Document ID: SEC-2006-1206-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2006-09-19T04:00Z

[Federal Register: September 19, 2006 (Volume 71, Number 181)]
[Notices]               
[Page 54862-54864]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19se06-74]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54427; File No. SR-NYSE-2006-58]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Definition of Crowd and To Clarify the Requirements of 
Exchange Rule 70.20(f)

September 12, 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 1, 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 and 
II below, which Items have been prepared by the Exchange. The Exchange 
filed 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 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

    The Exchange proposes to amend Exchange Rule 70.30, which sets 
forth the definition of Crowd, and to clarify the requirements of 
Exchange Rule 70.20(f). The text of the proposed rule change is 
available on the NYSE's Web site at 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 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
    The Exchange's Hybrid Market\SM\ integrates the auction market with 
automated trading. Essential to the auction market is the interaction 
among members on the Floor and between Floor brokers and orders in the 
Display Book[supreg] System, that creates opportunities for price 
improvement, provides information about changing market conditions, and 
serves as a catalyst to trading.\5\ Exchange Rule 70.30 defines a Crowd 
as ``* * * five contiguous panels at any one post where securities are 
traded.'' \6\ Exchange Rule 70.30 further requires that Floor brokers 
be in the Crowd in order to represent orders that the Floor broker has 
in his

[[Page 54863]]

or her agency interest files (i.e., in order to ``e-Quote''). Pursuant 
to Exchange Rule 70.30, a Floor broker may only have agency interest 
files or e-Quote in one Crowd at a time.
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    \5\ See Securities Exchange Act Release No. 53539 (March 22, 
2006), 71 FR 16353 (March 31, 2006).
    \6\ Telephone conversation between Deanna Logan, Director, 
Office of the General Counsel, NYSE, and Cyndi Rodriguez, Special 
Counsel, Division of Market Regulation, Commission, on September 7, 
2006.
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    As the Exchange continues its implementation of the Hybrid 
Market\SM\ it has gained experience operating in the Hybrid Market\SM\ 
environment. Based on this experience, the Exchange seeks to amend the 
definition of Crowd in order to better facilitate the critical 
interaction among members on the Floor.
    In practice, the five contiguous panel definition has proven too 
rigid a concept. The Exchange Floor is made up of five trading rooms. 
Trading rooms have large, in some instances rounded, posts that each 
contain distinct panels at which designated securities are traded. The 
post configuration on the Floor is such that, in certain instances, 
individuals standing at two separate posts are closer to each other 
than individuals standing at the first and fifth contiguous panels of 
the same post. For example, a Floor broker standing in the Crowd at 
Post 1 Panel B is easily able to see and hear the members located at 
Post 2 Panel L because they are located directly across from each 
other. In contrast, a Floor broker at Post 1 Panel B cannot easily see 
or hear the members located at Post 1 Panel G, which is exactly five 
contiguous panels away. Specifically, Panel B is on the opposite side 
of Post 1 from Panel G and thus the Floor broker must walk partly 
around Post 1 in order to effectively interact with the members at Post 
1 Panel G. Nevertheless, under the current rule, the Floor broker 
standing at Post 1 Panel B is considered part of the Crowd that 
includes Post 1 Panel G. Further, pursuant to the current rule, in 
order for the Floor broker at Post 1 Panel B to represent an order in a 
security traded at Post 2 Panel L, the Floor broker would first have to 
withdraw his or her agency interest or e-Quote from the Post 1 Panels 
B-G Crowd.
    In this filing, the Exchange proposes to amend the definition of 
the Crowd in order to reflect more accurately the areas which most 
efficiently facilitate the beneficial interaction among the members on 
the Floor. The Exchange believes that the best way to facilitate this 
interaction is to re-define the concept of Crowd from strictly 
contiguous panels to encompass an area that enables members to more 
efficiently conduct business. Essentially, this is the area in which 
members can see and hear the business conducted at a group of panels. 
These panels may be at one or more posts. To accomplish this, the 
Exchange proposes to divide each trading room of the Floor into 
specific areas, which will be identified on the Floor in a recognizable 
way. Each area will serve to delineate the boundaries of the Crowd. The 
Crowds will be created in such a way that when a Floor broker is 
standing in a Crowd, the Floor broker generally will be able to see and 
hear the business conducted at each post/panel within that Crowd. 
Similarly, the specialists in panels included in a Crowd will be able 
to see and hear the Floor brokers who are representing agency interests 
or e-Quotes in that Crowd. In addition to physically identifying each 
Crowd on the Floor in a unique manner, the Exchange will disseminate to 
its members a notice identifying the specific post(s) and panels 
comprising each Crowd.
    As is the case today, once in a Crowd, a Floor broker is able to e-
Quote in all securities located in that Crowd. If the Floor broker 
leaves one Crowd in order to work in another, the Floor broker is 
required to withdraw his or her agency interest from the Crowd he or 
she is leaving. However, a Floor broker may obtain ``market looks'' in 
a securities located in other Crowds without canceling his or her e-
Quotes. In this filing, the Exchange further seeks to amend Rule 
70.20(f) to reflect this concept.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act in general,\7\ and furthers the objectives 
of Section 6(b)(5) of the Act in particular,\8\ in that it is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system.
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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 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 does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it 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).
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    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.\11\ 
However, Rule 19b-4(f)(6)(iii) \12\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange provided the Commission 
with written notice of its intent to file this proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change. In addition, the Exchange has requested that the 
Commission waive the 30-day operative delay to allow the Exchange to 
implement the proposed rule change and avoid any undue confusion. The 
Exchange believes that the proposed rule change merely seeks to reflect 
more accurately the areas which most efficiently facilitate the 
beneficial interaction among the trading professionals on the Floor of 
the Exchange. The Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest because it would allow the Exchange to immediately implement 
the revised definition of Crowd without undue delay and clarify in 
Exchange Rule 70.20(f) a Floor broker's ability to obtain ``market 
look'' information while in a Crowd. For this reason, the Commission 
designates the proposal to be effective and operative upon filing with 
the Commission.\13\
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    \11\ Id.
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).

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[[Page 54864]]

    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such proposed 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-2006-58 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-2006-58. 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. 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-2006-58 and should be submitted on or before 
October 10, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-15499 Filed 9-18-06; 8:45 am]

BILLING CODE 8010-01-P