[Federal Register Volume 70, Number 160 (Friday, August 19, 2005)]
[Notices]
[Pages 48790-48792]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4533]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52251; File No. SR-NYSE-2005-47]


Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 2 Thereto Relating to NYSE Rule 103.12 Requiring 
Specialists and Clerks To Record Their Time on the Trading Floor of the 
Exchange

August 12, 2005.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 11, 2005, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
has designated the proposed rule change as constituting a ``non-
controversial'' rule change under Section 19(b)(3)(A)(iii) of the 
Act,\3\ and paragraph (f)(6) of Rule 19b-4 under the Act,\4\ which 
renders the proposal effective upon receipt of this filing by the 
Commission.\5\ On August 10, 2005, NYSE filed Amendment No. 1 to the

[[Page 48791]]

proposed rule change.\6\ On August 12, 2005, NYSE filed Amendment No. 2 
to the proposed rule change.\7\ The Commission is publishing this 
notice to solicit comments on the proposed rule change, as amended, 
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)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ NYSE has requested that the Commission waive both the five-
day pre-filing notification requirement and the 30-day operative 
delay, as specified in Rule 19b-4(f)(6)(iii). 17 CFR 240.19b-
4(f)(6)(iii).
    \6\ NYSE withdrew Amendment No. 1 on August 11, 2005.
    \7\ In Amendment No. 2, NYSE clarified that the specialist 
organization as well as individual specialists and Floor clerks must 
comply with separate obligations under the proposed rule. NYSE also 
withdrew the proposed addition of NYSE Rule 103.12 to the ``List of 
Exchange Rule Violations and Fines Applicable Thereto Pursuant to 
Rule 476A,'' which the Exchange represents it will file separately 
at a later date.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change seeks to amend NYSE rules to include NYSE 
Rule 103.12 to require specialists and their clerks to record the time 
they spend on the trading floor of the Exchange (``Floor'') working in 
those capacities. The text of the proposed rule change is available on 
the NYSE's Web site (http://www.nyse.com), at the NYSE's Office of the 
Secretary, and at the Commission's Public Reference Room.

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
    As part of a recent settlement with the Commission,\8\ the Exchange 
agreed to undertake certain initiatives concerning the oversight of the 
Floor. In one of these undertakings, the Exchange is required to 
develop systems to track the identity of specialists and their clerks 
and the times when each specialist and clerk act as such while on the 
Floor.
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    \8\ See Securities Exchange Act Release No. 51524 (April 12, 
2005) announcing Administrative Proceeding File No. 3-11892 (the 
``Administrative Proceeding'').
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    The Exchange believes that proposed NYSE Rule 103.12 will enable it 
to more accurately track the identity of specialists and their clerks 
and the times when each specialist and clerk act as such while on the 
Floor. The proposed rule would require that specialist member 
organizations make and keep, in the regular course of business, records 
of the times that each of the member organization's specialists and 
clerks work in these capacities on the Floor. The records created and 
maintained by the specialist member organizations must be able to be 
provided to the Exchange within the time frame and in a format 
determined by the Exchange.
    In addition, while the Exchange can utilize the identification 
badges issued to members and member organization employees, such as 
clerks, working on the Floor to record the time when they enter the 
trading Floor, the undertaking requires more detail as to the times 
when specialists and clerks act as such. To facilitate the Exchange's 
ability to monitor specialist and clerk activity, the Exchange will 
install a system to capture this information electronically. This 
system, to be known as IDTrack, will require specialists and clerks to 
log in to the IDTrack system and register their presence with respect 
to specialty stocks in which they are working. IDTrack will provide 
reports and information to the Exchange's Division of Market 
Surveillance and to specialist firms. Accordingly, under the proposed 
rule the Exchange will have an independent record of the times that 
specialists and their clerks spend on the Floor of the Exchange working 
in those capacities.
2. Statutory Basis
    The Exchange believes that the basis under the Act for this 
proposed rule change is the requirement under section 6(b)(5) \9\ that 
an Exchange have rules that are designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles 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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    \9\ 15 U.S.C. 78f(b)(5).
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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 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

    Because the proposed rule change: (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 (or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest) after the date of the filing, the proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \10\ and 
Rule 19b-4(f)(6) thereunder.\11\ At any time within 60 days of the 
filing of such 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 Act.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ For purposes of calculating the 60-day abrogation period, 
the Commission considers the proposed rule change to have been filed 
on August 12, 2005, the date the NYSE filed Amendment No. 2.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. In addition, Rule 19b-4(f)(6)(iii) requires a 
self-regulatory organization to provide the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule change, 
or such shorter time as designated by the Commission.
    The Exchange has asked the Commission to waive the five-day pre-
filing requirement and the 30-day operative delay to allow NYSE to 
implement the undertaking in the Administrative Proceeding with respect 
to the recording of time specialists and clerks spend on the Floor 
acting in those capacities. The Commission has decided, consistent with 
the protection

[[Page 48792]]

of investors and the public interest, to waive the five-day pre-filing 
notice and 30-day operative date so that the NYSE may meet the 
requirement in the Administrative Proceeding that the tracking of the 
time specialists and clerks spend on the Floor begin on or before 
October 1, 2005.\13\
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    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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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 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-2005-47 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File No. SR-NYSE-2005-47. 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 the filing 
also will be available for inspection and copying at the principal 
office of the Exchange. 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 No. SR-
NYSE-2005-47 and should be submitted on or before September 9, 2005.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
Jonathan G. Katz,
Secretary.
[FR Doc. E5-4533 Filed 8-18-05; 8:45 am]
BILLING CODE 8010-01-P