Document ID: SEC-2007-1399-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-10-09T04:00Z

[Federal Register: October 9, 2007 (Volume 72, Number 194)]
[Notices]               
[Page 57366-57368]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09oc07-120]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56588; File No. SR-NYSE-2007-92]

 
Self-Regulatory Organizations; New York Stock Exchange, LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to NYSE Rules 104(b) and 123D

October 1, 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 September 28, 2007, the New York Stock Exchange, 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 substantially prepared by the NYSE. The 
Exchange filed the proposal pursuant to Section 19(b)(3)(A) of the Act 
\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
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 NYSE proposes to amend its Rule 104(b) to provide for an 
automated opening message that will be effectuated through the 
Specialist Application Programmed Interface (``SAPI''), to allow 
specialists to open a security on a quote. Additionally, the Exchange 
seeks to amend its Rule 123D (Openings and Halts in Trading) to clarify 
that specialists may open a security on a trade or a quote. The text of 
the proposed rule change is available at the Exchange, on the 
Exchange's Web site at http://www.nyse.com, 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
    The Exchange is filing this proposed rule change to amend its Rules 
104(b) and 123D to allow specialists to open a security on a quote by 
sending a message from the SAPI to the NYSE Display Book[supreg] system 
for publication of a quote when there is no opening trade.\5\ The 
proposed rule change merely provides the specialist with the ability to 
electronically open a security on a quote, which currently may be 
accomplished manually.
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    \5\ The Display Book[supreg] system is an order management and 
execution facility. The Display Book system receives and displays 
orders to the specialists, contains the Book, and provides a 
mechanism to execute and report transactions and publish the results 
to the Consolidated Tape. The Display Book system is connected to a 
number of other Exchange systems for the purposes of comparison, 
surveillance, and reporting information to customers and other 
market data and national market systems.
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Proposed Rule 104(b)
    The Exchange seeks to add this electronic opening quote message 
provision to Exchange Rule 104(b), which includes other SAPI trading 
and quoting messages. The Exchange believes that, with increased 
automation of trading, specialists should be able to perform their 
trading and quoting functions both electronically and manually. To do 
otherwise would unnecessarily limit their effectiveness in

[[Page 57367]]

the market and disadvantage investors. The proposed Rule 104(b) 
provision refers to proposed Rule 123D, which clarifies that a 
specialist is permitted to open a security in which he or she is 
registered on either a trade or a quote.
Rule 123D: Specialist Obligations at the Opening
    The provisions of Exchange Rule 123D require a specialist to open 
the securities in which he or she is registered. According to Rule 
123D, specialists must, among other things, do the following when 
opening and reopening their assigned securities:
     Open a registered security as close to the opening bell as 
possible;
     Open securities in a timely, fair and orderly manner; and
     Provide timely and impartial information at all phases of 
the opening process.
    The proposed rule change will codify the practice of the specialist 
in the opening process, which is that the specialist may open an 
assigned security on a trade or on a quote. The specialist may open a 
security on a quote when there is no trade upon which to open. The 
practice has been and will remain that if a specialist opens a security 
on a quote, he or she must provide the highest bid price and lowest 
offer price available to them.\6\ The proposed amendment to Rule 123D 
refers to the proposed amendment of Rule 104(b) as described above.
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    \6\ The specialist must also be guided by Exchange Rules 79A.30 
(one or two points or more away from the last sale) and 115A (Orders 
at Openings or in Unusual Situations) when opening and reopening 
securities.
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Delayed or Untimely Openings
    Specialists' delayed or untimely openings of securities potentially 
disadvantage market participants, as investors are unable to trade such 
securities at the NYSE until the security is opened. The ability to 
open a security on a quote via an automated quoting message will enable 
the specialist to open their assigned securities in a timely manner, 
thereby providing investors with access to the NYSE market as close to 
9:30 a.m. as possible. Opening securities in a timely, fair and orderly 
manner is consistent with the specialist's obligations under Exchange 
Rules 123D and 104. Therefore, the Exchange believes it is imperative 
to provide the specialist with an automated message that will assist 
the specialist in opening their assigned securities on a quote. Through 
this rule filing, the Exchange is merely seeking to automate an 
approved specialist function that is presently performed manually.
    When a specialist on the NYSE fails to timely open a security that 
also trades on other exchanges, the investor will generally trade that 
particular security on other exchanges so as not to miss the market. As 
a consequence of late openings, the NYSE could lose market volume and 
market data revenue.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b)(5) of the Act \7\ in that it is designed to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, 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. The Exchange also believes 
that the proposed rule change is designed to support the principles of 
Section 11A(a)(1) of the Act \8\ in that it seeks to assure 
economically efficient execution of securities transactions by making 
it easier for specialists to open securities in which they are 
registered on a quote in a timely fashion by providing an automated 
quoting message that is effectuated through the SAPI.
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    \7\ 15 U.S.C. 78(f)(b)(5).
    \8\ 15 U.S.C. 78k-1(a)(1).
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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 forgoing rule change does not: (1) Significantly affect 
the protection of investors or the public interest; (2) impose any 
significant burden on competition; and (3) become operative for 30 days 
after the date of this filing, or such shorter time as the Commission 
may designate, it has become effective pursuant to Section 19(b)(3)(A) 
of the Act and Rule 19b-4(f)(6) thereunder.\9\
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    \9\ In addition, Rule 19b-4(f)(6) requires a self-regulatory 
organization to give 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 NYSE has satisfied this 
requirement.
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    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) 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. The Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest because it should assist the 
specialist in its ability to open securities in a timely, fair, and 
orderly manner. The Commission notes that the Exchange has represented 
that this proposal would merely automate the ability that specialists 
currently have to manually open trading in a security on a quote when 
there is no opening trade. For these reasons, the Commission designates 
the proposed rule change to be effective and operative upon filing with 
the Commission.\10\
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    \10\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such 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-2007-92 on the subject line.

[[Page 57368]]

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-2007-92. 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 the filing 
also will be available for inspection and copying at the principal 
office 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-2007-92 and should be submitted on or before October 30, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E7-19748 Filed 10-5-07; 8:45 am]

BILLING CODE 8011-01-P