7024 Federal Register / Vol. 73, No. 25 / Wednesday, February 6, 2008 / Notices 

13 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 Securities Exchange Act Release No. 47671 

(April 11, 2003), 68 FR 19048 (April 17, 2003) (SR–

NYSE–2002–11) (‘‘Original Order’’). 

6See Securities Exchange Act Release No. 47992 

(June 5, 2003), 68 FR 35047 (June 11, 2003) (SR–

NYSE–2003–19) (delaying the implementation date 

for portable phones from on or about May 1, 2003 

to no later than June 23, 2003). 

7See Securities Exchange Act Release Nos. 48919 

(December 12, 2003), 68 FR 70853 (December 19, 

2003) (SR–NYSE–2003–38) (extending the Pilot for 

an additional six months ending on June 16, 2004); 

49954 (July 1, 2004), 69 FR 41323 (July 8, 2004) 

(SR–NYSE–2004–30) (extending the Pilot for an 

additional five months ending on November 30, 

2004); 50777 (December 1, 2004), 69 FR 71090 

(December 8, 2004) (SR–NYSE–2004–67) (extending 

the Pilot for an additional four months ending 

March 31, 2005); 51464 (March 31, 2005), 70 FR 

17746 (April 7, 2005) (SR–NYSE–2005–20) 

(extending the Pilot for additional four months 

ending July 31, 2005); 52188 (August 1, 2005), 70 

FR 46252 (August 9, 2005) (SR–NYSE–2005–53) 

(extending the Pilot for an additional four months 

ending January 31, 2006); 53277 (February 13, 

2006), 71 FR 8877 (February 21, 2006) (SR–NYSE–

2006–03) (extending the Pilot for an additional six 

months ending July 31, 2006); 54276 (August 4, 

2006), 71 FR 45885 (August 10, 2006) (SR–NYSE–

2006–55) (extending the Pilot for an additional six 

months ending January 31, 2007); and 55218 

(January 31, 2007), 72 FR 6025 (February 8, 2007) 

(SR–NYSE–2007–05) (extending the Pilot for an 

additional twelve months ending January 31, 2008). 

Also, the Exchange has incorporated RCMMs into 

the Pilot and subsequently amended the Pilot to 

allow RCMMs to use an Exchange authorized and 

provided portable telephone on the Exchange Floor 

to call to and receive calls from their upstairs 

offices, the upstairs offices of their clearing firm, 

and their booth locations on the Exchange Floor. 

longer period to be appropriate and 

publishes its reasons for so finding, or 

(ii) as to which NYSE consents, the 

Commission will: 

(A) By order approve such proposed 

rule change; or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

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

Number SR–NYSE–2008–03 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–2008–03. 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 offices 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–NYSE–2008–03 and should 

be submitted on or before February 27, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–2075 Filed 2–5–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57249; File No. SR–NYSE–

2008–10] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Rule 36 (Communication Between 

Exchange and Exchange Members’

Offices) 

January 31, 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 January 

30, 2008, the 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 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,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 seeks to extend its 

current portable phone pilot (the 

‘‘Pilot’’) operating pursuant to Exchange 

Rule 36 from its scheduled January 31, 

2008 expiration date to April 30, 2008. 

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. The text of 

these statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange seeks to extend the 

Pilot operating pursuant to Exchange 

Rule 36 from the Pilot’s scheduled 

January 31, 2008 expiration date to 

April 30, 2008. Pursuant to the Pilot, 

Floor brokers and Registered 

Competitive Market Makers (‘‘RCMM’’) 

are permitted to use an Exchange 

authorized and provided portable 

telephone on the Exchange Floor 

provided certain conditions are met. 

Background 

The Commission originally approved 

the Pilot to be implemented for a sixmonth period 5 beginning no later than 

June 23, 2003.6 Since the inception of 

the Pilot, the Exchange has extended the 

Pilot eight times, with the current Pilot 

expiring on January 31, 2008.7 Exchange 


pwalker on PROD1PC71 with NOTICES
Federal Register / Vol. 73, No. 25 / Wednesday, February 6, 2008 / Notices 7025 

See Securities Exchange Act Release Nos. 53213 

(February 2, 2006), 71 FR 7103 (February 10, 2006) 

(SR–NYSE–2005–80), and 54215 (July 26, 2006), 71 

FR 43551 (August 1, 2006) (SR–NYSE–2006–51). 

8Floor brokers receiving orders from the public 

over portable phones must be properly qualified to 

engage in such ‘‘direct access’’ business under 

Exchange Rules 342 and 345, among others. See 

also note 10 infra. 

9See Securities Exchange Act Release No. 43689 

(December 7, 2000), 65 FR 79145 (December 18, 

2000) (SR–NYSE–98–25). See also Securities 

Exchange Act Release No. 44943 (October 16, 2001), 

66 FR 53820 (October 24, 2001) (SR–NYSE–2001–

39) (discussing certain exceptions to FESC, such as 

orders to offset an error, or a bona fide arbitrage, 

which may be entered within 60 seconds after a 

trade is executed). 

10For more information regarding Exchange 

requirements for conducting a public business on 

the Exchange Floor, see Information Memos 01–41 

(November 21, 2001), 01–18 (July 11, 2001) 

(available on www.nyse.com/regulation/) and 91–25 

(July 8, 1991). 

11Allowing RCMMs acting as Floor brokers to use 

portable phones would involve further discussions 

with the Commission and would be the subject of 

a separate filing with the Commission. 

12See Securities Exchange Act Release No. 46560 

(September 26, 2002), 67 FR 62088 (October 3, 

2002) (SR–NYSE–00–31) (discussing restrictions on 

specialists’ communications from the post). 

13Exchange Rule 36.30 provides that, with the 

approval of the Exchange, a specialist unit may 

maintain a telephone line at its stock trading post 

location to the off-Floor offices of the specialist unit 

or the unit’s clearing firm. Such telephone 

connection shall not be used for the purpose of 

transmitting to the Exchange Floor orders for the 

purchase or sale of securities but may be used to 

enter options or futures hedging orders through the 

unit’s off-Floor office or the unit’s clearing firm or 

through a member (on the Exchange Floor) of an 

options or futures exchange. 

14This data includes both Floor brokers and 

RCMMs. 

15The Exchange has received records of incoming 

and outgoing telephone calls from January 31, 2007 

through December 31, 2007 for Floor brokers and 

RCMMs and will continue to receive records of 

such telephone calls on a monthly basis. 

16With respect to regulatory actions concerning 

the Pilot, in October 2007, there were two matters 

concerning the receipt of a phone call from an 

unauthorized number by RCMMs that were each 

investigated and closed with no action by NYSE 

Regulation, Inc. 

17See Securities Exchange Act Release No. 43493 

(October 30, 2000), 65 FR 67022 (November 8, 2000) 

(SR–CBOE–00–04), cited by Securities Exchange 

Act Release No. 43836 (January 11, 2001), 66 FR 

6727 (January 22, 2001) (discussing and approving 

the Chicago Board Options Exchange’s and the 

Pacific Exchange’s proposals to remove current 

prohibitions against Floor brokers’ use of cellular or 

cordless phones to make calls to persons located off 

the trading floor). 

Rule 36 governs the establishment of 

telephone or electronic communications 

between the Exchange Floor and any 

other location. Prior to the Pilot, 

Exchange Rule 36 prohibited the use of 

portable telephone communication 

between the Exchange Floor and any 

off-Floor location. 

During the operation of the Pilot, 

Floor brokers and RCMMs may use 

Exchange authorized and issued 

portable telephones on the Exchange 

Floor. Floor brokers are permitted to 

engage in direct voice communication 

from the point of sale to an off-Floor 

location, such as a member firm’s 

trading desk or the office of one of the 

broker’s customers. Such 

communications permit the broker to 

accept orders consistent with Exchange 

rules governing the entry of orders on 

the Exchange Floor; 8 provide status and 

oral execution reports as to orders 

previously received, as well as ‘‘market 

look’’ observations as have historically 

been routinely transmitted from a 

broker’s booth location. 

Both incoming and outgoing calls are 

allowed, provided the requirements of 

all other Exchange rules have been met. 

A Floor broker is not permitted to 

represent and execute any order 

received as a result of such voice 

communication unless the order is first 

properly recorded by the member and 

entered into the Exchange’s Front End 

Systemic Capture (FESC) electronic 

database (Exchange Rule 123(e)).9 In 

addition, Exchange rules require that 

any Floor broker receiving orders from 

the public over portable phones must be 

properly qualified to engage in such 

direct access business under Exchange 

Rules 342 and 345, among others.10

The Pilot also allows RCMMs to use 

an Exchange authorized portable phone 

solely to call and receive calls from their 

booths on the Exchange Floor, to 

communicate with their or their 

member organizations’ off-Floor office, 

and to communicate with the off-Floor 

office of their clearing member 

organization to enter off-Floor orders 

and to discuss matters related to the 

clearance and settlement of transactions, 

provided the off-Floor office uses a 

wired telephone line for these 

discussions. RCMMs, who trade for 

their own accounts on the Exchange 

Floor subject to the requirements of 

Exchange Rule 107A, are currently not 

allowed to use a portable phone to 

conduct any agency business.11 For both 

RCMMs and Floor brokers, use of a 

portable telephone on the Exchange 

Floor other than one authorized and 

issued by the Exchange is prohibited. 

Specialists are subject to separate 

restrictions in Exchange Rule 36 on 

their ability to engage in voice 

communications from the specialist post 

to an off-Floor location.12 The Pilot does 

not apply to specialists, who would 

continue to be prohibited from speaking 

from the post to upstairs trading desks 

or customers.13

Pilot Program Results 

Currently, there are approximately 

400 portable phone subscribers.14 For a 

sample week of October 15 through 

October 19, 2007, an average of 2,518 

calls/day was outgoing calls from 

portable phones issued to Floor brokers 

and RCMMs. An average of 960 calls/ 

day was incoming calls to the portable 

phones. Of the outgoing calls from 

portable phones, an average of 1,026 

calls/day was internal calls to the booth 

by Floor brokers and RCMMs, and 1,492 

calls/day was external calls by RCMMs 

to the upstairs offices of their member 

organization and their clearing member 

organization and external calls of Floor 

brokers. Thus, approximately 47% of 

the outgoing calls from portable phones 

were internal calls to the booth by Floor 

brokers and RCMMs. 

Of the 960 average incoming calls/day 

received, an average of 337 calls/day 

was external calls to RCMMs from the 

upstairs offices of their member 

organization and their clearing member 

organization and external calls to Floor 

brokers. An average of 623 calls/day was 

internal calls received from the booth. 

Thus, approximately 65% of all 

incoming calls received were from the 

booth and the remaining 35% of 

incoming calls received were external 

calls to RCMMs from the upstairs offices 

of their member organization and their 

clearing member organization and 

external calls to Floor brokers.15

The Exchange believes that the Pilot 

is operating successfully in that there is 

a reasonable degree of usage of portable 

phones. During the period of January 31, 

2007 through January 31, 2008, there 

have been no significant regulatory 

concerns identified with their usage.16

Moreover, there have been no 

administrative or technical problems, 

other than routine telephone 

maintenance issues, that have resulted 

from the operation of the Pilot over the 

past few months. 

Conclusion 

The Exchange proposes to extend the 

operation of the current Pilot for an 

additional three months to April 30, 

2008. The Exchange believes that the 

approval of the Pilot’s continuation for 

an additional three months will enable 

the Exchange to continue to provide 

more direct, efficient access to its 

trading crowds and customers, increase 

the speed of transmittal of orders and 

the execution of trades, and provide an 

enhanced level of service to customers 

in an increasingly competitive 

environment.17 Therefore the Exchange 

believes it is appropriate to extend the 

Pilot for an additional three months, 

expiring on April 30, 2008. 


pwalker on PROD1PC71 with NOTICES
7026 Federal Register / Vol. 73, No. 25 / Wednesday, February 6, 2008 / Notices 

18 15 U.S.C. 78f(b)(5). 

19 15 U.S.C. 78s(b)(3)(A). 

20 17 CFR 240.19b–4(f)(6). 

21 17 CFR 240.19b–4(f)(6)(iii). 

22For purposes only of waiving the 30-day 

operative delay of this proposal, the Commission 

has considered the proposed rule’s impact on 

efficiency, competition, and capital formation. 15 

U.S.C. 78c(f). The Exchange provided the 

Commission written notice of its intent to file the 

proposed rule change at least five business days 

prior to filing. 

23See note 10 supra and accompanying text for 

other NYSE requirements that Floor brokers be 

properly qualified before doing public customer 

business. 

24 In any request for a permanent approval of the 

Pilot, the Commission would expect the 

information to distinguish between Floor brokers’

and RCMMs’ usage of the phones. 25 17 CFR 200.30–3(a)(12). 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under section 6(b)(5) 18 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. The amendment to 

Exchange Rule 36 supports the 

mechanism of free and open markets by 

providing for increased means by which 

communications to and from the 

Exchange Floor may take place. 

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 if 

consistent with the protection of 

investors and the public interest, it has 

become effective pursuant to section 

19(b)(3)(A) of the Act 19 and Rule 19b–

4(f)(6) thereunder.20 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, 

or otherwise in furtherance of the 

purposes of the Act. 

The Exchange requests that the 

Commission waive the 30-day operative 

period under Rule 19b–4(f)(6)(iii) of the 

Act.21 The Exchange believes that the 

continuation of the Pilot is in the public 

interest as it will avoid inconvenience 

and interruption to the public. The 

Commission believes that it is 

consistent with the protection of 

investors and the public interest to 

waive the 30-day operative delay and 

make this proposed rule change 

immediately effective.22 The 

Commission believes that the waiver of 

the 30-day operative delay will allow 

the Exchange to continue, without 

interruption, the existing operation of 

its Pilot until April 30, 2008. 

The Commission notes that proper 

surveillance is an essential component 

of any telephone access policy to an 

exchange trading floor. Surveillance 

procedures should help to ensure that 

Floor brokers and RCMMs use portable 

phones as authorized by Exchange Rule 

36 and that orders are being handled in 

compliance with Exchange rules.23 The 

Commission expects the Exchange to 

actively review these procedures and 

address any potential concerns that 

have arisen during the Pilot. In this 

regard, the Commission notes that the 

Exchange should address whether 

telephone records are adequate for 

surveillance purposes. 

The Commission also requests that 

the Exchange report any problems, 

surveillance, or enforcement matters 

associated with the Floor brokers’ and 

RCMMs’ use of an Exchange authorized 

and provided portable telephone on the 

Exchange Floor. As stated in the 

Original Order, NYSE should also 

address whether additional surveillance 

would be needed because of the 

derivative nature of the ETFs. 

Furthermore, in any future additional 

filings on the Pilot, the Commission 

would expect that NYSE submit 

information documenting the usage of 

the phones, any problems that have 

occurred, including, among other 

things, any regulatory actions or 

concerns, and any advantages or 

disadvantages that have resulted.24

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–2008–10 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–2008–10. 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 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–2008–10 and should 

be submitted on or before February 27, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–2140 Filed 2–5–08; 8:45 am] 

BILLING CODE 8011–01–P 


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