Document ID: SEC-2006-0684-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2006-05-26T04:00Z

[Federal Register: May 26, 2006 (Volume 71, Number 102)]
[Notices]               
[Page 30456-30458]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26my06-135]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53835; File No. SR-NYSE-2006-31]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the NYSE Retail Trading Product and the NYSE Program 
Trading Product

May 18, 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 May 8, 2008, 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 prepared by the NYSE. The Exchange 
has filed the proposal pursuant to section 19(b)(3)(A) of the

[[Page 30457]]

Act,\3\ and Rule 19b-4(f)(6) 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)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to introduce two new market data products: 
The NYSE Retail Trading Product and the NYSE Program Trading Product. 
The text of the proposed rule change is available on the Exchange's Web 
site (http://www.nyse.com), at the NYSE's Office of the Secretary, 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, 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
    Clause (b)(16) of Exchange Rule 132B (``Order Tracking 
Requirements'') requires members to record the type of account for 
which each order is submitted. NYSE proposes to make available to 
vendors and investors the following:
    (1) The NYSE Retail Trading Product will consist of (A) a real-time 
datafeed of certain execution report information that has been recorded 
as trades for accounts of ``individual investors'' \5\ and (B) an end-
of-day summary of the retail trading activity on the Exchange for that 
day, including total buy-and-sell retail share volume for each stock 
traded.
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    \5\ For this purpose, the ``account of an individual investor'' 
means an account covered by section 11(a)(1)(E) of the Act. That 
section refers to the ``account of a natural person, or a trust 
created by a natural person for himself or another natural person.''
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    (2) The NYSE Program Trading Product will consist of (A) a real-
time datafeed of certain execution report information that has been 
recorded as program trades \6\ and (B) an end-of-day summary of program 
trading activity on the Exchange for that day, including total index 
arbitrage (as opposed to non-index arbitrage) program trading volume.
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    \6\ For this purpose, ``program trading'' has the definition 
that Supplementary Material .40(b) to NYSE Rule 80A (``Index 
Arbitrage Trading Restrictions'') gives to that term.
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    Each published report of a trade execution that is included in the 
datafeed for either product shall indicate such information as the 
security's symbol, the size of the trade, the time of the trade's 
execution and other related information.\7\ (More information regarding 
the NYSE Retail Trading Product and the NYSE Program Trading Product 
can be found on the NYSE Web site at http://www.nysedata.com/InfoTools.
)

    The Exchange believes the NYSE Retail Trading Product should 
provide investors with increased information regarding individual 
investors' trading activity on the Exchange. Similarly, the NYSE 
Program Trading Product should provide investors with increased 
information regarding program trading activity.
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    \7\ NYSE will only include in the NYSE Retail Trading Product 
and the NYSE Program Trading Product information that is attached to 
execution reports. While the NYSE believes the information contained 
in the NYSE Retail Trading Product and the NYSE Program Trading 
Product is accurate, the NYSE does not guarantee the completeness or 
accuracy of account information submitted by order entry firms on 
which the InfoTools product is based.
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    Pursuant to the proposed rule change, the Exchange proposes to 
introduce the NYSE Retail Trading Product and the NYSE Program Trading 
Product without charge as a 60-day pilot program, commencing 30 days 
from the Exchange's submission of the proposed rule change to the 
Commission.
    In a companion proposed rule change that the Exchange has filed 
contemporaneously with the proposed rule change (see File No. SR-NYSE-
2006-32), the Exchange proposes to establish fees for the NYSE Retail 
Trading Product and the NYSE Program Trading Product. The Exchange 
plans to commence to impose those fees upon the later of Commission 
approval of that filing and the end of the pilot program.
    The Exchange is not proposing to impose any attribution 
requirements on vendors displaying NYSE Trading Information. However, 
the Exchange believes that it is incumbent on vendors to identify and 
display information in a manner that avoids investor confusion. This is 
especially true at a time when markets are offering investors, who have 
grown accustomed to viewing consolidated information over the past 
three decades, many new exchange-specific information services.
    Thus, while the Exchange is not proposing to impose any attribution 
requirement, it does propose to have vendors provide, by link or 
otherwise, a description of the NYSE Retail Trading Product and NYSE 
Program Trading Product in a manner that is reasonably transparent and 
accessible to subscribers of the two products. The Exchange will 
require the Exhibit A to each vendor's contract with the Exchange for 
the receipt and redistribution of the NYSE Retail Trading Product and 
NYSE Program Trading Product to describe how the vendor will make the 
description available.
    The description should read substantially as follows:

    NYSE Rule 132B requires each NYSE member firm to record for each 
order that it submits to the Exchange such information as whether 
the firm is placing the order for the account of a retail customer 
or whether the order results from program trade trading activity. 
NYSE uses this information to produce the NYSE Retail Trading 
Product and NYSE Program Trading Product, each of which includes 
real-time information relating to retail trading and program trading 
activity, respectively, as well as daily summaries and historical 
databases of that information.
    While the NYSE believes the information contained in the NYSE 
Retail Trading Product and NYSE Program Trading Product is accurate, 
Customer understands that its agreement with NYSE provides that NYSE 
(1) reserves all rights to that information, (2) does not guarantee 
the completeness or accuracy of account information submitted by 
order entry firms on which the InfoTools product is based, and (3) 
shall not be liable for any loss due either to their negligence or 
to any cause beyond their reasonable control.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of section 6(b) of the Act,\8\ in general, and with 
section 6(b)(5) of the Act,\9\ 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, in general, 
to protect investors and the public interest.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.

[[Page 30458]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments regarding the proposed rule change. The Exchange has not 
received any unsolicited written comments from Exchange participants or 
other interested parties.

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)(iii) of the Act \10\ and Rule 19b-4(f)(6) thereunder \11\ 
because the proposal: (i) Does not significantly affect the protection 
of investors or the public interest; (ii) does not impose any 
significant burden on competition; and (iii) does not become operative 
prior to 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; provided that the Exchange has given the 
Commission 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 
satisfied the five-day pre-filing requirement.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6).
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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.\12\
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    \12\ 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-2006-31 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-2006-31. 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 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-2006-31 and should be submitted on or before June 
16, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-8095 Filed 5-25-06; 8:45 am]

BILLING CODE 8010-01-P