Document ID: SEC-2008-0890-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2008-07-03T04:00Z

[Federal Register: July 3, 2008 (Volume 73, Number 129)]
[Notices]               
[Page 38270-38272]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03jy08-112]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58050; File No. SR-NYSE-2008-53]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Amending NYSE Rule 123D (Openings and Halts in Trading) To Provide for 
a Limited Exemption for Securities Trading on the Exchange That Are 
Part of the Russell Index Reconstitution

June 27, 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 June 27, 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 and 
II below, which Items have been substantially prepared by the Exchange. 
NYSE filed the proposed rule change as a ``non-controversial'' proposal 
pursuant to Section 19(b)(3)(A) of the Act \3\ and 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 amend NYSE Rule 123D to exempt orders for any 
security that is trading on the Exchange on June 27, 2008, and is part 
of the Russell Index Reconstitution \5\ (a ``Russell Stock''), from the 
provisions of the non-regulatory trading halt condition designated as 
``Sub-penny trading'' as set forth in subsection (3) of the rule. The 
text of the proposed rule change is available at the Exchange, the 
Commission's Public Reference Room, and http://www.nyse.com.
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    \5\ On June 27, 2008, the Russell Investment Group will 
reconstitute certain of its indices, including the Russell 
3000[supreg] Index and the Russell Microcap[supreg] Index.
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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
    Through this filing, the Exchange proposes to amend NYSE Rule 123D 
to provide a limited exemption for orders in a Russell Stock that is 
trading on the Exchange on June 27, 2008, and is part of the Russell 
Index Reconstitution, from the provisions of the non-regulatory trading 
halt condition designated as ``Sub-penny trading'' pursuant to NYSE 
Rule 123D(3).
Background
    Pursuant to NYSE Rule 123D(3), whenever a security trading on the 
Exchange is reported on the consolidated tape during normal trading 
hours as having traded at a price of $1.05 or less, or if a security 
would open on the Exchange at a price of $1.05 or less, trading in the 
security on the Exchange shall be immediately halted due to a ``Sub-
penny trading'' condition. Once halted for such reason, trading shall 
not resume on the Exchange until the security has traded on another 
automated trading center, as defined in Rule 600(b)(4) of Regulation 
NMS (``Reg NMS''),\6\ for at least one entire trading day at a price or 
prices that are at all times at or above $1.10. Any such resumption of 
trading shall occur at the beginning of a trading day, so that normal 
opening procedures can apply. In contrast to other trading halts 
described in NYSE Rule 123D, a ``Sub-penny trading'' halt is automatic 
and does not require the approval of any Floor Officials. However, if a 
determination is made by a Floor Official that a trade that triggered a 
halt because of a ``Sub-penny trading'' condition was made in error or 
otherwise was an anomaly, trading of the security on the Exchange will 
resume immediately. Orders entered with the Exchange in a security 
subject to a ``Sub-penny trading'' condition halt will be routed to 
NYSE Arca, where they will be handled in accordance with the rules 
governing that market. The

[[Page 38271]]

Exchange will cancel any open limit orders in the Display Book system 
with respect to securities that become subject to a ``Sub-penny 
trading'' condition halt.
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    \6\ See 17 CFR 242.600(b)(4).
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Exemption From NYSE Rule 123D(3)
    The Exchange seeks, through this filing, a limited exemption from 
the provisions of NYSE Rule 123D(3) on June 27, 2008. The Exchange 
believes that this exemption is necessary to address the possibility 
that a particular Russell Stock might open or trade on the Exchange at 
a price of $1.05 or less, thereby invoking the ``Sub-penny trading'' 
condition halt. In that instance, trading in the Russell Stock would be 
halted on the Exchange for the rest of the trading day and unexecuted 
limit orders remaining on the Display Book would be cancelled. More 
importantly, there would be no closing transaction on the Exchange for 
the Russell Stock on the day a ``Sub-penny trading'' condition halt was 
in effect and thus, no ability to price such stock during the Russell 
Index Reconstitution.
    Pursuant to this proposed limited exemption, the Exchange would not 
invoke the ``Sub-penny trading'' halt if the Russell Stock opened or 
traded on the Exchange at a price of $1.05 or less. Rather, the 
Exchange would permit the Russell Stock to continue to trade. If such 
stock were to trade at a price of $0.99 or less, a non-regulatory 
trading condition designated as ``Equipment Changeover'' would be 
implemented. When an ``Equipment Changeover'' condition trading halt is 
invoked, Exchange Systems will continue to accept all orders in the 
Russell Stock. Open orders in the Russell Stock on the NYSE Display 
Book system will not be cancelled nor will such orders be routed to 
NYSE Arca. Instead, all orders that have been entered will be 
aggregated for purposes of a closing transaction pursuant to all 
relevant NYSE rules governing the close. The Exchange believes that 
only one Russell Stock trading on the Exchange could potentially be 
eligible for a ``Sub-penny trading'' condition halt on June 27, 2008. 
Accordingly, the Exchange states that this limited exemption is 
applicable to only one such Russell Stock. If such security does not 
trade at a price of $1.05 or less, this limited exemption would prove 
unnecessary and would expire at the close of trading on June 27, 2008.
    The Exchange believes further that this limited exception would 
ensure that on June 27, 2008, each Russell Stock would be subject to 
pricing on the NYSE close, removing the possibility that such stock 
might be adversely affected on the close, causing potential harm to the 
market and to investors.
 2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\8\ in particular, 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 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 the proposed rule change would 
ensure that trading in Russell Stocks and the Russell Index 
Reconstitution on June 27, 2008, would proceed without any impediment.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    The Exchange states that written comments on the proposed rule 
change were neither solicited nor received.

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) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide 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 filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Commission is waiving the five business-day 
requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 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 Exchange requests that the Commission waive 
the five business-day pre-filing requirement and the 30-day operative 
delay so that it may immediately implement the limited exemption to the 
provisions of NYSE Rule 123D to ensure that Russell Stocks would be 
subject to pricing on the NYSE close on June 27, 2008. The Exchange 
states that the proposed rule change does not significantly affect the 
protection of investors or the public interest and does not impose any 
significant burden on competition.
    The Commission believes that waiving the 30-day operative delay and 
five business-day pre-filing requirement is consistent with the 
protection of investors and the public interest.\11\ The Commission 
believes that this narrowly tailored exception to NYSE Rule 123D(3), 
lasting only for the duration of one trading day, should help to ensure 
fair and orderly markets on June 27, 2008, the day of the Russell Index 
Reconstitution. The Commission notes that the requirements of Rule 611 
of Reg NMS \12\ would still apply. For these reasons, the Commission 
designates the proposed rule change as operative upon filing.
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    \11\ For purposes only of waiving the 30-day operative delay and 
five business-day pre-filing requirement, the Commission has also 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \12\ See 17 CFR 242.611.
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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

[[Page 38272]]

Number SR-NYSE-2008-53 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2008-53. 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 the 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-2008-53 and should be 
submitted on or before July 24, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-15070 Filed 7-2-08; 8:45 am]

BILLING CODE 8010-01-P