[Federal Register Volume 70, Number 22 (Thursday, February 3, 2005)]
[Notices]
[Pages 5716-5718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-405]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51085; File No. SR-NYSE-2005-10]


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

January 27, 2005.
    Pursuant to Section 19(b)(1)\1\ of the Securities Exchange Act of 
1934 (``Act''),\2\ and Rule 19b-4 thereunder, notice is hereby given 
that on January 18, 2005, the New York Stock Exchange, Inc. (``NYSE'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed amendments to its arbitration rules 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

[[Page 5717]]

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\ 15 U.S.C. 78a.
    \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 July 31, 
2005, of the Voluntary Supplemental Procedures for Selecting 
Arbitrators (``Supplemental 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 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 Change

1. Purpose
    The proposed rule change is intended to extend until July 31, 2005 
the Supplemental Procedures, which were approved by the Commission, 
most recently in SR-NYSE-2004-28,\5\ for a six-month period ending 
January 31, 2005.
---------------------------------------------------------------------------

    \5\ See Exchange Act Release No. 49915 (June 25, 2004), 69 FR 
39993 (July 1, 2004).
---------------------------------------------------------------------------

    The Exchange currently has several methods by which arbitrators are 
assigned to cases, including the traditional method under NYSE Rule 
607, pursuant to which Exchange staff appoints arbitrators to cases 
(the ``Traditional Method''). On August 1, 2000, the Exchange 
implemented a two-year pilot program to allow parties, on a voluntary 
basis, to select arbitrators under two alternative methods (in addition 
to the Traditional Method).\6\ Upon expiration of the two-year pilot, 
the Exchange renewed the pilot for an additional two years, which 
expired on July 31, 2004,\7\ and then again for an additional six 
months through January 31, 2005.\8\
---------------------------------------------------------------------------

    \6\ See Exchange Act Release No. 43214 (August 28, 2000), 65 FR 
53247 (September 1, 2000) (SR-NYSE-00-34).
    \7\ See 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).
    \8\ See Exchange Act Release No. 49915, supra note 5.
---------------------------------------------------------------------------

    Under the Supplemental Procedures, the first alternative to the 
Traditional Method is the Random List Selection method by which the 
parties are provided randomly generated lists of public-classified 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.
    The second alternative to the Traditional Method is entitled 
Enhanced List Selection, in which six public-classified and three 
securities-classified arbitrators are selected, based on their 
qualifications and expertise, by Exchange staff. 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 
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 as 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,\9\ is proposing 
amendments to NYSE Rule 607 which would, in effect, make permanent a 
variation of the pilot program described herein. Pending Commission 
consideration of those amendments, the Exchange proposes to extend the 
pilot period for the Supplemental Procedures for an additional six 
months, until July 31, 2005.
---------------------------------------------------------------------------

    \9\ See SR-NYSE-2005-02, filed with the Commission on January 4, 
2005.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b)(5)\10\ of the Act 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.
---------------------------------------------------------------------------

    \10\ 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\11\ and Rule 19b-4(f)(6)\12\ 
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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    Pursuant to Rule 19b-4(f)(6)(iii) under the Act,\13\ 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.
---------------------------------------------------------------------------

    \13\ 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.\14\ In this regard, the

[[Page 5718]]

Commission notes that the proposal is the extension of a pilot program 
that has been in effect at the Exchange since August 2000. For these 
reasons, the Commission designates the proposed rule change as 
effective and operative immediately. Nothing in the current notice 
should be interpreted as suggesting the Commission is predisposed to 
approving the proposed variation of the pilot program.
---------------------------------------------------------------------------

    \14\ 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-2005-10 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.
    All submissions should refer to File Number SR-NYSE-2005-10. 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 Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the NASD. 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-2005-10 and should be submitted on or before March 
10, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E5-405 Filed 2-2-05; 8:45 am]
BILLING CODE 8010-01-P