Document ID: SEC-2007-0762-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-06-04T04:00Z

[Federal Register: June 4, 2007 (Volume 72, Number 106)]
[Notices]               
[Page 30900-30901]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04jn07-110]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55823; File No. SR-NYSE-2007-10]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving Proposed Amendments to Interpretation to Rule 311(b)(5) 
(``Co-Designation of Principal Executive Officers'') as Modified by 
Amendment No. 1

 May 29, 2007.

I. Introduction

    On February 2, 2007, the New York Stock Exchange LLC (``NYSE'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities 
Exchange Act of 1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ a 
proposed rule change to amend Interpretation .05 to NYSE Rule 311(b)(5) 
regarding co-designation of principal executive officers. On April 16, 
2007, the Exchange submitted Amendment No. 1 to the proposed rule 
change. The proposed rule change, as amended, was published for comment 
in the Federal Register on April 26, 2007.\4\ The Commission received 
no comments on the proposal. This order approves the proposed rule 
change, as amended.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78(a) et seq.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 55650 (April 19, 
2007), 72 FR 20905.
---------------------------------------------------------------------------

II. Description of the Proposal

    NYSE Rule 311 (``Formation and Approval of Member Organizations'') 
and specifically Section (b)(5) thereof currently provide that 
principal executive officers \5\ shall exercise principal executive 
responsibility over the various areas of the business of the member 
corporation. Interpretation .05 to Rule 311(b)(5) (the 
``Interpretation'') sets forth the regulatory framework under which 
member organizations may request approval for assigning two persons as 
the principal executive officers for the same function pursuant to Rule 
311(b)(5). The Rule currently provides that no understanding or 
agreement purporting to limit or apportion the joint and several 
responsibility of each such co-officer will be recognized by the 
Exchange. The Exchange now believes, however, that there are situations 
in which CCOs and COOs can exercise supervisory authority over discrete 
and naturally separate business functions, consistent with the internal 
corporate structure of the particular member organization. Accordingly, 
the Exchange has proposed to permit co-CCOs and co-COOs to allocate 
supervisory responsibility in a fashion acceptable to the Exchange.\6\
---------------------------------------------------------------------------

    \5\ The Exchange recognizes four such principal executive 
officers: chief executive officer (``CEO''), chief operations 
officer (``COO''), chief finance officer (``CFO'') and chief 
compliance officer (``CCO'').
    \6\ The Exchange continues to believe that the authority vested 
in CEOs and CFOs is indivisible, thus the proposed amendments to the 
Interpretation would not apply to these principal executive 
officers.
---------------------------------------------------------------------------

    Specifically, where a member organization seeks to divide 
regulatory responsibility between more than one such principal 
executive officer bearing the same or similar titles without the 
assumption of joint and several responsibility, it must provide the 
Exchange with a plan acceptable to the Exchange allocating specific 
responsibility and making unambiguous provisions, especially for the 
supervision of areas where the separate functions interact. Joint and 
several responsibility would remain in effect for any area not 
specifically included in the plan approved by the Exchange.

[[Page 30901]]

    In addition, because the CCO of a member organization has unique 
responsibilities under NYSE Rule 342.30 (``Annual Reports''), the 
revised Interpretation would also require a representation that the 
certification required by Rule 342.30(e) will confirm the qualification 
of each such co-CCO and that the responsibility of the co-CCOs 
encompasses every aspect of the business of the member organization. 
Each of the co-CCOs would be required to meet with and advise the CEO 
as part of the Rule 342.30 certification process.

III. Discussion

    After careful review, the Commission finds that the proposed rule 
change, as amended is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange \7\ and, in particular, the requirements of Section 
6 of the Act. \8\ Specifically, the Commission finds that the proposal 
is consistent with Section (b)(5) of the Act,\9\ in that the proposal 
has been designed to promote just and equitable principles of trade, 
and to protect investors and the public interest. The Commission 
believes that the proposal should provide the Exchange with flexibility 
in selecting, and offering positions to, qualified candidates to fill 
CCO and COO positions, thus helping to ensure skilled management of the 
Exchange.
---------------------------------------------------------------------------

    \7\ The Commission has considered the amended proposed rule 
change's impact on efficiency, competition and capital formation. 15 
U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-NYSE-2007-10), as modified 
by Amendment No. 1, is approved.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(2).
    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-10668 Filed 6-1-07; 8:45 am]

BILLING CODE 8010-01-P