[Federal Register Volume 68, Number 112 (Wednesday, June 11, 2003)]
[Notices]
[Pages 35045-35046]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-14712]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47984; File No. SR-NYSE-2003-14]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc.; Adding Rules 60, 124(A), 
130, 407A, 411(b), 440I, and 445(4) to the ``List of Exchange Rule 
Violations and Fines Applicable Thereto Pursuant to Rule 476A''

June 4, 2003.
    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 May 5, 2003, 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 proposed rule change would revise the ``List of Exchange Rule 
Violations and Fines Applicable Thereto Pursuant to Rule 476A'' for 
imposition of fines for minor violations of rules and/or policies 
(``List'') by adding to the List failure to comply with the provisions 
of NYSE Rules 60, 124(A), 130, 407A, 411(b), 440I, and 445(4). The 
Exchange believes it is appropriate to make the failure to comply with 
the provisions of the cited rules subject to the possible imposition of 
a fine under NYSE Rule 476A procedures.

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 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 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 believes that 
NYSE Rule 476A preserves due process rights, and further states that it 
identifies those rule violations which 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 NYSE 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\ See Securities Exchange Act Release No. 21688 (January 25, 
1985), 50 FR 5025 (February 5, 1985) (SR-NYSE-84-27).
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    The Exchange is seeking approval to add failure to comply with the 
provisions of NYSE Rules 60, 124(A), 130, 407A, 411(b), 440I, and 
445(4) to the List subject to imposition of fines under NYSE Rule 476A 
procedures.
    NYSE Rule 60 pertains to the dissemination of quotations for 
reported securities.
    NYSE Rule 124 relates to prohibited odd-lots, the unbundling of 
round-lot orders, failure to aggregate odd-lot orders into round-lot 
orders, the entry of both buy and sell odd-lot limit orders for the 
purpose of capturing the spread in the stock, and order entry practices 
intended to circumvent the round-lot market.
    NYSE Rule 130 pertains to the submission of trade data required for 
overnight comparison of transactions effected on the Exchange.
    NYSE Rule 407A requires members to report and update information to 
the Exchange regarding certain accounts in which they have an interest.
    NYSE Rule 411(b) requires persons entering multiple odd-lot orders 
in the same stock, which aggregate to 100 shares or more, to aggregate 
the orders into round-lots, where possible, for execution in the round-
lot auction market.
    NYSE Rule 440I requires the maintenance of certain compensation 
records by members and member organizations.
    NYSE Rule 445(4) requires the designation and identification to the 
Exchange of a person or persons responsible for implementing and 
monitoring the day-to-day operations and internal controls of Anti-
Money Laundering Programs.
    The NYSE states that the purpose of the proposed change to the list 
is to facilitate the Exchange's ability to induce compliance with all 
aspects of the cited rules. The Exchange believes failure to comply 
with the requirements of the cited rules 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 Rules 60, 
124(A), 130, 407A, 411(b), 440I, and 445(4).
    The Exchange wishes to emphasize the importance it places upon 
compliance with the NYSE Rules. 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 NYSE Rules, the Exchange will 
provide an appropriate regulatory response. This includes the full 
disciplinary procedures available under NYSE Rule 476.
2. Statutory Basis
    The NYSE believes that the proposed rule change is consistent with 
the requirements of Section 6(b)(6)\4\ of the Act, which provides that 
members and persons associated with its members shall be appropriately 
disciplined for violation of the provisions of this title, the rules or 
regulations thereunder, or the rules of the exchange, by expulsion, 
suspension, limitation of activities, functions, and operations, fine, 
censure, being suspended or barred from being

[[Page 35046]]

associated with a member, or any other fitting sanction.
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    \4\ 15 U.S.C. 78f(b)(6).
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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 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 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-2003-14 and 
should be submitted by July 2, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 03-14712 Filed 6-10-03; 8:45 am]
BILLING CODE 8010-01-P