[Federal Register Volume 70, Number 150 (Friday, August 5, 2005)]
[Notices]
[Pages 45458-45459]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4227]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52182; File No. SR-NYSE-2005-16]


Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Order Approving Proposed Rule Change to Rescind the ``Nine-Bond Rule''

August 1, 2005
    On February 11, 2005, the New York Stock Exchange, Inc. (``NYSE'') 
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 
rescind NYSE Rule 396, commonly known as the ``Nine-Bond Rule.'' The 
proposed rule change was published for comment in the Federal Register 
on June 29, 2005.\3\ The Commission received no comments on the 
proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 51899 (June 22, 
2005), 70 FR 37461.
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    NYSE Rule 396 prohibits a member, member organization, or 
affiliated person or firm from effecting any transaction in any NYSE-
listed bond in the over-the-counter market, either as principal or 
agent, without first satisfying all public bids and offers on the NYSE 
at prices equal to, or better than, the price at which such portion of 
the order is executed over-the-counter. The rule contains a number of 
exceptions, including one for any order submitted for ten bonds or 
more.
    The Commission finds that the NYSE's proposal to rescind Rule 396 
is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\4\ 
In particular, the Commission believes that the proposal is consistent 
with section 6(b)(5) of the Act,\5\ which requires that the rules of 
the exchange be designed to prevent fraudulent and manipulative acts, 
to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market, and 
in general, to protect investors and the public interest. Eliminating 
NYSE Rule 396 should facilitate the efficient execution of bond 
transactions on the NYSE without compromising smaller customer orders. 
The Commission notes that the approval

[[Page 45459]]

of the proposed rule change in no way diminishes or otherwise affects 
the best execution obligations of NYSE members, member organizations, 
or affiliated persons that are otherwise imposed by federal securities 
law or agency law.
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    \4\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\6\ that the proposed rule change (SR-NYSE-2005-16) be, and it 
hereby is, approved.
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    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-4227 Filed 8-4-05; 8:45 am]
BILLING CODE 8010-01-P