Document ID: SEC-2006-1462-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2006-11-14T05:00Z

[Federal Register: November 14, 2006 (Volume 71, Number 219)]
[Notices]               
[Page 66359-66361]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14no06-64]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54713; File No. SR-NYSE-2006-98]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of a Proposed Rule Change Regarding the Amendment of 
NYSE Rule 300 Relating to Trading Licenses and the Deletion of NYSE 
Rule 300T

November 6, 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 November 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, II, 
and III below, which items have been prepared by NYSE. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend NYSE Rule 300 relating to trading

[[Page 66360]]

licenses to charge a fixed price of $50,000 for calendar year 2007 
trading licenses that are purchased during the 2006 offering period, 
rather than using an auction to determine the trading license price as 
was done for calendar year 2006. The Exchange is also proposing to 
modify the fee relating to the approval of any new member or pre-
qualified substitute. The Exchange is also deleting NYSE Rule 300T, 
which is no longer necessary.
    The text of the proposed rule change is available on NYSE's Web 
site at http: //http://www.nyse.com, at NYSE's principal office, 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, NYSE included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposal. The text of these 
statements may be examined at the places specified in Item IV below. 
NYSE 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 amend NYSE Rule 300 relating to trading 
licenses to charge a fixed price of $50,000 for calendar year 2007 
trading licenses that are purchased during the 2006 offering period, 
rather than using an auction to determine the trading license price as 
was done for calendar year 2006. The Exchange is also proposing to 
modify the fee relating to the approval of any new member or pre-
qualified substitute. The Exchange is also deleting NYSE Rule 300T, 
which is no longer necessary.
    The auction process used in anticipation of the merger between New 
York Stock Exchange, Inc. and Archipelago Holdings, Inc. in March 2006 
produced a trading license price of $49,290. The Exchange believes that 
this is evidence that a $50,000 annual fee for a trading license is 
fair and reasonable. The Exchange believes that moving to a fixed price 
for trading licenses will also simplify the process under which member 
organizations obtain trading licenses, and that certainty regarding the 
price for a trading license will be a benefit to both its member 
organizations and the Exchange.
    Because there will be no chance of an unexpectedly high purchase 
price, as was the case when the price was set by auction, the Exchange 
believes that there is no need to provide for a re-pricing if fewer 
than 1,000 trading licenses are applied for. The Exchange also notes 
that since 1,279 trading licenses were purchased last year at $49,290, 
there is no reason to believe that a price of $50,000 would 
substantially reduce the number of trading licenses sold for calendar 
year 2007.
    Nonetheless, to insure fairness in the allocation of trading 
licenses among those desiring them, the Exchange will retain certain 
restrictions imposed this past year. Accordingly, member organizations 
would initially be limited to applying for a number of licenses equal 
to the greater of 35 or 125% of the number of trading licenses they 
used in 2006. So that member organizations would not be affected by 
end-of-year fluctuations in the number of licenses held, the 125% will 
be calculated with reference to the greatest number of licenses held by 
the member organization during calendar year 2006. For example, if a 
member organization had, at its highest point in 2006, 36 trading 
licenses issued to it, the member organization would be entitled to 
apply for 45 trading licenses for 2007, even if at the time of the 2006 
offering period, the member organization only held 32 trading licenses. 
In no event would the total number of trading licenses issued by the 
Exchange exceed 1,366, and if in the offering more than 1,366 licenses 
are applied for, the Exchange would allow member organizations to 
purchase up to the greatest number they used in calendar year 2006, 
with the additional trading licenses up to 1,366 apportioned among 
interested member organizations by lottery.
    Since there is no longer a need to encourage participation in an 
auction, the Exchange would eliminate the requirement that trading 
licenses purchased after the annual offering pay a 10% premium. As was 
the case this year, the purchase price for all trading licenses would 
be paid in monthly installments, and early terminations would pay a 
termination fee equal to one month's installment of the purchase price.
    The Exchange also proposes to modify the fee relating to the 
approval of any new member or pre-qualified substitute. Currently, the 
Exchange charges a fee of $1,000 for the approval of new trading 
license holders or pre-qualified substitutes. The fee does not apply to 
current trading license holders who are approved for trading floor 
access. Based on its experience with the administration of the approval 
process during 2006, the Exchange proposes to increase this fee from 
$1,000 to $5,000. The Exchange believes that the increase is 
appropriate to defray the administrative expenses associated with the 
approval of new members and pre-qualified substitutes, and notes that 
it is in line with the $5,000 fee the Exchange charged prior to the 
merger for transfers of memberships.
    Finally, the Exchange is eliminating NYSE Rule 300T, which was 
needed only with respect to the auction conducted in 2006, the year in 
which the merger between New York Stock Exchange, Inc. and Archipelago 
Holdings, Inc. occurred.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirement under Section 6(b)(4) of the Act \3\ that a 
national securities exchange have rules that provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and other persons using its facilities.
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    \3\ 15 U.S.C. 78f(b)(4).
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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 were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which NYSE consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

[[Page 66361]]

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-2006-98 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-2006-98. 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 also will be available for inspection and copying at the 
principal office of 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-2006-98 and should be submitted on or before December 5, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-19165 Filed 11-13-06; 8:45 am]

BILLING CODE 8011-01-P