[Federal Register Volume 59, Number 135 (Friday, July 15, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-17253] [[Page Unknown]] [Federal Register: July 15, 1994] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-34343; File No. SR-NYSE-94-3] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the New York Stock Exchange, Inc. Relating to the Adoption of New Rule 123A.46 July 11, 1994. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ notice is hereby given that on February 22, 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. --------------------------------------------------------------------------- \1\15 U.S.C. Sec. 78s(b)(1). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change consists of a new Rule 123A.46 pertaining to members' representation of multiple orders. Rule 123A.46 would require members and member organizations (including ``upstairs'' trading personnel) to inform customers if they are representing orders for more than one customer at the same time, on the same side of the market, if the orders may not receive an execution in time priority of receipt, or may not receive an equal or proportional split. 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. The text of these statements may be examined at the places specified in Item IV below and is set forth in Sections (A), (B) and (C) below. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing adoption of new Rule 123A.46 to ensure that customers are informed, in a timely manner, of the circumstances under which their orders are being represented. Under this rule, members and member organizations (including ``upstairs'' trading personnel) would be required to inform each customer if they are representing orders for more than one customer at the same time, on the same side of the market, if the orders may not receive an execution in time priority of receipt, or may not receive an equal or strictly proportional split based upon the size of the orders. For example, if a broker was representing three not held orders to buy stock, one for 100,000 shares, and two for 50,000 shares each, and the broker executed a trade for 12,000 shares, the broker would be permitted to (1) allocate all 12,000 shares to the customer who entered the order first (time priority), (2) split the trade equally by giving 4,000 shares to each customer, or (3) split the trade proportionally to the customer orders, i.e., 6,000 shares, 3,000 shares and 3,000 shares. Under these circumstances, no disclosures would be required. However, if the execution would be split in any other manner, this information would have to be disclosed to customers prior to multiple orders being represented. 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 the mechanism of a free and open market, and, in general, to protect investors and the public interest. The proposed adoption of Rule 123A.46 is consistent with these objectives in that it will ensure that customers are informed in a timely manner of the circumstances under which their orders are being represented. 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 longer 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-94-3 and should be submitted by August 5, 1994. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. Jonathan G. Katz, Secretary. [FR Doc. 94-17253 Filed 7-14-94; 8:45 am] BILLING CODE 8010-01-M