Document ID: SEC-2008-0562-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2008-04-11T04:00Z

[Federal Register: April 11, 2008 (Volume 73, Number 71)]
[Notices]               
[Page 19919-19921]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11ap08-120]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57627; File No. SR-NYSE-2008-19]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 To Amend NYSE Rule 46 To Permit the Appointment of 
Qualified Exchange Employees To Act as Floor Governors

April 4, 2008.
    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 March 14, 2008, 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. On April 4, 2008 
the Exchange filed Amendment No. 1 to the proposed rule change. NYSE 
has designated this proposal as concerned solely with the 
administration of a self-regulatory organization, pursuant to Section 
19(b)(3)(A)(iii) of the Act and Rule 19b-4(f)(3) thereunder,\3\ which 
renders the proposed rule change effective upon filing. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(3).
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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 46 to permit the 
appointment of qualified Exchange employees to act as Floor Governors. 
The text of the proposed rule change is available at http://
www.nyse.com, the Exchange and 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 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

[[Page 19920]]

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 46 currently provides a process for the Exchange to 
appoint NYSE members as Floor Officials. NYSE Rule 2(a) states that the 
term ``member,'' when referring to a natural person, means a natural 
person associated with a member organization who has been approved by 
the Exchange and designated by such member organization to effect 
transactions on the Floor of the Exchange or any facility thereof. 
Floor Officials are delegated certain authority from the Board of 
Directors of the Exchange to supervise and regulate active openings and 
unusual situations that arise in connection with the making of bids, 
offers or transactions on the trading Floor, and to review and approve 
certain trading actions, such as trades to be effected at wide 
variations in price and delayed openings and trading halts.\4\
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    \4\ See NYSE Rules 37, 47, 48, 60, 64, 75, 79A, 85, 90, 91, 93, 
100, 103, 103A, 103B, 104, 107A, 110, 111, 112, 115A, 122, 123A, 
123C, 123D, 127, 128B, 284, 325, 476A, 903 and 906.
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    Floor Officials have traditionally been drawn from the ranks of 
experienced NYSE Floor members and serve in a volunteer capacity in 
addition to their regular obligations as either brokers or specialists. 
Within the broad category of ``Floor Official,'' there are several 
ranks reflecting the experience of the member serving, including (in 
ascending order of seniority) Floor Official, Senior Floor Official, 
Floor Governor, and Executive Floor Governor. Under NYSE Rule 46, more 
senior-level Floor Officials may take any action that a lower-level 
Floor Official is authorized to take.
    Floor Officials at all ranks are appointed by the NYSE's Chairman 
and Board of Directors, in consultation with the Executive Floor 
Governors and NYSE Regulation Board, which advises on the fitness of 
the individuals designated. In connection with the NYSE Regulation 
Board's advisory function, NYSE Regulation staff gives a mandatory 
education program to the prospective officials, which all candidates 
for Floor Official (including Floor Governors) must complete. NYSE 
Regulation also administers a qualifying examination to newly-named 
Floor Officials, who must pass the exam prior to being recommended by 
the NYSE Regulation Board for appointment.
    As the NYSE's trading Floor has downsized from five trading rooms 
to two, a number of highly-experienced members have left the Floor as a 
result of retirement, layoffs and restructurings within their member 
organizations. Because of these departures, the available pool of 
experienced members who can serve as senior-level Floor Officials 
(particularly Floor Governors) has shrunk commensurately.
    During this same time, the Exchange has hired several former 
members who, while they were active on the Floor, served as senior-
level Floor Officials.\5\ The Exchange believes that these individuals 
have the necessary business and rule knowledge that would enable them 
to act as Floor Governors if the need arose, but are restricted by the 
provision in NYSE Rule 46 that states that Floor Governors must be 
``members'' of the Exchange. In order to broaden the pool of 
experienced individuals who can participate in and supervise unusual 
trading situations on the Floor, the Exchange is proposing an amendment 
to NYSE Rule 46 that would permit the Exchange to designate qualified 
Exchange employees, who would have the same authority as Floor 
Governors, in addition to appointing active members as Floor Governors. 
To avoid any conflicts of interest between business interests and 
regulatory interests, the proposed amendment also provides that the 
Exchange may not appoint employees of NYSE Regulation as Floor 
Governors.
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    \5\ For example, one such individual served as an Executive 
Floor Governor, while two others served as Floor Governors.
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    The proposed amendment would preserve the Exchange's flexibility to 
appoint both qualified members and qualified staff to act as Floor 
Governors. In addition, and as importantly, the amendment would not 
change either the selection or the qualification processes: qualified 
Exchange employees (like qualified members) would need to be appointed 
by the Exchange's chairman in consultation with the Executive Floor 
Governors and NYSE Regulation Board of Directors and approved by the 
NYSE Board of Directors; and they would need to complete the mandatory 
education program and, if necessary, the qualifications exam.\6\ By 
retaining these processes, the Exchange intends to limit the 
appointment of Exchange employees to only those employees who meet the 
standards that the Exchange currently expects of member Floor 
Governors.
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    \6\ The Exchange notes that under NYSE Regulation policy, former 
Floor Governors employed by the Exchange and appointed as qualified 
Exchange employees under Rule 46 would not need to retake the 
qualifying examination. This is consistent with the treatment of 
members being promoted to Floor Governor from Floor Official 
positions; such members are deemed to be qualified for the position 
after completing the mandatory education program, and are exempt 
from retaking the examination.
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    Because the proposed amendment adds a new category of Floor 
Official (qualified Exchange employee), the Exchange is proposing to 
add new supplementary material, Rule 46.20, to clarify that qualified 
Exchange employees are authorized to take any action that a Floor 
Governor may take. Because all Floor Governors are also empowered to 
take any action that a Floor Official may take, the rule further 
clarifies that qualified Exchange employees may also take any action 
that a Floor Official may take.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
and furthers the objectives of Section 6(b)(5) of the Act,\7\ in that 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanisms 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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    \7\ 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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    The foregoing rule change is concerned solely with the 
administration of the Exchange and has, therefore, become effective 
pursuant to Section 19(b)(3)(A)(iii) of the Act \8\ and Rule 19b-
4(f)(3) \9\ thereunder. At any time within 60 days of the filing of 
such 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

[[Page 19921]]

the protection of investors, or otherwise in furtherance of the 
purposes of the Act.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(3).
    \10\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of the Act, the Commission considers the period 
to commence on April 4, 2008, the date on which NYSE filed Amendment 
No. 1. See 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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-2008-19 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-2008-19. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. 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-2008-19 and should be 
submitted on or before May 2, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
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    \11\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E8-7699 Filed 4-10-08; 8:45 am]

BILLING CODE 8011-01-P