Document ID: SEC-2008-0669-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2008-05-07T04:00Z

[Federal Register: May 7, 2008 (Volume 73, Number 89)]
[Notices]               
[Page 25816-25818]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07my08-143]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57746; File No. SR-NYSE-2008-34]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Exchange Rule 36 (Communication Between Exchange and 
Exchange Members' Offices)

April 30, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on April 29, 2008, the New York Stock Exchange LLC (``NYSE'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II below, which Items have been substantially prepared by the 
Exchange. The Exchange filed the 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. 
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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange seeks to extend its current portable phone pilot (the 
``Pilot'') operating pursuant to Exchange Rule 36 from its scheduled 
April 30, 2008 expiration date to no later than the approval of SR-
NYSE-2008-20 \5\ or June 30, 2008, the earlier thereof.
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    \5\ See Securities Exchange Act Release No. 57611 (April 3, 
2008), 73 FR 19274 (April 9, 2008). The comment period expires on 
April 30, 2008.
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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 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 seeks to extend the Pilot operating pursuant to 
Exchange Rule 36 from the Pilot's scheduled April 30, 2008 expiration 
date to no later than the approval of SR-NYSE-2008-20 or June 30, 2008, 
the earlier thereof.
    Pursuant to the Pilot, Floor brokers and Registered Competitive 
Market Makers (``RCMMs'') are permitted to use an Exchange authorized 
and provided portable telephone on the Exchange Floor provided certain 
conditions are met. Such usage has been permitted on a pilot basis. The 
current Pilot expires on April 30, 2008. Through the rule filing SR-
NYSE-2008-20, the Exchange seeks to have the amendment to Exchange Rule 
36 made permanent.

[[Page 25817]]

Exchange filing SR-NYSE-2008-20 was noticed for comment in the Federal 
Register by the Commission on April 9, 2008. The comment period ends on 
April 30, 2008. In order to avoid a lapse of the operation of the Pilot 
pending the approval of SR-NYSE-2008-20 by the Commission, the Exchange 
proposes in the instant filing to extend the operation of the Pilot 
either for an additional two months until June 30, 2008, or until the 
approval of SR-NYSE-2008-20, whichever occurs first.

Background

    The Commission originally approved the Pilot to be implemented for 
a six-month period \6\ beginning no later than June 23, 2003.\7\ Since 
the inception of the Pilot, the Exchange has extended the Pilot nine 
times, with the current Pilot expiring on April 30, 2008.\8\
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    \6\ See Securities Exchange Act Release No. 47671 (April 11, 
2003), 68 FR 19048 (April 17, 2003) (SR-NYSE-2002-11).
    \7\ See Securities Exchange Act Release No. 47992 (June 5, 
2003), 68 FR 35047 (June 11, 2003) (SR-NYSE-2003-19) (delaying the 
implementation date for portable phones from on or about May 1, 
2003, to no later than June 23, 2003).
    \8\ See Securities Exchange Act Release Nos. 48919 (December 12, 
2003), 68 FR 70853 (December 19, 2003) (SR-NYSE-2003-38) (extending 
the Pilot for an additional six months ending on June 16, 2004); 
49954 (July 1, 2004), 69 FR 41323 (July 8, 2004) (SR-NYSE-2004-30) 
(extending the Pilot for an additional five months ending on 
November 30, 2004); 50777 (December 1, 2004), 69 FR 71090 (December 
8, 2004) (SR-NYSE-2004-67) (extending the Pilot for an additional 
four months ending March 31, 2005); 51464 (March 31, 2005), 70 FR 
17746 (April 7, 2005) (SR-NYSE-2005-20) (extending the Pilot for 
additional four months ending July 31, 2005); 52188 (August 1, 
2005), 70 FR 46252 (August 9, 2005) (SR-NYSE-2005-53) (extending the 
Pilot for an additional six months ending January 31, 2006); 53277 
(February 13, 2006), 71 FR 8877 (February 21, 2006) (SR-NYSE-2006-
03) (extending the Pilot for an additional six months ending July 
31, 2006); 54276 (August 4, 2006), 71 FR 45885 (August 10, 2006) 
(SR-NYSE-2006-55) (extending the Pilot for an additional six months 
ending January 31, 2007); 55218 (January 31, 2007), 72 FR 6025 
(February 8, 2007) (SR-NYSE-2007-05) (extending the Pilot for an 
additional twelve months ending January 31, 2008); and 57249 
(January 31, 2008), 73 FR 7024 (February 6, 2008) (SR-NYSE-2008-10) 
(extending the Pilot for an additional three months ending April 30, 
2008). Also, the Exchange has incorporated RCMMs into the Pilot and 
subsequently amended the Pilot to allow RCMMs to use an Exchange 
authorized and provided portable telephone on the Exchange Floor to 
call to and receive calls from their upstairs offices, the upstairs 
offices of their clearing firm, and their booth locations on the 
NYSE Floor. See Securities Exchange Act Release Nos. 53213 (February 
2, 2006), 71 FR 7103 (February 10, 2006) (SR-NYSE-2005-80) and 54215 
(July 26, 2006), 71 FR 43551 (August 1, 2006) (SR-NYSE-2006-51).
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    Exchange Rule 36 governs the establishment of telephone or 
electronic communications between the Exchange's Trading Floor and any 
other location. Prior to the Pilot, Exchange Rule 36 prohibited the use 
of portable telephone communication between the Trading Floor and any 
off-Floor location.
    During the operation of the Pilot, Floor brokers and RCMMs may use 
Exchange authorized and issued portable telephones on the Floor. Floor 
brokers are permitted to engage in direct voice communication from the 
point of sale to an off-Floor location, such as a member firm's trading 
desk or the office of one of the broker's customers. Such 
communications permit the broker to accept orders consistent with 
Exchange rules governing the entry of orders on the NYSE Floor, provide 
status and oral execution reports as to orders previously received, as 
well as ``market look'' observations as have historically been 
routinely transmitted from a broker's booth location.
    Both incoming and outgoing calls are allowed, provided the 
requirements of all other Exchange rules have been met. A Floor broker 
is not permitted to represent and execute any order received as a 
result of such voice communication unless the order is first properly 
recorded by the member and entered into the Exchange's Front End 
Systemic Capture (``FESC'') electronic database (Exchange Rule 
123(e)).\9\ In addition, Exchange rules require that any Floor broker 
receiving orders from the public over portable phones must be properly 
qualified to engage in such direct access business under Exchange Rules 
342 and 345, among others.\10\
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    \9\ See Securities Exchange Act Release No. 43689 (December 7, 
2000), 65 FR 79145 (December 18, 2000) (SR-NYSE-98-25). See also 
Securities Exchange Act Release No. 44943 (October 16, 2001), 66 FR 
53820 (October 24, 2001) (SR-NYSE-2001-39) (discussing certain 
exceptions to FESC, such as orders to offset an error, or a bona 
fide arbitrage, which may be entered within 60 seconds after a trade 
is executed).
    \10\ For more information regarding Exchange requirements for 
conducting a public business on the Exchange Floor, see Information 
Memos 01-41 (November 21, 2001), 01-18 (July 11, 2001) (available at 
http://www.nyse.com/regulation/) and 91-25 (July 8, 1991).
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    The Pilot also allows RCMMs to use an Exchange authorized portable 
phone solely to call and receive calls from their booths on the Floor, 
to communicate with their or their member organizations' off-Floor 
office, and to communicate with the off-Floor office of their clearing 
member organization to enter off-Floor orders and to discuss matters 
related to the clearance and settlement of transactions, provided the 
off-Floor office uses a wired telephone line for these discussions. 
RCMMs, who trade for their own accounts on the Floor subject to the 
requirements of NYSE Rule 107A, are currently not allowed to use a 
portable phone to conduct any agency business.\11\ For both RCMMs and 
Floor brokers, use of a portable telephone on the Exchange Floor other 
than one authorized and issued by the Exchange is prohibited.
    Specialists are subject to separate restrictions in Exchange Rule 
36 on their ability to engage in voice communications from the 
specialist post to an off-Floor location.\12\ The Pilot does not apply 
to specialists, who would continue to be prohibited from speaking from 
the post to upstairs trading desks or customers.\13\
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    \11\ Allowing RCMMs acting as Floor brokers to use portable 
phones would involve further discussions with the Commission and 
would be the subject of a separate filing with the Commission.
    \12\ See Securities Exchange Act Release No. 46560 (September 
26, 2002), 67 FR 62088 (October 3, 2002) (SR-NYSE-00-31) (discussing 
restrictions on specialists' communications from the post).
    \13\ Exchange Rule 36.30 provides that, with the approval of the 
Exchange, a specialist unit may maintain a telephone line at its 
stock trading post location to the off-Floor offices of the 
specialist unit or the unit's clearing firm. Such telephone 
connection shall not be used for the purpose of transmitting to the 
Floor orders for the purchase or sale of securities, but may be used 
to enter options or futures hedging orders through the unit's off-
Floor office or the unit's clearing firm, or through a member (on 
the Floor) of an options or futures exchange.
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    The Exchange believes that the Pilot is operating successfully in 
that there is a reasonable degree of usage of portable phones. During 
the period of January 31, 2008 through April 29, 2008, there have been 
no significant regulatory concerns identified with their usage.\14\ 
Moreover, there have been no administrative or technical problems, 
other than routine telephone maintenance issues, that have resulted 
from the operation of the Pilot over the past few months.
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    \14\ The Exchange has received records of incoming and outgoing 
telephone calls from January 31, 2008, through March 31, 2008, for 
Floor brokers and RCMMs and will continue to receive records of such 
telephone calls on a monthly basis.
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Conclusion

    The Exchange proposes to extend the operation of the current Pilot 
for an additional two months to June 30, 2008 or until the approval of 
SR-NYSE-2008-20. The Exchange believes that the approval of the Pilot's 
continuation for the earlier of an additional two months or until the 
approval of SR-NYSE-2008-20 will enable the Exchange to continue to 
provide more direct, efficient access to its trading crowds and 
customers, increase the speed of order transmittal and trade execution, 
and provide an enhanced level of service to customers in an 
increasingly competitive environment. Therefore the Exchange believes 
it is appropriate to extend the Pilot to expire no later than the 
approval of the pending filing to

[[Page 25818]]

make the amendment to Exchange Rule 36 permanent or to June 30, 2008.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with, 
and furthers the objectives of, Section 6(b)(5) of the Act,\15\ in that 
it is designed to prevent fraudulent and manipulative practices, to 
promote just and equitable principles of trade, to remove impediments 
to, and perfect the mechanisms 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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    \15\ 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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) thereunder.\17\ 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.
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6).
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    The Exchange requests that the Commission waive the five-day pre-
filing period and 30-day operative period under Rule 19b-
4(f)(6)(iii).\18\ The Commission has waived the five-day pre-filing 
requirement for this proposed rule change. Additionally, the Exchange 
believes that the continuation of the Pilot is in the public interest 
as it will avoid inconvenience and interruption to the public. The 
Commission believes that it is consistent with the protection of 
investors and the public interest to waive the 30-day operative delay 
and make this proposed rule change immediately effective upon 
filing.\19\ The Commission believes that the waiver of the 30-day 
operative delay will allow the Exchange to continue, without 
interruption, the existing operation of its Pilot until the earlier of 
the approval of SR-NYSE-2008-20 or June 30, 2008.
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    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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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-2008-34 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-2008-34. 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, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such 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-2008-34 and should be 
submitted on or before May 28, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
Florence E. Harmon,
Deputy Secretary.
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    \20\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E8-9995 Filed 5-6-08; 8:45 am]

BILLING CODE 8010-01-P