[Federal Register Volume 60, Number 132 (Tuesday, July 11, 1995)]
[Notices]
[Pages 35766-35771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16920]



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[[Page 35767]]


SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35931; File No. SR-NYSE-95-22]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. Relating to the Exchange's 
Wireless Data Communications Initiatives

June 30, 1995.
    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 June 1, 
1995, the New York Stock Exchange, Inc. (``NYSE'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'' or 
``SEC'') 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 Exchange is proposing to introduce onto its trading floor 
wireless data communications technology that allows a member in a 
trading crowd or elsewhere on the floor to communicate with others by 
means of a hand-held wireless device. The Exchange is also proposing to 
issue an interpretation with respect to NYSE Rule 117 which requires 
members' orders to be in writing.

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

Purpose
    The Exchange is proposing to introduce wireless data communications 
in order to expedite, and make more efficient, the process by which 
members receive and execute orders on the floor of the Exchange. The 
Exchange also is proposing to issue an interpretation to NYSE Rule 117 
(Orders of Members To Be in Writing) that would deem a transmission of 
an order that a member receives by means of an authorized hand-held 
device to constitute a ``written order.''

a. Interpretation of NYSE Rule 117

    The use of the Exchange's proposed wireless data communications 
technology will affect Exchange Rule 117 which prohibits members on the 
floor of the Exchange from making a bid, offer or transaction for or on 
behalf of another member except pursuant to a written order.\1\ The 
Exchange is proposing an interpretation that will deem a transmission 
of an order that a member located on the floor of the Exchange receives 
by means of an authorized hand-held device to constitute a ``written 
order'' for the purposes of Rule 117 if the member can show that the 
transmission of the order:

    \1\ Rule 117 also provides that if a member to whom an order has 
been entrusted leaves the trading crowd without actually 
transferring the written order to another member, the order shall 
not be represented in the market during his absence. The use of 
wireless data communications devices does not affect this portion of 
Rule 117. If a member receives an order by means of a transmission 
to his wireless device and he leaves a trading crowd without 
transferring a written version of the order to another member, the 
order may not be represented in the market in his absence.
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    (i) Provides adequate information relating to the price, size and 
time of the order, the cancellation of the order, and the like; \2\

    \2\ All orders entered from off the floor must be transmitted to 
a booth terminal before they are retransmitted to a hand-held 
device.
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    (ii) Satisfies the Exchange's audit trail requirements; and
    (iii) Satisfies all other Exchange reporting and recordkeeping 
requirements.\3\

    \3\ In the case where an order is transmitted electronically 
from a member's off-floor location to a booth terminal and then the 
order is retransmitted from the booth terminal to a member's hand-
held device, a record must be established and maintained which 
reflects the time the order was received by the booth terminal and 
the time the order was received by the hand-held device. The record 
of time of receipt by the booth terminal may be established and 
maintained by such terminal or by a server which records the time 
such terminal acknowledges receipt of the order. The booth terminal 
must display the order (and the time of receipt, on inquiry) and the 
automated record of the order (including time of receipt) must be 
supplemented by a paper record of the order at the booth. If the 
paper record cannot be produced at the booth terminal, it must then 
be produced by hand. The record of time of receipt by a hand-held 
device may be established and maintained by such device or by the 
server or the booth terminal which receives a message 
acknowledgement from the hand-held device. Regardless of whether the 
hand-held device records are maintained in such device or in the 
booth terminal or a server, such records must be capable of being 
printed at the booth location.
b. Wireless Communications Plan

    The Exchange's proposed wireless data communications technology 
involves the floor-based use of wireless hand-held data communications 
devices. The Exchange proposes to adopt a four-phase process to 
integrate new technology into the floor environment. The Exchange's 
basic operating premise is to allow private vendors to provide wireless 
data communications services to Exchange members on the floor, but only 
in a manner that treats members equitably and does not unfairly 
discriminate among members. The Exchange also proposes to provide its 
own wireless data communications service on a non-discriminatory basis.
Phase I
    In Phase I, which the Exchange has already completed, the Exchange 
supervised and monitored three ``proof-of-concept'' pilot programs on 
the floor of the Exchange.\4\ Each of the programs tested the viability 
of the operation and functionality of wireless hand-held data devices 
on the floor. Members participating in the pilot programs were 
instructed to use the devices strictly for the purposes of evaluating 
the devices and to compare results that might have been achieved had 
the devices been used for actual trading purposes with results from 
actual trades using traditional paper tickets, telephones and the like.

    \4\ One pilot program was conducted by the Exchange and the 
other two were conducted by member-sponsored, private wireless data 
communications vendors.
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    The Phase I pilot programs allowed the Exchange to conclude that 
the technology will function in the Exchange's floor environment and 
would improve broker efficiency. They also made clear that introducing 
the technology on the floor on a wide scale (i.e., allowing the 
technology to be offered to all members) would require the Exchange to 
install a robust, standardized, Exchange-controlled infrastructure in 
order to ensure reliable, secure wireless data communications.
Phase II
    Phase II, which the Exchange proposes to commence upon Commission 
approval of the proposed rule change, would involve additional, more 
structured, pilot testing of independent wireless data communications 
services, including that offered by the Exchange. A prototype of the 
infrastructure that the Exchange hopes will eventually support all such 


[[Page 35768]]
services will support the Exchange's Phase II pilot program. A 
description of the primary characteristics of the Phase II pilot 
programs follows.
    1. Scope of Phase II Pilot Programs. (a) Functions of Pilot 
Programs. For the purposes of the Phase II pilot programs, the Exchange 
proposes to permit members to use hand-held data devices for actual 
trading purposes. That is, a participating member may rely on the 
information it receives on the floor by means of the device to make 
trading decisions, without having to rely on such conventional trading 
tools as paper tickets and telephones.
    (b) Number of Pilot Programs. In order to preserve the ability of 
the Exchange to satisfy its regulatory oversight responsibilities, the 
Exchange reserves the right to limit the number of private vendors that 
it will allow to provide those pilot programs. The Exchange will choose 
vendors in its sole discretion. In the absence of mitigating 
circumstances, the Exchange currently contemplates that it will accept 
vendor Phase II pilot programs on a ``first-come, first-serve'' basis.
    (c) Size of Pilot Programs. Similarly, the Exchange will -initially 
limit the number of members that may participate in any vendor's Phase 
II pilot program to 25. That is, at the commencement of Phase II, no 
vendor may provide its pilot program to more than 25 members. This 
limitation will facilitate the control, monitoring and evaluation of 
pilot program operations. Where more than 25 members wish to 
participate in a vendor's Phase II pilot program, the Exchange will 
require the vendor to describe its procedures for selecting which 25 
members it will allow to participate. Those procedures must provide a 
fair and non-discriminatory environment and must otherwise comply with 
the Exchange's selection requirements. The Exchange will develop 
procedures for selecting its own pilot program participants on the same 
basis.
    If the Exchange determines that circumstances so warrant (based on 
its actual experience with the Phase II pilot programs), it may permit 
increases, or require decreases, in the maximum allowable number of 
pilot programs or the number of participants in any or all Phase II 
pilot programs.
    2. Exchange Support of Vendor Systems. The Exchange will use 
reasonable efforts to accommodate the installation of a participating 
vendor's base stations, battery charging equipment, antennae and other 
such service facilities. However, the Exchange will do so only at the 
vendor's expense and only insofar as any such installation does not 
necessitate any substantial modification to the Exchange's facilities 
and does not interfere with the Exchange's development and installation 
of its planned wireless data communications system infrastructure or 
other aspects of the Exchange's wireless data communications, or other 
Exchange technology upgrade initiatives.
    The Exchange will have no other obligation to support any aspect of 
the vendor's communications system. This means, among other things, 
that the Exchange will have no obligation to install, maintain or 
support base stations, base antennae, battery charging equipment, user 
equipment, user training, or any other special facilities, services or 
features related to the vendor's system.
    3. Exchange Charges. Except as described above in connection with 
vendor responsibility for installation costs, the Exchange does not 
currently plan to charge vendors for the privilege of providing a Phase 
II pilot program. However, the Exchange may impose charges on vendors 
that provide wireless data communications services during Phase IV. If 
the Exchange does determine to impose Phase IV charges or any other 
charges, it would first seek Commission approval of any such charge.
    4. Vendor Requirements. (a) Contract with the Exchange. The 
Exchange will not permit a vendor to provide a Phase II pilot program 
until the vendor and the Exchange have entered into the Exchange's 
Phase II pilot program agreement.\5\ That agreement codifies the terms 
and conditions that are described in the proposed rule change and 
pursuant to which the Exchange is willing to allow a vendor to provide 
its Phase II pilot program.

    \5\ A copy of the Exchange's Phase II pilot program agreement is 
included in the Exchange's Form 19b-4 which may be examined at the 
places specified in Item IV below.
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    (b) Contracts with Participating Members. The Exchange will not 
permit a vendor to provide its Phase II pilot program to a particular 
member until the vendor and the member have entered into an agreement 
which (i) extends to the Exchange third-party beneficiary status and 
the right to enforce the agreement, (ii) codifies the Exchange's 
required provisions regarding the terms and conditions pertaining to 
members' receipt of a wireless data communications service that the 
proposed rule change describes (``Service Agreement Terms'') \6\ and 
(iii) specifies the parties' obligations as to the following matters:

    \6\ The Exchange's Service Agreement Terms are set forth in 
Attachment B  to Exhibit A in the Exchange's Form 19b-4 which may be 
examined at the places specified in Item IV below.
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    (A) The degree of responsibility and liability, if any, that the 
vendor agrees to assume in the event that data is lost or delayed 
through the system or losses otherwise occur as a result of the 
member's use of the system;
    (B) the amount of training that the vendor will provide;
    (C) the maintenance and system support that the vendor will 
provide;
    (D) any technological limitations or other restrictions on the 
member's participation (e.g., restrictions on where the member may use 
the device or the types of orders or other messages that the member may 
receive or transmit by means of the device);
    (E) the availability of equipment and spare parts; and
    (F) any charges that the vendor may impose for the use of its 
system.
    In addition, a vendor's agreements with members receiving its 
service must be non-discriminatory. That is, the vendor must agree to 
offer its system to members pursuant to fair and unbiased terms and 
conditions that do not unfairly discriminate against any Exchange 
member. The Exchange will require each vendor to submit each such 
agreement or any form of agreement to the Exchange for the Exchange's 
prior approval so as to allow the Exchange to monitor that it comports 
with the Exchange's Service Agreement Terms and does not give one or 
more of the vendor's subscribing members an unfair competitive 
advantage over other of the vendor's subscribing members.
    (c) Use of Radio Frequencies. (i) Pre-Infrastructure Frequencies. 
During Phase II, the Exchange will test a prototype of its proposed 
wireless data communications infrastructure and will design and, 
perhaps during Phase II, install and test the infrastructure itself. 
The Exchange plans to use the 2.4 Ghz ``unlicensed'' radio band for 
both the prototype and the actual infrastructure.
    Because the Exchange cannot yet assess whether, or the extent to 
which, vendor pilot programs will interfere with the infrastructure or 
with other Exchange uses of radio frequencies, the Exchange reserves 
the right to require a vendor to refrain from using a particular 
frequency if the Exchange determines that the use would interfere with 
any of the Exchange's wireless systems. In particular, the Exchange 
plans to preclude Phase II pilot program vendors from using the 2.4 Ghz 
radio band for part or all of the Phase II period.

[[Page 35769]]

    To ensure an absence of interference with Exchange systems, the 
Exchange will require vendors to receive advance Exchange approval of 
any radio frequency that a vendor may wish to use for the purposes of 
its Phase II pilot program.
    In addition, the Exchange reserves the right to notify a vendor of 
any interference with Exchange systems that the vendor's wireless 
transmissions may be causing. The vendor would then have to cease to 
use the interfering frequency immediately or would have to otherwise 
resolve the interference problem to the Exchange's satisfaction.
    The Exchange will not allow a vendor to use infrared technology.
    (ii) Post-Infrastructure Frequencies. The Exchange, after 
consultation with its system integrator, will determine when the 
Exchange's proposed wireless data communications infrastructure is 
ready for pre-production pilot testing and/or full production 
implementation. The Exchange will then direct the orderly migration of 
the wireless data communications services to the infrastructure. 
Pursuant to a time schedule that the Exchange will establish, the 
Exchange will then require each vendor that wishes to continue to 
provide a wireless data communications system on the floor to conform 
its system to, and cause its system to interface with, the 
infrastructure. The vendors would bear all expenses of migrating from 
its Phase II radio frequency to the radio frequency that the Exchange's 
infrastructure will support, and of adopting the communications 
specifications and protocols that the infrastructure will require.
    (d) Permissible Communications. A vendor's Phase II pilot program 
must restrict wireless data communications to communications between a 
hand-held device used by a member on the floor and a terminal in a 
floor booth location. The Exchange will prohibit all floor-based 
wireless data communications between any other points.
    However, a pilot program participant may effect communications 
between a floor booth terminal and a member's off-floor system in the 
same ``wired'' manner as it can today, subject to applicable rules and 
policies. In addition, the pilot program participant's booth terminal 
may interface with the Exchange's Common Message Switch (``CMS'') in 
order to allow the member to enter orders into the Exchange's SuperDOT 
System complex. That interface would not differ from today's booth/CMS 
interfaces and would be subject to existing CMS interface standards.
    (e) Fair Treatment of Participating Members. Because wireless data 
communications systems may imbue users with real or perceived 
competitive advantages, each vendor must demonstrate to the Exchange 
that it is willing and able to offer any member who wishes to use that 
vendor's system the opportunity to participate in the vendor's pilot 
program, subject to (i) the capacity constraints of the vendor's 
system, (ii) reasonable lead-time that the vendor may need to bring new 
users on-line and (iii) the above-mentioned limit of 25 participants 
per pilot program. The Exchange will require each vendor to provide its 
pilot program to participating members on fair, unbiased, non-
discriminatory terms, including the provision of adequate support for 
all such participating members. Creating a level playing field requires 
each vendor, among other things, to offer its service in a reasonable 
manner that does not give the vendor (if it is also a member), or a 
member that is a sponsor or affiliate of the vendor, an unfair 
advantage over other of the vendor's competing members.
    The Exchange will prohibit a vendor from commencing to provide its 
pilot program to any member that primarily trades \7\ in one stock 
unless and until (i) the vendor is prepared to provide its service to 
all members who primarily trade in the same stock and who desire to 
participate in the pilot program or (ii) the Exchange otherwise 
permits.

    \7\ The Exchange deems a member to ``primarily trade in one 
stock'' if more than 50 percent of either his trades or share volume 
occur in that stock. The Exchange will base determinations of 
percentages of trades and share volumes on, among other things, the 
Exchange's audit trail data.
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    In addition, the Exchange will require each vendor to refrain from 
falsely representing that it is the sole vendor of wireless data 
communications services on the floor and to assure that each member 
that expresses an interest in participating in its Phase II pilot 
program is aware that the Exchange will require the vendor's service to 
move to the wireless data communications infrastructure that the 
Exchange plans to develop and install.
    (f) Description of System. As a condition precedent to the 
Exchange's approval of a vendor's pilot program, the Exchange will 
require each vendor to provide the Exchange with a detailed description 
of the capabilities and limitations of the vendor's system and its 
functionality. That description must be approved by the Exchange and 
must satisfy the description requirements set forth in the Exchange's 
proposed ``Agreement for Wireless Data Communications Service,'' \8\ 
including a description of such things as:

    \8\ A copy of the Exchange's proposed ``Agreement for Wireless 
Data Communications Service'' is set forth in Attachment A to 
Exhibit A in the Exchange's Form 19b-4 which may be examined at the 
places specified in Item IV below.
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    (i) The number of members that the system can support (and if the 
number of users needs to be ``scaled'', a description of the time frame 
required for each upgrade to the system's capacity);
    (ii) Technical specifications (e.g., the radio frequency, the 
transmission method (such as frequency hopping spread spectrum), system 
protocols and hardware descriptions, etc.);
    (iii) Operating plans (e.g., the manner for charging devices, for 
distributing them to members each day and for collecting them at day's 
end);
    (iv) The functionality of the vendor's hand-held device;
    (v) The manner for assuring compliance with all rules and 
regulatory requirements of the Exchange, the Commission and the Federal 
Communications Commission; and
    (vi) Such other technical information, records and other items as 
the Exchange may require to determine whether the vendor's proposed 
pilot program will interfere with the Exchange's proposed 
infrastructure or the pilot programs of the Exchange or of any other 
vendor or to determine whether the vendor is complying with its 
agreement with the Exchange.
    The Exchange will further require each vendor to provide advance 
notice of any changes to the technical specifications of its system, to 
update its description as necessary to keep the description current and 
to cause its pilot program to perform in compliance with its 
description at all times. The Exchange may prohibit a vendor from 
effecting a proposed modification to its pilot program if the Exchange 
determines that the modification would interfere with other aspects of 
Phase II or other operations of the Exchange.
    In addition, if the Exchange determines that equipment or software 
that a vendor uses for the purposes of its service interferes, or is 
otherwise inconsistent, with other aspects of the wireless data 
communications technology on the floor or other Exchange systems, the 
Exchange may require the vendor to change the equipment or software or 
to modify the manner in which it provides its service.
    (g) Reporting and Cooperation. The Exchange will require vendors to 
submit to the Exchange whatever documentation and/or periodic reports 
that the Exchange may require to assure 

[[Page 35770]]
that the vendor's Phase II pilot program is operating in compliance 
with existing regulatory requirements and is not interfering with other 
pilot programs or production operations of the Exchange. The Exchange 
will also require vendors to supply the Exchange with such data 
relating to its pilot program as the Exchange may reasonably request so 
as to enable the Exchange to evaluate the features of the vendor's 
pilot program and to develop the Exchange's infrastructure in a way 
that provides adequate support of private systems.
    In addition, each vendor must agree to cooperate with the Exchange 
as necessary to assist the Exchange in its dealings with the 
Commission. That may mean providing information concerning such matters 
as complaints received, system and device failures, the perceived 
strengths and weaknesses of the system, the number of pilot program 
participants, the number of pilot program transmissions and such other 
information as the Commission may require.
    (h) Compliance with Regulatory Requirements. The Exchange will 
require each vendor to acknowledge, and to assure that each of its 
pilot program participants acknowledges, that (i) it understands that 
the Exchange has submitted to the Commission, and the Commission has 
approved, the terms and conditions governing the Phase II pilot 
programs and (ii) it is familiar with those terms and conditions. The 
Exchange will require each vendor to agree to comply, and to cause each 
of its pilot program participants to agree to comply, with those terms 
and conditions.
    In addition, the Exchange will hold each vendor responsible for 
assuring that its pilot program complies with all Exchange rules and 
with any rules and regulations of the Commission or the Federal 
Communications Commission. This includes compliance with Exchange Rule 
117 (Orders of Members to Be in Writing), which require certain orders 
to be in writing, and Commission Rule 17a-3, which imposes record-
keeping requirements.
    The Exchange will also require each vendor to agree to comply with, 
and to assure that its participating members will comply with, such 
other limitations and restrictions as the Exchange may determine to be 
necessary to assure the integrity of other aspects of the Phase II 
pilot programs, the Exchange's development of the infrastructure or 
other Exchange systems.
    (i) Exculpation of the Exchange. The Exchange will require each 
vendor to agree that the Exchange assumes no liability or 
responsibility for any inaccuracies, delays, omissions, security 
breaches or other failures that may result from any use of the vendor's 
wireless data communications system. Furthermore, the Exchange will 
require any vendor to agree, and to cause each of its participating 
members or member organizations to agree, to indemnify and defend the 
Exchange against, and hold the Exchange harmless from, any losses or 
claims arising from any use of the vendor's system.
    (j) Termination of Service. (i) By the Exchange. The Exchange 
reserves the right to withdraw its permission for a vendor to provide a 
Phase II pilot program, either in its entirety or as to any particular 
member or function. The Exchange will base any determination to 
withdraw its permission on feedback that the Exchange receives from the 
program's participants or other members, or other evidence that the 
Exchange may collect. In making any such determination, the Exchange 
will examine the merits of the vendor's particular pilot program. In 
addition, the Exchange will examine whether one or more Phase II pilot 
programs, whether alone or in combination, is disrupting the fair, 
orderly and efficient conduct of business, including any interference 
with the Exchange's systems and any reduction in the ability of program 
participants (A) to communicate orders, reports and related information 
in a timely and accurate manner and (B) to provide their customers with 
an opportunity to receive best-price executions.
    (ii) By the Vendor. The Exchange will allow a vendor to terminate 
its provision of the service to a participating member only (A) for 
``cause'', upon 10 days written notice to the Exchange and the member 
(unless the Exchange agrees that circumstances warrant a shorter 
termination period or immediate termination), which notice must explain 
the ``cause'' in detail, or (B) because the vendor no longer wishes to 
provide its service on the floor of the Exchange to any and all 
members, upon 60 days written notice to the Exchange and each of the 
vendor's participating members.
    (iii) By a Participating Member. The Exchange will require each 
vendor to allow any member participating in the vendor's Phase II pilot 
program to cease its participation immediately upon notice to the 
vendor.
    (iv) Removal of Equipment. Insofar as a vendor ceases to provide a 
Phase II pilot program, either in its entirety or as to any particular 
member, whether because the Exchange determines to withdraw its 
permission as to that vendor or member or as to all vendors or because 
the vendor determines to cease providing its service, then the Exchange 
will require the affected vendor to remove, and to assure that each of 
its participating members removes, from the floor all affected pilot 
program equipment.
    5. Participating Member Requirements. The Exchange will require 
each member that wishes to participate in a vendor's Phase II pilot 
program to agree to comply with Exchange-prescribed terms and 
conditions. The Exchange will not contract directly with those 
participating members, but, instead, will require each vendor to 
contract with each of the vendor's participating members for the 
benefit of the Exchange, as described above. The Exchange will require 
vendors to include in those contracts the following member 
acknowledgements:
    (a) That the Exchange has no responsibility or liability with 
respect to the vendor's system;
    (b) That the member will indemnify and defend the Exchange and hold 
the Exchange harmless for claims or losses evolving from the member's 
use of the system;
    (c) That the Exchange can direct the vendor to terminate its 
service, or to terminate the vendor's provision of the service to the 
member, if the Exchange deems the circumstances to warrant that action; 
and
    (d) That the member's use of the vendor's system shall be subject 
to all applicable rules, regulations and other requirements of the 
Exchange, the Commission and the Federal Communications Commission.
Phase III
    In Phase III, the Exchange will conduct on the floor a 
preproduction pilot test of its wireless data communications system 
infrastructure. The Exchange will design that infrastructure to use the 
2.4 Ghz radio frequency band and to support all hand-held device 
wireless data communications services of the Exchange and vendors. The 
Exchange will select an integrator to assist in the design, 
installation, testing and maintenance of the infrastructure.\9\

    \9\ The Exchange plans to have the integrator define 
requirements, analyze technology and design the infrastructure 
during Phase II.
    During Phase III, the Exchange plans to allow its wireless data 
communications service to interface with the Exchange's Broker Booth 
Support System.
    As the Exchange gains confidence in the capacity and reliability of 
the 

[[Page 35771]]
infrastructure, the Exchange may invite, or even require, vendors to 
test their systems on the infrastructure and/or to migrate to it. The 
timing of such invitations or requirements will depend on the timing 
and success of the testing of the infrastructure.
    The Exchange will continue to limit the size of each vendor's 
wireless data communications system during Phase III.
Phase IV
    One Phase IV commences, the Exchange will have installed and tested 
the infrastructure, which would then be fully operational and will have 
moved its own wireless data communications system to the 
infrastructure. At that point, the Exchange will have commenced the 
production roll-out of the wireless data communications infrastructure 
and will have directed all vendors to migrate their systems to the 
infrastructure.
    During Phase IV, the Exchange will permit all authorized vendors to 
offer their wireless data communications services (and the Exchange 
will offer its own system) to such number of members as their 
respective systems can accommodate. At that point, the Exchange 
anticipates that floor-based wireless data communications technology 
will be available to all members.
Terms and Conditions Applicable to Vendors and Members During Phase III 
and Phase IV
    As in respect to Phase II, the Exchange reserves the right to limit 
the number of vendors that may provide wireless data communications 
systems on the floor during Phase III and Phase IV, based on the 
ability of the Exchange to maintain its regulatory oversight 
responsibilities in a satisfactory manner. In addition, as the Exchange 
gains experience with the use of wireless data communications 
technology on its floor, it may determine that additional restrictions, 
such as in respect of permissible transmissions or hardware, are 
warranted.
    The Exchange anticipates that it will impose the same contract 
structure on vendors and members during Phase III and Phase IV as it 
will impose in Phase II. The continued use of Phase II contracts in the 
later phases will assure that vendors and members remain subject to 
regulatory, reporting and other applicable requirements in an 
uninterrupted manner.
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 foster 
cooperation and coordination with persons engaged in regulating, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, to protect investors 
and the public interest, and that are not designed to permit unfair 
discrimination between customers, issuers, brokers or dealers. In 
addition, the proposed rule change is based on the requirement under 
Section 6(b)(4) that an exchange have rules that provide for the 
equitable allocation of reasonable dues, fees and other charges among 
its members and other persons using its facilities.

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 N.W., Washington, D.C. 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 N.W., 
Washington, D.C. 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-95-22 and should be 
submitted by August 1, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 95-16920 Filed 7-10-95; 8:45 am]
BILLING CODE 8010-01-M