[Federal Register Volume 66, Number 57 (Friday, March 23, 2001)]
[Notices]
[Pages 16307-16309]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-7197]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44084; File No. SR-NYSE-01-06]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the New York Stock Exchange, 
Inc. To Amend NYSE Rule 60 Relating to the Dissemination of Depth 
Indications and Depth Conditions

March 16, 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 March 15, 2001, 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 Exchange. The 
Exchange filed the proposal pursuant to Section 19(b)(3)(A) of the 
Act,\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission.\5\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ The NYSE has asked, and the Commission agreed, to waive the 
5-day pre-filing notice requirement. See Rule 19b-4(f)(6)(iii). 17 
CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to amend NYSE Rule 60 ``Dissemination of 
Quotations,'' to provide for the dissemination of a depth indication 
and a depth condition to reflect market interest in a security below 
the published bid and above the published offer. The Exchange has 
designated this proposal as non-controversial, rendering it effective 
upon filing with the Commission. The NYSE asks that the Commission 
waive the 30-day operative waiting period pursuant to SEC Rule 19b-
4(f)(6)(iii),\6\ so that the proposal may be implemented on March 19, 
2001. The text of the proposed rule change is below. Proposed new 
language is in italics.
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    \6\ 17 CFR 240.19b-4(f)(6)(iii).
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Rule 60  Dissemination of Quotations
* * * * *
* * * Supplementary Material
* * * * *
    .30 (a) On a best efforts basis, the specialist may disseminate a 
depth indication and a depth condition in any security. Such depth 
indication and a depth condition may be disseminated for the purpose of 
indicating that there is additional market interest to buy below the 
current published bid, or additional market interest to sell above the 
current published offer, as described in paragraph (b) below. The depth 
indication shall be disseminated by means of an appropriate symbolic 
designation, appended to the current published bid and/or offer, as 
appropriate, but neither the depth indication nor the depth condition 
shall themselves be deemed to constitute a ``firm quotation'' for 
purposes of this Rule or Rule 11Ac1-1 of the Securities and Exchange 
Commission.

Phase 1

    (b) The depth indication may be disseminated only when there is 
market interest, consisting of the specialist's proprietary interest as 
well as interest reflected by orders represented by the specialist as 
agent (including percentage orders), aggregating such minimum number of 
shares and range of prices below the published bid or above the 
published offers as the Exchange deems appropriate and communicates to 
its membership.

Phase 2

    (b) In addition to the appropriate symbolic designation for the 
depth indication, the specialist may disseminate a depth condition, 
which shall specify the number of shares, consisting of the 
specialist's proprietary interest as well as interest reflected by 
orders represented by the specialist as agent (including percentage 
orders), that the specialist believes represents a reasonable 
reflection of the depth of the market at a particular price in a 
particular security, consistent with the usual trading characteristics 
of such security, or any unusual activity that may be present on any 
particular day.
* * * * *

[[Page 16308]]

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 NYSE included statements 
concerning the purpose of and basis for its proposal and discussed any 
comments it received regarding the proposal. 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.

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

1. Purpose
    The NYSE proposes to add .30 to NYSE Rule 60 to permit a specialist 
to disseminate a depth indication and a depth condition to indicate 
that there is additional market interest in a security not shown in the 
published quotation--interest to buy below the current published bid, 
or interest to sell above the current published offer.
    The additional market interest reflected in the depth indication 
and depth condition would include the specialist's proprietary interest 
as well as orders the specialist has on his or her book, and other 
orders, such as percentage orders, which the specialist is representing 
as agent.
    A specialist would make such a depth indication and depth condition 
dissemination on a ``best efforts basis.'' The specialist would be 
allowed to use his or her professional judgment as to whether 
dissemination of the existence of additional market interest would be 
expected to be useful with respect to current conditions in the 
security or the market in general.
    The depth indication and depth condition are simply informational 
in nature, and therefore, would not, in themselves, constitute a 
``firm'' quotation for purposes of NYSE Rule 60 or Rule 11Ac1-1 \7\ 
under the Act.
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    \7\ 17 CFR 240.11Ac1-1.
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    The Exchange proposes to institute the dissemination of this 
additional market information in two phases. In Phase 1, at the outset, 
a depth indication would be disseminated only in securities that are 
components of the Standard and Poor's 500 Stock Price Index and the 20 
most active foreign stocks that are not components of that Index, and 
only to signify that there is additional market interest aggregating at 
least 20,000 shares within fifteen cents below the published bid or 
above the published offer. The Exchange may subsequently determine to 
extend the use of the depth indication to other securities, and to 
modify the share size and price range criteria as appropriate based on 
experience. Any such changes would be communicated to the Exchange's 
membership and to the Commission before they are implemented. The depth 
indication would be disseminated by means of Consolidated Quote System, 
which is under the auspices of the Consolidated Tape Association. In 
Phase 2, in addition to the depth indication, the specialist may also 
disseminate a depth condition showing the actual number of shares of 
additional market interest at a particular price below the published 
bid or above the published offer. There would be no specified minimum 
number of shares or range of prices below the published bid or above 
the published offer. Rather, the depth condition would constitute a 
reasonable reflection of the depth of the market in a particular 
security, consistent with the usual trading characteristics of such 
security, or any unusual activity that may be present on any particular 
day. The depth condition would be disseminated by means of the 
Exchange's proprietary distribution network. This network will 
disseminate the information to market data vendors and to the NYSE's 
own web site and data feeds. Subject to Commission approval, the 
Exchange intends to initiate the first Phase on March 19, 2001. The 
second Phase is intended to be initiated on April 16, 2001.
2. Statutory Basis
    The Exchange believes that the proposed rule is consistent with the 
provisions of Section 6(b)(5) of the Act \8\ that require an Exchange 
to 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 a national market system and, in general, 
to protect investors and the public interest. The NYSE also believes 
the proposed rule change also is consistent with Section 11A(a)(1) of 
the Act \9\ in that it seeks to assure the availability to market 
participants of information with respect to market interest in 
securities traded on the Exchange, and thereby promote economically 
efficient execution of securities transactions.
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    \8\ 15 U.S.C. 78f(b)(5).
    \9\ 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

    Because the foregoing 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 it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \10\ and 
Rule 19b-4(f)(6) thereunder.\11\ 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 purpose of 
the Act.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    The NYSE has requested that the Commission accelerate the operative 
date. The Commission finds good cause to waive the 30-day operative 
waiting period, because such designation is consistent with the 
protection of investors and the public interest. Acceleration of the 
operative date will allow the NYSE to provide market participants with 
information regarding market interest in securities traded on the 
Exchange without further delay, as the transformation from quoting in 
fractions to quoting in decimals continues. For these reasons, the 
Commission finds good cause to waive both the 5-day pre-filing 
requirement and the 30-day operative waiting period.\12\
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    \12\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).

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[[Page 16309]]

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposal 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 
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 number SR-NYSE-01-06 and should be submitted by April 13, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 01-7197 Filed 3-22-01; 8:45 am]
BILLING CODE 8010-01-M