Document ID: SEC-2007-0847-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-06-20T04:00Z

[Federal Register: June 20, 2007 (Volume 72, Number 118)]
[Notices]               
[Page 34054-34056]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20jn07-159]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55904; File No. SR-NYSE-2007-50]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend Its Current Revenue Sharing Program for Its Specialists for an 
Additional Three Months

June 13, 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 May 31, 2007, the New York Stock Exchange LLC (``Exchange'' or 
``NYSE'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been substantially prepared by the 
Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend its current revenue sharing program 
for its specialists for an additional three months (through August 31, 
2007).

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. 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 proposes to extend for an additional three months its 
current revenue sharing program for its specialists. The revenue 
sharing program was instituted \3\ in connection with the Exchange's 
adoption of Rule 104B,\4\ which prohibits specialists from charging 
commissions. The Exchange established the revenue sharing program for a 
six-month period commencing December 1, 2006, in order to partially 
offset the specialists' loss of commission revenues. In its original 
filing, the Exchange stated that it intended to adopt a revised revenue 
sharing program commencing June 1, 2007, that would provide variable 
payments to the specialist firms depending on performance. The Exchange 
is not yet ready to put this revised revenue sharing program in place 
and, in the interim, proposes to extend the current revenue sharing 
program for an additional three months commencing June 1, 2007.
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    \3\ See Securities Exchange Act Release No. 54856 (December 1, 
2006), 71 FR 71215 (December 8, 2006) (SR-NYSE-2006-106).
    \4\ See Securities Exchange Act Release No. 54850 (November 30, 
2006), 71 FR 71217 (December 8, 2006) (SR-NYSE-2006-105).

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[[Page 34055]]

    The Exchange will distribute a fixed amount of $26.5 million among 
the specialists for the three-month period commencing on June 1, 2007, 
to be paid in three monthly installments. The Exchange will allocate 
this fixed amount in proportion to the rebates each of the specialist 
firms would have received in October 2006 \5\ if there had been a 
revenue sharing program in place utilizing the following two formulas:
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    \5\ The Exchange is using the specialist firms' performance in 
October 2006 as a basis for determining the amounts received by each 
firm because this was the period used for that purpose in connection 
with the initial six months of the revenue sharing program and the 
amount each specialist firm will receive each month will therefore 
remain unchanged.
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    (1) Each specialist firm would receive a rebate relating to that 
specialist firm's absolute market share for October 2006 in each of its 
specialty stocks if that market share exceeded 35%. A market share in a 
stock that was equal to or exceeded 35% would entitle a specialist to a 
rebate of (i) $15 for each percentage point above or equal to 35% up to 
and including 50%, (ii) $25 for each percentage point above 50% up to 
and including 65%, (iii) $35 for each percentage point above 65% up to 
and including 80%, and (iv) $45 for each percentage point above 80%. 
The following are examples of how this rebate would be paid:
     If Specialist X traded XYZ stock in which the Exchange had 
a 50% market share, it would receive $225 per month, which is 15 (i.e., 
the number of percentage points above 35%) multiplied by $15.
     If Specialist X traded XYZ stock in which the Exchange had 
a 65% market share, it would receive $600 per month, which is 15 (i.e., 
the number of percentage points above 35% up to and including 50%) 
multiplied by $15, plus 15 (i.e., the number of percentage points above 
50%) multiplied by $25.
    (2) Each specialist firm would receive a volume-weighted rebate for 
every share traded in October 2006 in a stock in which the Exchange had 
a greater than 35% market share. If the Exchange had a market share:
     Equal to or greater than 35% up to and including 50%, the 
rebate would be $0.00013 per share.
     Greater than 50% up to and including 65%, the rebate would 
be $0.00014 per share.
     Greater than 65% up to and including 80%, the rebate would 
be $0.00015 per share.
     Greater than 80%, the rebate would be $0.00016 per share.
    The following are examples of how the volume-weighted rebate would 
be paid:
     If Specialist X traded XYZ stock in which the Exchange had 
a 50% market share, it would receive a rebate of $0.00013 for every 
share traded above the 35% market share threshold.
     If Specialist X traded XYZ stock in which the Exchange had 
a 65% market share, it would receive a rebate of $0.00013 per share for 
every share traded above the 35% market share threshold up to and 
including a 50% market share and then would receive $0.00014 for every 
share above the 50% level.
    The Exchange may alter the provisions of the revenue sharing 
program in the future in response to its experience with its 
application over time.\6\
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    \6\ The Exchange will file a rule filing with the Commission 
pursuant to the Act and the rules thereunder in relation to any such 
changes prior to their implementation.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act \7\ in general and furthers 
the objectives of Section 6(b)(4) \8\ in particular, in that it is 
designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among its members and other persons using its 
facilities.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
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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

    Written comments were neither solicited nor received.

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

    Because the foregoing proposed rule change establishes or changes a 
due, fee, or other charge imposed by the Exchange, it has become 
effective upon filing pursuant to Section 19(b)(3)(A) of the Act \9\ 
and Rule 19b-(f)(2)\10\ thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 19b-(f)(2).
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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:

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-2007-50 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-2007-50. 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 Commissions 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-2007-50 and should be submitted on or before July 11, 2007.

[[Page 34056]]

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-11884 Filed 6-19-07; 8:45 am]

BILLING CODE 8010-01-P