Document ID: SEC-2006-0842-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca, Inc.
Posted Date: 2006-07-03T04:00Z

[Federal Register: July 3, 2006 (Volume 71, Number 127)]
[Notices]               
[Page 37965-37967]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03jy06-81]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54046; File No. SR-NYSEArca-2006-42]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to 
Extending the Time Period by Which the Exchange Will Amend the NASD-PCX 
Agreement Pursuant to Rule 17d-2

June 26, 2006.
    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 June 23, 2006, NYSE Arca, Inc. (``NYSE Arca'' 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 prepared by the Exchange. The Exchange filed the proposal as 
a ``non-controversial'' rule change 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.\5\ 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).
    \5\ The Exchange has asked the Commission to waive the 5-day 
pre-filing notice requirement and the 30-day operative delay. See 15 
U.S.C. 78s(b)(3)(A), 17 CFR 240.19b-4(f)(6)(iii).
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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 undertaking \6\ to extend 
for 90 days from the date of this filing the time period by which the 
Exchange will amend and restate the agreement between the National 
Association of Securities Dealers, Inc. (``NASD'') and the Exchange 
currently in place pursuant to Rule 17d-2 under the Act \7\ (the 
``NASD-PCX Agreement'' or the ``Agreement''). As described in more 
detail below, the revisions to the NASD-PCX Agreement will expand the 
scope of the NASD's regulatory responsibility.
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    \6\ See Securities Exchange Act Release No. 52497 (September 22, 
2005), 70 FR 56949 (September 29, 2005) (approving SR-PCX-2005-90, 
as amended).
    \7\ 17 CFR 240.17d-2. See Securities Exchange Act Release No. 
16858 (May 30, 1980), 45 FR 37927 (June 5, 1980) (File No. 4-267).
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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
    On September 22, 2005, the Commission approved a proposed rule 
change submitted by the Exchange relating to the acquisition of PCX 
Holdings, Inc. (now known as NYSE Arca Holdings, Inc.) \8\ by 
Archipelago Holdings, Inc.\9\ In that filing, the Exchange (formerly 
known as the Pacific Exchange, Inc.) committed to amend the NASD-PCX 
Agreement within 90 days of the Commission's approval of SR-PCX-2005-90 
to expand the scope of the NASD's regulatory functions under the NASD-
PCX Agreement so as to encompass all of the regulatory oversight and 
enforcement responsibilities with respect to the broker-dealer 
affiliate of Archipelago Holdings, Inc., Archipelago Securities, L.L.C. 
(``Archipelago Securities'').\10\ The Exchange submitted subsequent 
filings on December 21, 2005 \11\ and March 21, 2006 \12\ to extend for 
90 days the time period within which to amend the NASD-PCX Agreement. 
The Exchange and the NASD (collectively, the ``Parties'') have executed 
an amended and restated agreement and, on January 20, 2006, the Parties 
filed the amended and restated agreement with the Commission but have 
not yet received Commission approval of the amended and restated 
agreement.\13\
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    \8\ See Securities Exchange Act Release No. 53615 (April 7, 
2006), 71 FR 19226 (April 13, 2006) (notice of filing and immediate 
effectiveness of SR-PCX-2006-24, regarding the name change from PCX 
Holdings, Inc. to NYSE Arca Holdings, Inc.)
    \9\ See Securities Exchange Act Release No. 52497, supra note 6.
    \10\ Archipelago Securities acts as the outbound order router 
for the NYSE Arca Marketplace and, as such, is regulated as an 
exchange ``facility'' of the Exchange and NYSE Arca Equities, Inc.
    \11\ See Securities Exchange Act Release No. 52995 (December 21, 
2005), 70 FR 77232 (December 29, 2005) (notice of filing and 
immediate effectiveness of SR-PCX-2005-140, as amended).
    \12\ See Securities Exchange Act Release No. 53545 (March 23, 
2006), 71 FR 16183 (March 30, 2006) (notice of filing and immediate 
effectiveness of SR-NYSEArca-2006-06, as amended).
    \13\ The Commission notes that the staff of the Division of 
Market Regulation (``Commission staff'') has been engaged in 
discussions with the Parties regarding the amended and restated 
agreement filed by the Parties. NYSE Arca continues to work with the 
staff, and, together with the NASD, intends to submit in the near 
future a revised amended and restated agreement reflecting changes 
made in response to Commission staff comments. Telephone 
conversation between Janet Angstadt, Acting General Counsel, NYSE 
Arca, Richard Holley III, Special Counsel, and Sara Gillis, 
Attorney, Division of Market Regulation, Commission, on June 26, 
2006.
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    The Exchange believes that an extension of time for an additional 
90 days from the date of this filing to amend the NASD-PCX Agreement 
will give the Commission staff sufficient time to publish and take 
action on the proposal. There is currently a plan in place (i.e., the 
NASD-PCX Agreement) allocating to the NASD the responsibility to 
receive regulatory reports from Archipelago Securities, to examine 
Archipelago Securities for compliance and to enforce compliance by 
Archipelago Securities with the Act, the rules and regulations 
thereunder and the rules of the NASD, and to carry out other specified 
regulatory functions with respect to Archipelago Securities.

[[Page 37966]]

The Exchange notes that the current NASD-PCX Agreement will remain in 
full force and effect during the interim period, and the Exchange will 
continue to abide by the terms of the agreement. The Exchange believes, 
therefore, that the requested extension of time is consistent with the 
Act and the rules and regulations thereunder, will not significantly 
affect the protection of investors or the public interest, and does not 
impose any significant burden on competition.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\14\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\15\ 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 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.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 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

    Because the foregoing rule: (i) Does not significantly affect the 
protection of investors or the public interest; (ii) does not impose 
any significant burden on competition; and (iii) by its terms, does not 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest,\16\ the proposed 
rule change has become effective pursuant to Section 19(b)(3)(A) of the 
Act \17\ and Rule 19b-4(f)(6) thereunder.\18\
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    \16\ Pursuant to Rule 19b-4(f)(6)(iii) under the Act, the 
Exchange is required 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 
Exchange has requested that the Commission waive the 5-day pre-
filing notice requirement. The Commission has determined to waive 
this requirement for this filing.
    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6).
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    The Exchange has requested that the Commission waive the 30-day 
operative delay, which would make the rule change effective and 
operative upon filing. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Such waiver will allow the Exchange to comply with its 
undertaking made in connection with the Commission's approval of SR-
PCX-2005-90 to amend the NASD-PCX Agreement. The Commission notes that 
the Exchange has filed with the Commission, on January 20, 2006, an 
executed amended and restated agreement, and that the Commission staff 
has been engaged in continuous discussions with the Parties regarding 
the amended and restated agreement. The Commission further notes that 
the Exchange has represented that it continues to work with the 
Commission staff, and that it intends to submit in the near future a 
revised amended and restated agreement reflecting changes made in 
response to Commission staff comments.\19\ Extending the compliance 
date for the Exchange's undertaking by an additional 90 days will 
provide time for the Exchange to finalize and file the amended and 
restated agreement, as well as provide time for publication of, and 
action on, the amended and restated agreement. The Commission further 
notes that the current Commission-approved NASD-PCX Agreement will 
remain in full force and effect during the interim period, and the 
Exchange will continue to abide by the terms of that Agreement. For 
these reasons, the Commission designates the proposal to be effective 
and operative upon filing with the Commission.\20\
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    \19\ See supra note 13.
    \20\ 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. 15 U.S.C. 78c(f).
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    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.

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 NYSEArca-2006-42 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 NYSEArca-2006-42. 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 
NYSEArca-2006-42 and should be submitted on or before July 24, 2006.

[[Page 37967]]

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-10334 Filed 6-30-06; 8:45 am]

BILLING CODE 8010-01-P