Document ID: SEC-2007-1638-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-12-06T05:00Z

[Federal Register: December 6, 2007 (Volume 72, Number 234)]
[Notices]               
[Page 68935-68937]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06de07-106]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56858; File No. SR-NYSE-2007-103]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to NYSE Rule 124 (Odd-Lot Orders)

November 28, 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 November 14, 2007, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange''), 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 
NYSE. The Exchange has filed the proposal pursuant to section 
19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(5) 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)(5).
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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 Exchange Rule 124 (Odd-Lot Orders) 
to clarify the manner in which Exchange systems price and execute odd-
lot orders \5\ at the opening and at the re-opening after a halt in 
trading on the Exchange. The text of the proposed rule change is 
available on the Exchange's Web site (http://www.nyse.com), at the 

Exchange's Office of the Secretary, and at the Commission's Public 
Reference Room.
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    \5\ Odd-lot orders are orders for a size less than the standard 
unit (roundlot) of trading, which is 100 shares for most stocks, 
although some stocks trade in 10 share units.
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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, NYSE 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
    This filing is submitted to amend Exchange Rule 124 in order to 
clarify that for the opening transaction in a subject security, odd-lot 
market orders and all odd-lot limit orders that are eligible to receive 
an execution based on

[[Page 68936]]

the price of the opening transaction \6\ shall be executed at the price 
of the opening transaction. Similarly, in the event of a halt in 
trading on the Exchange in the subject security, odd-lot market orders 
and all odd-lot limit orders eligible to receive an execution based on 
the re-opening price that are accepted by Exchange systems prior to the 
halt in trading or are received during the halt in trading shall be 
executed at the price of the re-opening transaction.
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    \6\ Pursuant to Exchange Rule 124(b), an odd-lot limit order is 
considered marketable when its limit price is at or higher than the 
current National best offer (in the case of an odd-lot limit to buy) 
and when its limit price is at or lower than the current National 
best bid (in the case of an odd-lot limit to sell).
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    On September 6, 2007, the Exchange amended Exchange Rule 124 to 
modify the way in which Exchange systems priced and executed odd-lot 
orders (the ``Odd-lot Filing'').\7\ As it pertains to openings and 
halts in trading, the Odd-lot Filing was intended to provide that odd-
lot orders entered into the Exchange systems before the opening 
transaction of the subject security that would be eligible for 
execution based on the price of the opening transaction would be 
executed at the price of the opening transaction.\8\ With respect to 
halts in trading on the Exchange, the Odd-lot Filing was also to 
provide that odd-lot orders accepted by Exchange systems prior to, or 
during, a halt in trading that are subsequently eligible to receive an 
execution based on the re-opening price would be executed at the price 
of the re-opening transaction.\9\
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    \7\ See Securities Exchange Act Release No. 56551 (September 27, 
2007), 72 FR 56415 (October 3, 2007) (SR-NYSE-2007-82).
    \8\ See Exchange Rule 124 subsections (c)(vi) (relating to 
openings) and (c)(vii) (relating to trading halts).
    \9\ The Commission made minor clarifications to this paragraph 
pursuant to a telephone call with the Exchange. See telephone call 
among Jennifer Dodd, Special Counsel, Division of Trading and 
Markets, Commission, Rahman Harrison, Special Counsel, Division of 
Trading and Markets, Commission, and Gillian Rowe, Principal Rule 
Counsel, NYSE, on November 19, 2007.
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    Currently, Exchange systems handle odd-lot orders at the opening 
and re-opening after a halt in trading as intended and as described 
above. However, the Exchange states that the use of the word 
``marketable'' \10\ in the rule text of subsections (c)(vi) and 
(c)(vii) is not accurate. Specifically as it pertains to the open, an 
order is neither marketable or non-marketable until the specialist 
determines the opening price. As such, the rule text of subsection 
(c)(vi) and (c)(vii) should not include the word marketable. Moreover, 
the use of the term marketable in (c)(vii) technically excludes non-
marketable odd-lot limit orders accepted by Exchange systems prior to a 
halt in trading that are subsequently eligible to receive an execution 
based on the re-opening price from receiving an execution.\11\ This 
would occur because the definition of marketable in the rule requires 
the odd-lot limit order to have been marketable ``upon receipt by the 
system.''
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    \10\ See Exchange Rule 124(c) which defines ``marketable odd-lot 
orders'' as odd-lot market orders and odd-lot limit orders that are 
marketable upon receipt.
    \11\ Exchange Rule 124(d) governs the execution and pricing of 
odd-lot limit orders that are non-marketable upon receipt that 
become marketable.
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    Accordingly, the Exchange proposes in this filing to amend 
subsection (c)(vi) of Exchange Rule 124 to clarify that odd-lot orders 
entered into the Exchange systems before the opening transaction of the 
subject security that would be eligible for execution based on the 
price of the opening transaction shall be executed at the price of the 
opening transaction. The Exchange further proposes to amend subsection 
(c)(vii) to clarify that, in the event of a halt in trading on the 
Exchange, odd-lot orders accepted by Exchange systems prior to, or 
during, a halt in trading that are subsequently eligible to receive an 
execution based on the re-opening price shall be executed at the price 
of the re-opening transaction.
    The Exchange believes these amendments will accurately align the 
rule text with the operation of Exchange systems in the handling of 
odd-lot orders under these specific circumstances. However, the 
Exchange will continue to monitor the recent changes to the processing 
of odd-lots and confer with our constituents in order to evaluate 
whether further change is necessary.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of section 6(b) of the Act,\12\ in general, and 
with section 6(b)(5) of the Act,\13\ in particular, in that it is 
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. The Exchange also states that the proposed rule change 
also is designed to support the principles of section 11A(a)(1) \14\ in 
that it seeks to assure economically efficient execution of securities 
transactions, make it practicable for brokers to execute investors' 
orders in the best market and provide an opportunity for investors' 
orders to be executed without the participation of a dealer.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ 15 U.S.C. 78k-1(a)(1).
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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 proposed rule change effects a change in an 
existing order-entry or trading system of a self-regulatory 
organization that does not (1) Significantly affect the protection of 
investors of the public interest, (2) impose any significant burden on 
competition, and (3) have the effect of limiting the access to or 
availability of the system, it has become effective pursuant to section 
19(b)(3)(A)(iii) of the Act \15\ and Rule 19b-4(f)(5) thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 17 CFR 240.19b-4(f)(5).
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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.

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-2007-103 on the subject line.

[[Page 68937]]

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-2007-103. 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 the 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-2007-103 and should be 
submitted on or before December 27, 2007.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-23651 Filed 12-5-07; 8:45 am]

BILLING CODE 8011-01-P