Federal Register / Vol. 72, No. 68 / Tuesday, April 10, 2007 / Notices 17975 

14 17 CFR 200.30–3(a)(12). 

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). 

5See NYSE Arca Rule 1.1(u). 

6These price levels are: (1) At the last price and 

size entered by the Market Maker during the 

previous trading day, either including or excluding 

reserve size; (2) at a specified percentage from the 

best bid or offer; or (3) at the standard Q defined 

as $0.01 bid and 2 times the previous day’s close 

for the offer with specified display and reserve 

sizes. 

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

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(6). 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6675 Filed 4–9–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55578; File No. SR–

NYSEArca–2007–29] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to NYSE Arca 

Rule 7.20 and 7.31 

April 4, 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 March 20, 

2007, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been 

substantially prepared by the Exchange. 

The Exchange filed the proposed rule 

change pursuant to Section 19(b)(3)(A) 

of the Act 3 and Rule 19b–4(f)(6) 

thereunder, which renders it effective 

upon filing with the Commission.4 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, through its wholly owned 

subsidiary, NYSE Arca Equities, Inc. 

(‘‘NYSE Arca Equities’’), is proposing to 

amend its rules governing NYSE Arca, 

LLC (‘‘NYSE Arca Marketplace’’), the 

equities trading facility of NYSE Arca 

Equities. With this filing, the Exchange 

proposes to clarify: (1) That Equity 

Trading Permit (‘‘ETP’’) Holders who 

are not registered Market Makers 5 are 

prohibited from entering Q Orders 

pursuant to NYSE Arca Equities Rule 

7.20(a), and (2) when Q Orders will 

automatically repost pursuant to NYSE 

Arca Equities Rule 7.31(l). The text of 

the proposed rule change is available at 

the Exchange, the Commission’s Public 

Reference Room, and http:// 

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 

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 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 

Pursuant to NYSE Arca Equities Rule 

7.23(a)(1) (Obligations of Market 

Makers), Market Makers are required to 

maintain continuous, two-sided Q 

Orders in those securities in which the 

Market Maker is registered to trade. 

NYSE Arca Equities Rule 7.31(k)(1)(A) 

provides that a Market Maker may 

instruct the NYSE Arca Marketplace 

before 6:28 a.m. (Pacific Time) to enter 

a Q Order on its behalf at price levels 

set forth in Rule 7.31(k)(1)(A).6

Furthermore, Rule 7.31(k) provides that 

upon execution, the Q Order entered 

pursuant to the Market Maker’s 

instructions will automatically repost 

with the original size at $10 below the 

original bid or $10 above the original 

offer, but never below $0.01. 

The amendment to Rule 7.31 reflected 

in this rule filing is consistent with the 

intent of the rule and how the system 

currently operates. Specifically, such 

automatic reposting will not occur if the 

Market Maker initially enters the Q 

Order without a reserve size, or if the 

Market Maker initially enters the Q 

Order with a reserve size and such 

reserve size is exhausted. The proposed 

amendment clarifies that under such 

circumstances, a Market Maker will be 

responsible for reposting a new Q Order 

in the security in order to remain in 

compliance with its continuous Q Order 

obligation pursuant to Rule 7.23(a)(1). 

In addition, due to the broad 

definition of ‘‘Q Order’’ in Rule 

7.31(k)(1), ETP Holders, who are not 

registered Market Makers, have been 

improperly acting as Market Makers by 

entering Q Orders on the NYSE Arca 

Marketplace. In order to prevent this 

practice, the Corporation is clarifying 

the language in NYSE Arca Equities 

Rule 7.20(a) to prohibit specifically ETP 

Holders not registered as Market Makers 

from acting as Market Markers (i.e., 

submitting Q Orders) and make Rule 

7.20(a) more consistent with the 

proposed changes to Rule 7.31(k)(l). 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 7 of the Act, 

in general, and furthers the objectives of 

Section 6(b)(5) 8 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 cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 

and to remove impediments to and 

perfect the mechanism 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 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) 9 and Rule 19b–4(f)(6) 

thereunder.10 At any time within 60 

days of the filing of the 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, 


cprice-sewell on PROD1PC66 with NOTICES
17976 Federal Register / Vol. 72, No. 68 / Tuesday, April 10, 2007 / Notices 

11For purposes only of waiving the 30-day preoperative period, the Commission has considered 

the proposed rule’s impact on efficiency, 

competition and capital formation. 15 U.S.C. 78c(f). 

12 17 CFR 200.30–3(a)(12). 

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

2Securities Exchange Act Release No. 55575 

(April 3, 2007) (File No. SR–ISE–2006–59). For 

notice of the proposal, see Securities Exchange Act 

Release No. 55336 (February 23, 2007), 72 FR 9364 

(March 1, 2007). 

3The Commission has modified parts of these 

statements. 

4The Commission recently approved a proposed 

rule change filed by OCC to accommodate CashSettled FCOs traded on the Philadelphia Stock 

Exchange (‘‘Phlx’’). Securities Exchange Act Release 

No. 54935 (December 13, 2006), 71 FR 76417 

(December 20, 2006) (File No. SR–OCC–2006–10). 

The rule changes that were made with respect to the 

Phlx Cash-Settled FCOs will also apply to RateModified FCOs. 

or otherwise in furtherance of the 

purposes of the Act. 

NYSE Arca has asked the Commission 

to waive the five-day pre-filing notice 

requirement and the 30-day operative 

delay. The Commission believes such 

waivers are consistent with the 

protection of investors and the public 

interest because they would permit the 

Exchange to codify the proposed 

clarifications without further delay.11

For this reason, the Commission 

designates the proposal to be operative 

upon filing with the Commission. 

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

Number SR–NYSEArca–2007–29 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–2007–29. 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 will also be 

available for inspection and copying at 

the principal office of the 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–2007–29 and should be 

submitted on or before May 1, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6710 Filed 4–9–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55579; File No. SR–OCC–

2007–02] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing and Order Granting 

Accelerated Approval of a Proposed 

Rule Change Relating to Rate-Modified 

Foreign Currency Options 

April 4, 2007. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 notice is hereby given that on 

March 5, 2007, The Options Clearing 

Corporation (‘‘OCC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which items have been prepared 

primarily by OCC. The Commission is 

publishing this notice and order to 

solicit comments on the proposed rule 

change from interested persons and to 

grant accelerated approval of the 

proposal. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The proposed rule change will allow 

OCC to clear and settle rate-modified 

foreign currency options (‘‘RateModified FCOs’’) which have been 

proposed and approved for trading by 

the International Securities Exchange 

(‘‘ISE’’).2

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

OCC 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. OCC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of such statements.3

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

The purpose of this rule change is to 

accommodate a request from ISE that 

OCC clear and settle Rate-Modified 

FCOs. OCC’s By-Laws and Rules 

currently provide for the clearance and 

settlement of cash-settled foreign 

currency options (‘‘Cash-Settled 

FCOs’’).4 However, unlike the CashSettled FCOs currently covered by 

OCC’s By-Laws and Rules, the 

underlying interest for Rate-Modified 

FCOs is stated in terms of the exchange 

rate between a ‘‘currency pair,’’ one of 

which may be the U.S. dollar or both of 

which may be non-U.S. currencies, as 

modified by a ‘‘rate modifier’’

determined by ISE. 

The rate modifier for Rate-Modified 

FCOs is selected so that the underlying 

modified rate looks similar to an index. 

The exchange rates underlying RateModified FCOs may or may not be 

stated in the same way that they are 

conventionally quoted in the spot 

market. For example, exchange rates 

between the U.S. dollar and the euro are 

generally quoted as dollars per euro on 

the spot market, but the rate modifying 

a Rate-Modified FCO could be stated as 

euros per dollar. The number by which 

the exchange rate is multiplied to 

determine the modified rate for a 

particular class of options will be 1, 10 

or 100 depending on the level of the 

exchange rate in question. 

For purposes of determining an 

exercise settlement amount, RateModified FCOs would use a multiplier 


cprice-sewell on PROD1PC66 with NOTICES