[Federal Register Volume 59, Number 130 (Friday, July 8, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-16571] [[Page Unknown]] [Federal Register: July 8, 1994] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-34302; File No. SR-NYSE-94-10] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by New York Stock Exchange, Inc., Relating to Amendments to Rule 127 (Block Positioning) and Rule 72(b) (``Clean'' Agency Crosses) July 1, 1994. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on March 17, 1994, the New York Stock Exchange, Inc. (``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 self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change consists of amendments to Exchange Rule 127 on Block Positioning and 72(b) on ``clean'' agency crosses. 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 self-regulatory organization 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 self-regulatory organization 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 Rule 127, which governs procedures for handling block crosses outside the prevailing quotation, was originally adopted in June 1972 and amended in February 1976. The Exchange recently undertook a review of the Rule and determined that, due to changes in trading rules and practices since the Rule was first adopted, it should be revised to simplify the language and eliminate a number of provisions that the Exchange believes are no longer appropriate. Specifically, the Exchange has determined:To eliminate the requirement that a member affecting an agency cross outside of the prevailing quotation give up the greater of 5% of 1,000 shares of the amount crossed to orders on the specialist book limited to the cross (clean-up) price; To eliminate the reference to the block positioner's responsibility for maintaining the after market when the block positioner has not satisfied the reasonable needs of the specialist; To require documentation on the Floor when an agency block cross outside the prevailing quotation is effected and the specialist's book does not participate. This may be done after the trade has been completed. The Exchange expects these procedures to include notification of a Floor Official. In addition, Rule 72(b) will be amended to include the same documentation requirements for agency crosses under the Rule as those proposed for agency block crosses under Rule 127. The Exchange believes that the deletion of the requirements to give the greater of 5% or 1,000 shares of the cross to orders on the specialist's book in agency cross transactions is appropriate to conform the agency cross principles of Rule 127 with the agency cross principles of Rule 72(b). Under both rules, a member may still participate in the cross transaction by providing price improvement to one side of the cross. The Exchange is not proposing to amend the requirement in Rule 127 that a member organization that is establishing or increasing a position must fill, at the clean-up price, public orders limited to the clean-up price or better before retaining any stock for its proprietary account. The Exchange believes that it is appropriate to place responsibility for the after-market on the specialist rather than the block positioner, as the specialist is otherwise responsible under Exchange rules for the maintenance of a fair and orderly market.\1\ The Exchange believes that the proposed Floor documentation requirement will help ensure appropriate regulatory oversight with respect to agency cross transactions. --------------------------------------------------------------------------- \1\See NYSE Rule 104 (Dealings by Specialists). --------------------------------------------------------------------------- 2. Statutory Basis The basis under the Act for the proposed rule change is the requirement under Section 6(b)(5) that an Exchange have rules that are designed to promote just and equitable principles of trade, to remove impediments to, and perfect their mechanism of a free and open market and, in general, to protect investors and the public interest. 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 Within 35 days of the publication of this notice in the Federal Register or within such other period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve the proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549. 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 at the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. 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-94-10 and should be submitted by July 29, 1994. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. Jonathan G. Katz, Secretary. [FR Doc. 94-16571 Filed 7-7-94; 8:45 am] BILLING CODE 8010-01-M