Document ID: SEC-2005-0312-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange, Inc.
Posted Date: 2005-12-02T05:00Z

[Federal Register: December 2, 2005 (Volume 70, Number 231)]
[Notices]               
[Page 72320-72321]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02de05-68]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52838; File No. SR-NYSE-2005-66]

 
Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Order Granting Accelerated Approval of Proposed Rule Change and 
Amendment No. 1 Thereto To Amend Rule 460 (Specialists Participating in 
Contests)

November 28, 2005.

I. Introduction

    On September 29, 2005, the New York Stock Exchange, Inc. (``NYSE'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change, pursuant to Section 19(b)(1) 
of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ to amend NYSE Rule 460 (Specialists Participating in 
Contests). On October 25, 2005, the NYSE amended the proposed rule 
change. The proposed rule change, as modified by Amendment No. 1, was 
published for comment in the Federal Register on November 3, 2005.\3\ 
The Commission received no

[[Page 72321]]

comments on the proposal. This order grants accelerated approval to the 
proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 52688 (October 27, 
2005), 70 FR 66879.
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II. Description of the Proposal

    The Exchange proposes to add an exemption to NYSE Rule 460, which 
generally restricts business transactions between a specialist or his 
affiliates and any company in whose stock the specialist is registered. 
The exemption, in new NYSE rule 460.25, would apply to business 
transactions between a specialist or his affiliates and the sponsor of 
any Exchange Traded Funds (``ETFs'') in which the specialist is 
registered. For purposes of the proposed rule, ETFs are Investment 
Company Units (defined in paragraph 703.16 of the Exchange's Listed 
Company Manual), Trust Issued Receipts, such as HOLDRs (defined in NYSE 
Rule 1200), and derivative instruments based on one or more securities, 
currencies or commodities.
    Since ETFs are based on derivatives or indices representing 
multiple securities, or a single commodity or currency, and the 
specialist registered to that ETF is not a market maker in any of the 
underlying component securities, commodities or currencies, the 
Exchange believes that any potential for conflicts which might have an 
undue influence or impact on the ETF trading price is removed. 
Furthermore, while the ETF sponsor generally oversees the performance 
of the trustee of the ETF and the trust's principal service providers, 
the trustee is responsible for the day-to-day administration of the 
trust.
    The rule would provide that any fee or other compensation paid in 
connection with the business transaction to a specialist or his 
affiliates not have any relationship to the trading price or daily 
trading volume of the ETF. The rule also would provide that a 
specialist or his affiliates must notify and provide a full description 
to the Exchange of any business transaction or relationship it may have 
with any sponsor of an ETF in which the specialist is registered, 
except those of a routine and generally available nature.
    The Exchange requested accelerated approval of the proposed rule 
change on November 25, 2005, prior to the thirtieth day after the date 
of publication of the notice in the Federal Register.\4\
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    \4\ Telephone conference between Donald Siemer, Director, NYSE, 
and Florence E. Harmon, Senior Special Counsel, Division of Market 
Regulation, Commission, on November 21, 2005.
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III. Discussion

    After careful consideration, the Commission finds that the proposed 
rule change, as amended, is consistent with the requirements of the Act 
and the rules and regulations thereunder applicable to a national 
securities exchange.\5\ In particular, the Commission believes that the 
proposal is consistent with Section 6(b)(5) of the Act,\6\ in that it 
is designed to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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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    \5\ In approving the proposed rule change, the Commission has 
considered its impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\7\ for approving the proposed rule change prior to the 
thirtieth day after the date of publication of the notice in the 
Federal Register. The Commission notes that the proposal was noticed 
for the full 21-day comment period, and no comments were received. 
Accelerated approval will also accommodate the Exchange's trading of 
certain derivative products.
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    \7\ 15 U.S.C. 78s(b)(2).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-NYSE-2005-66), as amended, 
be, and it hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-6752 Filed 12-1-05; 8:45 am]

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