Document ID: SEC-2006-1423-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2006-11-06T05:00Z

[Federal Register: November 6, 2006 (Volume 71, Number 214)]
[Notices]               
[Page 65019-65021]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06no06-70]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54675; File No. SR-NYSE-2006-96]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to a Request to Extend the Pilot Operating During the 
Exchange's Implementation of NYSE Hybrid Market Phase 3 Until November 
30, 2006

October 31, 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 October 26, 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. NYSE filed 
the proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ 
and

[[Page 65020]]

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

    NYSE proposes to extend the pilot (``Pilot'') \5\ which put into 
operation certain rule changes pending before the Commission to 
coincide with the Exchange's implementation of NYSE HYBRID MARKET\SM\ 
(``Hybrid Market'') \6\ Phase 3.
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    \5\ See Securities Exchange Act Release Nos. 54578 (October 5, 
2006), 71 FR 60216 (October 12, 2006) and 54610 (October 16, 2006), 
71 FR 62142 (October 23, 2006).
    \6\ The Hybrid Market was approved on March 22, 2006. See 
Securities Exchange Act Release No. 53539 (March 22, 2006), 71 FR 
16353 (March 31, 2006).
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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 October 5, 2006, the Commission approved the Pilot to, among 
other things, put into operation certain proposed modifications to 
Exchange Rules that are currently pending \7\ before the Commission to 
coincide with the Exchange's implementation of the Hybrid Market Phase 
3. The Pilot commenced on October 6, 2006 \8\ and is scheduled to 
terminate on the close of business October 31, 2006.
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    \7\ See, Securities Exchange Act Release Nos. 54520 (September 
27, 2006), 71 FR 57590 (September 29, 2006) (proposing to amend 
several Exchange Rules to clarify certain definitions and systemic 
processes (``Omnibus Filing'')); 54504 (September 26, 2006), 71 FR 
57011 (September 28, 2006) (proposing to amend the specialist 
stabilization requirements set forth in Exchange Rule 104.10 
(``Stabilization Filing'')); and SR-NYSE-2006-73 (filed on September 
13, 2006) and Amendment No. 1 thereto (filed on October 13, 2006) 
(proposing to amend Exchange Rule 127 which governs the execution of 
a block cross transaction at a price outside the prevailing NYSE 
quotation (``Block Cross Filing'')).
    \8\ The changes related to stop orders and stop limit orders 
proposed in the Omnibus Filing were implemented on October 16, 2006 
in order to give customers and member organizations sufficient time 
to make any changes necessary as a result of the elimination of stop 
limit orders.
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    The Exchange proposes to extend the Pilot through November 30, 2006 
or the earlier of Commission approval of the Omnibus Filing, 
Stabilization Filing and the Block Cross Filing while the Commission 
continues to review the aforementioned pending filings. The approval of 
any one of the pending filings terminates the operation of the rules 
associated with the approved filing from the Pilot. The Pilot shall not 
terminate in its entirety unless and until all pending filings are 
approved or November 30, 2006.
    An extension of the Pilot will allow the Exchange to continue to 
operate the Hybrid Market Phase 3 and commence implementation of Hybrid 
Market Phase 4 in a timely manner. The Exchange believes that an 
extension of the Pilot will also enable the Exchange to be fully 
Regulation NMS \9\-compliant by February 5, 2007 date and comply with 
its obligations under the proposed NMS Linkage Plan.\10\
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    \9\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005).
    \10\ A ``Plan for the Purpose of Creating and Operating an 
Intermarket Communications Linkage Pursuant to Section 11A(a)(3)(B) 
of the Securities Exchange Act of 1934'' to facilitate trades 
between different market centers. See Securities Exchange Act 
Release No. 54551 (September 29, 2006), 71 FR 59148 (October 6, 
2006). The Commission published notice of the NMS Linkage Plan on 
July 28, 2006. See Securities Exchange Act Release No. 54239 (July 
28, 2006), 71 FR 44328 (August 4, 2006).
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    The Exchange further believes that extending the Pilot will allow 
it to continue identifying and addressing any system problems. The 
Exchange will continue to identify and incorporate beneficial system 
changes that become apparent as a result of usage in real time and 
under real market conditions.
    An extension of the Pilot will further the Exchange's ability to 
have real time user interface which is proving very useful to the 
Exchange. Moreover, by extending the Pilot, current users will continue 
gaining the essential practical experience with the new systems and 
processes in a well-modulated way, in real time and under real market 
conditions that cannot be completely replicated in the mock-trading 
environment.
    The Exchange is currently in the process of phasing in the 
securities operating under the Pilot. As expected, the Pilot is 
operating with minimal problems and the benefits as described above are 
proving invaluable. Therefore, the Exchange believes it is appropriate 
to extend the Pilot through November 30, 2006 or the earlier of 
Commission approval of the pending filings as described above.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \11\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \12\ in particular, 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. The Exchange believes that the 
proposed rule change is also designed to support the principles of 
Section 11A(a)(1) of the Act \13\ in that it seeks to assure 
economically efficient execution of securities transactions.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 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 foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest; does not 
impose any significant burden on competition; and 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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-

[[Page 65021]]

4(f)(6)(iii) \16\ 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 five-day pre-filing notice requirement and the 30-day operative 
delay and designate the proposed rule change immediately operative upon 
filing. The Commission believes that waiver of the five-day pre-filing 
notice requirement and the 30-day operative delay is consistent with 
the protection of investors and the public interest because it would 
allow the Pilot to continue without interruption. Accordingly, the 
Commission designates the proposal to be effective and operative upon 
filing with the Commission on a pilot basis until November 30, 
2006.\17\
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    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ For 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 SR-NYSE-2006-96 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-2006-96. 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 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-2006-96 and should be submitted on or before 
November 27, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-18634 Filed 11-3-06; 8:45 am]

BILLING CODE 8011-01-P