Document ID: SEC-2005-0427-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange, Inc.
Posted Date: 2005-12-22T05:00Z

[Federal Register: December 22, 2005 (Volume 70, Number 245)]
[Notices]               
[Page 76094-76095]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22de05-106]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52958; File No. SR-NYSE-2005-73]

 
Self-Regulatory Organizations; New York Stock Exchange, Inc., 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change to Rule 600, Relating To Arbitration

 December 15, 2005.
    Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Exchange Act'' or ``Act''),\2\ and Rule 19b-4 thereunder,\3\ 
notice is hereby given that on October 20, 2005, the New York Stock 
Exchange, Inc. (``NYSE'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed amendments to its 
arbitration rules as described in Items I and II below, which items 
have been prepared by the NYSE. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons and is approving the proposal on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change consists of the rescission of Exchange 
Rule 600(g), a pilot rule relating to the waiver of the California 
Ethics Standards for Neutral Arbitrators in Contractual Arbitrations.

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. The 
text of these statements may be examined at the places specified in 
Item IV below. The NYSE 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 July 1, 2002, the Exchange suspended the appointment of 
arbitrators for cases pending in California as a result of the 
purported application of the Ethics Standards for Neutral Arbitrators 
in Contractual Arbitrations (the ``California Standards'') to Exchange 
arbitrations and arbitrators. The Exchange proposed Rule 600(g) in 
response to the purported imposition of California state law on 
arbitrations conducted under the auspices of the Exchange and pursuant 
to a set of nationally-applied rules approved by the Commission.\4\ 
Under Rule 600(g), the Exchange implemented a pilot rule whereby 
parties to an arbitration could in certain circumstances request that a 
hearing be held outside California or waive application of the 
California Standards and hold the hearing in California. The Exchange 
and NASD Dispute Resolution, Inc. (``NASD Dispute Resolution'') became 
involved in a number of legal actions challenging the California 
Standards. On March 1, 2005, the United States Court of Appeals for the 
Ninth Circuit issued a decision in Credit Suisse First Boston Corp. v 
Grunwald \5\ in which it held that the provisions of the Act preempt 
application of the California Standards to NASD Dispute Resolution 
arbitrations. On May 23, 2005, the Supreme Court of California issued a 
decision in Jevne v. The Superior Court of Los Angeles County\6\ in 
which it also held that the provisions of the Act preempt application 
of the California Standards to NASD Dispute Resolution arbitrations. 
Accordingly, the Exchange believes that it can once again appoint 
arbitrators and hold hearings in California without requiring a waiver 
of the California Standards.
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    \4\ See Exchange Act Release No. 46816 (November 12, 2002); 67 
FR 69793 (November 19, 2002) (SR-NYSE-2002-56).
    \5\ 400 F.3d 1119 (9th Cir. 2005).
    \6\ S121532 (35 Cal. 4th 935) (CA Sup. Ct. May 23, 2005).
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    The proposed rule change is intended to rescind Rule 600(g), which 
expired on September 30, 2005, as it is no longer necessary, in light 
of the court decisions referenced above.
2. Statutory Basis
    The NYSE believes that the proposed rule change is consistent with 
Section 6(b) \7\ of the Act in general and section 6(b)(5) of the Act 
\8\ in particular in that it promotes just and equitable principles of 
trade by ensuring that members and member organizations and the public 
have a fair and impartial forum for the resolution of their disputes.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The NYSE 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 NYSE has neither solicited nor received written comments on the 
proposed rule change.

III. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    The Commission has determined to approve the proposed rule change 
on an accelerated basis, thereby permitting the Exchange to rescind 
Rule 600(g) promptly.\9\ The Commission finds that the proposed rule 
change is consistent with the requirements of section 6(b) \10\ of the 
Act in general and section 6(b)(5) of the Act \11\ in particular. 
Specifically,

[[Page 76095]]

the Commission believes that permitting the Exchange to rescind Rule 
600(g) will alleviate any confusion by California claimants as to 
whether the California Standards are applicable to their claims. The 
Commission finds good cause for approving the proposed rule change 
prior to the thirtieth day after the date of publication of the notice 
thereof in the Federal Register. Although California claimants are no 
longer required to waive the California Standards, Rule 600(g) might 
lead California claimants to believe that the California Standards 
conflict with the NASD Code of Arbitration. Accordingly, the Commission 
believes that it is consistent with sections 6(b)(5) \12\ and 19(b)(2) 
\13\ of the Act to approve the proposed rule change on an accelerated 
basis.
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    \9\ The Exchange requested accelerated approval of the proposed 
rule change. Conversation between Daniel Beyda, Chief Administrative 
Officer of NYSE Arbitration, NYSE, and Elizabeth MacDonald, Special 
Counsel, Division of Market Regulation, on December 15, 2005.
    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5). In approving this proposed rule 
change, the Commission notes that it has considered the proposed 
rule's impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 15 U.S.C. 78s(b)(2).
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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 e-mail to rule-comments@sec.gov. Please include File 

Number SR-NYSE-2005-73 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.

All submissions should refer to File Number SR-NYSE-2005-73. 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. 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-2005-73 and should be submitted on or before 
January 12, 2006.

V. Conclusion

    It is Therefore Ordered, pursuant to section 19(b)(2) of the Act 
\14\ that the proposed rule change (SR-NYSE-2005-73) be, and hereby is, 
approved.
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    \14\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-7674 Filed 12-21-05; 8:45 am]

BILLING CODE 8010-01-P