[Federal Register Volume 70, Number 79 (Tuesday, April 26, 2005)]
[Notices]
[Pages 21484-21485]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1965]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51573; File No. SR-NYSE-2004-71]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change and Amendment No. 1 Thereto by the New York Stock Exchange, Inc. 
To Amend NYSE Rule 104 Regarding the Requirement That Specialists 
Obtain Floor Official Approval for Destabilizing Dealer Account 
Transactions in ETFs

April 19, 2005.
    On December 15, 2004, the New York Stock Exchange, Inc. (``NYSE'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend NYSE Rule 104 regarding the requirement 
that specialists obtain floor official approval for destabilizing 
dealer account transactions in ETFs. On February 28, 2005, the NYSE 
submitted Amendment No. 1 to the proposed rule change.\3\ The proposed 
rule change, as amended, was published for comment in the Federal 
Register on March 15, 2005.\4\ The Commission received no comments on 
the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 superseded the originally filed proposed 
rule change in its entirety.
    \4\ See Securities Exchange Act Release No. 51329 (March 8, 
2005), 70 FR 12769.
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    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\5\ 
In particular, the Commission believes that the proposed rule change is 
consistent with section 6(b)(5) of the Act,\6\ which requires that the 
rules of an exchange be designed, among other things, to prevent 
fraudulent and manipulative practices, to promote just and equitable 
principles

[[Page 21485]]

of trade, to remove impediments to and perfect the mechanism of a free 
and open market and a national market system, and, in general, to 
protect investors and the public interest.
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    \5\ In approving this proposed rule change, the Commission notes 
that it 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(b)(5).
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    The Exchange has proposed to remove the current restriction on the 
ability of specialists to buy on plus ticks or sell on minus ticks 
without Floor Official approval, as set forth in NYSE Rules 104.10(5) 
and (6), for transactions in investment company units and Trust Issued 
Receipts (collectively referred to as ``Exchange Traded Funds,'' or 
``ETFs''). The Commission believes that, because ETFs are priced 
derivatively, based on the value of an underlying basket of securities, 
the removal of this restriction is warranted, and notes that it has 
previously approved a similar rule change adopted by the American Stock 
Exchange LLC (``Amex'').\7\ In approving the proposed rule change, the 
Commission notes that an Exchange specialist must continue to engage in 
dealings for his or her own account to assist in the maintenance of a 
fair and orderly market.\8\
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    \7\ See Securities Exchange Act Release No. 49087 (January 15, 
2004), 69 FR 3622 (January 26, 2004) (order approving, among other 
things, the removal of the restriction on Amex specialists from 
buying on plus ticks and selling on minus ticks without Floor 
Official approval for transactions in Exchange Traded Funds).
    \8\ See NYSE Rule 104 and Rule 11b-1 under the Act, 17 CFR 
240.11b-1.
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\9\ that the proposed rule change (File No. SR-NYSE-2004-71), as 
amended, be, and hereby is, approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    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. E5-1965 Filed 4-25-05; 8:45 am]
BILLING CODE 8010-01-P