Document ID: SEC-2006-0882-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca, Inc.
Posted Date: 2006-07-11T04:00Z

[Federal Register: July 11, 2006 (Volume 71, Number 132)]
[Notices]               
[Page 39136-39138]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11jy06-128]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54080; File No. SR-NYSEArca-2006-27]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to Rule 
10.1 (Disciplinary Jurisdiction)

June 30, 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 June 8, 2006, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') 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 proposed 
rule change as a ``non-controversial'' rule change under Rule 19b-
4(f)(6) under the Act,\3\ which rendered 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\ 17 CFR 240.19b-4(f)(6).
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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 10.1 (Disciplinary 
Jurisdiction) in the Rules of the Exchange and NYSE Arca Equities, Inc. 
to create a mechanism that would allow the Exchange to contract with 
another self-regulatory organization (``SRO'') for the performance of 
certain of the Exchange's regulatory functions. The text of the 
proposed rule change is available on the Exchange's Web site, (http://www.nyse.com
), at the Exchange's principal office, and at the 

Commission's Public Reference Room.

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
    The proposed rule change in the Rules of the Exchange and NYSE Arca 
Equities, Inc. would create a mechanism \4\ that would allow the 
Exchange to contract with another SRO for the performance of certain of 
the Exchange's regulatory functions. The purpose of the proposed rule 
change is to enhance the Exchange's ability to carry out its regulatory 
obligations under the Act by providing the Exchange the ability to 
contract with another SRO for regulatory services. Under any agreement 
for regulatory services with another SRO, the Exchange would remain an 
SRO registered under section 6 of the Act \5\ and, therefore, would 
continue to have statutory authority and responsibility for enforcing 
compliance by its

[[Page 39137]]

members, and persons associated with its members, with the Act, the 
rules thereunder, and the rules of the Exchange.
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    \4\ The Exchange states that, as a public company, the Board of 
Directors of the Exchange is currently authorized as part of its 
duties and responsibilities to delegate authority to enter into 
these types of agreements. For example, the Exchange states that in 
March of 2006 it entered into a contract with NYSE Regulation, Inc. 
to provide certain regulatory services. The Exchange, however, 
recognizes that current industry practice is to have the authority 
to delegate this responsibility explicitly written in the rules or 
constitution of an exchange. As such, the Exchange states that it is 
voluntarily submitting the instant filing to conform to current 
industry practice.
    \5\ 15 U.S.C. 78f.
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    This change in the Rules of the Exchange and NYSE Arca Equities, 
Inc. would have immediate applicability with respect to a Regulatory 
Services Agreement (``RSA'') between the Exchange, the Chicago Board 
Options Exchange, Incorporated (``CBOE''), and other options markets 
participating in the proposed Options Regulatory Surveillance Authority 
national market system plan. The Exchange has determined that, to best 
discharge certain of its SRO responsibilities, it will contract with 
CBOE, which is subject to Commission oversight pursuant to sections 6 
and 19 of the Act,\6\ for CBOE to provide certain regulatory services 
to the Exchange, as set forth in the RSA between the Exchange and CBOE. 
In performing services under the RSA, CBOE will be operating pursuant 
to the statutory SRO responsibilities of the Exchange under sections 6 
and 19, as well as performing for itself its own SRO responsibilities. 
The proposed rule change specifically states that any action taken by 
another SRO, or its employees or authorized agents, operating on behalf 
of the Exchange pursuant to a regulatory services agreement with the 
Exchange (e.g., CBOE under the RSA) will be deemed an action taken by 
the Exchange. The Exchange will retain ultimate responsibility for 
performance of its SRO duties under the RSA, and the proposed rule 
change states that the Exchange will retain ultimate legal 
responsibility for, and control of, its SRO responsibilities.
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    \6\ 15 U.S.C. 78f and 15 U.S.C. 78s.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act \7\ in general, and furthers the 
objectives of sections 6(b)(1),\8\ 6(b)(6),\9 \ and 6(b)(7) \10\ in 
that it will enhance the ability of NYSE Arca to enforce compliance by 
its members and persons associated with its members with the provisions 
of the Act, the rules and regulations thereunder, and the rules of the 
Exchange. Further, the proposed rule change will help ensure that 
members and persons associated with members are appropriately 
disciplined for violations of the Act, the rules and regulations 
thereunder, and the rules of the Exchange. The proposed rule change 
will allow the Exchange to continue to provide a fair procedure for the 
disciplining of members and persons associated with members.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(1).
    \9\ 15 U.S.C. 78f(b)(6).
    \10\ 15 U.S.C. 78f(b)(7).
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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 comments on the 
proposed rule change.

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

    Because the proposed rule change: (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 after the date of filing, or such 
shorter time as the Commission may designate, if consistent with the 
protection of investors and the public interest, the proposed rule 
change has become effective pursuant to section 19(b)(3)(A) of the Act 
\11\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\12 \The Exchange 
has requested that the Commission waive the 30-day operative delay 
period for ``non-controversial'' proposals and make the proposed rule 
change effective and operative upon filing. The Commission hereby 
grants the request. The Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. In this regard, the Commission believes that the 
proposal should be implemented without delay because of its immediate 
applicability with respect to the RSA among the Exchange, CBOE and the 
other participants in the Options Regulatory Surveillance Authority 
national market system plan.\13\ For this reason, the Commission 
designates the proposal to be effective and operative upon filing with 
the Commission.\ 14 \
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ The Commission notes that the proposed rule change is based 
on a similar rule of the Boston Stock Exchange, Inc. See Securities 
Exchange Act Release No. 53436 (March 7, 2006), 71 FR 13194 (March 
14, 2006) (SR-BSE-2006-08).
    \14\ For the purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition and capital formation. 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 the 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-2006-27 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-2006-27. 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

[[Page 39138]]

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-2006-27 and should 
be submitted on or before August 1, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-10787 Filed 7-10-06; 8:45 am]

BILLING CODE 8010-01-P