Document ID: SEC-2007-0175-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations;proposed rule changes: NYSE Arca, Inc.
Posted Date: 2007-02-06T05:00Z

[Federal Register: February 6, 2007 (Volume 72, Number 24)]
[Notices]               
[Page 5483-5485]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06fe07-70]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55186; File No. SR-NYSEArca-2007-08]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to Further 
Extending the Time Period by Which the Exchange Will Enter Into the 
NASD/NYSE Arca Options Agreement Pursuant to Rule 17d-2

January 29, 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 January 23, 2007, NYSE Arca, Inc. (``NYSE Arca'' 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 Exchange. The Exchange filed the proposal as 
a ``non-controversial'' 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.
---------------------------------------------------------------------------

    \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 Exchange has asked the Commission to waive the 5-day 
pre-filing notice requirement and the 30-day operative delay. See 15 
U.S.C. 78s(b)(3)(A), 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend its undertaking \6\ to extend 
for 90 days from the date of this filing the time period by which the 
Exchange will enter into an agreement with the National Association of 
Securities Dealers, Inc. (``NASD'') pursuant to Rule 17d-2 under the 
Act \7\ (the ``NASD/NYSE Arca Options Agreement'' or ``Agreement''). 
The Agreement would expand the allocation to NASD of regulatory 
responsibility to encompass all the regulatory oversight and 
enforcement responsibilities with respect to the options activities of 
Archipelago Securities, L.L.C. (``Archipelago Securities''),\8\ except 
for ``real-time market surveillance.''
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 54238 (July 28, 
2006), 71 FR 44758 (August 7, 2006) (SR-NYSEArca-2006-13) (OX 
Approval Order). See Securities Exchange Act Release No. 54690 
(November 2, 2006), 71 FR 66211 (November 13, 2006) (SR-NYSEArca-
2006-79) (90-Day Extension).
    \7\ 17 CFR 240.17d-2.
    \8\ Archipelago Securities, a wholly-owned subsidiary of 
Archipelago Holdings, Inc. and a registered broker-dealer, acts as 
the outbound order router for the NYSE Arca Marketplace (formerly 
known as the Archipelago Exchange) and, as such, is regulated as an 
exchange ``facility'' of NYSE Arca and NYSE Arca Equities, Inc. See 
15 U.S.C. 78c(a)(2). As such, any proposed rule change relating to 
Archipelago Securities' order-routing function must be filed with 
the Commission, and must operate in a manner that is consistent with 
the provisions of the Act applicable to exchanges and with NYSE Arca 
rules.
---------------------------------------------------------------------------

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
    In connection with the Commission's approval of the Exchange's new 
electronic options trading platform, OX, Archipelago Securities became 
a routing broker for OX options orders on the Exchange.\9\ In Amendment 
No. 3 to its filing seeking approval of the OX platform,\10\ the 
Exchange proposed to

[[Page 5484]]

clarify that NASD, a self-regulatory organization unaffiliated with the 
Exchange or any of its affiliates, would continue to carry out 
oversight and enforcement responsibilities as the Designated Examining 
Authority designated by the Commission pursuant to Rule 17d-1 under the 
Act \11\ with the responsibility for examining Archipelago Securities 
for compliance with the applicable financial responsibility rules. 
Furthermore, the Exchange represented that it would enter into the 
NASD/NYSE Arca Options Agreement pursuant to Rule 17d-2 under the 
Act,\12\ to expand the allocation to NASD of regulatory responsibility 
to encompass all the regulatory oversight and enforcement 
responsibilities with respect to the options activities of Archipelago 
Securities, except for ``real-time market surveillance.'' \13\ The 
Exchange agreed to submit the NASD/NYSE Arca Options Agreement to the 
Commission under Rule 17d-2 within 90 days of the date of the 
Commission's approval of the OX trading platform (July 28, 2006), which 
was October 26, 2006.\14\
---------------------------------------------------------------------------

    \9\ See OX Approval Order, supra note 6. Pursuant to NYSE Arca 
Rule 6.1A(a)(15), which was adopted in connection with the 
establishment of the new OX trading platform, the term ``OX Routing 
Broker'' refers to the broker-dealer affiliate of the Exchange that 
acts as agent for routing orders entered into OX of OTP Holders, OTP 
Firms and OTP Firms' Sponsored Participants to other Market Centers 
for execution whenever such routing is permitted by Exchange Rules. 
Archipelago Securities is the Exchange's only OX Routing Broker.
    \10\ See OX Approval Order, supra note 6.
    \11\ 17 CFR 240.17d-1.
    \12\ 17 CFR 240.17d-2.
    \13\ See OX Approval Order, supra note 6.
    \14\ Id.
---------------------------------------------------------------------------

    On October 20, 2006, the Exchange submitted to the Commission a 
draft NASD/NYSE Arca Options Agreement and requested a ninety day 
extension \15\ of the October 26, 2006 deadline to January 24, 2007, in 
order for the Commission to review the proposed NASD/NYSE Arca Options 
Agreement. Based on the recommendation of the staff, the Exchange 
hereby seeks a further extension of time, permitting an additional 90 
days from the date of this filing to enter into the NASD/NYSE Arca 
Options Agreement. NYSE Arca believes this will afford the Commission 
staff sufficient time to review, publish, and take action on the 
proposal.
---------------------------------------------------------------------------

    \15\ See 90-Day Extension, supra note 6.
---------------------------------------------------------------------------

    The Exchange believes that the requested extension of time is 
consistent with the Act and the rules and regulations thereunder, will 
not significantly affect the protection of investors or the public 
interest, and does not impose any significant burden on competition. 
The Exchange notes that NASD already carries out oversight and 
enforcement responsibilities as the Designated Examining Authority 
designated by the Commission pursuant to Rule 17d-1 with the 
responsibility for examining Archipelago Securities for compliance with 
the applicable financial responsibility rules.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\16\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\17\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 on the proposed rule change were neither solicited 
nor received.

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

    Because the foregoing rule: (i) Does not significantly affect the 
protection of investors or the public interest; (ii) does not impose 
any significant burden on competition; and (iii) by its terms, does not 
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,\18\ the proposed 
rule change has become effective pursuant to Section 19(b)(3)(A) of the 
Act \19\ and Rule 19b-4(f)(6) thereunder.\20\
---------------------------------------------------------------------------

    \18\ Pursuant to Rule 19b-4(f)(6)(iii) under the Act, the 
Exchange is required to give the Commission written 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 requested that the Commission waive the 5-day pre-
filing notice requirement. The Commission has determined to waive 
this requirement for this filing.
    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    The Exchange has requested that the Commission waive the 30-day 
operative delay, which would make the rule change effective and 
operative upon filing. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Such waiver will allow the Exchange to comply with its 
undertaking made in connection with the OX Approval Order to submit the 
NASD/NYSE Arca Options Agreement to the Commission. The Exchange 
requests a waiver of the 30-day period on the basis that the current 
deadline for entering into the NASD/NYSE Arca Options Agreement was 
January 24, 2007 and a delay of 30 days would place the Exchange out of 
compliance with its undertaking. Extending the compliance date for the 
Exchange's undertaking by an additional 90 days will provide time for 
the Exchange to finalize and file the Agreement. For these reasons, the 
Commission designates the proposal to be effective and operative upon 
filing with the Commission.\21\
---------------------------------------------------------------------------

    \21\ 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).
---------------------------------------------------------------------------

    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-NYSEArca-2007-08 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-NYSEArca-2007-08. This 
file number should be included on the subject line if e-mail is used. 
To help the

[[Page 5485]]

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-NYSEArca-2007-08 and 
should be submitted on or before February 27, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-1861 Filed 2-5-07; 8:45 am]

BILLING CODE 8011-01-P