Document ID: SEC-2007-0350-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-03-09T05:00Z

[Federal Register: March 9, 2007 (Volume 72, Number 46)]
[Notices]               
[Page 10808-10809]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09mr07-141]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55387; File No. SR-NYSE-2007-23]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 15A.50 Clarifying the Circumstances Under Which the Exchange 
Will Automatically Route Orders to Other Market Centers to Prevent 
Trade-Throughs, and Rename Rule 15A

March 2, 2007.
    Pursuant to Section 19(b)(1)\1\ of the Securities Exchange Act of 
1934 (the ``Act'')\2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on March 1, 2007, the New York Stock Exchange LLC (``NYSE'' 
or the ``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 
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\ 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 Exchange is proposing to amend Rule 15A.50 to describe how 
trade-throughs will be prevented on the Exchange in conformance with 
the Order Protection Rule (``OPR'')\4\ of Regulation National Market 
System (``Reg. NMS'')\5\ beginning on the Trading Phase Date of Reg. 
NMS,\6\ and to rename Rule 15A the ``Order Protection Rule.''
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    \4\ 17 CFR 242.611.
    \5\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005).
    \6\ The Trading Phase Date is currently March 5, 2007.
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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. 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 NYSE proposes to amend Rule 15A.50 to reflect the circumstances 
under which the Exchange will automatically route orders to other 
market centers to prevent trade-throughs\7\ on its market, beginning on 
the Trading Phase Date of Reg. NMS. The avoidance of trade-throughs on 
the Exchange has been governed by Section 8(d)(i) (Order Protection--
Trade Throughs; Locked Markets) and the related provisions of Section B 
of the ITS Plan, and NYSE Rule 15A (ITS ``Trade-Throughs'' And ``Locked 
Markets''), implemented as a function of the Exchange's participation 
in the ITS Plan. Presently, NYSE Rule 15A.50 describes the 
circumstances under which the Exchange will route orders to other 
market centers to avoid trade throughs according to parameters 
established by the ITS Plan. However, it is expected that the 
termination of the ITS Plan will coincide with the Trading Phase Date. 
More significantly, the Exchange is required to fully operate a Reg. 
NMS-compliant trading system, which includes compliance with Rule 611 
of Reg. NMS,\8\ no later than the Trading Phase Date in order to 
qualify NYSE quotations for trade-through protection beginning with the 
Pilot Stocks Phase and beyond.\9\
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    \7\ As defined in Reg. NMS, a ``trade-through'' is the 
``purchase or sale of an NMS stock during the regular trading hours, 
either as principal or agent, at a price that is lower than a 
protected bid or higher than a protected offer.'' 17 CFR 
242.600(b)(77).
    \8\ 17 CFR 242.611.
    \9\ The Pilot Stocks Phase is currently set to begin on July 9, 
2007.
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    The Exchange notes that it completed Phase IV of the Hybrid 
MarketSM rollout on February 28, 2007.
    The rule amendment proposed herein is intended to conform Rule 
15A.50 in recognition of certain Phase IV changes that were made to 
Exchange trading systems to be consistent with the requirements of Rule 
611 of Reg. NMS,\10\ as well as the elimination of the ITS Plan. 
Specifically, the amendment seeks to update NYSE Rule 15A.50 to 
describe the conditions under which the

[[Page 10809]]

Exchange will automatically route orders to other markets to prevent 
trade-throughs beginning on the Trading Phase Date. Further, the filing 
seeks to rename NYSE Rule 15A from ``ITS `Trade-Throughs' And `Locked 
Markets' '' to ``Order Protection Rule.''\11\
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    \10\ 17 CFR 242.611.
    \11\ NYSE Rule 19 governs locking or crossing protected 
quotations in NMS stocks. Additionally, a forthcoming filing will 
propose conforming changes to NYSE rules to reflect the elimination 
of the ITS Plan.
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    In addition, the NYSE has requested from the Commission limited no-
action relief with respect to the Exchange's obligation to route 
orders, in accordance with amended Rule 15A.50, proposed herein, to 
protected quotations, as defined in Rule 600(b)(57) under the Act,\12 
\of NASD ADF participants and the International Stock Exchange, LLC 
beginning on Reg. NMS's Trading Phase Date until April 5, 2007.\13\
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    \12\ 17 CFR 242.600(b)(57).
    \13\ See Letter from Mary Yeager, Assistant Secretary, NYSE, to 
Nancy M. Morris, Secretary, Commission, dated March 1, 2007.
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2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \14\ that an Exchange have rules that 
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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    \14\ 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

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \15\ and Rule 19b-4(f)(6) thereunder \16\ 
because the proposal 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.\17\ NYSE has requested that the Commission waive the 30-day 
operative delay. The Commission believes that such waiver is consistent 
with the protection of investors and the public interest because the 
proposed rule change will allow the Exchange to implement, without 
delay, its amended Rule 15A.50 to specify the circumstances under which 
the Exchange will automatically route orders to other market centers to 
prevent trade-throughs on its market beginning on March 5, 2007, which 
marks the Trading Phase Date of Regulation NMS and the expected 
termination of the ITS Plan. Accordingly, the Commission hereby 
designates the proposed rule change to be operative on March 5, 
2007.\18\
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ Rule 19b-4(f)(6)(iii) under the Act requires that a self-
regulatory organization submit to 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. NYSE 
has satisfied the pre-filing requirement.
    \18\ For purposes only of waiving the 30-day operative delay of 
the proposal, 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 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.\19\
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    \19\ See 15 U.S.C. 78s(b)(3)(C).
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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-2007-23 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-2007-23. 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-2007-23 and should be submitted on or before March 
30, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-4186 Filed 3-8-07; 8:45 am]

BILLING CODE 8010-01-P