[Federal Register Volume 66, Number 208 (Friday, October 26, 2001)]
[Notices]
[Pages 54316-54317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26958]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44961; File No. SR-NYSE-2001-34]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. Amending NYSE Rule 103A To 
Delete an Unused Measure of Specialist Performance

October 19, 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 29, 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 NYSE. 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 NYSE proposes to delete one of the performance measures for 
specialists under Exchange Rule 103A. The test of the proposal is 
below. Deletions are in brackets. Specialist Stock Reallocation and 
Member Education and Performance Rule 103A(a)(1) In order to ensure 
that a high level of market quality and performance in Exchange listed 
securities is achieved and maintained, the Market Performance 
Committee, under the authority granted in its Charter, shall develop 
and administer systems and procedures, including the determination of 
specific kinds of data to be reviewed and the establishment of 
appropriate standards and measurements of performance, designed to 
measure specialist performance and market quality on a periodic basis 
to determine whether or not all or particular specialist units need to 
take actions to improve their performance. Based on such 
determinations, the Market Performance

[[Page 54317]]

Committee shall take steps as described in this rule, to encourage 
performance improvement and to improve or sustain market quality in 
appropriate cases.
* * * * *

Supplementary Material

    .10  Performance Improvement Action Criteria.--The Market 
Performance Committee shall initiate a Performance Improvement Action 
as described in paragraph (b) above whenever a specialist unit does not 
meet any standard of acceptable performance as specified below.
    (A) No change.
    (B) No change.
    (C) No change.
    (D) Market Share
    (i) in any case where the Market Performance Committee finds that a 
specialist unit's overall percentage of the total share volume as 
reported on the Consolidated Transaction Reporting System in any of its 
registered securities has declined significantly within two consecutive 
quarters and further determines that the reason(s) for the decline can 
be attributed to factors within the control of the specialist unit.]
* * * * *

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, 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 NYSE 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 Exchange proposes to amend NYSE Rule 103A to delete an unused 
measure of specialist performance.
    Currently, NYSE Rule 103A provides authority for the Market 
Performance Committee (``MPC'') to establish and administer measures of 
specialist performance, conduct performance improvement actions where a 
specialist unit does not meet the performance standards in the Rule, 
and reallocate stocks if a unit does not achieve its specified goals 
when subject to a performance improvement action. The performance 
standards in the Rule include the Specialist Performance Evaluation 
Questionnaire, timeliness of stock openings, SuperDot order turnaround, 
administrative message responses and market share. This latter 
provision refers to a significant decline in market share, as measured 
by share volume, in two consecutive quarters where the decline is 
determined to be attributable to factors within the control of the 
specialist unit.
    At the time the Exchange adopted the market share measure, it was 
intended that the Exchange would develop criteria as to what 
constitutes a ``significant decline`` before the market share 
performance standard could be enforced. However, criteria were never 
developed, and the MPC has never used the market share standard as a 
performance measure. The Exchange, therefore, is proposing to eliminate 
the provision from NYSE Rule 103A.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\3\ in general, and furthers the 
objectives of section 6(b)(5),\4\ in particular, because it should 
promote just and equitable principles of trade, 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.
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    \3\ 15 U.S.C. 78f(b)
    \4\ 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 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 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the NYSE 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, 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 the 
Commission's Pubic 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 No. SR-NYSE-2001-34 and 
should be submitted by November 16, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-2(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
 FR Doc. 01-26958 Filed 10-25-01; 8:45 am]
 BILLING CODE 8010-01-M