[Federal Register Volume 67, Number 229 (Wednesday, November 27, 2002)]
[Notices]
[Pages 70994-70999]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-30040]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46858; File No. SR-NYSE-2002-36]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. To Adopt Amendments to 
Exchange Rule 342 (``Offices--Approval, Supervision and Control'') and 
its Interpretation, Rule 401 (``Business Conduct''), Rule 408 
(``Discretionary Power in Customers' Accounts''), and Rule 410 
(``Records of Orders'')

November 20, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on 
August 16, 2002, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which items have been prepared by the self-
regulatory organization.\3\ On November 20, 2002, the Exchange 
submitted Amendment No. 1 to the proposed rule change.\4\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(2).
    \2\ 17 CFR 240.19b-4.
    \3\ The NASD submitted a proposed rule change addressing 
internal controls and supervisory issues (SR-NASD-2002-162), which 
the Commission is publishing in the Federal Register for public 
comment simultaneously with the instant proposed rule change. See 
Securities Exchange Act Release No. 46859 (November 20, 2002).
    \4\ See letter to Nancy Sanow, Assistant Director, Division of 
Market Regulation, Commission, from Darla Stuckey, Corporate 
Secretary, NYSE, dated November 18, 2002 (``Amendment No. 1''). In 
Amendment No. 1, the Exchange added ``customer changes of investment 
objectives'' to the list of enumerated activities with regard to 
which Exchange members must maintain written policies and 
procedures.
---------------------------------------------------------------------------

    The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change is intended to address several issues 
involving the establishment, maintenance, and testing of Internal 
Controls as well as several supervisory issues. Included are amendments 
to Rule 342 (``Offices--Approval, Supervision and Control'') and its 
Interpretation, 401 (``Business Conduct''), 408 (``Discretionary Power 
in Customers' Accounts''), and 410 (``Records of Orders''). Additions 
are in italics; deletions are in brackets.
* * * * *

Offices--Approval, Supervision and Control

    Rule 342. (a) Each office, department or business activity of a 
member or member organization (including foreign incorporated branch 
offices) shall be under the supervision and control of the member or 
member organization establishing it and of the personnel delegated such 
authority and responsibility.
    The person in charge of a group of employees shall reasonably 
discharge his duties and obligations in connection with supervision and 
control of the activities of those employees related to the business of 
their employer and compliance with securities laws and regulations.
    (b) The general partners or directors of each member organization 
shall provide for appropriate supervisory control and shall designate a 
general partner or principal executive officer to assume overall 
authority and responsibility for internal supervision and control of 
the organization and compliance with securities' laws and regulations. 
This person shall:
    (1) delegate to qualified principals or employees responsibility 
and authority for supervision and control of each office, department or 
business activity, and provide for appropriate procedures of 
supervision and control.
    (2) establish a separate system of follow-up and review to 
determine that the delegated authority and responsibility is being 
properly exercised.
    (c) The prior consent of the Exchange shall be obtained for each 
office established by a member or member organization, other than a 
main office.
    (d) Qualified persons acceptable to the Exchange shall be in charge 
of:
    (1) any office of a member or member organization,
    (2) any regional or other group of offices,
    (3) any sales department or activity.
    (e) The amounts and types of credit extended by a member 
organization shall be supervised by members or allied members qualified 
by experience for such control in the types of business

[[Page 70995]]

in which the member organization extends credit.
    Supplementary Material:
    .10 through .18 unchanged.
    .19 Supervision of Managers.--Members and member organizations 
whose Branch Office Managers, Sales Managers, Regional/District Sales 
Managers, or any person performing a similar supervisory function, 
service customer accounts must develop and implement written policies 
and procedures reasonably designed to independently supervise each such 
person's customer account activity.
    .20 through .22 unchanged.
    .23 Internal Controls--Pursuant to paragraphs (a) and (b) of this 
Rule, members and member organizations must develop and maintain 
adequate controls over each of its business activities. Such controls 
must provide for the establishment of procedures for independent 
verification and testing of those business activities separate and 
apart from the day-to-day supervision of such functions. A review of 
each member's or member organization's efforts with respect to internal 
controls, including a summary of tests conducted and significant 
exceptions identified, must be included in the Annual Report required 
by .30 of this Rule. The independent verification and testing 
procedures shall not apply to members and member organizations that do 
not conduct a public business, or that have a capital requirement of 
$5,000 or less, or that employ 10 or fewer registered representatives.
    (See also Rule 401(b))
    .30 Annual Report.--By April 1 of each year, each member not 
associated with a member organization and each member organization 
shall prepare, and each member organization shall submit to its chief 
executive officer or managing partner, a report on the member's or 
member organization's supervision and compliance effort during the 
preceding year. The report shall include:
    (a) A tabulation of the reports pertaining to customer complaints 
and internal investigations made to the Exchange during the preceding 
year pursuant to Rules 351(d) and (e)(ii),
    (b) Identification and analysis of significant compliance problems, 
plans for future systems or procedures to prevent and detect violations 
and problems, and an assessment of the preceding year's efforts of this 
nature, and
    (c) Discussion of the preceding year's compliance efforts, new 
procedures, educational programs, etc. in each of the following areas:
    (i) Antifraud and trading practices,
    (ii) Investment banking activities,
    (iii) Sales practices,
    (iv) Books and records,
    (v) Finance and operations, [and]
    (vi) Supervision[.], and
    (vii) Internal Controls.
    If any of these areas do not apply to the member or member 
organization, the report should so state.

Business Conduct

    Rule 401. (a) Every member, allied member and member organization 
shall at all times adhere to the principles of good business practice 
in the conduct of his or its business affairs.
    (b) Each member and member organization shall maintain written 
policies and procedures, administered pursuant to the internal control 
requirements prescribed under Rule 342.23, specifically with respect to 
the following activities:
    (1) Transmittals of funds (e.g., wires, checks, etc.) or 
securities:
    (i) from customer accounts to third party accounts (i.e., a 
transmittal that would result in a change of beneficial ownership.);
    (ii) from customer accounts to outside entities (e.g., banks, 
investment companies, etc.);
    (iii) from customer accounts to locations other than a customer's 
primary residence (e.g., post office box, ``in care of'' accounts, 
alternate address, etc.); and
    (iv) between customers and registered representatives (including 
the hand-delivery of checks).
    (2) Customer changes of address.
    (3) Customer changes of investment objectives. The policies and 
procedures required under (b)(1) and (b)(2) above must include a means/
method of customer confirmation, notification, or follow-up that can be 
documented.

Discretionary Power in Customers' Accounts

    Rule 408 (a) No member, allied member or employee of a member 
organization shall exercise any discretionary power in any customer's 
account or accept orders for an account from a person other than the 
customer without first obtaining written authorization of the customer.
    (b) No member, allied member or employee of a member organization 
shall exercise any discretionary power in any customer's account, 
without first notifying and obtaining the approval of another person 
delegated under Rule 342(b)(1) with authority to approve the handling 
of such accounts. Every order entered on a discretionary basis by a 
member, allied member or employee of a member organization must be 
identified as discretionary on the order at the time of entry. Such 
discretionary accounts shall receive frequent appropriate supervisory 
review by a person delegated such responsibility under Rule 342(b)(1), 
who is not exercising the discretionary authority. A written statement 
of the supervisory procedures governing such accounts must be 
maintained.
    (c) No member or allied member or employee of a member organization 
exercising discretionary power in any customer's account shall (and no 
member organization shall permit any member, allied member, or employee 
thereof exercising discretionary power in any customer's account to) 
effect purchases or sales of securities which are excessive in size or 
frequency in view of the financial resources of such customer.
    (d) The provisions of this rule shall not apply to discretion as to 
the price at which or the time when an order given by a customer for 
the purchase or sale of a definite amount of a specified security shall 
be executed. The authority to exercise time and price discretion will 
be considered to be in effect only until the end of the business day on 
which the customer granted such discretion, absent a specific, written, 
contrary indication signed and dated by the customer. Any exercise of 
time and price discretion must be reflected on the order ticket.

Records of Orders

    Rule 410. (a) Every member or [his] member organization must 
[shall] preserve for at least three years the first two years in an 
easily accessible place, a record of:
[Transmitted to Floor
    (1) Every order transmitted directly or indirectly by such member 
or organization to the Floor, which record shall include the name and 
amount of the security, the terms of the order, the time when it was so 
transmitted, and the time at which a report of execution was received. 
Carried to the Floor]
    [(2)] (1) every order received by such member or member 
organization, either orally or in writing, [and carried by such member 
to the Floor,] which record must [shall] include the name and amount of 
the security, the terms of the order, the time when it was so received 
and the time at [as] which a report of execution was received.
[Entered Off Hours]
    [(3)] (2) every order entered by such member or member organization 
into the Off-Hours Trading Facility (as Rule 900 (Off-Hours Trading: 
Applicability and Definitions) defines that term), which record must 
[shall] include the name and amount of the security, the

[[Page 70996]]

terms of the order, the time when it was so entered, and the time at 
which a report of execution was received. [Cancellation]
    [(4)] (3) the time of the entry of every cancellation of an order 
covered by (1)[,] and (2) [and (3)] above.
[By Accounts] Changes In Account Name or Designation
    Before any order covered by (1)[,] or (2) [or (3)] above is 
executed, there must [shall] be placed upon the order slip or other 
similar record of the member[,] or [his] member organization the name 
or designation of the account for which such order is to be executed. 
No change in such account name (including related accounts) or 
designation (including error accounts) shall be made unless the change 
has been authorized by [the] a member, [or another member,] allied 
member, or a person or persons designated under the provisions of Rule 
342(b)(1). [in his organization who shall,] Such person must, prior to 
giving his or her approval of [such] the account designation change, be 
personally informed of the essential facts relative thereto and [shall] 
indicate his or her approval of such change in writing on the order or 
other similar record of the member or member organization. The 
essential facts relied upon by the person approving the change must be 
documented in writing and maintained in a central location.

Exceptions

    Under exceptional circumstances, the Exchange may upon written 
request waive the requirements contained in (1), (2) and (3) above.
    (b) Every order in any manner transmitted or carried to the Floor 
and [covered by (1) or (2) above to be] executed pursuant to Section 
11(a)(1)(G) of the Act and Rule 11a1-1(T) thereunder must [shall] be 
identified in a manner that will enable the executing member to 
disclose to other members that the order is subject to those 
provisions.
    (See also Rules 112A.10 and 123A.45.)
    .10 For purposes of this Rule, a person designated under the 
provisions of Rule 342(b)(1) to approve account name or designation 
changes must pass an examination acceptable to the Exchange.
INTERPRETATION
Rule 342 OFFICES--APPROVAL, SUPERVISION AND CONTROL
    (a)(b)
.03 Annual Branch Office Inspection
    [At least annual b]Branch office inspections by members and member 
organizations are expected to be conducted at least annually pursuant 
to this Rule, unless it has been demonstrated to the satisfaction of 
the Exchange that because of proximity, special reporting or 
supervisory practice, other arrangements[,] may satisfy the Rule's 
requirements. [certain offices may not warrant an annual inspection.] 
All required inspections must be conducted by a person who is 
independent of the ongoing supervision, control, or performance 
evaluation of the branch office (i.e., not the Branch Office Manager, 
Sales Manager, District/Regional Manager assigned to the office, or any 
other person performing a similar supervisory function). Written 
reports of these inspections, or the written authorization of an 
alternative arrangement, are to be kept on file by the organization for 
a minimum period of three years.
    An annual branch office inspection program must include, but is not 
limited to, testing and independent verification of internal controls 
related to the following areas:
    (1) Safeguarding of customer funds and securities,
    (2) Maintaining books and records,
    (3) Supervision of customer accounts serviced by Branch Office 
Managers,
    (4) Transmittal of funds between customers and registered 
representatives and between customers and third parties,
    (5) Validation of customer address changes, and
    (6) Validation of changes in customer account information.
    For purposes of this interpretation, ``annual'' means once in a 
calendar year.
* * * * *

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. 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 Changes

1. Purpose
    Cases involving misappropriation of funds and securities have 
highlighted the need to re-examine issues related to both supervision 
and internal controls, including the appropriate application of such 
controls and the independent testing of their efficiency. In the course 
of reviewing the issues raised by these cases, Exchange staff has met 
with management of several member organizations, undertaken special 
sales practice examinations of potential problem areas, and conducted 
surveys of members' and member organizations' existing policies and 
procedures. As a result, the Exchange is proposing a number of 
initiatives intended to generally bolster the overall internal controls 
and procedures of members and member organizations and to specifically 
require such controls and procedures in certain areas that have been 
identified as particularly problematic. It is expected that the 
proposed amendments will help to focus and reinforce members' and 
member organizations' internal control policies. The proposals include 
the addition of paragraph .23 to NYSE Rule 342 (``Offices--Approval, 
Supervision and Control'') which addresses internal control 
requirements generally, as well as amendments to Rule 401 (``Business 
Conduct'') which identify and require specific internal control 
safeguards related to the transmission of customer funds and 
securities, and changes of customer address.
    The proposals also address related supervision and/or control 
issues that were encompassed in the Exchange's review including 
amendments to: NYSE Rule 342 (``Offices--Approval, Supervision and 
Control'') that would require systems and procedures to independently 
supervise sales managers who handle customer accounts; NYSE Rule 408 
(``Discretionary Power in Customers' Accounts'') that would clarify 
time limits on time-and-price discretionary authority; NYSE Rule 410 
(``Records of Orders'') that would expand the Rule's application and 
clarify its supervisory and recordkeeping provisions; and to the 
Interpretation of NYSE Rule 342 that would require persons who conduct 
branch office inspections to be independent of such office's ongoing 
supervision, control, or performance evaluation.
Supervision and Control
    NYSE Rule 342 prescribes the general requirement that ``[e]ach 
office, department or business activity of a member or member 
organization (including foreign incorporated branch offices) shall be 
under the supervision and control of the member organization 
establishing it and of the personnel

[[Page 70997]]

delegated such authority and responsibility.'' In this context, 
``supervision'' refers to the ongoing, day-to-day review of each 
business activity to ensure overall compliance with applicable rules 
and regulations. A member organization's supervisory structure is 
reflected in its policy and the manner in which personnel implement the 
systems and procedures designed to enforce that policy.
    ``Control,'' on the other hand, refers to the development of these 
systems and procedures and to the independent oversight and testing of 
them in order to measure and maintain their effectiveness. Such 
internal controls typically involve random sampling of supervisory 
functions to identify shortcomings, gaps, or other inefficiencies. 
Internal controls also involve ongoing reassessment of these functions 
to determine whether they are serving their intended purpose (i.e., 
have they been updated to address new or modified means of doing 
business?). Internal controls should, therefore, be considered a means 
by which the process of supervision is analyzed, tested, and refined. 
The following sets forth proposed internal control requirements, both 
general and specific, designed to highlight the importance of such 
controls, identify those areas where they can be most effectively 
implemented, and provide minimum standards for their application.
Internal Controls--General Requirement
    Proposed paragraph .23 of NYSE Rule 342 elaborates upon the general 
requirement that members and member organizations develop and maintain 
adequate controls over each of their business activities. Paragraph .23 
further requires that such controls must provide for the establishment 
of procedures for independent verification and testing of those 
business activities separate and apart from the day-to-day supervision 
of such functions. A summary of these actions is required to be 
included in the required Annual Report to a member organization's chief 
executive officer or managing partner per NYSE Rule 342.30.
    In recognition of the fact that the ``independent verification and 
testing'' requirement may not be practical or reasonable for certain 
business models, an exemption from this requirement is available to 
members or member organizations that do not conduct a public business, 
or have a capital requirement of $5,000 or less, or employ 10 or fewer 
registered representatives. This exemption does not, however, provide 
relief from the general requirement that internal controls be 
developed, established, and effectively maintained.
Internal Controls--Specific Requirements
    The following proposed amendments require that internal control 
policies and procedures be adopted that address specific areas 
identified to be particularly susceptible to potential abuse. These 
include the transmission of customer funds and securities and changes 
of customer address.
    The Exchange states that it is recognized that no single approach 
to internal controls can be appropriate for all business models given 
differences in organizational size, supervisory structure, scope of 
business activities, products offered, location of branch offices, etc. 
Therefore, the controls established and implemented should reasonably 
conform to the nature of the business conducted.
Business Conduct: Transmission of Customers' Funds and Securities/
Customer Changes of Address
    Proposed NYSE Rule 401(b)(1) clarifies that, consistent with their 
duty to adhere to principles of good business practice, members and 
member organizations must maintain written policies, procedures, and 
controls over the transmission of customer funds and securities. The 
proposed amendments specify certain types of transmission based on 
their potential for abuse. These include transmission of funds (e.g., 
wires, checks, etc.) or securities:
    [sbull] From customer accounts to third party accounts (i.e., a 
transmittal that would result in a change of beneficial ownership);
    [sbull] From customer accounts to outside entities (e.g., banks, 
investment companies, etc.);
    [sbull] From customer accounts to locations other than a customer's 
primary residence (e.g., post office box, ``in care of'' account, 
alternate address, etc.); and
    [sbull] Between customers and registered representatives (including 
the hand delivery of checks).
    Proposed NYSE Rule 401(b)(2) requires written policies and controls 
to monitor customer changes of address, including a reasonable method 
of customer notification that can be documented. The purpose of this 
amendment is to prevent the delivery of confirmations, statements, and 
other account-related documentation to other than the beneficial owner 
of the account or their duly authorized agent. Proposed NYSE Rule 
401(b)(3) requires written policies and controls to monitor customer 
changes of investment objectives.
Additional Amendments
    The following proposed amendments address additional specific 
supervision and/or control issues identified by Exchange staff during 
the course of their review:
Supervision of Sales Managers
    Proposed NYSE Rule 342.19 requires the development and 
implementation of written policies and procedures to independently 
supervise sales managers and other supervisory personnel who handle 
customer accounts. This requirement applies to Branch Office Managers, 
Regional/District Sales Managers, or any person performing a similar 
supervisory function. Such policies and procedures are expected to 
encompass all sales-related activities to include, at a minimum, new 
account approval, the monitoring of customer account activity (for 
suitability, unauthorized transactions, etc.), and prior approval of 
account designation changes (both ``cancel and re-bills'' and ``order 
errors'') pursuant to NYSE Rule 410. This provision is intended to 
ensure all sales activity is monitored for compliance with applicable 
regulatory requirements by persons who do not have a personal interest 
in such activity and to remove doubt with respect to whether managers 
may ``self-approve'' their sales-related activities.
Time-and-Price Discretionary Power in Customers' Accounts
    Proposed Amendment to NYSE Rule 408(d) limits the authority of 
registered representatives to exercise time-and-price discretion \5\ 
over customer orders, absent a signed authorization from the customer, 
to the end of the business day on which the customer granted such 
discretion. NYSE Rule 408(d) currently allows the exercise of time-and-
price discretion, without written authorization, on orders for the 
purchase or sale of a definite amount of a specified security, but is 
silent on such authority's length of effectiveness. The absence of 
clear guidance on this point has been the source of interpretive 
uncertainty. The proposed amendment's establishment of a specific time 
limitation will eliminate uncertainty in this regard.
---------------------------------------------------------------------------

    \5\ Time-and-price discretion is authority granted (usually 
informally) by a customer to a registered representative that allows 
the representative to exercise judgment, based on prevailing market 
conditions, as to when and at what price to execute a customer 
order.

---------------------------------------------------------------------------

[[Page 70998]]

Records of Orders: Record Preservation/Account Designation Changes
    NYSE Rule 410, as currently written, applies only to orders 
transmitted or carried to the Floor of the Exchange. It requires 
members and member organizations to preserve a record of certain 
specified terms of each order, and it prescribes procedures for 
administering changes in account name or designation on previously 
executed orders. The proposed amendments would:
    [sbull] Expand the application of the Rule to all orders (sent to 
any market-place), not just those carried or transmitted to the Floor. 
The Exchange states that the expansion of the Rule to include all 
orders sent to any marketplace is necessary for effective regulatory 
oversight and enforcement proceedings. The Exchange also states that 
the information requested is not duplicative of existing NASD 
recordkeeping requirements.\6\
---------------------------------------------------------------------------

    \6\ Telephone call with Donald Van Weezel, Vice President, 
Regulatory Affairs, NYSE, and Florence Harmon, Senior Special 
Counsel, Division of Market Regulation, Commission, October 25, 
2002.
---------------------------------------------------------------------------

    [sbull] Require that a person designated to approve account name or 
designation changes be qualified by passing an examination acceptable 
to the Exchange. Currently, the Rule reads that such changes shall be 
approved by a person or persons designated under the provisions of NYSE 
Rule 342(b)(1). While this provision requires that the designated 
person be ``qualified,'' it does not specifically prescribe an 
examination requirement. Given that account name and designation 
changes can be indicative of serious sales practice violations such as 
unauthorized or unsuitable trading, the Exchange has long held that 
this exceptionally important and sensitive area be subject to 
heightened supervisory scrutiny. Accordingly, proposed paragraph .10 
would specify that, for purposes of NYSE Rule 410, a person designated 
under the provisions of NYSE Rule 342(b)(1) would be required to pass a 
qualifying examination such as the General Securities Sales Supervisor 
Qualification Examination (``Series 9/10''), the Compliance Official 
Examination (``Series 14''), or other sales supervisory examination 
acceptable to the Exchange.
    [sbull] Clarify that the Rule applies to all account name and 
designation changes, including related accounts and order errors. Some 
have read the current Rule to apply only to ``Cancel-and-Rebills'' in 
which a trade is moved from one customer account to another unrelated 
account. The proposed amendments make clear that the provisions of the 
Rule also apply to designation changes to related accounts (e.g., 
``Smith Trading Account'' to ``Smith IRA'') and to orders cancelled and 
moved into an error account.
    [sbull] Require documentation of the essential facts relied upon 
when approving such account name or designation changes in order to 
maintain a record, available for review, of the basis for the change.
Annual Branch Office Inspection
    The proposed amendments also include changes to the written 
Interpretation of NYSE Rule 342, clarifying that persons who conduct a 
member organization's annual branch office inspection must be 
independent of any ongoing supervision, control, or performance 
evaluation in connection with the particular office. This clarification 
recognizes that, with regard to such persons, an objective perspective 
is best maintained by having no interest in a branch's ``bottom line'' 
and by being outside of the branch's supervisory structure. In 
addition, the Interpretation requires that annual branch office 
inspection programs include, at minimum, testing and verification of 
specified internal controls including:
    [sbull] Safeguarding of customer funds and securities,
    [sbull] Maintaining books and records,
    [sbull] Supervision of customer accounts serviced by Branch Office 
Managers,
    [sbull] Transmittal of funds between customers and registered 
representatives and between customers and third parties,
    [sbull] Validation of customer address changes, and
    [sbull] Validation of changes in customer account designation.
2. Statutory Basis
    The basis for the proposed rule change is the requirement under 
section 6(b)(5) of the Act \7\ that an Exchange have rules that are 
designed to promote just and equitable principles of trade, to remove 
impediments to and to 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 proposed rule change is intended to foster the 
strengthening of NYSE members' and member organizations' internal 
controls and supervisory systems.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change does not impose 
any burden on competition 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

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the 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 self-regulatory organization 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 filed with the 
Commission and all written communications relating to the proposed rule 
changes 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 No. SR-NYSE-2002-36 and should be 
submitted by December 18, 2002.


[[Page 70999]]


    For the Commission, by the Division of Market Regulation, 
pursuant to the delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-30040 Filed 11-26-02; 8:45 am]
BILLING CODE 8010-01-P