Document ID: SEC-2006-0438-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange, Inc.
Posted Date: 2006-04-04T04:00Z

[Federal Register: April 4, 2006 (Volume 71, Number 64)]
[Notices]               
[Page 16852-16853]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04ap06-81]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53565; File No. SR-NYSE-2005-86]

 
Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Order Approving Proposed Rule Change and Amendment No. 1 Thereto To 
Conform NYSE Rules 123C and 476A With NYSE Rule 80A

March 29, 2006.
    On December 7, 2005, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend: (a) NYSE Rule 123C (Market on the Close 
Policy and Expiration Procedures); and (b) the Supplementary Material 
to NYSE Rule 476A (Imposition of Fines for Minor Violation(s) of 
Rules), to conform such rules with the current provisions of NYSE Rule 
80A (Index Arbitrage Trading Restrictions). On February 9, 2006, the 
Exchange filed Amendment No. 1 to the proposed rule change. The 
proposed rule change, as amended, was published for comment in the 
Federal Register on February 24, 2006.\3\ The Commission received no 
comments regarding the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 53327 (February 16, 
2006), 71 FR 9629.
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    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\4\ In 
particular, the Commission believes that the proposal is consistent 
with Section 6(b)(5) of the Act,\5\ because the proposal promotes 
transparency and accuracy of the rules of the Exchange for Exchange 
members by making clarifying changes to NYSE Rule 123C and conforming 
NYSE Rules 123C and 476A with the provisions of NYSE Rule 80A. A 
proposed rule change that is reasonably designed to make the Exchange's 
rules more consistent and transparent should help protect investors and 
the public interest.
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    \4\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \5\ 5 15 U.S.C. 78f(b)(5).
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    The Commission further believes that the proposal is consistent 
with Sections 6(b)(1) and 6(b)(6) of the Act,\6\ which

[[Page 16853]]

require that the rules of an exchange enforce compliance with, and 
provide appropriate discipline for, violations of Commission and 
Exchange rules. The Commission notes that the proposed rule change 
clarifies the list of Exchange rule violations that are subject to 
disciplinary fines pursuant to NYSE Rule 476A. In addition, because 
existing NYSE Rule 476A provides procedural rights to a person fined 
for any violation of an Exchange rule that is determined to be minor in 
nature to contest the fine and permits disciplinary proceedings on the 
matter, the Commission believes NYSE Rule 476A, as amended by this 
proposal, provides a fair procedure for the disciplining of members and 
persons associated with members, consistent with Sections 6(b)(7) and 
6(d)(1) of the Act.\7\
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    \6\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \7\ 15 U.S.C. 78f(b)(7) and 78f(d)(1).
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    Finally, the Commission finds that the proposal is consistent with 
the public interest, the protection of investors, or otherwise in 
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2) 
under the Act \8\ which governs minor rule violation plans. The 
Commission believes that the proposed change to NYSE Rule 476A will 
strengthen the Exchange's ability to carry out its oversight and 
enforcement responsibilities as a self-regulatory organization in cases 
where full disciplinary proceedings are unsuitable in view of the minor 
nature of the particular violation.
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    \8\ 17 CFR 240.19d-1(c)(2).
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    In approving this proposed rule change, the Commission in no way 
minimizes the importance of compliance with NYSE rules and all other 
rules subject to the imposition of fines under the minor rule violation 
plan of the Exchange. The Commission believes that the violation of any 
self-regulatory organization's rules, as well as Commission rules, is a 
serious matter. However, the Exchange's minor rule violation plan under 
NYSE Rule 476A provides a reasonable means of addressing rule 
violations that do not rise to the level of requiring formal 
disciplinary proceedings, while providing greater flexibility in 
handling certain violations. The Commission expects that NYSE will 
continue to conduct surveillance with due diligence and make a 
determination based on its findings, on a case-by-case basis, whether a 
fine of more or less than the recommended amount is appropriate for a 
violation under the minor rule violation plan or whether a violation 
requires formal disciplinary action under NYSE Rule 476.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\9\ and Rule 19d-1(c)(2) under the Act,\10\ that the proposed rule 
change (SR-NYSE-2005-86), as amended, be, and hereby is, approved and 
declared effective.
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ 17 CFR 240.19d-1(c)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
Nancy M. Morris,
Secretary.
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    \11\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(44).
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[FR Doc. E6-4823 Filed 4-3-06; 8:45 am]

BILLING CODE 8010-01-P