[Federal Register: April 10, 2007 (Volume 72, Number 68)]
[Notices]
[Page 17975-17976]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10ap07-126]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55578; File No. SR-NYSEArca-2007-29]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating to NYSE
Arca Rule 7.20 and 7.31
April 4, 2007.
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 March 20, 2007, NYSE Arca, Inc. (``NYSE Arca'' 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. The Exchange filed
the proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\
and Rule 19b-4(f)(6) thereunder, which renders it effective upon filing
with the Commission.\4\ 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 Arca, through its wholly owned subsidiary, NYSE Arca Equities,
Inc. (``NYSE Arca Equities''), is proposing to amend its rules
governing NYSE Arca, LLC (``NYSE Arca Marketplace''), the equities
trading facility of NYSE Arca Equities. With this filing, the Exchange
proposes to clarify: (1) That Equity Trading Permit (``ETP'') Holders
who are not registered Market Makers \5\ are prohibited from entering Q
Orders pursuant to NYSE Arca Equities Rule 7.20(a), and (2) when Q
Orders will automatically repost pursuant to NYSE Arca Equities Rule
7.31(l). 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\ See NYSE Arca Rule 1.1(u).
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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 NYSE Arca 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 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
Pursuant to NYSE Arca Equities Rule 7.23(a)(1) (Obligations of
Market Makers), Market Makers are required to maintain continuous, two-
sided Q Orders in those securities in which the Market Maker is
registered to trade. NYSE Arca Equities Rule 7.31(k)(1)(A) provides
that a Market Maker may instruct the NYSE Arca Marketplace before 6:28
a.m. (Pacific Time) to enter a Q Order on its behalf at price levels
set forth in Rule 7.31(k)(1)(A).\6\ Furthermore, Rule 7.31(k) provides
that upon execution, the Q Order entered pursuant to the Market Maker's
instructions will automatically repost with the original size at $10
below the original bid or $10 above the original offer, but never below
$0.01.
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\6\ These price levels are: (1) At the last price and size
entered by the Market Maker during the previous trading day, either
including or excluding reserve size; (2) at a specified percentage
from the best bid or offer; or (3) at the standard Q defined as
$0.01 bid and 2 times the previous day's close for the offer with
specified display and reserve sizes.
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The amendment to Rule 7.31 reflected in this rule filing is
consistent with the intent of the rule and how the system currently
operates. Specifically, such automatic reposting will not occur if the
Market Maker initially enters the Q Order without a reserve size, or if
the Market Maker initially enters the Q Order with a reserve size and
such reserve size is exhausted. The proposed amendment clarifies that
under such circumstances, a Market Maker will be responsible for
reposting a new Q Order in the security in order to remain in
compliance with its continuous Q Order obligation pursuant to Rule
7.23(a)(1).
In addition, due to the broad definition of ``Q Order'' in Rule
7.31(k)(1), ETP Holders, who are not registered Market Makers, have
been improperly acting as Market Makers by entering Q Orders on the
NYSE Arca Marketplace. In order to prevent this practice, the
Corporation is clarifying the language in NYSE Arca Equities Rule
7.20(a) to prohibit specifically ETP Holders not registered as Market
Makers from acting as Market Markers (i.e., submitting Q Orders) and
make Rule 7.20(a) more consistent with the proposed changes to Rule
7.31(k)(l).
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \7\ of the
Act, in general, and furthers the objectives of Section 6(b)(5) \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 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) \9\ and Rule 19b-4(f)(6)
thereunder.\10\ 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,
[[Page 17976]]
or otherwise in furtherance of the purposes of the Act.
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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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NYSE Arca has asked the Commission to waive the five-day pre-filing
notice requirement and the 30-day operative delay. The Commission
believes such waivers are consistent with the protection of investors
and the public interest because they would permit the Exchange to
codify the proposed clarifications without further delay.\11\ For this
reason, the Commission designates the proposal to be operative upon
filing with the Commission.
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\11\ For purposes only of waiving the 30-day pre-operative
period, the Commission has considered the proposed rule's impact on
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
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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/rules/sro.shtml.
); or Send e-mail to rule-comments@sec.gov. Please include File
Number SR-NYSEArca-2007-29 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-NYSEArca-2007-29.
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 will also be available for inspection and copying at the
principal office of the NYSE Arca. 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-NYSEArca-2007-29 and should be submitted on or before
May 1, 2007.
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. E7-6710 Filed 4-9-07; 8:45 am]
BILLING CODE 8010-01-P