Document ID: SEC-2006-0981-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2006-08-01T04:00Z

[Federal Register: August 1, 2006 (Volume 71, Number 147)]
[Notices]               
[Page 43551-43553]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01au06-102]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54215; File No. SR-NYSE-2006-51]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to NYSE Rule 36 To Allow a Registered Competitive Market Maker 
To Call To and Receive Calls From the Booth

July 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 July 3, 2006, 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 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) \4\ thereunder, 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

    NYSE is proposing to amend NYSE Rule 36 (Communication Between 
Exchange and Members' Offices) to allow a Registered Competitive Market 
Maker (``RCMM'') to use an Exchange authorized and provided portable 
telephone on the Exchange Floor to call to and receive calls from his 
or her booth on the Floor, provided certain conditions are met.

[[Page 43552]]

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
NYSE Rule 36
    NYSE Rule 36 governs the establishment of telephone or electronic 
communications between the Exchange's Trading Floor and any other 
location. Currently, NYSE Rules 36.20 through 36.22 provide that, 
subject to certain restrictions, Floor brokers and RCMMs are allowed to 
use Exchange authorized and provided portable phones on the Exchange 
Floor.\5\
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    \5\ The Exchange has authorized the use of portable phones by 
Floor brokers and RCMMs pursuant to a series of pilots. The current 
pilot is scheduled to expire July 31, 2006 (``Pilot''). See 
Securities Exchange Act Release No. 53277 (February 13, 2006), 71 FR 
8877 (February 21, 2006) (SR-NYSE-2006-03).
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    Under the existing Pilot, subject to certain restrictions, RCMMs 
are allowed to use an Exchange authorized and provided portable phone 
solely to communicate with their or their member organizations' off-
Floor office and the off-Floor office of their clearing member 
organization to enter off-Floor orders and to discuss matters related 
to the clearance and settlement of transactions, provided the off-Floor 
office uses a wired telephone line for these discussions. RCMMs are not 
allowed to use a portable phone to conduct any agency business.\6\
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    \6\ See Securities Exchange Act Release No. 53213 (February 2, 
2006), 71 FR 7103 (February 10, 2006) (SR-NYSE-2005-80).
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Proposed Amendment to NYSE Rule 36.22
    The Exchange proposes to amend NYSE Rule 36.22 to allow RCMMs to 
call their booths on the Floor for business-related purposes, including 
discussing trade reporting and executions and clearance and settlement 
of trades, much as they do today by calling their upstairs office 
personnel and their clearing member organization's upstairs offices. 
Booth personnel would also be allowed to call their RCMMs' Exchange 
authorized and provided portable phones for business-related purposes. 
In turn, all booth phones on the Floor which are used to make calls to 
and receive calls from RCMMs' Exchange authorized and provided portable 
phones would be systemically blocked by the Exchange from call-
forwarding and conference calling.\7\ By allowing RCMMs to communicate 
with their booths on the Floor, NYSE believes that the proposed rule 
change would increase the efficiency of trading on the Floor.
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    \7\ See proposed NYSE Rule 36.22(c)(ii).
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    In addition, all Exchange authorized and provided portable phones 
used by Floor brokers and RCMMs do not have call-forwarding or 
conference calling capabilities and would continue to not have such 
capabilities.\8\ The Exchange would issue a revised Member Education 
Bulletin outlining the amendment to the Pilot.
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    \8\ See proposed NYSE Rules 36.21(a)(v) and 36.22(c)(iii).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b)(5) of the Act \9\ in that it is 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. 
NYSE believes that the amendment to NYSE Rule 36 supports the mechanism 
of free and open markets by providing for increased means by which 
communications on the Floor of the Exchange may take place.\10\
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    \9\ 15 U.S.C. 78f(b)(5).
    \10\ Telephone conversation between David Matta, Principal Rule 
Counsel, NYSE, and Molly M. Kim, Special Counsel, Division of Market 
Regulation, Commission, on July 11, 2006.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
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 if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\ 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.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
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    The Exchange has requested that the Commission waive the 30-day 
operative period under Rule 19b-4(f)(6)(iii) of the Act.\13\ The 
Commission believes that it is consistent with the protection of 
investors and the public interest to waive the 30-day operative delay 
and make this proposed rule change immediately effective upon filing. 
The Commission believes that the waiver of the 30-day operative delay 
may increase the efficiency of the Exchange by providing immediate use 
of Exchange authorized and portable phones to RCMMs to communicate with 
their booths on the Floor. For this reason, the Commission designates 
the proposal to be effective and operative upon filing with the 
Commission.\14\
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    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For purposes only of waiving the operative delay for this 
proposal, 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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    The Commission notes that proper surveillance is an essential 
component of any telephone access policy to an exchange trading floor. 
Surveillance procedures should help to ensure that RCMMs use portable 
phones as authorized by NYSE Rule 36. The Commission expects the 
Exchange to actively review these procedures and address any potential 
concerns that arises. In this regard, the Commission notes that the 
Exchange should address whether telephone records are adequate for 
surveillance purposes. The Commission also requests that the Exchange 
report any problems, surveillance, or enforcement matters

[[Page 43553]]

associated with RCMMs' use of an Exchange authorized and provided 
portable telephone on the Exchange Floor. Furthermore, in any future 
additional filings on the Pilot, the Commission would expect that the 
Exchange submit information documenting the usage of the Exchange 
authorized and portable phones and any problem that have occurred, 
including, among other things, any regulatory actions or concerns.

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-2006-51 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-2006-51. 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. 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-2006-51 and should be submitted on or before August 
22, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-12322 Filed 7-31-06; 8:45 am]

BILLING CODE 8010-01-P