[Federal Register Volume 70, Number 41 (Thursday, March 3, 2005)]
[Notices]
[Pages 10449-10450]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-846]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51264; File No. SR-NYSE-2005-07]


Self-Regulatory Organizations; Order Granting Approval of 
Proposed Rule Change by the New York Stock Exchange, Inc. Relating to 
Proposed Changes to Exchange Rules 440F (``Public Short Sale 
Transactions Effected on the Exchange'') and 440G (``Transactions in 
Stocks and Warrants for the Accounts of Members, Allied Members and 
Member Organizations'')

February 25, 2005.
    On January 11, 2005, the New York Stock Exchange, Inc. (the 
``NYSE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (the ``SEC'' or the ``Commission'') the proposed rule change 
pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of 1934 
(the ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ a proposed 
rule change relating to the inclusion of certain short-exempt sales on 
Reports of Short Interest (i.e., NYSE Forms SS20 and 121). This order 
approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1)
    \2\ 15 U.S.C. 78a et seq.
    \3\ 17 CFR 240.19b-4.
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    The proposed rule change was published for notice and comment in 
the Federal Register on January 26, 2005.\4\ The Commission did not 
receive comments on the foregoing proposed rule change.
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    \4\ See Securities Exchange Act Release No. 51054 (January 18, 
2005), 70 FR 3758.
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    The Commission has carefully reviewed the proposed rule change and 
finds that the proposed rule change is consistent with the requirements 
of the Exchange Act and the rules and regulations thereunder applicable 
to a national securities exchange \5\ and, in particular, the 
requirements of section 6 of the Exchange Act.\6\ In particular, the 
Commission finds that the proposed rule change is consistent with 
section 6(b)(5) in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to perfect the mechanism of a free 
and open market and national market system, and in general to protect 
investors and the public interest; and the prompt and accurate 
clearance and settlement of securities transactions.\7\
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    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(5).
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    The Commission notes that the NYSE proposal amends Exchange Rule 
440F, which requires members and member organizations to report round-
lot short sale transactions for public customers on Form SS20, and 
Exchange Rule 440G, which requires members and member organizations to 
report round-lot short sale transactions for members, allied members or 
member organizations on Form 121, to include certain short-exempt sale 
transactions. Currently, short-exempt sales are excluded when computing 
the total short interest on the forms, under Rules 440F and 440G, 
respectively. However, the Commission's Pilot Order issued pursuant to 
Rule 202T of Regulation SHO \8\ greatly increased the number of short-
exempt sales transactions. Under the terms of the Commission's Pilot 
Order, sales in certain ``designated securities'' should be marked 
``short-exempt.'' \9\ The Commission finds that

[[Page 10450]]

including the designated securities subject to the Pilot Order, 
regardless as to whether they are marked ``short-exempt,'' is 
consistent with the requirements of the Exchange Act.
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    \8\ 17 CFR 242.202T.
    \9\ See Securities Exchange Act Release No. 50104 (July 28, 
2004), 69 F.R. 48032 (August 6, 2004) (``Pilot Order''), available 
at http://www.sec.gov/rules/other/34-50104.htm; see also Securities 
Exchange Act Release No. 50747 (November 29, 2004), 69 FR 70480 
(December 6, 2004), available at http://www.sec.gov/rules/other/34-50747.htm (Second Pilot Order). The Pilot Order provided for a one-
year pilot program (``Pilot Program''), under which short sale price 
tests are suspended for short sales in: (1) Certain ``designated 
securities'' identified in Appendix A to the SEC's Pilot Order; (2) 
any security included in the Russell 1000 Index effected between 
4:15 p.m. EST and the open of the consolidated tape on the following 
day; and (3) any security not included in (1) and (2) above effected 
in the period between the close of the consolidated tape (i.e., 
after 8 p.m. EST) and the open of the consolidated tape the 
following day. The Commission's Second Pilot Order delayed the start 
date of the Pilot Program to May 2, 2005.
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Exchange Act, that the proposed rule change (SR-NYSE-2005-07) be, and 
it hereby is, approved.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-846 Filed 3-2-05; 8:45 am]
BILLING CODE 8010-01-P