Document ID: SEC-2007-1367-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-10-03T04:00Z

[Federal Register: October 3, 2007 (Volume 72, Number 191)]
[Notices]               
[Page 56419-56421]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03oc07-113]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56554; File No. SR-NYSE-2007-84]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to NYSE Rule 104.10(6) (Dealings With Specialists)

September 27, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 25, 2007, 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 substantially prepared by the NYSE. The 
NYSE has designated the proposed rule change as a ``non-controversial'' 
rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 
19b-4(f)(6) thereunder,\4\ which renders the proposed rule change 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NYSE is proposing to extend for three (3) months the current 
pilot related to specialist stabilization requirements operating 
pursuant to NYSE Rule 104.10(6) (Specialist Transactions in Active 
Securities that Establish or Increase the Specialist's Position) 
(``Stabilization Pilot''),\5\ that is scheduled to terminate on 
September 30, 2007. The text of the proposed rule change is available 
on NYSE's Web site at http://www.nyse.com, at NYSE's principal office, 

and at the Commission's Public Reference Room.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 54860 (December 1, 
2006), 71 FR 71221 (December 8, 2006) (SR-NYSE 2006-76).
---------------------------------------------------------------------------

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 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 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 is proposing to extend the operation of the 
Stabilization Pilot pursuant to NYSE Rule 104.10(6) from September 30, 
2007 to the earlier of December 31, 2007 or such time as the Commission 
approves a proposal by the Exchange to modify the current Pilot.\6\
---------------------------------------------------------------------------

    \6\ On September 14, 2007, the Exchange filed SR-NYSE-2007-83 in 
order to amend NYSE Rule 104.10 to (i) extend the duration of the 
Stabilization Pilot to March 31, 2008; (ii) remove the ``active 
securities'' limitation on Conditional Transactions that establish 
or increase a specialist's position and reach across the market to 
transact with the Exchange's published quote; and (iii) make certain 
conforming changes to NYSE Rule 104.10(5). See Securities Exchange 
Act Release No. 56455 (September 18, 2007), 72 FR 54499 (September 
25, 2007) (SR-NYSE-2007-83).
---------------------------------------------------------------------------

a. Stabilization Pilot
    On December 1, 2006, the Commission approved changes to NYSE Rules 
104.10(5) and 104.10(6) governing specialist stabilization 
requirements.\7\ The amendments to the Rule moved away from defining 
stabilization in terms of the last sale to focus on market conditions, 
the type of trade in question and the specialist's existing position. 
The amendments to NYSE Rule 104.10(6) govern Conditional Transactions 
(as defined below) in active securities (``Stabilization Pilot'').\8\
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 54860, supra note 5.
    \8\ ``Active'' securities are: (a) securities comprising the S&P 
500[reg] Stock Index; (b) securities trading on the Exchange during 
the first five trading days following their initial public offering 
of such securities; and (c) securities that have been designated as 
``active'' by a Floor Official subject to the provisions of the 
Rule.
---------------------------------------------------------------------------

    Pursuant to the Stabilization Pilot, specialists can trade in 
active securities that establish or increase a position by reaching 
across the market to trade in

[[Page 56420]]

the Exchange published bid (in the case of a specialist's sale) or 
offer (in the case of a specialist's purchase) when such bid (offer) is 
priced below (above) the last differently priced published bid (offer) 
(``Conditional Transaction''). A specialist is allowed to execute 
Conditional Transactions without restriction as to price provided the 
specialist follows said transaction with an appropriate transaction on 
the opposite side of the market commensurate with the size of the 
specialist's transaction, which is referred to as ``appropriate re-
entry.'' \9\
---------------------------------------------------------------------------

    \9\ ``Appropriate re-entry'' for Conditional Transactions shall 
mean the specialist's stabilization obligation to re-enter a 
transaction on the opposite side of the market at or before the 
price participation point (``PPP''). The PPP is an Exchange-issued 
minimum guideline that identifies the price at or before which a 
specialist is expected to re-enter the market after effecting a 
Conditional Transaction. PPPs are only minimum guidelines and 
compliance with them does not guarantee a specialist is meeting his 
or her obligation.
---------------------------------------------------------------------------

    The Exchange states that the Stabilization Pilot provides the 
specialist with the ability to effect transactions for its dealer 
account to provide support to the Hybrid Market. The Exchange believes 
that the specialists have a greater ability to position themselves to 
provide more liquidity against market trend and thus moderate 
volatility. The Exchange, therefore, requests that the Stabilization 
Pilot be extended for three (3) months to continue to afford 
specialists this needed flexibility to continue their adaptation to the 
new challenges of the Hybrid Market.
    The Exchange believes that extension of the Stabilization Pilot 
will continue to allow specialists to effectively manage their 
inventory in order to provide liquidity during times of market 
volatility. As such, the Exchange requests that the Commission extend 
the Stabilization Pilot to December 31, 2007, or such earlier time that 
the Commission approves the expansion of the Stabilization Pilot as 
discussed above.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirement under Section 6(b)(5) \10\ of the Act that an 
Exchange have rules that are 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 
also believes that the proposed rule change also is designed to support 
the principles of Section 11A(a)(1) \11\ in that it seeks to assure 
economically efficient execution of securities transactions.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b)(5).
    \11\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

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: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, the proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) \12\ of the Act and Rule 19b-4(f)(6) 
thereunder.\13\ As required under Rule 19b-4(f)(6)(iii),\14\ the 
Exchange provided the Commission with written notice of its intent to 
file the proposed rule change, along with a brief description and text 
of the proposed rule change, at least five business days prior to the 
date of the filing of the proposed rule change.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    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-4(f)(6)(iii) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The NYSE requests that the 
Commission waive the 30-day operative delay, as specified in Rule 19b-
4(f)(6)(iii), which would make the rule change effective and operative 
upon filing. The Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest because such waiver would allow the Stabilization Pilot to 
continue without interruption through the earlier of (i) December 30, 
2007 or (ii) when the Commission acts on a corresponding proposed rule 
change,\15\ and provide the Exchange and the Commission additional time 
to evaluate the pilot.\16\ Accordingly, the Commission designates that 
the proposed rule change effective and operative upon filing with the 
Commission.
---------------------------------------------------------------------------

    \15\ See Securities Exchange Act Release No. 56455, supra note 
6.
    \16\ 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. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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 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-2007-84 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-2007-84. 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

[[Page 56421]]

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 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-2007-84 and should be 
submitted on or before October 24, 2007.
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-19490 Filed 10-2-07; 8:45 am]

BILLING CODE 8011-01-P