[Federal Register: December 4, 2002 (Volume 67, Number 233)]
[Notices]
[Page 72260-72261]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04de02-105]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-46906; File No. SR-NYSE-2002-47]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by
the New York Stock Exchange, Inc. Extending the NYSE Direct+ Pilot
Program Through December 23, 2003
November 25, 2002.
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 October 8, 2002, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') submitted to 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. On
November 1, 2002, the Exchange filed Amendment No. 1 to the proposed
rule change.\3\ The Exchange filed the proposed rule change pursuant to
section 19(b)(3)(A) of the Act,\4\ and Rule 19b-4(f)(6) thereunder,\5\
which renders the proposed rule change effective upon filing with the
Commission.\6\ The Commission is publishing this notice to solicit
comments on the proposed rule change, as amended, from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See letter from Darla C. Stuckey, Corporate Secretary, NYSE,
to Nancy J. Sanow, Assistant Director, Division of Market Regulation
(``Division''), Commission, dated October 31, 2002 (``Amendment No.
1''). In Amendment No. 1, the Exchange requested a waiver of the 5-
day pre-filing requirement under Rule 19b-4(f)(6)(iii), withdrew its
request for a waiver of the 30-day operative period under the same
rule, and clarified that it would implement proposed changes to NYSE
Direct+ that the NYSE has submitted in other proposed rule changes
as they are approved by the Commission.
\4\ 15 U.S.C. 78s(b)(3)(A).
\5\ 17 CFR 240.19b-4(f)(6).
\6\ For purposes of calculating the 30-day delayed operative
date and the 60-day abrogation period, the Commission considers the
proposed rule change to have been filed on November 1, 2002, when
Amendment No. 1 was filed.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend through December 23, 2003\7\ the
effectiveness of a pilot program for NYSE Direct+ (``Pilot''). A
current extension of the Pilot ends December 23, 2002.\8\
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\7\ Telephone conversation among Jeffrey Rosenstrock, Senior
Special Counsel, Market Surveillance, NYSE and Terri Evans,
Assistant Director and Steven Johnston, Special Counsel, Division,
Commission, on November 5, 2002 (clarifying date of proposed
extension of the pilot).
\8\ See Securities Exchange Act Release No. 45331 (January 24,
2002), 67 FR 5024 (February 1, 2002)(File No. SR-NYSE-2001-
50)(notice of filing and immediate effectiveness of proposal to
extend NYSE Direct+ until December 23, 2002). The Pilot is
implemented through a series of rules, NYSE Rules 1000 through 1005,
and NYSE Rule 13. In addition, the Exchange previously submitted for
Commission approval interpretations of certain rules, as well as a
no action or interpretive position which the Exchange requested the
Commission adopt under its short sale rule, Rule 10a-1 under the
Act. See Securities Exchange Act Release No. 45331 (January 24,
2002), 67 FR 5024 (February 1, 2002). The Exchange proposes that
these exemptions and interpretations be extended for an additional
year concurrent with the extension of the NYSE Direct+ Pilot through
December 23, 2003. Telephone conversation between Jeffrey
Rosenstrock, Senior Special Counsel, Market Surveillance, NYSE and
Terri Evans, Assistant Director, Division, Commission on November
25, 2002.
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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. No changes to previously approved rule language are being
proposed.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
NYSE Direct+ was originally filed as a one-year pilot, ending on
December 21, 2001.\9\ The Exchange then extended the Pilot for an
additional one-year period, ending December 23, 2002.\10\
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\9\ See Securities Exchange Act Release No. 43767 (December 22,
2000), 66 FR 834 (January 4, 2001) (File No. SR-NYSE-00-18) (order
approving amended proposed rule change establishing NYSE Direct+
pilot program).
\10\ See supra, note 7.
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The Pilot provides for the automatic execution of orders of 1099
shares or less (``auto ex'' orders) against trading interest reflected
in the Exchange's published quotation. It is not mandatory that all
limit orders of 1099 shares be entered as auto ex orders; rather, the
member organization entering the order, or its customer if enabled by
the member organization, can choose to enter an auto ex order when such
member organization (or customer) believes that the speed and certainty
of an execution at the Exchange's published bid or offer price is in
its customer's best interest.
The Exchange proposes to extend the Pilot for an additional year
(from December 24, 2002 until December 23, 2003). The Exchange notes,
however, that there are two other proposed rule changes concerning NYSE
Direct+ which have also been filed with the Commission during the
current Pilot. These include (a) a proposal to amend NYSE Rule 1000 to
provide that NYSE Direct+ executions will not be available if the
resulting trade would be more than five cents away from the last
sale;\11\ and (b) a proposal to (i) amend NYSE Rule 13 to establish a
one-year pilot program that would expand Direct+ order size eligibility
for Exchange-Traded Funds (``ETFs'') and Holding Company Depositary
Receipts (``HOLDRs''); (ii) amend NYSE Rule 1002 to include ETFs and
HOLDRs and provide that ETFs trade until 4:15 p.m.; and (iii) amend
NYSE Rule 1005 to reflect that the rule applies to ETFs and HOLDRs.
\12\
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\11\ See File No. SR-NYSE-2002-44.
\12\ See Securities Exchange Act Release No. 46527 (September
20, 2002), 67 FR 61368 (September 30, 2002)(noticing SR-NYSE-2002-
37).
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The Exchange proposes that the above-mentioned proposed filings
amending NYSE Direct+ will become incorporated into the Pilot upon
their respective approvals by the Commission.\13\
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\13\ See Amendment No. 1, supra note 3.
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2. Statutory Basis
The Exchange represents that the proposed rule change, as amended,
is consistent with section 6(b)(5) of the Act \14\ in that it is
designed 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 further represents that the proposed rule
change, as amended, is designed to support the principles of Section
11A(a)(1) of the Act \15\ in that it seeks to assure economically
efficient execution of securities transactions, make it practicable for
brokers to execute investors' orders in the best market, and provide an
opportunity for investors' orders to be executed without the
participation of a dealer.
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\14\ 15 U.S.C. 78f(b)(5).
\15\ 15 U.S.C. 78k-1(a)(1).
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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
The foregoing rule change has become effective upon filing pursuant
to section 19(b)(3)(A)(iii) of the Act \16\ and Rule 19b-4(f)(6) \17\
thereunder because the 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 the proposed rule change was filed, or
such shorter time as the Commission may designate. 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.\18\
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\16\ 15 U.S.C. 78s(b)(3)(A)(iii).
\17\ 17 CFR 240.19b-4(f)(6).
\18\ For purposes of calculating the 30-day delayed operative
date and the 60-day abrogation period, the Commission considers the
proposed rule change to have been filed on November 1, 2002, when
Amendment No. 1 was filed.
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The Exchange has requested that the Commission waive the pre-filing
notice requirement. The Commission has determined to waive the five-day
pre-filing notice requirement, given that the Exchange filed the
original proposed rule change on October 8, 2002.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, is consistent with the Act. Persons making written
submissions should file six copies thereof with the Secretary,
Securities and Exchange Commission, 450 Fifth Street, NW., Washington,
DC 20549-0609. 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. All submissions should refer to File No.
SR-NYSE-2002-47 and should be submitted by December 26, 2002.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-30670 Filed 12-3-02; 8:45 am]
BILLING CODE 8010-01-P