[Federal Register Volume 67, Number 54 (Wednesday, March 20, 2002)]
[Notices]
[Pages 13031-13033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6641]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45547; File No. SR-NYSE-2002-12]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. to Eliminate References to 
Quoting in Fractions

March 12, 2002.
    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 5,

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2002, 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 amend its rules to eliminate references to 
fractional pricing increments and to make such rules compatible with 
quoting in decimals. 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 
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
    The Exchange proposes to amend its rules to change references to 
fractional pricing increments to decimal pricing of equities as 
described herein. This submission is in accordance with the 
Commission's order \3\ requiring self-regulatory organizations to 
submit rule filings regarding decimal pricing pursuant to section 
19(b)(2) of the Act.\4\ The Commission previously reviewed the 
Exchange's filing proposing amendments to Exchange rules to accommodate 
phasing in the quoting of decimals commencing August 28, 2000.\5\ The 
Exchange completed the conversion to quoting all listed stocks in 
decimals on January 29, 2001.
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    \3\ See Securities Exchange Act Release No. 44846 (September 25, 
2001), 66 FR 49983 (October 1, 2001).
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 43230 (August 30, 
2000), 65 FR 54589 (September 8, 2000) (SR-NYSE-2000-22).
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    In SR-NYSE-2000-22,\6\ the Exchange proposed a Minimum Price 
Variation (``MPV'') of one cent (0.01) for equities. The Exchange 
proposes to continue the MPV for equities of one cent (0.01). The rule 
changes proposed herein, therefore, primarily delete references to 
quoting in fractions that were retained in Exchange rules to 
accommodate securities that continued quoting in fractions during the 
phase in of full decimalization.
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    \6\ Id.
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    Summary of Rule Amendments: Other rules proposed to be amended are 
summarized below.
    Rule 15 (ITS and Pre-Opening Application). The changes to Rule 15 
remove references to fractions in the sections dealing with Intermarket 
Trading System procedures for openings.
    Rule 64 (Bonds, Rights and 100 Share-Unit Stocks). Floor Official 
approval must be obtained for a non-regular way trade that is 2/16 or 
.10 away from the regular way bid or offer. For trades during the last 
calendar week of the year, the approval level is \1/4\ or .25. The 
fractional references will be removed.
    Rule 72(b) (Clean Agency Cross). Decimals will replace fractions 
used in the two examples.
    Rule 79A.30 (Miscellaneous Requirements on Stock and Bond Market 
Procedures). Examples in fractions will be deleted.
    Rule 105 (Guidelines For Specialists' Specialty Stock Option 
Transactions Pursuant to Rule 105). References to fractions in the 
example will be deleted.
    Rule 123A.30 (Percentage Orders). Percentage orders may be 
converted on a destabilizing tick if the order meets certain 
requirements of size (10,000 shares or more or $500,000 in market 
value) and the execution price of the converted percentage order is no 
more than \1/4\ or .25 point away from the last sale. Percentage orders 
may also be converted on a destabilizing tick to narrow a quotation 
spread as long as the bid is no more than \1/8\ or .10 higher than the 
last sale. The \1/8\ and \1/4\ parameters will be removed.
    Rule 123A.40 (Stop Orders). Floor Official approval must be 
obtained when a specialist's transaction for his or her own account 
elects stop orders and the transaction is more than 2/16 or .10 away 
from the previous transaction. The 2/16 parameter will be removed.
    Rule 192 (Part-Paid Securities). Examples in fractions will be 
deleted.
    Rule 440B.15 (Short Sale Rule Interpretations). The examples in the 
last paragraph that delineate the prices at which short sales may be 
made are amended to show a one cent MPV for stocks.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of section 6(b)(5) of the Act,\7\ which requires an 
exchange to have rules that are designed to prevent fraudulent and 
manipulative acts and practices, 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.
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    \7\ 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

    No written comments were solicited or received with respect to 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 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, 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

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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 the filing will also be 
available for inspection and copying at the principal offices of the 
Exchange. All submissions should refer to File No. SR-NYSE-2002-12 and 
should be submitted by April 10, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-6641 Filed 3-19-02; 8:45 am]
BILLING CODE 8010-01-P