Document ID: SEC-2007-1739-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-12-20T05:00Z

[Federal Register: December 20, 2007 (Volume 72, Number 244)]
[Notices]               
[Page 72432-72433]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de07-109]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56968; File No. SR-NYSE-2007-114]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to NYSE Rule 92 and Riskless Principal Trading at the Exchange

December 14, 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 December 11, 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 Exchange. 
The Exchange has designated the proposed rule change 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 proposed rule 
change 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 Exchange proposes to extend the operative date of NYSE Rule 
92(c)(3) from January 16, 2008 to May 14, 2008. The text of the 
proposed rule change is available at NYSE, 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 Exchange included statements 
concerning the purpose of, and basis for, 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 extend the delayed operative date of NYSE 
Rule 92(c)(3) from January 16, 2008 to May 14, 2008. On July 5, 2007, 
the Commission approved amendments to NYSE Rule 92 to permit riskless 
principal trading at the Exchange.\5\ In connection with those 
amendments, the Exchange implemented NYSE Rule 92(c)(3), which requires 
members to submit to a designated Exchange database a report of the 
execution of the facilitated order. That rule also requires members to 
submit to that same database sufficient information to provide an 
electronic link of the execution of the facilitated order to all of the 
underlying orders.
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    \5\ See Securities Exchange Act Release No. 56017 (July 5, 
2007), 72 FR 38110 (July 12, 2007) (SR-NYSE-2007-21).
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    For purposes of NYSE Rule 92(c)(3), the Exchange requires that when 
executing riskless principal transactions, firms must submit order 
execution reports to the Exchange's Front End Systemic Capture 
(``FESC'') database linking the execution of the riskless principal 
order on the Exchange to the specific underlying orders. The 
information provided must be sufficient for both member firms and the 
Exchange to reconstruct in a time-sequenced manner all orders, 
including allocations to the underlying orders, with respect to which a 
member organization is claiming the riskless principal exception.
    Because the rule change required member organizations to make 
certain changes to their trading and order management systems, the 
Commission approved a delay to January 16, 2008 of the operative date 
of the NYSE Rule 92(c)(3) requirements, including submitting end-of-day 
allocation reports for riskless principal transactions and using the 
riskless principal account type indicator.
    The Exchange has been working diligently to develop its FESC 
database to accept riskless principal order types and the underlying 
batch orders. On October 12, 2007, the Exchange published an 
Information Memo that provided member organizations with information 
relating to the FESC technology interface and data requirements for 
riskless principal trading at the Exchange. The development of the 
systems, however, has taken longer than anticipated, which could affect 
the ability of member organizations to meet the operative date. Several 
member organizations have informed the Exchange that they need 
additional time to program their respective systems to meet the new 
FESC requirements.
    To accommodate both the Exchange's and the member organization 
community's need to complete the development of the FESC technology to 
both accept and route riskless principal orders, the Exchange proposes 
to delay the operative date for NYSE Rule 92(c)(3) from January 16, 
2008 to May 14, 2008.
    Pending implementation of the FESC database and use of the riskless 
principal account type indicator, the Exchange will continue to require 
that,

[[Page 72433]]

as of the date each member organization implements riskless principal 
routing, the member organization have in place systems and controls 
that allow them to easily match and tie the riskless principal 
execution on the Exchange to the underlying orders and that they be 
able to provide this information to the Exchange upon request.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under section 6(b)(5) \6\ that an Exchange have rules that 
are designed to promote just and equitable principles of trade, 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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    \6\ 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 proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) does not become 
operative for 30 days after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest, the proposed rule change has 
become effective pursuant to section 19(b)(3)(A) of the Act \7\ and 
Rule 19b-4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). 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 satisfied the five-day pre-filing requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate the 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-2007-114 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-NYSE-2007-114. 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, on official business 
days between the hours of 10 a.m. and 3 p.m. 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-2007-114 and should be submitted on or before January 10, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-24728 Filed 12-19-07; 8:45 am]

BILLING CODE 8011-01-P