[Federal Register Volume 70, Number 162 (Tuesday, August 23, 2005)]
[Notices]
[Page 49350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4592]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52274; File No. SR-NYSE-2005-21]


Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Order Granting Approval of Proposed Rule Change and Amendment No. 1 
Thereto Relating to the Temporary Reallocation of Securities Among 
Specialists

August 16, 2005.
    On March 11, 2005, 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 103.11 to introduce new 
procedures regarding the temporary reallocation of securities traded on 
the Exchange from one specialist organization to another specialist 
organization. On June 16, 2005, the Exchange filed Amendment No. 1 to 
the proposed rule change.\3\ The proposed rule change, as amended, was 
published for comment in the Federal Register on July 14, 2005.\4\ The 
Commission received no comments on the proposal. This order approves 
the proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the NYSE provided information concerning 
the designee of the Chief Regulatory Officer and corrected technical 
errors in the rule text.
    \4\ See Securities Exchange Act Release No. 51985 (July 7, 
2005), 70 FR 40768.
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    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of Section 6 of the Act 
\5\ and the rules and regulations thereunder applicable to a national 
securities exchange.\6\ In particular, the Commission finds that the 
proposed rule change is consistent with section 6(b)(5) of the Act,\7\ 
which requires, among other things, that the rules of an exchange be 
designed 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. The Commission notes that the Exchange has determined 
that the temporary reallocation of a security is most likely to be 
required for regulatory reasons and has therefore proposed to transfer 
the responsibility for such decisions from the Chief Executive Officer 
to the Chief Regulatory Officer (``CRO'') or his or her designee.\8\ 
The Commission also notes that the Exchange has proposed to specify 
that only non-specialist Board of Executive (``BoE'') Floor 
Representatives may join the CRO (or his or her designee) in making 
reallocation decisions in order to avoid any potential conflicts of 
interest that may exist with specialist BoE Floor Representatives 
participating in such decisions. The Commission also notes that the 
Exchange has provided an alternative that, if there are not two non-
specialist BoE Floor Representatives available to participate with the 
CRO (or his or her designee) in the reallocation decision, the most 
senior non-specialist Floor Governor or Governors, based on his or her 
current length of service as a Floor Governor, would be authorized to 
act in place of the non-specialist BoE Floor Representative or 
Representatives. The Commission believes that the proposed changes to 
the Exchange's procedure for the temporary reallocation of securities 
are designed to appropriately assign the responsibility for making 
reallocation decisions to the Exchange's regulatory group and 
disinterested members of the BoE (or disinterested Floor Governors), 
and thereby to minimize the potential for conflicts of interest and 
strengthen regulatory independence.
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    \5\ 15 U.S.C. 78f.
    \6\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ The Commission notes that the Exchange has represented that 
it expects that the designee would be an officer in the Exchange's 
regulatory group, with the Executive Vice President of the Market 
Surveillance Division being the primary designee. See Amendment No. 
1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-NYSE-2005-21) as amended, is 
approved.
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4592 Filed 8-22-05; 8:45 am]
BILLING CODE 8010-01-P