Document ID: SEC-2006-1635-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2006-12-15T05:00Z

[Federal Register: December 15, 2006 (Volume 71, Number 241)]
[Notices]               
[Page 75599-75600]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15de06-120]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54910; File No. SR-NYSE-2006-93]

 
Self-Regulatory Organizations; New York Stock Exchange LLC.; 
Order Approving Proposed Rule Change To Amend NYSE Rule 607 Concerning 
the Use of the Random Selection Method To Appoint Arbitrators in 
Matters Not Involving Customers

December 11, 2006.

I. Introduction

    On October 24, 2006, the New York Stock Exchange LLC (``NYSE'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'')\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend Rule 607 relating to use 
of the Random Selection Method to appoint arbitrators in matters not 
involving customers. The proposed rule change was published for comment 
in the Federal Register on November 9, 2006,\3\ and the Commission 
received one comment letter on the proposal.\4\ This order approves the 
proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Exchange Act Release No. 54694 (Nov. 2, 2005), 71 FR 
65869 (Nov. 9, 2006).
    \4\ See letter from A. Daniel Woska, Esq., A. Daniel Woska & 
Associates, PC, dated Nov. 14, 2006 (``Woska'').
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II. Description of the Proposal

    Under the Random List Selection methodology, the Director of 
Arbitration sends parties a randomly generated list of five public 
arbitrators for claims heard by a single arbitrator. If the claim is 
heard by three arbitrators, the Director of Arbitration provides 
parties a randomly generated list of 10 public arbitrators and another 
list of five securities industry arbitrators. Each party is then 
allocated strikes against these arbitrators.\5\ Currently, customers or 
non-members may request in writing a Random List Selection within 45 
days after they file a statement of claim. The parties also may agree 
to this methodology provided that they notify the NYSE within this 
timeframe.\6\ If parties do not request a Random List Selection, the 
Director of Arbitration will select the arbitrator(s) and name a 
chairman of each panel.\7\ NYSE Rule

[[Page 75600]]

607(c) also permits the NYSE to accommodate reasonable alternatives to 
select arbitrators, provided that all parties agree on the methodology.
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    \5\ NYSE Rule 607(c)(2)(i).
    \6\ NYSE Rule 607(c).
    \7\ NYSE Rule 607(b).
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    Under the proposed amendments to NYSE Rule 607(c), the Random List 
Selection methodology could be used in all arbitration matters not 
involving customers if the claimant requests that methodology in 
writing within 45 days after filing its statement of claim. The 
proposed amendments would not change the ability of a customer to 
request the Random Selection Method. The purpose of these amendments is 
to allow non-member or member claimants to use the Random List 
Selection method and to ensure that their choice of methodology for 
arbitrator appointment would prevail.

III. Summary of Comment

    The Commission received one comment on the proposal.\8\ The 
commenter believed that the proposed rule change would do little until 
the NYSE addressed the ``quality of arbitrators'' and the requirement 
that a securities industry arbitrator serve on arbitration panels. The 
commenter also questioned the constitutionality of the NYSE arbitration 
system.\9\ While the Commission appreciates these comments, we believe 
they are outside the scope of this rule filing.
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    \8\ Woska.
    \9\ Id.
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IV. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the Act and, in particular, with Section 
6(b)(5) of the Act, which requires, among other things, that the NYSE's 
rules be designed to promote just and equitable principles of trade, 
and, in general, to protect investors and the public interest.\10\ The 
Commission believes that the proposed rule change should help to ensure 
that members, member organizations, and non-members who choose to file 
their arbitration claims with the NYSE are treated fairly and equitably 
by expanding the availability of the Random Selection Method.
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    \10\ 15 U.S.C. 78f(b)(5).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\11\ that the proposed rule change (SR-NYSE-2006-93), be, and hereby 
is, approved.
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    \11\ 15 U.S.C. 78s(b)(2).

    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).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6-21339 Filed 12-14-06; 8:45 am]

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