Document ID: SEC-2006-1693-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca, Inc.
Posted Date: 2006-12-27T05:00Z

[Federal Register: December 27, 2006 (Volume 71, Number 248)]
[Notices]               
[Page 77847-77849]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27de06-120]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54966; File No. SR-NYSEArca-2006-89]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 
Thereto Relating to Exchange Fees and Charges

December 19, 2006.
    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 December 1, 2006, NYSE Arca, Inc. (``NYSE Arca'' 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 NYSE Arca. On December 15, 
2006, the Exchange submitted Amendment No. 1 to the proposed rule 
change. NYSE Arca has filed the proposal pursuant to Section 
19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(2) 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, as amended, 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)(2).
---------------------------------------------------------------------------

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

    NYSE Arca proposes to amend its Schedule of Fees and Charges For 
Exchange Services (``Schedule'') to make a minor change to the Firm 
Transaction Fee, eliminate certain obsolete fees, and make a non-
substantive formatting change to the Schedule. The text of the proposed 
rule change is available on NYSE Arca's Web site at http://www.nysearca.com
, at the principal office of NYSE Arca, and at the 

Commission's Public Reference Room.

[[Page 77848]]

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 Arca 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 the these statements may be examined at the places specified in 
Item IV below. NYSE Arca 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 amend its Schedule in order to make a 
minor change to the Firm Transaction Fee, eliminate certain obsolete 
fees, and make a non-substantive formatting change.
Changes to the Firm Transaction Fee
    NYSE Arca charges transaction fees associated with all option 
contracts that are executed on the Exchange. The current Firm 
Transaction Fee applies to OTP Firm \5\ proprietary trades that have a 
customer of that firm on the contra side of the transaction. The 
Exchange offers this rate as an incentive to OTP Firms to direct their 
customer orders to NYSE Arca for execution. NYSE Arca applies the Firm 
Transaction Fee to all trades between an OTP Firm and a customer of the 
same OTP Firm, whenever a proprietary account of the firm is used. This 
includes market makers that trade against orders that their affiliated 
firm represents for customers. The Firm Transaction Fee became 
applicable for certain market maker transactions upon the filing of a 
proposed rule change with the commission.\6\ At that time the Market 
Maker Transaction Fee was $0.26 per contract and the Firm Transaction 
Fee was $0.15 per contract. As stated above, the cost savings was 
offered as a incentive for Firms to send addition customer orders to 
NYSE Arca. As part of a more recent proposed rule change,\7\ the Market 
Maker Transaction Fee was lowered to $0.16 per contract, representing a 
savings of almost 40% over the previous fee. Because of the reduction 
in the Market Maker Transaction Fee, the additional savings afforded by 
the application of the Firm Transaction Fee in certain instances, is no 
longer significant. In order to simplify the billing process, all 
market maker transactions will now be billed the same the fee of $0.16 
per contract. While this change represents a modest $0.01 increase in 
certain cases, the Exchange believes that it is more than compensated 
for by the previous reduction in the Market Maker Transaction Fee.
---------------------------------------------------------------------------

    \5\ See NYSE Arca Rule (1(r).
    \6\ See Securities Exchange Act Release No. 53165 (January 22, 
2006), 71 FR 4955 (January 30, 2006) (SR-PCX-2005-136..
    \7\ See Securities Exchange Act Release No. 54309 (August 11, 
2006), 71 FR 48571 (August 21, 2006) (SR-NYSEArca-2006-25).
---------------------------------------------------------------------------

    The change to this fee will be reflected in the footnote associated 
with the Firm Transaction Fee on the Schedule.
Elimination of Obsolete Fees
    Due to changes in the market structure at NYSE Arca certain fees 
have become outdate and obsolete. The Exchange proposes to eliminate 
these fees from the Schedule.
     Order Cancellation Fee--This fee was applied to orders 
were cancelled on the PCX Plus automated trading system. This system is 
no longer in use and accordingly the fee no longer applies.
     Booth WorkStation Fee--This fee was assessed to OTP Firms 
operating on the floor of the Exchange that used certain Exchange 
provided workstations. These workstations have been replaced by firm 
proprietary systems; therefore the fee no longer applies.
     Printer Fee--Prior to the introduction of the OX 
system,\8\ the Exchange provided printers that would generate order 
tickets in certain cases where orders were not electronically executed 
or represented. OX is a fully automated system and does not need to 
print order tickets. The printers are no longer in use and therefore 
the user fee no longer applies.
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 54238 (July 28, 
2006), 71 FR 44758 (August 7, 2006)(SR-NYSEArca-2006-13).
---------------------------------------------------------------------------

     Market Maker Held Fees--Market Makers on the floor of the 
Exchange now use proprietary trading systems to interface with the OX 
system. The Market Maker Hand Held system is no longer in use on NYSE 
Area; accordingly the fees associated with it no longer apply.
Administrative Changes
    the Exchange also proposes a change to the formatting of the 
Schedule. Presently, the Schedule shows a list of explanatory end notes 
on the last page of the Schedule. With the new format, the end notes 
will be moved to the appropriate page that shows the corresponding fee 
or charge. Except where previously noted, the language in the reference 
notes will remain the same, just the formatting of the reference note 
will change. The Exchange believes that by having the reference notes 
on the same page as the corresponding charge or fee, the Schedule will 
be more user friendly and easier to read.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
provisions of Section 6 of the Act, \9\ in general, and with Section 
6(b)(4) of the Act,\10\ in particular, in that the proposal provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among its OTP Holders \11\ and OTP Firms trading option 
contracts on NYSE Arca.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ See NYSE Arca rule 1(q).
---------------------------------------------------------------------------

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

    The foregoing proposed rule change is subject to Section 
19(b)(3)(A)(ii) of the Act \12\ and subparagraph (f)(2) of Rule 19b-4 
thereunder \13\ because it establishes or changes a due, fee, or other 
charge applicable only to a member imposed by the self-regulatory 
organization. Accordingly, the proposal is effective upon Commission 
receipt of the filing. 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.\14\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 240.19bn-4(f)(2).
    \14\ 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-
day period within which the Commission may summarily abrogate the 
proposal, the Commission considers the period to commence on 
December 15, 2006, the date on which the Exchange submitted 
Amendment No. 1.

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

[[Page 77849]]

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 from (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-NYSEArca-2006-89 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-2006-89. 
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 NYSE Arca. 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-2006-89 and should be submitted on or before 
January 17, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 06-9864 Filed 12-26-06; 8:45 am]

BILLING CODE 8011-01-M