Document ID: SEC-2007-0718-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-05-21T04:00Z

[Federal Register: May 21, 2007 (Volume 72, Number 97)]
[Notices]               
[Page 28532-28533]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21my07-85]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55768; File No. SR-NYSE-2007-24]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto Relating to Rule 13 (Definitions of Orders) 
To Establish the New Order Type Called Do Not Ship

May 15, 2007.
    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 April 20, 2007, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change. The Exchange filed Amendment 
No. 1 to the proposed rule change on May 11, 2007. The proposed rule 
change, as amended, is described in Items I and II below, which Items 
have been substantially prepared by the NYSE. The Exchange filed the 
proposal 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, as amended, 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Rule 13 (Definitions of Orders) 
to establish the new order type called Do Not Ship (``DNS''). The text 
of the proposed rule change is available at the Exchange, on the 
Exchange's Web site at http://www.nyse.com, and at the Commission's 

Public Reference Room.

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 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 is amending Rule 13 to adopt a Do Not Ship, or 
``DNS,'' order. A DNS order will be a limit order to buy or sell that 
is to be quoted and/or executed in whole or in part only on the 
Exchange. In the event the order would require routing to another 
market center pursuant to Exchange rules or federal securities laws, it 
would be immediately cancelled by Exchange systems.
    The proposed DNS order provides an alternative for market 
participants who are seeking to have their order quoted and executed 
solely on the Exchange. The Exchange states that the DNS order provides 
the market participant with control over execution costs and where the 
order will be handled.
    Regulation National Market System (``Reg. NMS'') requires, among 
other things, that with limited exceptions, trading centers have 
policies and procedures reasonably designed to prevent the execution of 
trades at prices inferior to protected quotations displayed by other 
market centers.\5\ The Exchange states that, in this context, orders 
that are routed away to other market center(s) in compliance with Reg. 
NMS may cause the market participant to incur multiple fees because the 
customer has to pay a separate fee each time the order is routed to 
other market center(s) during the course of its execution. The DNS 
order enables a market participant to control the costs associated with 
order execution by limiting the execution of the order in whole or in 
part, to the Exchange.
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    \5\ See 17 CFR 242.611. See also Securities Exchange Act Release 
No. 51808 (June 9, 2005), 70 FR 37496 (June 29, 2005).
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    Similarly, a market participant who desires to have its order 
executed in whole or in part solely on the Exchange will also benefit 
from the DNS order which, by its terms, will immediately and 
automatically cancel if it is required to be routed away to another 
market center.
    Generally, a DNS order can quote and trade on the Exchange. Where 
the bid or offer on the Exchange matches the bid or offer at another 
market center, an incoming DNS order that is eligible to quote and 
trade will do so first at the Exchange. However, if quoting the DNS 
order will cause the locking or crossing

[[Page 28533]]

of another market center in violation of Exchange Rule 19 (Locking or 
Crossing Protected Quotations in NMS Stocks), the DNS order will 
cancel. If all or part of a DNS order would have been required, 
pursuant to Federal securities laws, to be routed to another market 
center upon entry at the Exchange, it will immediately and 
automatically cancel. When a DNS order is not eligible to be traded, it 
will be placed on the Display Book system at its limit price.
    The Commission has previously approved the use of order types 
substantially similar to the DNS on other exchanges.\6\ The Exchange 
believes that the DNS order will not only give the market participant 
greater flexibility in terms of execution costs and where the order 
will be handled, but it will also allow the Exchange a greater 
opportunity to compete in the current market landscape.
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    \6\ See NYSE Arca, Inc. Equities Rule 7.31 (Orders and 
Modifiers) subsection (w) PNP Order (Post No Preference); Securities 
Exchange Act Release No. 44983 (October 25, 2001), 66 FR 55225 
(November 1, 2001) (SR-PCX-00-25). See also Philadelphia Stock 
Exchange, Inc. Rules of the Board of Governors Rule 185 (Orders and 
Order Execution) subsection (b) (Limited Price Orders) subparagraphs 
(1)(D); Securities Exchange Release No. 54538 (September 28, 2006), 
71 FR 59184 (October 6, 2006) (SR-Phlx-2006-43).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirement under Section 6(b)(5) of the Act \7\ that the 
rules of an Exchange 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.
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    \7\ 15 U.S.C. 78f(b)(5).
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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 rule change does not: (1) Significantly 
affect the protection of investors or the public interest; (2) impose 
any significant burden on competition; and (3) become operative for 30 
days after the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    NYSE has requested that the Commission waive the 30-day operative 
delay.\10\ The Commission believes that waiver of the 30-day operative 
delay is consistent with the protection of investors and the public 
interest because the Commission has previously approved similar order 
types for other exchanges,\11\ and waiver will allow the Exchange to 
implement this order type as soon as its systems are modified to 
recognize it.\12\ For this reason, the Commission designates the 
proposed rule change to be effective and operative upon filing with the 
Commission.\13\
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    \10\ 17 CFR 240.19b-4(f)(6)(iii). Rule 19b-4(f)(6) also requires 
the self-regulatory organization to give the Commission notice of 
its intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied the five-day pre-filing requirement.
    \11\ See supra at note 6.
    \12\ The Exchange represents that it seeks the requested waivers 
to allow for the immediate implementation of this new order type 
upon the operability of the Exchange's systems on or about May 18, 
2007.
    \13\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such 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.\14\
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    \14\ The Commission considers the 60-day abrogation period to 
have commenced on May 11, 2007, the date the Exchange filed 
Amendment No. 1.
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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 an e-mail to rule-comments@sec.gov. Please include 

File Number SR-NYSE-2007-24 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-2007-24. 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 the 
filing also will be available for inspection and copying at the 
principal office 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-2007-24 and should be submitted on or before June 
11, 2007.

    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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E7-9667 Filed 5-18-07; 8:45 am]

BILLING CODE 8010-01-P