[Federal Register Volume 67, Number 196 (Wednesday, October 9, 2002)]
[Notices]
[Pages 63004-63006]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-25672]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46579; File No. SR-NYSE-2002-31]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the New York Stock Exchange, 
Inc. Relating to Codification of New York Stock Exchange Policies 
Previously Approved by the Commission and the Reordering of Other Rules

October 1, 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 August 12, 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

[[Page 63005]]

have been prepared by the Exchange. The proposed rule change has been 
filed by the NYSE as a ``non-controversial'' rule change under Rule 
19b-4(f)(6) of the Securities Exchange Act of 1934 (``Act'').\3\ 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\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change consists of the formal codification of 
several Exchange policies previously approved by the Commission and the 
reordering of several other Exchange rules. The text of the proposed 
rule change is available at the Office of the Secretary, 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 self-regulatory organization 
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
    According to the NYSE, the purpose of this filing is to formally 
codify in the NYSE Rule Book several policies which have been 
previously filed with, and approved by, the Commission pursuant to Rule 
19b-4 and to rearrange the placement of several other rules. The NYSE 
represents that the material filed herein does not constitute a 
substantive change to any NYSE rule or policy, and is responsive to 
recommendations made by an Independent Consultant retained by the 
Exchange. See In the Matter of New York Stock Exchange, 70 S.E.C. 
Docket 106, Release No. 34-41574, 1999 WL 430863 (June 29, 1999).

Rule 90

    Exchange Rule 90 prohibits member proprietary transactions on the 
Exchange in accordance with the principles of Section 11(a) of the Act 
and the Commission's rules thereunder. The Exchange is proposing to 
add, as Supplementary Material to Rule 90, the text of Section 11(a) 
and the text of the Commission's rules thereunder.

Rules 110, 111 and 112

    Exchange Rules 110, 111 and 112 are primarily addressed to 
Competitive Traders, although several provisions of these Rules relate 
to other matters. The Exchange is proposing to reorganize these rules 
so that all material directly relating to activities of Competitive 
Traders will be codified in Rule 110. This involves placing certain 
material currently codified in Rule 111 and Rule 112 into Rule 110. 
After the reorganization, Rule 111 would contain material currently 
codified in Supplementary Material to Rule 112 concerning reporting 
requirements for Competitive Traders and certain other traders. In 
addition, Rule 112 would consist of material currently codified in 
paragraphs .10 and .20 of Supplementary Material to Rule 112 dealing 
with orders initiated off the Floor, and what constitutes ``on Floor'' 
and ``off Floor'' for purposes of Exchange rules.
    No new material is being added. The Exchange is simply reorganizing 
the existing material for ease of reference.
    The specific reorganization is as follows. Paragraphs (a), (b), and 
(c) of current Rule 111 would become paragraphs (a), (b), and (c) of 
new Rule 110. Paragraphs (a), (b), (c), and (d) of current Rule 112 
would become paragraphs (d), (e), (f), and (g) of new Rule 110. 
Paragraphs (d), (e), (f), (g) and Supplementary Material .10 of current 
Rule 111 would become paragraphs (h), (i), (j), (k), and (l) of new 
Rule 110. The text of current Rule 110 would become paragraph (m) of 
new Rule 110. Supplementary Material paragraphs .21 and .22 of current 
Rule 112 would become new paragraphs (n), (o), and (p) of new Rule 110.
    Supplementary Material paragraph .30 of current Rule 112 would 
become paragraph (a) of new Rule 111. Supplementary Material paragraphs 
.40, .50, and .50A of current Rule 112 would become paragraphs (b), (c) 
and (d) of new Rule 111.
    Supplementary Material paragraph .10(a) of Rule 112 would become 
paragraph (a) of new Rule 112. Supplementary Material paragraphs 
.20(a), (b), (c), and (d) would become paragraphs (b), (c), (d), and 
(e) of new Rule 112.
    Three paragraphs are proposed to be deleted. Current Rule 112(e) 
contains exemptions from restrictions on Competitive Traders for 
specialists in securities in which they are registered. Current Rule 
111(c), however, contains similar exemptions. Accordingly, the Exchange 
is proposing to rescind Rule 112(e) as redundant and unnecessary, and 
this paragraph would not appear in proposed new Rule 110.
    Rule 112.23 refers to the ability of the specialist to establish 
priority, but not parity or precedence based on size, in certain market 
situations. This paragraph is similar to restrictions contained in Rule 
108, and the Exchange is proposing to delete it as redundant.
    Rule 112.24 provides that specialists should state the full size of 
the offer except in instances in which they believe the proper exercise 
of the brokerage function makes it inadvisable to do so. This Rule has 
been superseded by the Commission's limit order display rule, Rule 
11Ac1-4, and NYSE Rule 79A.15, and is therefore proposed to be 
rescinded.

Codification of Exchange Policies

    The Exchange is proposing to add its specialist stock allocation 
policy to Rule 103B.\4\ This Rule currently provides that securities 
listing on the Exchange will be allocated to specialist units according 
to such policies as the Exchange shall establish. The Exchange's 
Allocation Policy has been previously filed with the Commission but has 
not been codified in the Rule Book. The Exchange is simply proposing to 
add the text of the current Allocation Policy to the text of Rule 103B.
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    \4\ This policy was last amended in SR-NYSE-2001-10 (Allocation 
Policy for Exchange-Traded Funds), approved by Securities Exchange 
Act Release No. 44306 (May 15, 2001), 66 FR 28008 (May 21, 2001), 
and in SR-NYSE-2001-17 (Interview Pool for Exchange's Allocation 
Policy and Procedures), approved by Securities Exchange Act Release 
No. 44975 (October 24, 2001), 66 FR 55037 (October 31, 2001).
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    The Exchange is also proposing to codify three other policies which 
have been previously approved by the Commission. The Exchange's 
policies and interpretations regarding market-on-close and limit-on-
close orders would be codified in new Exchange Rule 123C.\5\ Included 
in this Rule would be interpretive material, previously disseminated to 
the Exchange's membership, which is reasonably and fairly implied by 
these policies. The Exchange is not proposing to adopt any new 
substantive requirements.
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    \5\ This policy was last amended in SR-NYSE-99-26, approved by 
Securities Exchange Act Release No. 41726 (August 11, 1999), 64 FR 
44985 (August 18, 1999).
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    The Exchange is proposing to codify its policies and 
interpretations regarding trading halts and delayed openings in

[[Page 63006]]

new Rule 123D.\6\ No new substantive requirements are proposed to be 
adopted.
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    \6\ This policy was last amended in SR-NYSE-93-19, approved by 
Securities Exchange Act Release No. 32890 (September 14, 1993), 58 
FR 48916 (September 20, 1993).
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    The Exchange is also proposing to codify its Specialist Combination 
Review Policy in new Rule 123E.\7\ No new substantive requirements are 
proposed to be adopted.
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    \7\ This policy was last approved in SR-NYSE-94-46, Securities 
Exchange Act Release No. 35343 (Feb. 8, 1995), 60 FR 8437 (Feb. 14, 
1995). The last proposed amendment to this policy was made in SR-
NYSE-2000-11 (March 2, 2000) (not yet approved).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\8\ in general, and furthers the 
objectives of section 6(b)(5) of the Act,\9\ in particular. Section 
6(b)(5) of the Act requires, among other things, that an exchange have 
rules that are designed to promote just and equitable principles of 
trade, to remove impediments to and perfect the mechanisms 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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    \8\ 15 U.S.C. 78f(b).
    \9\ 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

    The proposed rule change has been filed by the Exchange as a ``non-
controversial'' rule change pursuant to section 19(b)(3)(A) of the Act 
\10\ and Rule 19b-4(f)(6) thereunder.\11\ Because the foregoing 
proposed rule change: (1) Does not significantly affect the protection 
of investors or the public interest, (2) does not impose any 
significant burden on competition, and (3) by its terms does not become 
operative for 30 days after the date of this filing, or such shorter 
time as the Commission may designate, and the Exchange has provided the 
Commission with written notice of its intent to file the proposed rule 
change at least five business days prior to the filing date, it has 
become effective pursuant to section 19(b)(3)(A) of the Act \12\ and 
Rule 19b-4(f)(6)(iii)\13\ thereunder. 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 purposes of 
the Act.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\17 CFR 240.19b-4(f)(6)(iii).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The NYSE has requested that the Commission waive 
the 30-day pre-operative waiting period, which will allow the proposed 
administrative rule changes and codification of Exchange policies to 
take effect immediately. According to the NYSE, the proposed filing 
consists of formal codification of several Exchange policies previously 
approved by the Commission and the reordering of several other Exchange 
rules. Therefore, the Exchange believes that the proposed rule change 
is non-controversial, addresses the administration of Exchange rules, 
and should take effect immediately. In light of these considerations, 
the Commission, consistent with the protection of investors and the 
public interest, has determined to designate the proposed rule change 
as operative immediately.\14\
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    \14\ For the purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rules 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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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 at 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 the File No. SR-NYSE-2002-31 
and should be submitted by October 30, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-25672 Filed 10-8-02; 8:45 am]
BILLING CODE 8010-01-P