[Federal Register Volume 69, Number 126 (Thursday, July 1, 2004)]
[Notices]
[Pages 39993-39995]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-14898]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49915; File No. SR-NYSE-2004-28]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the New York Stock Exchange, 
Inc. To Extend a Pilot Relating to Voluntary Supplemental Procedures 
for Selecting Arbitrators

June 25, 2004.
    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 June 14, 2004, the New York Stock Exchange, Inc. (``NYSE'' or ``the 
Exchange'') filed with the Securities and Exchange Commission the 
proposed rule change as described in Items I and II below, which items 
have been prepared by the Exchange. The Exchange filed the proposed 
rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 
19b-4(f)(6) thereunder,\4\ which renders the proposal effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    The proposed rule change consists of an extension until January 31, 
2005, of a pilot regarding Voluntary Supplemental Procedures for 
Selecting Arbitrators (``Supplemental Procedures'' or ``pilot 
program'').

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.

[[Page 39994]]

The Exchange has prepared summaries, set forth in Sections A, B and C 
below.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The proposed rule change is intended to extend until January 31, 
2005, the pilot period of the Supplemental Procedures, which were 
approved by the Commission most recently for a two-year period ending 
July 31, 2004.\5\
---------------------------------------------------------------------------

    \5\ Exchange Act Release No. 46372 (August 16, 2002), 67 FR 
54521 (August 22, 2002) (SR-NYSE-2002-30).
---------------------------------------------------------------------------

    The Exchange currently offers four alternative methods by which 
arbitrators are assigned to cases. The first is the traditional method 
pursuant to NYSE Rule 607, in which the staff of the Exchange appoints 
arbitrators to cases. Three additional methods were introduced in 2000 
under the Supplemental Procedures to allow parties to select 
arbitrators: Random List Selection, Enhanced List Selection and any 
reasonable alternative method of the parties' own design and 
agreement.\6\
---------------------------------------------------------------------------

    \6\ The pilot program was implemented originally for a two-year 
period. Exchange Act Release No. 43214 (August 28, 2000), 65 FR 
53247 (September 1, 2000) (SR-NYSE-00-34). Upon expiration of the 
first two-year period, the Exchange renewed the pilot program for 
two additional years, ending on July 31, 2004. Exchange Act Release 
No. 46372. See also Exchange Act Release No. 47929 (May 27, 2003), 
68 FR 32791 (June 2, 2003) (SR-NYSE-2003-15) (amending the 
Supplemental Procedures to conform with NYSE Rule 601, which 
provides that a claim with an amount in dispute of $25,000 or less 
will be decided by a single arbitrator, instead of a panel of 
three).
---------------------------------------------------------------------------

    Under Random List Selection, the parties are provided randomly 
generated lists of public and securities classified arbitrators. The 
parties have ten days to strike and rank the names on the lists. Based 
on mutual ranking of the lists, the highest-ranking arbitrators are 
invited to serve on the case. If a panel cannot be generated from the 
first list, a second list is generated, with three potential 
arbitrators for each vacancy, and one peremptory challenge available to 
each party for each vacancy. If vacancies remain after the second list 
has been processed, arbitrators are then randomly assigned to serve, 
subject only to challenges for cause.
    Under Enhanced List Selection, six public and three securities 
classified arbitrators are selected by Exchange staff, based on their 
qualifications and expertise. The lists are then sent to the parties. 
The parties have a limited number of strikes to use and are required to 
rank the arbitrators not stricken. Based on the mutual ranking of the 
lists, the highest-ranking arbitrators are invited to serve on the 
case.
    Finally, the Supplemental Procedures provide that the Exchange will 
accommodate the use of any reasonable alternative method of selecting 
arbitrators that the parties decide upon, provided that the parties 
agree. Absent agreement to the use of Random List Selection, Enhanced 
List Selection, or any other reasonable alternative method, the 
traditional method is used.
    The Exchange, pursuant to a separate filing (SR-NYSE-2004-29) \7\, 
is proposing amendments to Rule 607 which would, in effect, make 
permanent a variation of the pilot program described herein. Pending 
approval of those amendments, the Exchange proposes to extend the pilot 
period for the Supplemental Procedures for an additional six months.
---------------------------------------------------------------------------

    \7\ Filed with the Commission on June 14, 2004.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b)(5) of the Act \8\ in that it promotes just and 
equitable principles of trade by ensuring that members and member 
organizations and the public have a fair and impartial forum for the 
resolution of their disputes.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 Exchange has designated the proposed rule change as one that: 
(i) Does not significantly affect the protection of investors or the 
public interest; (ii) does not impose any significant burden on 
competition; and (iii) does not become operative for 30 days from the 
date on which it was filed, or such shorter time as the Commission may 
designate. Therefore, the foregoing rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) 
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 Act.
    Pursuant to Rule 19b-4(f)(6)(iii) under the Act \9\, the proposal 
may not become operative for 30 days after the date of its filing, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, and the Exchange 
must file notice of its intent to file the proposed rule change at 
least five business days beforehand. The Exchange has requested that 
the Commission waive the five-day pre-filing requirement and the 30-day 
operative delay so that the proposed rule change will become 
immediately effective upon filing.
---------------------------------------------------------------------------

    \9\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission is exercising its authority to waive the five-day 
pre-filing requirement and believes that waiver of the 30-day operative 
delay is consistent with the protection of investors and the public 
interest.\10\ In this regard, the Commission notes that the proposal is 
the extension of a pilot program that has been in effect at the 
Exchange since August 2000. Nothing in the current notice should be 
interpreted as suggesting the Commission is predisposed to approving 
the pilot program on a permanent basis.
---------------------------------------------------------------------------

    \10\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

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. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NYSE-2004-28 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.

[[Page 39995]]

    All submissions should refer to File Number SR-NYSE-2004-28. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 Section, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
NYSE. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSE-2004-28 and should be submitted on or before July 22, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-14898 Filed 6-30-04; 8:45 am]
BILLING CODE 8010-01-P