Document ID: SEC-2007-0190-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca, Inc
Posted Date: 2007-02-07T05:00Z

[Federal Register: February 7, 2007 (Volume 72, Number 25)]
[Notices]               
[Page 5780-5782]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07fe07-163]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55214; File No. SR-NYSEArca-2006-50]

 
 Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change and Amendment No. 1 Thereto Relating to 
Amendments to Registration Rules of NYSE Arca Equities, Inc.

January 31, 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 November 14, 2006, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange''), 
through its wholly owned subsidiary NYSE Arca Equities, Inc. (``NYSE 
Arca Equities'' or ``Corporation''), 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 Exchange filed Amendment 
No. 1 to the proposed rule change on January 12, 2007. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.2
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, through its wholly owned subsidiary NYSE Arca 
Equities, proposes to amend certain NYSE Arca Equities Rules governing 
registration of employees of Equity Trading Permit (``ETP'') Holders 
\3\ in order to clarify registration procedures and make them 
consistent with the procedures of other self-regulatory organizations 
(``SROs''). The text of the proposed rule change is available at NYSE 
Arca, the Commission's Public Reference Room, and http://www.nysearca.com/regulation/filings.asp
.

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    \3\ See NYSE Arca Equities Rule 1.1(n).
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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 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
    The Exchange proposes to amend NYSE Arca Equities Rules 2.4, 2.21, 
and 9.27 (referred to herein as Rules 2.4, 2.21 and 9.27) in order to 
clarify registration procedures and ongoing compliance obligations for 
ETP Holders and their registered persons. Further, the Exchange 
proposes to amend these rules so that they are consistent with industry 
practices and with the operation of the Central Registration Depository 
(``CRD'') system maintained by the National Association of Securities 
Dealers, Inc. (``NASD''). The proposed rule changes are similar to the 
rules of other SROs.\4\
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    \4\ See NASD Rules 1070(d) and 1120(a) and (b) and New York 
Stock Exchange LLC (``NYSE'') Rule 345A and Supplementary Material 
.15(1)(b) to NYSE Rule 345.
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Consideration of Requests for Waivers of Examination Requirements

    The Exchange proposes to amend Rule 2.4(c), which governs requests 
from ETP Holder applicants to waive applicable examinations 
requirements prescribed by the Exchange. Specifically, the Exchange 
proposes to add new waiver standards under which the Corporation has 
discretion to grant waivers so that the Exchange's practices are 
generally consistent with the criterion set forth in NASD Rule 1070(d) 
and Supplementary Material .15(1)(b) to NYSE Rule 345.

Filing of Registration Documentation with the Exchange

    The Exchange proposes to amend Rule 2.21, which governs 
registration procedures for employees of ETP Holders. Specifically, the 
Exchange proposes to amend the rule to provide manual registration 
procedures for registration categories (e.g., floor clerk) for which 
CRD does not provide electronic registration.\5\
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    \5\ In 2005, NYSE Arca (formerly Pacific Exchange, Inc.) became 
a participant of the CRD system for maintenance of certain 
registration categories with the Exchange. As part of this 
implementation, applicable rules of the Exchange were amended to 
address filing appropriate registration documentation electronically 
with the CRD system for employees of ETP Holders. These amended 
rules, however, inadvertently omitted certain registration 
procedures for positions not available on the CRD system.
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Continuing Education Requirements

    Currently, employees of ETP Holders who wish to initiate and 
maintain registration with the Corporation must follow two separate 
rules--Rules 2.21 and 9.27. Rule 2.21 sets forth initial registration 
requirements, whereas Rule 9.27 sets forth the continuing education 
requirements that must be satisfied to maintain registration with the 
Corporation.
    In order to simplify compliance for employees of ETP Holders, the 
Exchange proposes to provide continuing registration requirements in 
the same rule as initial registration requirements. Specifically, the 
Exchange proposes to add continuing education requirements to new Rule 
2.21(d) and certain definitions and clarifications with respect thereto 
to new Commentary .01-.06 to Rule 2.21.
    The continuing education requirements in proposed new Rule 2.21(d) 
and related Commentary .01-.06

[[Page 5781]]

to Rule 2.21 are substantially similar to those contained in current 
Rule 9.27(c) and (d) and related Commentary .01-.06 to Rule 9.27(c) and 
(d), except that the Exchange has made certain clarifications so that 
the continuing education requirements and related definitions and 
clarifications are more closely aligned with NASD Rule 1120 and NYSE 
Rule 345A and other clean-up changes, as set forth in detail below.
    Specifically, the Exchange proposes in Rule 2.21(d)(1) that the 
content of the Regulatory Element of the program shall be consistent 
with the standards set forth by the Corporation and other SROs, rather 
than just determined by the Corporation as is set forth in the current 
Rule 9.27(c). In addition, the Exchange proposes to add language in 
Rule 2.21(d)(2)(B)(i) providing that if an ETP Holder's analysis 
establishes the need for supervisory training for persons with 
supervisory responsibilities, such training must be included in the ETP 
Holder's training plan. Such language is not included in the current 
Rule 9.27(d)(2)(A).
    The Exchange has not proposed for inclusion NASD's continuing 
education requirements applicable to research analysts because the 
Corporation does not provide for research analyst registration. 
Additionally, unlike current NASD Rule 1120(a)(6), the Corporation is 
not proposing to permit ETP Holders to self-administer the Regulatory 
Element of continuing education, as the Corporation does not have the 
resources or capability to offer an approval process or monitoring of 
such self-administered programs. ETP Holders will be responsible for 
ensuring continuing education information related to their associated 
persons is received by the firm in a timely manner and, as such, shall 
designate a person or persons to receive applicable information via 
electronic mail directly from the CRD system. ETP Holders will not be 
required to submit to the Corporation the names of such designated 
persons, as is required by the current NASD rule. This is based on the 
fact that the Corporation does not have a contact management system 
comparable to that of NASD.
    With respect to the proposed new Commentary to Rule 2.21, the 
Exchange proposes to add a definition of ``registered person'' to 
Commentary .01 to Rule 2.21 as is currently set forth in Commentary .01 
to Rule 9.27(c) and (d), except that the definition that the Exchange 
is proposing does not include the carve-out for ``any such person whose 
activities are limited solely to the transaction of business on the 
facilities of the Corporation with ETP Holders or registered broker-
dealers.'' In addition, the Exchange proposes in Commentary .04 to Rule 
2.21 to correct a mistake in the language in Commentary .04 to Rule 
9.27(c) and (d) to provide that reassociated registered persons shall 
participate in the Regulatory Element at intervals based on their 
initial base date, rather than their new base date. Lastly, the 
Exchange proposes in Commentary .06 to Rule 2.21 to change the 
reference of ``any registered member who is an ETP Holder,'' which is 
currently in Commentary .06 to Rule 9.27(c) and (d), to ``any 
registered person associated with an ETP Holder'' in order to be 
consistent with the language of other SROs.
    In connection with the addition of proposed new Rule 2.21(d) and 
Commentary .01-.06 to Rule 2.21 as set forth above, the Exchange 
proposes to delete the specific continuing education requirements in 
Rule 9.27(c) and (d) and the related Commentary .01-.06 to Rule 9.27(c) 
and (d). The purpose for deleting the continuing education requirements 
in Rule 9.27(c) and (d) is to avoid needless repetition and risk of 
inconsistencies. The Exchange proposes to include cross-reference 
language in Rule 9.27(c) that provides that registered persons shall 
follow the continuing education requirements set forth in Rule 2.21(d).
    In addition, the Exchange proposes to delete current Rule 2.21(i) 
with respect to transition to the CRD system because registration with 
CRD is already provided for in Rule 2.21(a).
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act \6\ in general, and furthers the objectives of 
Section 6(b)(5) \7\ 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 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

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-NYSEArca-2006-50 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-NYSEArca-2006-50. 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

[[Page 5782]]

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 NYSE Arca. 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-NYSEArca-2006-50 and should be submitted on or before 
February 28, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-2000 Filed 2-6-07; 8:45 am]

BILLING CODE 8010-01-P