Document ID: SEC-2006-1582-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2006-12-07T05:00Z

[Federal Register: December 7, 2006 (Volume 71, Number 235)]
[Notices]               
[Page 71012-71013]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07de06-105]                         

[[Page 71012]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54847; File No. SR-NYSE-2006-97]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change to NYSE Rule 342.30

 November 30, 2006.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act''),\2\ and Rule 19b-4 thereunder, notice is hereby given 
that on October 26, 2006, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed amendments to its Rule 342.30, as 
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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NYSE is filing with the Commission a proposed rule change that 
would amend Rule 342.30 (``Annual Report and Certification'') to 
require submission of the process report prepared in connection with 
the Chief Executive Officer (``CEO'') certification, as required under 
Rule 342.30(e)(iii), to the Board of Directors and Audit Committee (if 
such committee exists) of the member organization on or before April 
1st of each year.

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 the proposed rule change is available on the NYSE's Web site 
(http://www.NYSE.com), at the NYSE's principal office, and at the Commission's 

Public Reference Room. 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 is filing with the Commission a proposed rule change 
that would amend Rule 342.30 to require that the report required 
pursuant to Rule 342.30(e)(iii) (herein referred to as the ``process 
report'') in connection with a member organization's CEO certification 
be submitted to the member organization's board of directors and audit 
committee (if such committee exists) on or before April 1st of each 
year. The purpose of the rule change is to better harmonize the 
requirements of Rule 342.30 with those of NYSE Rule 354 (``Reports to 
Control Persons'').

Background

Rule 342.30

    Rule 342.30 requires each member organization to file with the 
Exchange, by April 1st of each year, a report (the ``Annual Report'') 
outlining its supervision and compliance efforts in prescribed 
regulatory areas during the preceding year and assessing the adequacy 
of its ongoing compliance processes and procedures. The Annual Report 
submitted to the Exchange is also required to include, pursuant to Rule 
342.30(e), a certification by the CEO of each member organization 
confirming that the member organization has in place processes to:
    (A) Establish and maintain policies and procedures reasonably 
designed to achieve compliance with applicable Exchange rules and 
federal securities laws and regulations;
    (B) Modify such policies and procedures as business, regulatory and 
legislative changes and events dictate; and
    (C) Test the effectiveness of such policies and procedures on a 
periodic basis, the timing and extent of which is reasonably designed 
to ensure continuing compliance with Exchange and federal securities 
laws and regulations.
    Subsection (e)(iii) of Rule 342.30 requires that the above-stated 
processes be evidenced in a process report that is to be reviewed by 
the CEO, the Chief Compliance Officer, and such other officers as the 
organization may deem necessary to make the certification. Subsection 
(e)(iii) also requires that the process report be submitted to the 
member organization's board of directors and audit committee (if such 
committee exists), although the timing of such submission is not 
explicitly stated. The Exchange has, heretofore by interpretation, 
required such submission prior to CEO certification.

Rule 354

    Subsection (a) of Rule 354 requires, in relevant part, that each 
member organization submit, by April 1st of each year, a copy of the 
Rule 342.30 Annual Report (also due to the Exchange by April 1st) to 
one or more of its control persons or, if the member organization has 
no control person, to the audit committee of its board of directors or 
its equivalent committee or group.
    In order to better harmonize the process report submission 
requirements of Rule 342.30(e)(iii) with the Annual Report submission 
requirements of Rule 354(a), it is proposed that Rule 342.30(e)(iii) be 
amended to require each member organization to submit the process 
report to its board of directors and audit committee (if such committee 
exists) on or before April 1st of each year, consistent with the timing 
requirements of Rule 354(a) with respect to submission of the Annual 
Report. This would promote timely submission of the process report to 
the board of directors and audit committee, while serving the practical 
purpose of allowing member organizations to submit it together with the 
Annual Report so that it may be reviewed as a single comprehensive 
package.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b)(5) \3\ of the Act which requires NYSE to have rules 
that are designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest. In this 
regard, the proposed rule change promotes timely submission of 
substantive regulatory material to member organizations' governing 
bodies by better coordinating the requirements of Rule 342.30(e)(iii) 
(Process Report) and Rule 354(a) (Submission of Annual Report to 
Control Persons).
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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.

[[Page 71013]]

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 self-regulatory organization 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-NYSE-2006-97 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-2006-97. 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 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-2006-97 and should be submitted on or before 
December 28, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
---------------------------------------------------------------------------

    \4\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E6-20733 Filed 12-6-06; 8:45 am]

BILLING CODE 8011-01-P