Document ID: SEC-2007-0478-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-04-02T04:00Z

[Federal Register: April 2, 2007 (Volume 72, Number 62)]
[Notices]               
[Page 15749-15750]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap07-127]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55537; File No. SR-NYSE-2007-30]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Rule 123D (Openings and Halts in Trading)

March 27, 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 March 19, 2007, the New York Stock Exchange LLC (``NYSE'' or the 
``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 the 
Exchange. The NYSE has filed this proposal pursuant to Section 
19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(5) 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)(5).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NYSE proposes to amend NYSE Rule 123D(3) to establish that any 
orders received by the NYSE in a security subject to a ``Sub-penny 
Trading'' condition will be routed to NYSE Arca, Inc. (``NYSE Arca'') 
and handled in accordance with the rules governing that market. The 
text of the proposed rule change is available at the Exchange's Office 
of the Secretary, on the Exchange's Web site at http://www.nyse.com/

http://apps.nyse.com/commdata/pub19b4.nsf/rulefilings?openview, 

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
    Recently, the Exchange amended NYSE Rule 123D to add subsection 
(3),\5\ which provides for a non-regulatory trading halt on the NYSE 
when securities listed on the Exchange approach the price at which 
quoting and trading in sub-penny increments is permitted pursuant to 
SEC Rules.\6\
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    \5\ See Securities Exchange Act Release No. 55398 (March 5, 
2007), 72 FR 11072 (March 12, 2007) (SR-NYSE-2007-25).
    \6\ See Regulation NMS Rule 612, 17 CFR 242.612, which permits 
markets to accept bids, offers, orders and indications of interest 
in increments smaller than a $0.01, but not less than $0.0001, for 
stocks priced below $1.00 per share and to quote and trade such 
stocks in sub-pennies. Markets may choose not to accept such bids, 
offers, orders or indications of interest and the NYSE has done so, 
maintaining a minimum trading and quoting variation of $0.01 for all 
securities trading below $100,000. See NYSE Rule 62.
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    Pursuant to NYSE Rule 123D(3), whenever a security trading on the 
Exchange is reported on the consolidated tape during normal trading 
hours as having traded at a price of $1.05 or less, or if a security 
would open on the Exchange at a price of $1.05 or less, trading in the 
security on the Exchange shall be immediately halted due to a ``Sub-
penny Trading'' condition. Once halted for such reason, trading shall 
not resume on the Exchange until the security has traded on another 
automated trading center as defined in Commission Rule 600(b)(4) \7\ 
for at least one entire trading day at a price or prices that are at 
all times at or above $1.10. Any such resumption of trading shall occur 
at the beginning of a trading day, so that normal opening procedures 
can apply. In contrast to other trading halts described in NYSE Rule 
123D, a ``Sub-penny Trading'' halt is automatic and does not require 
the approval of any Floor Officials. However, if a determination is 
made by a Floor Official that a trade that triggered a halt because of 
a ``Sub-penny Trading'' condition was made in error or otherwise was an 
anomaly, trading of the security on the Exchange will resume 
immediately.
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    \7\ See 17 CFR. 242.600(b)(4).
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    The purpose of this filing is to amend NYSE Rule 123D(3) to reflect 
that orders entered with the Exchange in a security subject to a ``Sub-
penny Trading''

[[Page 15750]]

condition halt will be immediately routed to NYSE Arca, where they will 
be handled in accordance with the rules governing that market. This 
process will facilitate customers who maintain systems connectivity 
with the Exchange, but may not have direct connectivity with NYSE Arca. 
If the entity entering the order on the Exchange is not an NYSE Arca 
``ETP Holder'' as defined in NYSE Arca Rule 1.1(m), such order will be 
cancelled by NYSE Arca when received. Similarly, if an order routed by 
the NYSE to NYSE Arca contains execution instructions not supported by 
NYSE Arca, such order will be cancelled by NYSE Arca when received.
    In addition, NYSE Rule 123D(3) is amended to reflect that the 
Exchange will cancel any open limit orders in the Display Book system 
with respect to securities that become subject to a ``Sub-penny 
Trading'' condition halt.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\8\ in general, and furthers the objectives of Section 6(b)(5) of 
the Act,\9\ in particular, in that it is designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
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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 
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

    The foregoing proposed rule change has become effective upon filing 
pursuant to Section 19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-
4(f)(5) thereunder \11\ because it effects a change in an existing 
order-entry or trading system of a self-regulatory organization that: 
(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 have the effect of limiting the access 
to or availability of the system. 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 19b-4(f)(5).
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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-2007-30 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NYSE-2007-30. 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 offices 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-2007-30 and should be submitted on or before April 
23, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-5965 Filed 3-30-07; 8:45 am]

BILLING CODE 8010-01-P