Document ID: SEC-2007-1780-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-12-28T05:00Z

[Federal Register: December 28, 2007 (Volume 72, Number 248)]
[Notices]               
[Page 73949-73951]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28de07-198]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57003; File No. SR-NYSE-2007-112]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Rule 15 (ITS and Pre-Opening Applications)

December 20, 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 December 14, 2007, the New York Stock Exchange

[[Page 73950]]

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 substantially by 
NYSE. 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 it 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 amend NYSE Rule 15 (Intermarket Trading 
System Plan and Pre-Opening Applications) to create the procedures for 
publishing pre-opening price information. The text of the proposed rule 
change is available at http://www.nyse.com, the Exchange, and 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. NYSE 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 Rule 15 to create procedures for the 
dissemination of pre-opening price information in view of the 
elimination of the requirement to publish the same pursuant to the 
Intermarket Trading System (``ITS'') Plan.
    From 1978 until its elimination in March 2007, the Exchange routed 
orders (as commitments to trade) to other market centers and received 
them through ITS. ITS facilitated trades between members located in 
different markets. Through ITS, a member in any participating market 
could send orders, as commitments to trade, at the bid or offer on any 
other participating market. The ITS Plan was administered by the 
participating markets, and was filed with and approved by the 
Commission.
    In 2006, the Commission approved a national market system plan 
(``Linkage Plan''), which became effective on October 1, 2006.\5\ The 
purpose of the Linkage Plan was to enable the plan participants to act 
jointly in planning, developing, operating and regulating the NMS 
Linkage System that was to electronically link the Participant Markets 
to one another. The Linkage Plan ran concurrently with the ITS Plan 
until March 5, 2007, at which time the ITS Plan terminated and SEC Rule 
611 (the Order Protection Rule) of Regulation National Market System 
(``Reg. NMS''),\6\ became operative. The Linkage Plan terminated on 
June 30, 2007.
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    \5\ See Securities Exchange Release No. 54551 (September 29, 
2006), 71 FR 59148 (October 6, 2006).
    \6\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005).
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    The ITS Plan required each market center to have procedures that 
governed the dissemination of pre-opening price information and also 
provided a model rule. The model rule is encompassed in Rule 15 (the 
``Pre-Opening Application''). According to Rule 15, there are two 
instances where the Pre-Opening Application applies: (a) ``whenever a 
market maker in any Participant Market, in arranging an opening 
transaction in his market in a System security, anticipates that the 
opening transaction will be at a price that represents a change from 
the security's previous day's consolidated closing price at more than 
the `applicable price change' ''; and, (b) ``whenever an `indication of 
interest' (i.e., an anticipated opening price range) is sent to the CTA 
Plan Processor as required or permitted by the CTA Plan or a 
Participant market's rules prior to the opening of trading in a System 
security or prior to the reopening of trading in a System security 
prior to the reopening of trading in a security following a Trading 
Halt.''
    The Linkage Plan Pre-Opening provision suspended the operation of 
the relevant ITS Plan requirements and much of NYSE's Rule 15. While 
the specialist was still required to send out an indication when he 
would open a specialty security at a price that represented a change 
from the previous days consolidated closing price of more than the 
``applicable price change,'' he or she was no longer required to adhere 
to any other relevant requirements of the ITS Plan or Rule 15. For 
example, in contrast to the ITS Plan, the Linkage Plan contained no 
prohibition against the specialist disseminating a pre-opening price 
range that straddled the previous day's consolidated closing price. 
Further, the ITS Plan and Rule 15 required the specialist, after 
disseminating a pre-opening notification, to delay the opening of the 
subject security until at least three minutes had passed from the time 
of the pre-opening notification. The Linkage Plan did not provide a 
defined time standard by which a specialist must delay the opening 
after issuance of a pre-opening notification. The Linkage Plan did not 
require a specialist to disseminate subsequent pre-opening information. 
With the elimination of the ITS Plan and the Linkage Plan, specialists 
were no longer required to disseminate ITS pre-opening indications at 
all.
    The specialists continue to provide this type of information orally 
to market participants as a part of the performance of their 
affirmative obligations which require that they provide accurate and 
timely market information to all inquiring market participants on the 
Floor upon request. However, customers and market participants informed 
Exchange management that they found the information the specialists 
provided pursuant to their obligations under the ITS Plan and the 
Linkage Plan useful.
    In response to customer and market participant requests, the 
Exchange proposes to amend Rule 15 to re-establish procedures for the 
publication of pre-opening price information, according to the 
framework established by the Linkage Plan requirement. This proposed 
rule change requires no modification of the specialists' proprietary 
systems. With the re-institution of these procedures, the specialists 
will now resume using the pre-opening indication template on the NYSE 
Display Book[supreg] to disseminate pre-opening price information to 
all market participants through Exchange systems.
    The proposed rule text states that the specialist shall publish a 
pre-opening price indication whenever the specialist, in arranging the 
opening transaction in a subject security, anticipates that the price 
of the opening transaction will be at a price which is different from 
the previous day's consolidated closing price by more than the 
``applicable price change.'' The pre-opening price indication will 
include the security and the price range within which the specialist 
anticipates the opening transaction will occur. Rule 15 as amended will 
be entitled ``Pre-Opening Indications.''

[[Page 73951]]

    The price change parameters under the proposed rule have been 
broadened to more accurately address the current volatility of today's 
markets. The ``applicable price change'' will be $0.50 where the 
consolidated closing price of a subject security on the Exchange is 
under $100 and $1.00 where the consolidated closing price of a subject 
security on the Exchange is equal to or greater than $100.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \8\ 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.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 
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) 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 public interest, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \9\ and 
Rule 19b-4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    Normally, a proposed rule change filed under 19b-4(f)(6) may not 
become operative prior to 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) \11\ 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 set forth in Rule 19b-
4(f)(6)(iii) under the Act.\12\ The Commission believes that the 
earlier operative date is consistent with the protection of investors 
and the public interest because the proposed rule change permits the 
Exchange to implement without further delay a proposal that re-
establishes procedures for the publication of pre-opening price 
information, according to the framework established by the Linkage Plan 
requirement; furthermore, the proposed rule change requires no 
modification of the specialists' proprietary systems. For these 
reasons, the Commission designates the proposal to be operative upon 
filing with the Commission.\13\
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    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires that a self-regulatory organization submit to the 
Commission written 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. The Commission notes that NYSE has satisfied the five-
day pre-filing notice requirement.
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay 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 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-2007-112 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-2007-112. 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 such filing also will be available for 
inspection and copying at the principal office of 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-2007-112 and should be 
submitted on or before January 18, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-25185 Filed 12-27-07; 8:45 am]

BILLING CODE 8011-01-P