Document ID: SEC-2006-1366-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2006-10-23T04:00Z

[Federal Register: October 23, 2006 (Volume 71, Number 204)]
[Notices]               
[Page 62143-62145]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23oc06-93]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54611; File No. SR-NYSE-2006-86]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Rule 13 (``Definitions of Orders ``) To Clarify That an 
Immediate or Cancel Order Must Be Designated ``Regulation NMS-compliant 
Immediate or Cancel'' in Order To Be so Executed, and To Modify the 
Definition of an ``At the Opening'' or ``At the Opening Only'' Order To 
Ensure That It Complies With the Securities and Exchange Commission's 
Regulation NMS

October 16, 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 October 16, 2006, 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 and 
II below, which Items have been prepared by the Exchange. NYSE filed 
the proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ 
and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposed rule 
change effective upon filing with the Commission. The Commission is 
publishing this notice to solicit

[[Page 62144]]

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)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NYSE proposes to amend Exchange Rule 13 (``Definitions of Orders 
``) to clarify that an Immediate or Cancel order must be designated 
``Regulation NMS-compliant Immediate or Cancel'' in order to be so 
executed, and to modify the definition of an ``At the Opening'' or ``At 
the Opening Only'' order to ensure that it complies with the 
Commission's Regulation NMS (``Reg. NMS'').\5\ 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\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005). See also 17 CFR 242.600(b)(3).
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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 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 self-regulatory organization 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 certain rules governing the NYSE 
HYBRID MARKET\SM\ (``Hybrid Market'') in order to clarify the 
definition of a Regulation NMS-compliant Immediate or Cancel order.
    In the Hybrid Market, the Exchange created two types of Immediate 
or Cancel (``IOC'') orders which are defined in Exchange Rule 13. The 
first type is an IOC order that complies with Reg. NMS.\6\ A Reg. NMS 
IOC order will not be routed during an Exchange sweep, if any, to 
satisfy better priced protected bids or offers \7\ displayed by other 
market centers; rather, a Reg. NMS IOC order will be cancelled and the 
Exchange sweep will end.
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    \6\ See id.
    \7\ A protected bid and offer is one that meets the definition 
set forth in Section 242.600(b)(57) of Regulation NMS.
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    The second type of IOC order is a ``NYSE IOC'' order. Unlike a Reg. 
NMS IOC order, a NYSE IOC order permits portions to be routed during a 
sweep, if any, to other markets to satisfy better priced protected bids 
or offers and cancels only when once it is no longer able to receive an 
execution.
    In this filing, the Exchange proposes to amend the definition of a 
Reg. NMS IOC order to clarify that all Reg. NMS IOC orders submitted to 
the Exchange for execution must be appropriately designated. Therefore, 
if an IOC order is submitted to the Exchange without the appropriate 
designation for a Reg. NMS IOC order, said order will be handled as a 
NYSE IOC order.
    In addition, in order to comply with Reg. NMS,\8\ the Exchange 
proposes to amend the definition of an ``At the Opening'' or ``At the 
Opening Only'' order to provide that all or part of such order may be 
executed as part of the opening transaction on another market center if 
compliance with Reg. NMS requires that the order, or part thereof, be 
routed to another market center. If the possibility of a NYSE-only 
opening execution is sought, an ``At the Opening'' or ``At the Opening 
Only'' order must be designated as a ``Reg. NMS-compliant immediate or 
cancel'' order in the manner directed by the Exchange. As noted above, 
such orders will not be routed to other markets. Therefore, if such 
orders are unable to trade on the Exchange, they will be cancelled 
immediately and automatically. Accordingly, if the Exchange opens on a 
quote, such orders will be immediately and automatically cancelled.
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    \8\ See note 5, supra.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \10\ 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 believes that the 
proposed rule change is also designed to support the principles of 
Section 11A(a)(1) of the Act \11\ in that it seeks to assure 
economically efficient execution of securities transactions, the 
practicability of brokers executing investors' orders in the best 
market, and an opportunity for investors' orders to be executed without 
the participation of a dealer.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ 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 does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
by its terms, 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, it 
has become effective pursuant to Section 19(b)(3)(A) of the Act \12\ 
and Rule 19b-4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \14\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay and designate the proposed 
rule change immediately operative upon filing. The Commission believes 
that waiver of the 30-day operative delay is consistent with the 
protection of investors and the public interest because it would allow 
the Exchange to meet the Reg. NMS compliance dates.\15\
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    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the operative delay for this 
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 proposed rule change 
if it appears

[[Page 62145]]

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-2006-86 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-2006-86. 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 such 
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-2006-86 and should be submitted on or before 
November 13, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-17674 Filed 10-20-06; 8:45 am]

BILLING CODE 8011-01-P