[Federal Register Volume 66, Number 174 (Friday, September 7, 2001)]
[Notices]
[Pages 46853-46854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-22456]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44752; File No. SR-NYSE-2001-28]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. To Administer NYSE Rule 
91.10 Pursuant to the NYSE's Minor Rule Violation Plan

August 29, 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 August 21, 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 
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 Exchange proposes to amend the ``List of Exchange Rule 
Violations and Fines Applicable Thereto Pursuant to Rule 476A'' for 
imposition of fines for minor rule violations of rules and/or policies 
(``List'') by adding to the List the failure to comply with the 
provisions of NYSE Rule 91.10, Taking or Supplying Securities Named in 
Order. The Exchange believes it is appropriate to make the failure to 
comply with the provisions of NYSE Rule 91.10 subject to the possible 
imposition of a fine under NYSE Rule 476A procedures. The text of the 
proposed rule change is available at the NYSE and at the Commission.

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 Exchange included statements

[[Page 46854]]

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 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 476A provides that the Exchange may impose a fine, not to 
exceed $5,000, on any member, member organization, allied member, 
approved person, or registered or non-registered employee of a member 
or member organization for a minor violation of certain specified 
Exchange rules. The purpose of the NYSE Rule 476A procedure is to 
provide for a meaningful sanction for a rule violation when the 
initiation of a disciplinary proceeding under NYSE Rule 476 would be 
more costly and time-consuming than would be warranted given the minor 
nature of the violation, or when the violation calls for a stronger 
regulatory response than an admonition letter would convey. NYSE Rule 
476A preserves due process rights, identifies those rule violations 
that may be the subject of summary fines, and includes a schedule of 
fines.
    In SR-NYSE-84-27,\3\ which initially set forth the provisions and 
procedures of Rule 476A, the Exchange indicated it would amend the list 
of rules from time to time, as it considered appropriate, in order to 
phase-in the implementation of NYSE Rule 476A as experience with it was 
gained.
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    \3\ Securities Exchange Act Release No. 21688 (January 25, 
1985), 50 FR 5025 (February 5, 1985) (approving SR-NYSE-84-27).
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    The Exchange proposes to add to the List the failure by specialists 
or specialist organizations to comply with the provisions of NYSE Rule 
91.10. That rule requires that whenever a specialist has elected to 
take or supply for his or her account the securities named in an order 
entrusted to the specialist, he or she must summon a representative of 
the firm that entered the order to confirm, in written format, the 
acceptance or rejection of such transaction.
    The purpose of the proposed change to the List is to facilitate the 
Exchange's ability to induce compliance with all aspects of the above-
cited rule. The Exchange believes failure to comply with the 
requirements of the rule should be addressed with an appropriate 
sanction and seeks Commission approval to add violations of these 
requirements to the List so as to have a broad range of regulatory 
responses available. The Exchange believes that this would more 
effectively encourage compliance by enabling a prompt, meaningful and 
heightened regulatory response (e.g., the issuance of a fine rather 
than an admonition letter) to a minor violation of NYSE Rule 91.10.
    The Exchange wishes to emphasize the importance it places upon 
compliance with the above-named rule and all others on the List. While 
the Exchange, upon investigation, may determine that a violation of any 
of these rules is a minor violation of the type which is properly 
addressed by the procedures adopted under NYSE Rule 476A, in those 
instances where investigation reveals a more serious violation of the 
above-described rules, the Exchange will provide an appropriate 
regulatory response. This includes the full disciplinary procedures 
available under NYSE Rule 476.
2. Statutory Basis
    The Exchange believes the proposal will advance the objectives of 
Section 6(b)(6) \4\ of the Act in that it will provide a procedure 
whereby member organizations can be appropriately disciplined in those 
instances when a rule violation is minor in nature, but a sanction more 
serious than an admonition letter is appropriate. The NYSE believes the 
proposed rule change provides a fair procedure for imposing such 
sanctions, in accordance with the requirements of Sections 6(b)(7) \5\ 
and 6(d)(1) \6\ of the Act.
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    \4\ 15 U.S.C. 78f(b)(6).
    \5\ 15 U.S.C. 78f(b)(7).
    \6\ 15 U.S.C. 78f(d)(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

    Within 35 days of the date of 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 
appropriate and publishes its reasons for so findings or (ii) as to 
which the Exchange 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.

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, N.W., 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 
NYSE. All submissions should refer to file number SR-NYSE-2001-28 and 
should be submitted by September 28, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 01-22456 Filed 9-6-01; 8:45 am]
BILLING CODE 8010-01-M