[Federal Register Volume 66, Number 23 (Friday, February 2, 2001)]
[Notices]
[Pages 8829-8831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-2819]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43886; File No. SR-NYSE-00-60]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. Amending NYSE Rule 416, 
Questionnaires and Reports

January 25, 2001.
    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 December 21, 2000, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the 
Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The proposed rule change amends existing NYSE Rule 416 
(``Questionnaires and Reports''). The amendment will give the Exchange 
general authority to require members and member organizations to 
submit, on an ongoing basis, certain data in a prescribed manner and 
form. Below is the text of the proposed rule change. Proposed new 
language is italicized; proposed deletions are in brackets.
* * * * *
Questionnaires and Reports
    Rule 416. (a) Each member and member organization shall submit to 
the Exchange at such times as may be designated in such form and within 
such time period as may be prescribed such information as the Exchange 
deems essential for the protection of investors and the public 
interest.
    (b) Unless a specific temporary extension of time has been granted, 
there shall be imposed upon each

[[Page 8830]]

member or member organization required to file reports pursuant to this 
Rule, a fee of $500 \3\ for each day that such report is not filed in 
the prescribed time. Requests for such extension of time must be 
submitted to the Exchange at least three business days prior to the due 
date.
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    \3\ See Securities Exchange Act Release No. 43847 (January 16, 
2001) (SR-NYSE-00-59). (increasing from $100 to $500 the late filing 
fee charged to members and member organizations for the failure to 
submit information on a timely basis).
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    (c) Any report filed pursuant to this Rule containing material 
inaccuracies shall, for purposes of this Rule, be deemed not to have 
been filed until a corrected copy of the report has been resubmitted.
    Supplementary Material:
    .10  Member organizations may be required to provide financial and 
operational reports as required by paragraph (a) of this Rule for 
affiliated organizations, including but not limited to, persons 
referred to in Rules 321 and 322.
    .20  Each member and member organization shall, on an ongoing basis 
and in such format as the Exchange may require, submit to the Exchange, 
or its designated agent, prescribed data of the member or member 
organization, and of any broker-dealer that is a party to a carrying 
agreement with a member or member organization pursuant to NYSE Rule 
382.

(See also Rule 382.)
Carrying Agreements
    Rule 382.
    (a) No change.
    (b) No change.
    (c) No change.
    (d) No change.
    (e) No change.
    (f) No change.
(See also Rules 342, [and] 401, and 416)

* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commisison, 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 palces 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.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NYSE Rule 416 authorizes the Exchange to require members and member 
organizations to submit prescribed information that the Exchange 
believes to be essential for the protection of investors and the public 
interest. NYSE rule 416 has been used to require the periodic submittal 
of specific predefined financial, operational, and other information 
necessary for an effective evaluation of a member's or member 
organization's compliance with applicable rules and regulations. NYSE 
rule 416 has also been used to prepare the membership for specific 
initiatives such as participation in Year 2000 Testing and the 
conversion to Decimalization.
    Under proposed rule 416.20, the Exchange may require members and 
member organizations to submit data, on an ongoing basis (e.g., daily, 
monthly, quarterly) and in such format as the Exchange may require.\4\ 
Further, the proposed rule change provides that members and member 
organizations that clear and settle transactions may be required to 
provide data regarding both their own business as well as the business 
of firms that introduce to them pursuant to NYSE Rule 382 (``Carrying 
Agreements''). NYSE rules 382 and 416 would be cross-referenced to 
highlight their interaction in this regard.
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    \4\ On January 22, 2001, in a telephone conversation between 
Donald van Weezel, Managing Director, Regulatory Affairs, Exchange, 
and Heidi Pilpel, Special Counsel, Commission, the Exchange 
represented that it anticipates requesting members and member 
organizations to submit raw data electronically.
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    The Exchange believes that the authority provided under proposed 
rule 416.20, while broad in nature, is necessary to facilitate the 
participation of members and member organizations in an industry-wide 
regulatory initiative with respect to clearing firms. This initiative 
will be coordinated by a committee that includes the Exchange, the 
Commission, National Association of Securities Dealers Regulation, 
Inc., Securities Industry Association, several member organizations, 
and other securities industry representatives. The committee has 
developed a broker-dealer reporting system intended to help identify 
potential sales practice violations, particularly those associated with 
low-priced microcap issues. Under the clearing firm initiative, data 
will be submitted to a processing center that will organize it 
according to exception parameters established by the Exchange and other 
self-regulatory organizations (``SROs'').
    The required data will initially include, at minimum, various raw 
statistical data pertaining to cancelled trades. It is intended that 
additional data will be required at future dates. Once the reporting 
system is fully operational, it is expected that the trade information 
collected pursuant to this initiative will serve as an early warning 
system to ``red flag'' unusual trading patterns.
2. Statutory Basis
    The proposed rule change is consistent with the requirements of the 
Act and the rules and regulations thereunder applicable to a national 
securities exchange, and in particular, with the requirements of 
sections 6(b)(5) of the Act,\5\ which requires, among other things, 
that the rules of an exchange be designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
of a free and open market and national market system, and in general, 
to protect investors and the public interest.
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    \5\ 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 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 such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

[[Page 8831]]

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. 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 
Exchange. All submissions should refer to File No. SR-NYSE-00-60 and 
should be submitted by February 23, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to the delegated authority.\6\
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    \6\ 17 CFR 200.30-2(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-2819 Filed 2-1-01; 8:45 am]
BILLING CODE 8010-01-M