48416 Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / Notices 

9 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)(iii). 

4 17 CFR 240.19b–4(f)(6). 

5The Display Book system is an order 

management and execution facility. The Display 

Book system receives and displays orders to the 

specialists, contains the Book, and provides a 

mechanism to execute and report transactions and 

publish the results to the Consolidated Tape. The 

Display Book system is connected to a number of 

other Exchange systems for the purposes of 

comparison, surveillance, and reporting 

information to customers and other market data and 

national market systems. 

6See Securities Exchange Release No. 56588 

(October 1, 2007), 72 FR 57366 (October 9, 2007) 

(SR–NYSE–2007–92). 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NSX–2008–14. 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, 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 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 publicly available. All 

submissions should refer to File 

Number SR–NSX–2008–14 and should 

be submitted on or before September 9, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–19114 Filed 8–18–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58351; File No. SR–NYSE–

2008–73] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Amending 

NYSE Rule 104(b) To Provide for an 

Automated Opening Message That Will 

Be Effectuated Through the Specialist 

Application Programmed Interface To 

Allow Specialists To Automatically 

Open a Security on a Trade 

August 13, 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 August 5, 

2008, New York Stock Exchange LLC 

(‘‘NYSE’’ or the ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. NYSE has filed the 

proposed rule change pursuant to 

Section 19(b)(3)(A)(iii) of the Act 3 and 

Rule 19b–4(f)(6) thereunder,4 which 

renders the proposal effective upon 

filing with the Commission. 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 Rule 104(b) to provide for an 

automated opening message that will be 

effectuated through the Specialist 

Application Programmed Interface 

(‘‘Specialist APISM’’ or ‘‘SAPI’’) to allow 

specialists to automatically open a 

security on a trade. 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 

self-regulatory organization 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 those 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 parts 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 amend 

NYSE Rule 104(b) to provide for an 

automated opening message that will be 

effectuated through the SAPI to allow 

specialists to automatically open a 

security on a trade. 

Background 

Pursuant to NYSE Rule 104, Exchange 

specialists, in their capacity as dealers 

for their assigned securities, maintain 

systems that use proprietary algorithms, 

based on predetermined parameters, to 

electronically participate in the 

Exchange market (‘‘Specialist 

Algorithm’’). The Specialist Algorithm 

communicates with the NYSE Display 

Book system 5 via the SAPI. The 

Specialist Algorithm is intended to 

replicate electronically some of the 

activities specialists are permitted to 

engage in on the Floor in the auction 

market and to facilitate the specialists’

ability to fulfill their obligation to 

maintain a fair and orderly market. 

Specialists on the Exchange are 

responsible for initiating trading (the 

‘‘opening’’) in their assigned securities. 

Pursuant to NYSE Rule 123D, it ‘‘is the 

responsibility of each specialist to 

ensure that registered stocks open as 

close to the opening bell as possible, 

while at the same time not unduly 

hasty, particularly when at a price 

disparity from the prior close.’’

Specialist Algorithms may generate 

quoting and trading messages as 

prescribed by NYSE Rule 104(b)(i). 

Specialists may either open trading in 

their assigned securities with a manual 

transaction or, pursuant to NYSE Rule 

104(b), with an automated quote.6


ebenthall on PRODPC60 with NOTICES
Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / Notices 48417 

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

8 15 U.S.C. 78k–1(a)(1). 

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

10 17 CFR 240.19b–4(f)(6). 

11See 17 CFR 240.19b–4(f)(6)(iii). 12 Id. 13 In addition, Rule 19b–4(f)(6)(iii) requires the 

self-regulatory organization to give the Commission 

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 filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

14For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

Proposed Automated Open on a Trade 

Through this filing, the Exchange 

seeks to amend NYSE Rule 104(b) to 

allow a specialist to automatically open 

his or her assigned security with an 

automated trade. Specifically, the 

Exchange seeks to amend NYSE Rule 

104(b) to add an automated opening 

message provision which will allow the 

SAPI to generate a message to open the 

security with an automated transaction. 

In so doing the Exchange seeks merely 

to automate a currently approved 

specialist function. 

Because opening securities in a 

timely, fair, and orderly manner is 

consistent with the specialist’s 

obligations under NYSE Rules 104 and 

123D, the Exchange believes it is 

important to provide the specialists 

with the ability to have the SAPI 

generate an automated message that will 

assist the specialists in opening their 

assigned securities with a transaction. 

The Exchange estimates that the 

implementation of an automated 

message through the SAPI to open a 

security on a trade would allow for 

approximately 30% of the securities 

traded on the Exchange to be opened 

algorithmically on a trade or a quote. 

The Exchange notes that specialists 

must still comply with all NYSE rules 

when utilizing the open on trade 

technology, including but not limited to, 

NYSE rules relating to depth and 

continuity, mandatory indications, Rule 

79A regarding Floor Official Approval 

for 1 and 2 points price movements, and 

any other rule that might require Floor 

Official consultation in connection with 

an open. Specialists are not exempt 

from requirements regarding the open 

by using an automated means for 

effecting an opening. 

The Exchange believes that providing 

the specialists with this ability will 

continue to promote the efficient 

operation of the NYSE market and 

provide customers with continued 

speed of execution at the opening. 

Relying solely on manual trade 

openings limits the efficiency of the 

specialists. By allowing specialists to 

automatically open securities with a 

transaction through the SAPI will 

promote timelier openings of securities 

on the Exchange. Moreover, providing 

specialists with the ability to 

automatically open securities with an 

automated transaction will allow 

specialists to focus their attention on 

those securities that require the 

expertise of specialists to facilitate price 

discovery and cushion volatility in 

securities that may have news that may 

impact trading, ultimately benefiting 

Exchange customers. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with and 

furthers the objectives of Section 

6(b)(5) 7 of the Act, in that it is designed 

to prevent fraudulent and manipulative 

practices, to promote just and equitable 

principles of trade, to remove 

impediments to, and perfect the 

mechanisms of, a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. The proposed rule 

change is designed to support the 

principles of Section 11A(a)(1) of the 

Act 8 in that it seeks to assure 

economically efficient execution of 

securities transactions by making it 

easier for specialists to open securities 

in which they are registered on a quote 

in a timely fashion by providing an 

automated trading message that is 

effectuated through the SAPI. 

Automating this trading message will 

promote greater efficiency on the Floor 

and will also promote timelier openings 

of securities. 

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 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the 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 after the date of 

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) of the Act 9 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.10

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative prior to the 30th day 

after the date of filing.11 However, Rule 

19b–4(f)(6)(iii) 12 permits the 

Commission to designate a shorter time 

if such action is consistent with the 

protection of investors and the public 

interest.13 The Exchange has requested 

that the Commission waive the 30-day 

operative delay. Waiver of this period 

would allow the Exchange to 

immediately provide specialists with 

the ability to facilitate openings of 

securities through the Specialist 

Algorithm. This should allow a 

specialist to focus his or her attention 

on those securities that require the 

expertise of a specialist to facilitate 

price discovery and cushion volatility. 

The Commission also notes that 

specialists’ responsibilities and 

obligations with respect to openings 

remain unchanged, whether a specialist 

utilizes its SAPI to open a security or 

not. For these reasons, the Commission 

believes that waiving the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest. Accordingly, the Commission 

hereby designates the proposal as 

operative upon filing.14

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

the 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 

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 rulecomments@sec.gov. Please include File 

Number SR–NYSE–2008–73 on the 

subject line. 


ebenthall on PRODPC60 with NOTICES
48418 Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / Notices 

15 17 CFR 200.30–3(a)(12). 

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

2Securities Exchange Act Release No. 57963 

(June 13, 2008), 73 FR 34969. 

3Article V, Section 1 of OCC’s By-laws, including 

the Interpretations and Policies thereunder, sets 

forth the requirements for membership. 

Interpretation and Policy.04 permits an applicant 

for clearing membership (‘‘managed clearing 

member’’) to meet specified membership 

requirements by entering into an FMA with another 

clearing member (‘‘managing clearing member’’) 

pursuant to which the managing clearing member 

would perform certain of the applicant’s obligations 

as a clearing member (‘‘managed services’’). An 

operationally capable clearing member also may 

elect to outsource certain of its obligations as a 

clearing member, and thereby, become a managed 

clearing member. OCC Rule 309(f). 

4OCC would use the expedited review process for 

FMA terminations only in cases that present no 

significant or novel issues. Requests involving 

complex issues would be presented to the 

Committee at its next regularly scheduled meeting. 

5 Interpretation & Policy.01 to Rule 309. See also 

Securities Exchange Act Release No. 57535 (March 

20, 2008), 73 FR 16086 (March 26, 2008) [SR–OCC–

2008–01]. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2008–73. 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, 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–2008–73 and should 

be submitted on or before September 9, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–19130 Filed 8–18–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58346; File No. SR–OCC–

2008–08] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Order 

Granting Approval of a Proposed Rule 

Change Relating to its Facilities 

Management Agreements 

August 12, 2008. 

I. Introduction 

On January 9, 2008, The Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change SR–OCC–2008–08 pursuant 

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

Exchange Act of 1934 (‘‘Act’’).1 Notice 

of the proposal was published in the 

Federal Register on June 19, 2008.2 No 

comment letters were received. This 

order approves the proposed rule 

change. 

II. Description 

The purpose of the proposed rule 

change is to provide an expedited 

process for reviewing a managed 

clearing member’s request to operate 

without a facilities management 

agreement (‘‘FMA’’).3 Under OCC Rule 

309(e), a managed clearing member that 

desires to terminate an FMA must 

withdraw from membership on the 

business day before the proposed 

termination unless the Membership/ 

Risk Committee (‘‘Committee’’) has 

determined in accordance with Article 

V, Section 1 of OCC’s By-laws either 

that the managed clearing member has 

the operational capability, experience, 

and competence to perform the 

managed services required of a clearing 

member or that the managed clearing 

member has entered into another 

acceptable FMA that will be effective on 

or before such proposed termination. 

From March, 2006 to February, 2008, 

the Committee reviewed three requests 

to terminate FMAs, all of which were 

approved. In each case, the managed 

clearing member was required to defer 

terminating its FMA until the next 

regularly scheduled Committee meeting. 

To provide for a more timely review of 

certain FMA terminations, OCC is 

adopting a new Interpretation and 

Policy.02 under Rule 309. Under the 

new policy, a managed clearing member 

desiring to terminate its FMA will be 

permitted to request an expedited 

review. If OCC consents to an expedited 

review,4 the Chairman, the Management 

Vice Chairman, or the President will be 

authorized to determine whether, as 

specified in Rule 309(e), a managed 

clearing member had the operational 

capability, experience, and competency 

to perform the managed services 

required of a clearing member, and to 

approve or disapprove the termination. 

At the next regularly scheduled 

Committee meeting, the Committee will 

independently review de novo whether 

the managed clearing member has met 

the requirements of Rule 309(e) and 

determine whether or not to approve the 

FMA’s termination. Notwithstanding 

that, if the Committee modifies or 

reverses the action taken by the 

Chairman, the Management Vice 

Chairman, or the President, any actions 

taken by OCC or the clearing member 

prior to the modification or reversal 

would not be invalidated, and no rights 

of any person arising out of such actions 

would be affected. In the unlikely event 

that the Committee disapproved of a 

termination previously approved by 

OCC, the clearing member would be 

given a reasonable time either to 

establish another FMA or to withdraw 

from membership. 

This proposal is comparable to a 

process recently approved by the 

Commission which permits the 

expedited review of requests by 

operationally capable clearing members 

that desire to outsource certain of their 

clearing member obligations by entering 

into FMAs.5 OCC believes that the 

rationale for giving senior management 

the authority to approve FMAs on an 

interim basis applies equally to FMA 

terminations. OCC believes the proposal 

strikes a reasonable balance between 

meeting the business requirements of 

clearing members and continuing to 


ebenthall on PRODPC60 with NOTICES