[Federal Register Volume 70, Number 103 (Tuesday, May 31, 2005)]
[Notices]
[Pages 30986-30988]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2723]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51729; File No. SR-NYSE-2004-57]


Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendments No. 1 and No. 2 Thereto Relating to Member Organization 
Increases in Arbitration Filing Fees and Member Organization Surcharges 
in Arbitration Claims Filed by Customers

May 24, 2005.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Exchange Act''), and Rule 19b-4 \2\ thereunder, notice is 
hereby given that on October 12, 2004 and on April 4, 2005 (Amendment 
No. 1) and on April 11, 2005 (Amendment No. 2), the New York Stock 
Exchange, Inc. (``NYSE'' or the ``Exchange'') filed with the Securities 
and Exchange Commission (``SEC'' or the ``Commission'') the proposed 
rule change as described in Items I, II, and III below, which Items 
have been prepared by the Exchange. For the purposes of Section 
19(b)(3)(A)(ii) of the Exchange Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ NYSE has designated the proposed rule change as one 
establishing or changing a due, fee, or other charge imposed by the 
self-regulatory organization on its members, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change consists of amendments to Rule 629 
concerning arbitration filing fees and hearing deposits, and the 
imposition of member organization surcharges pertaining to arbitration 
claims. Below is the text of the proposed rule change to Rule 629. 
Proposed new language is in italics; proposed deletions are in 
brackets.

Rule 629 Schedule of Fees

* * * * *
    (c)(1) The arbitrators, in their award, may determine the amount 
chargeable to the parties as forum fees and shall determine who shall 
pay such forum fees. Forum fees chargeable to the parties shall be 
assessed on a per hearing session basis and the aggregate for each 
hearing session may equal but shall not exceed the amount of the 
largest initial hearing deposit deposited by any party. [,e] Except 
that in a case where claims have been joined subsequent to filing [in 
which cases hearing session], forum fees for any party other than a 
customer shall be computed as provided in paragraph (d), and forum fees 
for a customer in connection with any industry claim shall be computed 
as provided in this paragraph (c)(1). [The arbitrators may determine in 
the award that a party shall reimburse to another party any non-
refundable filing fee it has paid.]
    If a customer is assessed forum fees in connection with an industry 
claim, [forum fees assessed against] the customer's forum fees shall be 
based on the [hearing deposit required under the industry claims 
schedule for the] total amount awarded to industry parties to be paid 
by the customer and not based on the size of the industry claim. The 
maximum fee per session for purposes of calculating any forum fees that 
may be assessed against the customer in connection with an industry 
claim shall be:

------------------------------------------------------------------------
                                                           Maximum per-
                                                              session
      Amount of award (excluding interest expenses)        customer fee
                                                              amount
------------------------------------------------------------------------
$25,001 to $100,000.....................................            $600
$100,001 to $500,000....................................             750
$500,001 to $5,000,000..................................           1,000
Over $5,000,000.........................................           1,500
------------------------------------------------------------------------

    (c)(2) The arbitrators, in their award, may determine that a party 
shall reimburse to another party any non-refundable filing fee it has 
paid; any such filing fee assessed against a customer in connection 
with an industry claim shall not exceed $500.00.
    No fees shall be assessed against a customer in connection with an 
industry claim that is dismissed; however, in cases where there is also 
a customer claim, the customer may be assessed forum fees based on the 
customer claim under the procedure set out above. Amounts deposited by 
a party as hearing deposits shall be applied against forum fees, if 
any.
    In addition to forum fees, the arbitrator(s) may determine in the 
award the amount of costs incurred pursuant to Rules 617, 619 and 623 
and, unless applicable law directs otherwise, other costs and expenses 
of the parties. The arbitrator(s) shall determine by whom such costs 
shall be borne[.], provided that the following schedule of hearing 
deposits shall be used to calculate any

[[Page 30987]]

costs assessable against the customer pursuant to Rule 617 in 
connection with an industry claim.

------------------------------------------------------------------------
                                                              Hearing
    Amount of dispute  (excluding interest expenses)          deposit
------------------------------------------------------------------------
$25,001 to $100,000.....................................            $600
$100,001 to $500,000....................................             750
$500,001 to $5,000,000..................................           1,000
Over $5,000,000.........................................           1,500
------------------------------------------------------------------------

    If the [hearing session] forum fees are not assessed against a 
party who had made a hearing deposit, the hearing deposit will be 
refunded unless the arbitrators determine [otherwise] that a hearing 
deposit paid by a party other than a customer should not be refunded. 
In no event shall the arbitrators determine not to refund a hearing 
deposit to a customer against whom forum fees are not assessed.
* * * * *
    (e) If the dispute, claim or controversy does not involve, disclose 
or specify a money claim, the non-refundable filing fee for a public 
customer will be $250 and the non-refundable filing fee for an industry 
party shall be $500. The hearing session deposit to be remitted by a 
party shall be $600 or such greater or lesser amounts as the Director 
of Arbitration or the panel of arbitrators may require, but shall not 
exceed $1,500.
* * * * *
    (h) The fee for a pre-hearing conference with an arbitrator shall 
be:

       Schedule for Pre-Hearing Conference With One Arbitrator \1\
------------------------------------------------------------------------
                                                       Conference fee
                                                   ---------------------
              Amount in  controversy                   For        For
                                                    customers   industry
------------------------------------------------------------------------
$1,000 or less....................................     $15.00     $25.00
$1,001 up to $2,500...............................      25.00      50.00
$2,501 up to $5,000...............................     100.00     125.00
$5,001 up to $10,000..............................     200.00     250.00
$10,001 up to $25,000.............................     300.00     300.00
Over $25,000......................................     450.00    450.00
------------------------------------------------------------------------
\1\ Fee for pre-hearing conference with three arbitrators shall be based
  on applicable hearing session deposit fee.

    (i) Schedule of Fees.
    For purposes of the schedule of fees the term ``claim'' includes 
Claims, Counterclaims, Third-Party Claims or Cross-Claims. Any such 
claim submitted by a customer is a customer claim. Any such claim 
submitted by a member, allied member, registered representative, member 
firm or member corporation against a customer or other non-member is an 
industry claim.
    For claims of $25,000 or less see schedule of fees in Rule 601 
Simplified Arbitration.

                           Custer as Claimant
------------------------------------------------------------------------
    Amount of dispute  (excluding interest and        Filing    Hearing
                     expenses)                         fee      deposit
------------------------------------------------------------------------
$25,001 to $50,000................................       $120       $400
$50,001 to $100,000...............................        150        500
$100,001 to $500,000..............................        200        750
$500,001 to $5,000,000............................        250      1,000
Over $5,000,000...................................        300      1,500
------------------------------------------------------------------------


                                              Industry as Claimant*
----------------------------------------------------------------------------------------------------------------
                                                                                  Industry
     Amount of dispute  (excluding interest expenses)          Filing fee      hearing deposit  Customer hearing
                                                                                   3 Arbs.      deposit  3 Arbs.
----------------------------------------------------------------------------------------------------------------
$25,001 to $100,000.......................................      $[500] 1,000        $[600] 750              $600
$100,001 to $500,000......................................       [500] 1,000       [750] 1,125               750
$500,001 to $5,000,000....................................       [500] 1,500     [1,000] 1,200              1000
Over $5,000,000...........................................             [500]           [1,500]              1500
$5,000,001 to $10,000,000.................................             2,500             1,500
Over $10,000,000..........................................             5,000            1,500
----------------------------------------------------------------------------------------------------------------
* This is the fee schedule for claims submitted by members, member firms, member corporations or allied members
  against members, member firms, member corporations or allied members, customers, registered representatives or
  non-members other than customers, and for claims submitted by registered representatives or non-members other
  than customers against members, member firms, member corporations, allied members or non-members.

    (j) Member Surcharges
    Each member, member firm, member corporation or allied member 
(hereinafter referred to as any ``entity'') that is named as a party to 
an arbitration proceeding, whether in a Claim, Counterclaim, Cross-
Claim or Third-Party Claim, shall be assessed a member surcharge 
pursuant to the schedule below upon receipt of the claim naming such 
entity as a party to the proceeding. For each associated person who is 
named, the member surcharge shall be assessed against the entity or 
entities that employed the associated person at the time of the events 
which gave rise to the dispute, claim or controversy. No entity shall 
be assessed more than a single member surcharge in any arbitration 
proceeding. The member surcharge will be refunded by the Exchange in an 
arbitration filed by a customer if the arbitration panel: (1) denies 
all of a customer's claims against the entity or associated person, and 
(2) allocates all forum fees assessed pursuant to Rules 601 and 629 
against the customer.

------------------------------------------------------------------------
                                                                Member
                     Amount in Dispute                        Surcharge
------------------------------------------------------------------------
Up to $2,500...............................................         $150
$2,501 to $5,000...........................................          200
$5,001 to $10,000..........................................          325
$10,001 to $25,000.........................................          425
$25,001 to $30,000.........................................          600
$30,001 to $50,000.........................................          875
$50,001 to $100,000........................................        1,100
$100,001 to $500,000.......................................        1,700
$500,001 to $1,000,000.....................................        2,250
$1,000,001 to $5,000,000...................................        2,800
$5,000,001 to $10,000,000..................................        3,350
Over $10,000,000...........................................        3,750
------------------------------------------------------------------------

    If the dispute, claim or controversy does not involve, disclose, or 
specify a monetary claim, the member surcharge shall be $1,500 or such 
greater or lesser amount as the Director of Arbitration or the panel of 
arbitrators may require, but shall not exceed the maximum amount 
specified in the schedule of member surcharges.
* * * * *

A. 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 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,

[[Page 30988]]

of the most significant aspects of such statements.
1. Purpose
    The proposed rule change would raise existing fees associated with 
filing arbitration claims for member organizations and associated 
persons, and would impose a new surcharge on member organizations that 
are the subject of arbitration claims, or whose associated person(s) 
are the subject of such claims. Under the proposed rule change, filing 
fees and hearing deposits would be increased only for cases initiated 
by members and member organizations, and the filing fees and hearing 
deposits for claims initiated by public customers would not be 
increased.
    When a party files an arbitration claim at the Exchange, a non-
refundable filing fee and a hearing deposit is required. Fees are also 
required when filing counterclaims, cross-claims and third party 
claims. The amount of the fee and deposit varies based on the amount in 
dispute. At the conclusion of the hearings, the arbitrators assess 
forum fees against the claimant(s) or respondent(s), or both. The forum 
fees are computed by multiplying the total number of hearing sessions 
by the initial hearing deposit. These fees are payable to the Exchange 
and offset the cost of maintaining the arbitration forum.
    As the arbitration caseload has increased significantly over the 
past several years, the attendant costs to the Exchange in maintaining 
the arbitration forum have also increased. This fee increase will 
offset a portion of those increased costs.
2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(4) \5\ that an exchange have rules 
that provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members and other persons using its facilities.
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    \5\ 15 U.S.C. 78f(b)(4).
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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 not necessary or appropriate in 
furtherance of the purposes of the Exchange 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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) \6\ of the Exchange Act and Rule 19b-4(f)(2) \7\ 
thereunder, in that it establishes or changes a due, fee, or other 
charge imposed by the Exchange on its members. At any time within 60 
days of the filing of this 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 
purposes of the Exchange Act.\8\
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-4(f)(2).
    \8\ For purposes of calculating the 60-day abrogation period, 
the Commission considers the proposed rule change to have been filed 
on April 11, 2005, when Amendment No. 2 was filed.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Exchange 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 e-mail to [email protected]. Please include File 
Number SR-NYSE-2004-57 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-2004-57. 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 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 will also 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-2004-57 and should be submitted by June 21, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-2723 Filed 5-27-05; 8:45 am]
BILLING CODE 8010-01-P