2 17 CFR 240.19b–7. 

3 7 U.S.C. 7a–2(c). 

4Securities Exchange Act Release No. 52779 

(November 16, 2005), 70 FR 70902 (November 23, 

2005). 

5Securities Exchange Act Release No. 52911 

(December 7, 2005), 70 FR 74078 (December 14, 

2005). 

6 15 U.S.C. 78f(h)(3)(C). 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2006–48. 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 (http://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. Copies of such filing also will be 

available for inspection and copying at 

the principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NYSEArca–2006–48 and 

should be submitted on or before 

October 13, 2006. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.8

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 06–8036 Filed 9–21–06; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISISON 

[Release No. 34–54454; File No. SR–OC–

2006–02] 

Self-Regulatory Organizations; 

OneChicago, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Relating to Listing 

Standards of Security Futures 

Products 

September 15, 2006. 

Pursuant to Section 19(b)(7) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–7 thereunder,2

notice is hereby given that on 

September 6, 2006, OneChicago, LLC 

(‘‘OneChicago’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change described in Items 

I, II, and III below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

OneChicago has also filed the 

proposed rule change with the 

Commodity Futures Trading 

Commission (‘‘CFTC’’). OneChicago 

filed a written certification with the 

CFTC under Section 5c(c) of the 

Commodity Exchange Act 3 on 

September 5, 2006. 

I. Self-Regulatory Organization’s 

Description of the Proposed Rule 

Change 

OneChicago proposes to amend its 

listing standards for a security futures 

product. The text of the proposed rule 

change is available at the principal 

office of the Exchange and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of, and basis for, 

the proposed rule change 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 

Currently, under OneChicago Rule 

906(b)(2), the Exchange will not open a 

new delivery month for trading in a 

security future unless the issuer of the 

underlying security satisfies applicable 

reporting requirements of the Act or 

corrects any failure within 30 days after 

the date the report was due to be filed, 

and the underlying security is listed on 

a national securities exchange or is 

principally traded through the facilities 

of a national securities association and 

is designated as an NMS security. The 

Exchange proposes to delete 

OneChicago Rule 906(b)(2)(A), which 

requires that the issuer of a security 

underlying a single stock futures 

(‘‘SSF’’) satisfy applicable reporting 

requirements of the Act or correct any 

failure within 30 days after the date the 

report was due to be filed. OneChicago 

believes that the proposed rule change 

is consistent with listing standards in 

the options market and in the best 

interest of market participants. 

The Exchange believes that the 

current OneChicago Rule 906(b)(2)(A) 

limits an investor’s ability to hedge her 

underlying stock positions at a time 

when she may be most in need to 

protect her investment. The failure of a 

public company to comply with its 

reporting requirements under the Act 

could cause a significant movement in 

the price of that company’s stock. The 

Exchange believes restricting the 

Exchange from opening new contract 

months may leave investors without the 

means to hedge their positions with 

SSFs. 

The Exchange believes that the 

proposed rule change is consistent with 

options listing standards. In December 

2005, the Commission approved a rule 

change for the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’) that 

deleted Interpretation and Policy .01(e) 

to CBOE Rule 5.4, which contained 

language similar to that in OneChicago 

Rule 906(b)(2)(A).4 The Pacific 

Exchange, Inc. (n/k/a NYSE Arca, Inc.) 

(‘‘PCX’’) also filed a similar rule change 

with the Commission, which was 

effective immediately.5 Under Section 

6(h)(3)(C) of the Act, listing standards 

for security futures are to be no less 

restrictive than comparable option 

listing standards.6 Since a similar rule 

change was made to the options listing 

standards of CBOE and PCX, 

OneChicago believes that the proposed 

rule change is comparable to, and no 

less restrictive than, option listing 

standards. 

The Exchange will monitor the listing 

status of the security underlying a SSF 

and, pursuant to OneChicago Rule 

906(b), not open a new delivery month 

for trading in a SSF when the 

underlying security is delisted from 

trading. 


sroberts on PROD1PC70 with NOTICES