Document ID: SEC-2006-1469-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2006-11-16T05:00Z

[Federal Register: November 16, 2006 (Volume 71, Number 221)]
[Notices]               
[Page 66820-66822]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16no06-117]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54727; File No. SR-NYSE-2006-79]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to a Fee on Orders in Equities and Exchange Traded Funds 
Routed From the Exchange and Executed in Another Market Pursuant to the 
Linkage Plan

November 8, 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 September 29, 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, II, 
and III below, which Items have been prepared by the Exchange. The 
Exchange filed the proposal pursuant to Section 19(b)(3)(A) of the Act 
\3\ and subparagraph (f)(2) of Rule 19b-4 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)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to charge a fee (``Linkage Order Fee'') 
to its member organizations in connection with orders in equities and 
Exchange Traded Funds (``ETFs'') routed from the Exchange and executed 
in another market pursuant to the ``Plan for the Purpose of Creating 
and Operating an Intermarket Communications Linkage'' (``Linkage 
Plan'').
    The text of the proposed rule change is available on the NYSE's Web 
site (http://www.nyse.com), at the NYSE's Office of the Secretary, and 

at 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, 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 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose

[[Page 66821]]

    The NYSE proposes to charge a Linkage Order Fee to its member 
organizations in connection with orders in equities and ETFs routed 
from the Exchange and executed in another market pursuant to the 
Linkage Plan.\5\ The ``Linkage Order Fee'' would be paid on such orders 
in the amount of $0.00025 per share and, for ETFs, in the amount of 
$0.0030 per share. The Linkage Order Fee is proposed to take effect on 
October 1, 2006 and to extend until the scheduled termination of the 
Linkage Plan on June 30, 2007.
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    \5\ The Linkage Plan was filed with the Commission pursuant to 
Rule 608 of Regulation NMS under the Act. The purpose of the Linkage 
Plan is to enable the Plan Participants to act jointly in planning, 
developing, operating and regulating the NMS Linkage System 
electronically linking the Plan Participant Markets to one another, 
as described in the Linkage Plan. Following approval by the 
Commission, the Plan became operative on October 1, 2006. The Plan 
would terminate on June 30, 2007; however, Participants that wished 
to extend the term could agree to do so, subject to Commission 
approval. See Securities Exchange Act Release No. 54551 (Sept. 29, 
2006), 71 FR 59148 (Oct. 6, 2006) (approving the Linkage Plan).
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    The Linkage Plan provides that orders be sent to a Participant 
market through the auspices of a member of that Participant 
(``Sponsoring Member'').\6\ The Exchange has identified Archipelago 
Securities LLC (``Arca Securities'') as the Exchange's Sponsoring 
Member for orders executed in a destination market. Arca Securities 
would be billed by the destination markets for orders entered on the 
Exchange by Entering Firms but routed to other markets for execution. 
The Exchange would assume responsibility for fees paid by Arca 
Securities to Participant markets in its capacity as the Exchange's 
Sponsoring Member. The Exchange proposes to bill each Entering Firm the 
Linkage Order Fee in order to recover these expenses.
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    \6\ The Participants in the Linkage Plan are the American Stock 
Exchange LLC, the Boston Stock Exchange, Inc., the Chicago Board 
Options Exchange, Inc., the Chicago Stock Exchange, Inc., the Nasdaq 
Stock Market LLC, the National Stock Exchange, the New York Stock 
Exchange LLC, the NYSE Arca, Inc., and the Philadelphia Stock 
Exchange, Inc.
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    Each Entering Firm would be billed the Linkage Order Fee for 
equities each month with respect to the number of shares that such firm 
has executed pursuant to the Linkage Plan. Such fee would be subject to 
the monthly fee cap per Entering Firm of $750,000, but it would not be 
subject to the cap of $80 per transaction in the 2006 Exchange Price 
List.
    The Exchange also would impose a Linkage Order Fee for ETFs of 
$0.0030 per share, to be billed monthly. While this is the same as the 
Broker/Dealer per share fee currently imposed, the Linkage Order Fee 
would apply both to ETFs listed on the Exchange and to those traded on 
the Exchange pursuant to unlisted trading privileges (``UTP''). (ETFs 
traded pursuant to UTP are currently subject to a transaction fee 
moratorium.) In addition, the Linkage Order Fee would apply to System 
Orders under 5,100 shares and would not be subject to the cap of $100 
per trade for ETFs.
    The Exchange is also proposing to make a minor change to the ETF 
transaction fee schedule to specify that the fee is $0.0030 per share 
rather than $0.30 per round lot, consistent with the form of the 
transaction fee schedule for equities.
    The Exchange also proposes to amend the 2006 Price List to clarify 
that transactions by members acting as specialist for the specialist's 
own account are not subject to transaction fees on ETF transactions.\7\
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    \7\ The Exchange's transaction fee schedule was most recently 
amended in Securities Exchange Act Release No. 54142 (July 13, 
2006), 71 FR 41493 (July 21, 2006) (SR-NYSE-2006-46).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) of the Act,\8\ in general, and 
Section 6(b)(4) of the Act,\9\ in particular, in that it is designed to 
provide for the equitable allocation of reasonable dues, fees and other 
charges among the Exchange's members and other persons using its 
facilities. The fee is intended to permit the Exchange to recover fees 
billed to Arca Securities, as a Sponsoring Member, by other markets for 
orders executed pursuant to the Linkage Plan. In addition, with the 
exception of the per trade or per month fee caps applicable to non-
Linkage orders, the billing rate is the same for Linkage and non-
Linkage orders.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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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 proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \10\ and subparagraph (f)(2) of Rule 19b-4 
\11\ thereunder, because it involves a member due, fee or other charge. 
At any time within sixty (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.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
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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 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/.
[fxsp0]rules/sro.[fxsp0]shtml); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-NYSE-2006-79 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-2006-79. 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

[[Page 66822]]

Room. 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-2006-79 and should be submitted on 
or before December 7, 2006.
    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).

Nancy M. Morris,
Secretary.
 [FR Doc. E6-19380 Filed 11-15-06; 8:45 am]

BILLING CODE 8011-01-P