Document ID: SEC-2007-0840-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca, Inc.
Posted Date: 2007-06-19T04:00Z

[Federal Register: June 19, 2007 (Volume 72, Number 117)]
[Notices]               
[Page 33795-33797]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19jn07-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55896; File No. SR-NYSEArca-2007-50]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 
Thereto Relating to the Establishment of Primary Sweep Orders

 June 11, 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 May 25, 2007, 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 the proposed 
rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 
19b-4(f)(6) thereunder, which renders it effective upon filing with the 
Commission.\4\ On June 4, 2007, the Exchange filed Amendment No. 1 to 
the proposed rule change.\5\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ Amendment No. 1 replaced and superseded the original filing 
in its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend its rules in order to add a new 
order type known as the Primary Sweep Order (``PSO''). The changes 
described in this rule proposal would add a new Exchange Rule 7.31(kk). 
The text of the proposed rule change is available at the Exchange, the 
Commission's Public Reference Room, and http://www.nyse.com.

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 NYSE Arca 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 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
    In order to provide additional flexibility and increased 
functionality to its system and its Users,\6\ the Exchange proposes to 
add a new and complimentary variation to an existing order type. The 
existing order type, the Primary Only Order (``PO Order''), is a market 
or limit order that is routed to the primary, listing market, without

[[Page 33796]]

sweeping the NYSE Arca book.\7\ The new corollary to this order type, 
the PSO, will sweep the NYSE Arca book prior to being directed to the 
primary, listing market.
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    \6\ See NYSE Arca Equities Rule 1.1(yy) for the definition of 
``User.''
    \7\ See NYSE Arca Equities Rule 7.31(x) for the definition of 
``PO Order.''
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The PO Order
    Presently, PO Orders are restricted to participation in the primary 
market opening and must be entered before 6:28 a.m. (Pacific Time), or 
a cut-off time as determined from time to time by the Corporation. In 
addition, these orders do not sweep the NYSE Arca book. In an effort to 
enhance order execution opportunities for its Users, the Exchange 
proposes adding a new variation on this order type that may be entered 
at any time and that first sweeps the NYSE Arca book.
PSO Features
    The proposed PSO is a PO Order that may be entered at any time, and 
which first sweeps the NYSE Arca book.\8\ After sweeping the book, the 
PSO (or any unexecuted portion thereof) shall be routed directly to the 
primary, listing market. If the order is not designated as immediate-
or-cancel, the order is not returned to the book and remains at the 
venue routed to, until executed or cancelled. In addition, PSOs may be 
designated as intermarket sweep orders thereby providing the entering 
party the ability to trade-through any protected bid or offer (as 
defined in Rule 600(b) of Regulation NMS under the Act) \9\ and execute 
first at NYSE Arca and then at the primary, listing market. Of course, 
a broker-dealer that designates an order as an ISO has the 
responsibility of complying with Rules 610 and 611 of Regulation 
NMS.\10\
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    \8\ Users would be able to enter PSOs into the system for 
execution during any of the Exchange's trading sessions (Opening, 
Core and Late Sessions). Users also would be able to designate a PSO 
to participate in any of the Exchange's auctions (Opening, Market 
Order and Closing Auctions).
    \9\ 17 CFR 242.600(b).
    \10\ 17 CFR 242.610 and 17 CFR 242.611, respectively.
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    The Exchange believes that the addition of the proposed order type, 
as a variation of the existing PO Order, will enhance flexibility and 
order execution opportunities for its Users. The Exchange also believes 
that the proposed PSO will also allow its Users to comply with their 
obligation to avoid trading through any protected bid or offer within 
the meaning of Rule 600(b) of Regulation NMS.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\11\ in general, and furthers the objectives of Section 6(b)(5) 
\12\ 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 mechanisms of a free and open 
market and a national market system.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 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, it has become 
effective pursuant to Section 19(b)(3)(A) \13\ and Rule 19b-4(f)(6) 
thereunder.\14\ 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.\15\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposal, the Commission 
considers the period to commence on June 4, 2007, the date on which 
the Exchange submitted Amendment No. 1.
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    NYSE Arca has asked the Commission to waive the 30-day operative 
delay. The Commission believes such a waiver is consistent with the 
protection of investors and the public interest because it would permit 
the Exchange to codify the proposed order type, the PSO, which 
represents an expansion of an existing order type, the PO Order, 
without further delay.\16\ For this reason, the Commission designates 
the proposal to be operative upon filing with the Commission.
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    \16\ For purposes only of waiving the 30-day pre-operative 
period, 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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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 e-mail to rule-comments@sec.gov. Please include File 

Number SR-NYSEArca-2007-50 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-2007-50. 
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 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 will also be available for inspection and copying at the 
principal office of the 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

[[Page 33797]]

SR-NYSEArca-2007-50 and should be submitted on or before July 10, 2007.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-11719 Filed 6-18-07; 8:45 am]

BILLING CODE 8010-01-P