Document ID: SEC-2006-1436-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2006-11-08T05:00Z

[Federal Register: November 8, 2006 (Volume 71, Number 216)]
[Notices]               
[Page 65559-65561]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08no06-127]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54685; File No. SR-NYSE-2006-95]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Include an Additional 32 Securities in the Current Exchange Pilot 
Operating in Conjunction With the Implementation of Hybrid Market Phase 
3

November 1, 2006.
    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 October 26, 2006, the New York Stock Exchange LLC (``NYSE'' 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 prepared by the NYSE. The NYSE filed 
the proposal as a ``non-controversial'' 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.\5\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \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).
    \5\ The NYSE has asked the Commission to waive the 30-day 
operative delay. See Rule 19b-4(f)(6)(iii), 17 CFR 240.19b-
4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to include an additional 32 securities to 
participate in the Exchange's current pilot (``Pilot'') program which 
puts into operation certain rule changes pending before the Commission 
to coincide with the Exchange's implementation of NYSE HYBRID 
MARKET\SM\ (``Hybrid Market'') \6\ Phase 3. The additional securities 
are identified in Exhibit 3 to the filing. The text of the proposed 
rule change is available on the NYSE's Web site (http://www.nyse.com), 

at the principal office of the NYSE and at the Commission's Public 
Reference Room.
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    \6\ The Hybrid Market was approved on March 22, 2006. See 
Securities Exchange Act Release No. 53539 (March 22, 2006), 71 FR 
16353 (March 31, 2006) (SR-NYSE-2004-05).
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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 included statements 
concerning the purpose of, and basis for, the proposed rule change, and 
discussed any comments it received on the proposal. 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
    On October 5, 2006 the Commission approved an Exchange Pilot \7\ 
to, among other things, put into operation certain proposed 
modifications to Exchange

[[Page 65560]]

Rules that are currently pending \8\ before the Commission to coincide 
with the Exchange's implementation of the Hybrid Market Phase 3. The 
Pilot commenced on October 6, 2006 \9\ and is scheduled to terminate on 
the close of business November 30, 2006.\10\ The Pilot applies to a 
group of securities, known as Phase 3 Pilot securities (``Pilot 
securities'').\11\
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    \7\ Securities Exchange Act Release No. 54578, 71 FR 60216 
(October 12, 2006) (SR-NYSE-2006-82). See also Securities Exchange 
Act Release No. 54610 (October 16, 2006), 71 FR 62142 (October 23, 
2006) (SR-NYSE-2006-84) (amending the Pilot).
    \8\ See Securities Exchange Act Release No. 54520 (September 27, 
2006), 71 FR 57590 (September 29, 2006) (SR-NYSE-2006-65) (proposing 
to amend several Exchange Rules to clarify certain definitions and 
systemic processes) (``Omnibus Filing''); Securities Exchange Act 
Release No. 54504 (September 26, 2006), 71 FR 57011 (September 28, 
2006) (SR-NYSE 2006-76) (proposing to amend the specialist 
stabilization requirements set forth in Exchange Rule 104.10). In 
addition, in SR-NYSE-2006-73, filed on September 13, 2006, and 
Amendment No. 1 thereto (filed on October 13, 2006), the Exchange 
proposes to amend Exchange Rule 127 which governs the execution of a 
block cross transaction at a price outside the prevailing NYSE 
quotation.
    \9\ The changes related to stop orders and stop limit orders 
proposed in the Omnibus Filing were implemented on October 16, 2006 
in order to give customers and member organizations sufficient time 
to make any changes necessary as a result of the elimination of stop 
limit orders.
    \10\ See Securities Exchange Act Release No. 54675 (October 31, 
2006).
    \11\ Phase 3 Pilot Securities will also be posted on the 
Exchange's Web site.
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    The Exchange is currently in the process of phasing in the 
securities operating under the Pilot. As expected, the Pilot is 
operating with minimal problems and the benefits are proving 
invaluable. The Pilot is providing the Exchange with the opportunity to 
identify and address any system problems. Moreover, the Exchange has 
the ability to identify and incorporate beneficial system changes that 
become apparent as a result of usage in real time and under real market 
conditions.
    The Exchange further has the ability to have real time user 
interface that is proving very useful to the Exchange. In addition to 
its usefulness to the Exchange, the Pilot is providing the current 
users with essential practical experience with the new systems and 
processes in a well-modulated way, in real time and under real market 
conditions that cannot be completely replicated in the mock-trading 
environment.
    The Exchange therefore seeks through this filing to include an 
additional 32 securities for participation in the Pilot. Among the 
securities the Exchange seeks to add to the Pilot is a security that 
was not listed on the Exchange when the Exchange initially sought 
approval for the Pilot. Specifically, the security traded under the 
symbol SAI was an initial public offering that occurred on October 13, 
2006 subsequent to the Exchange's request to operate the Pilot and thus 
was not available to be included at that time.
    The Exchange believes that allowing additional securities to 
participate in the Pilot will increase the number of users that may 
benefit from the enhanced educational and supervisory training 
experience that the Pilot provides. Specialist firms will be able to 
provide an increased number of individual specialists with the 
educational opportunity of real time experience under real market 
conditions that cannot be completely replicated in the mock-trading 
environment. It will further provide an increased number of the 
specialists firms' supervisory personnel with additional opportunities 
for supervisory training in real time and under real market conditions.
    Accordingly, the Exchange believes that the inclusion of additional 
securities will only further the Exchange's ability to identify and 
address any system problems and to identify and incorporate beneficial 
system changes while providing the new users with real time education.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirement under Section 6(b)(5) of the Act \12\ that a 
registered national securities exchange have rules 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 proposed rule change also is designed to support the principles of 
Section 11A(a)(1) of the Act \13\ in that it seeks to assure 
economically efficient execution of securities transactions.
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    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 15 U.S.C. 78k-1(a)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change will not 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 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: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this 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 and Rule 19b-4(f)(6) thereunder. The 
Exchange has requested that the Commission waive the 30-day operative 
delay period for this ``non-controversial'' proposal.
    The Commission has determined to waive the 30-day operative 
delay.\14\ The Exchange states that this waiver will allow the Exchange 
to immediately implement this proposal, which will allow specialist 
firms to provide more of their specialists and supervisory personnel 
with the educational opportunity of real-time experience under real 
market conditions under the Pilot program. Inclusion of additional 
securities in the Pilot may allow the Exchange to identify and correct 
any system problems \15\ and formulate any necessary corrective 
changes. Therefore, the Commission finds that it is consistent with the 
protection of investors and the public interest that the proposed rule 
change become effective and operative upon filing pursuant to Section 
19(b)(3)(A)(iii) of the Act \16\ and Rule 19b-4(f)(6) thereunder.\17\
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    \14\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
    \15\ The Exchange states that, currently, the Pilot is operating 
with minimal problems.
    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 17 CFR 240.19b-4(f)(6).
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    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.

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:

[[Page 65561]]

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-2006-95 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-2006-95. 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 NYSE's 
Office of the Secretary.
    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-2006-95 
and should be submitted on or before November 29, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-18791 Filed 11-7-06; 8:45 am]

BILLING CODE 8011-01-P