[Federal Register Volume 70, Number 181 (Tuesday, September 20, 2005)]
[Notices]
[Pages 55199-55200]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-18666]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52421; File No. SR-NYSE-2005-54]


Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Order Granting Accelerated Approval of a Proposed Rule Change To Amend 
NYSE Rule 123C (Market on the Close Policy and Expiration Procedures) 
To Eliminate the Requirement To Publish Pre-Opening Market Order 
Imbalances on Expiration Fridays

September 14, 2005.

I. Introduction

    On July 26, 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 
proposal to amend NYSE Rule 123C (Market on the Close Policy and 
Expiration Procedures) to eliminate the requirement to publish pre-
opening market order imbalances on expiration Fridays. The proposed 
rule change was published for comment in the Federal Register on August 
19, 2005.\3\ The Commission received no comments regarding the 
proposal. This order approves the proposed rule change on an 
accelerated basis.
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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. 52255 (August 15, 
2005), 70 FR 48792.
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II. Description of the Proposal

    NYSE Rule 123C contains requirements with respect to operation of 
the Exchange's market concerning market-on-close (``MOC'') and limit-
on-close (``LOC'') orders as well as order entry and imbalance 
publication requirements for use on expiration days.\4\ Under NYSE Rule 
123C(6), the Exchange currently publishes information order imbalances, 
as promptly as possible after 9 a.m., only with respect to the 
imbalance of buy and sell market orders, and does not include buy and 
sell limit orders entered up to that time for execution at the opening. 
The NYSE proposes to eliminate the publication of pre-opening market 
order imbalances on expiration Fridays. The NYSE believes that the 
publication of only market order imbalances does not provide useful 
information, especially with respect to stocks which are part of an 
expiring index whose settlement is based on NYSE opening prices on one 
of those days.
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    \4\ NYSE Rule 123C defines an ``expiration day'' as ``a trading 
day prior to the expiration of index-related derivative products 
(futures, options or options on futures), whose settlement pricing 
is based upon opening or closing prices on the Exchange, as 
identified by a qualified clearing corporation (e.g., the Options 
Clearing Corporation). The twelve expiration days are `expiration 
Fridays' which fall on the third Friday in every month.'' On these 
expiration days, the Exchange has specific requirements governing 
the entry of orders in stocks relating to index contracts whose 
settlement prices are based on the opening prices on the Exchange of 
the stocks comprising the indices.
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III. Discussion

    The Commission finds that the proposed rule change 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 finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\6\ which requires, among 
other things, that the rules of a national securities exchange be 
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

[[Page 55200]]

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 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 Commission believes that by amending NYSE Rule 123C to 
eliminate the publication of pre-opening market order imbalances which 
do not include limit orders, the NYSE will no longer disseminate 
information that may have been misleading to investors.
    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\7\ for approving the proposed rule change prior to the 30th 
day after the date of publication of notice in the Federal Register. 
The Commission does not believe that the proposed rule change raises 
novel regulatory issues. Granting accelerated approval of the proposed 
rule change allows the NYSE to implement the proposed rule change by 
the next expiration Friday. Consequently, the Commission believes that 
it is appropriate to grant accelerated approval to permit the Exchange 
to eliminate the publication of pre-opening market order imbalances on 
expiration Fridays as soon as possible. Accordingly, the Commission 
finds that there is good cause, consistent with the reasons herein, to 
approve the proposal on an accelerated basis.
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    \7\ 15 U.S.C. 78s(b)(2).
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IV. Conclusion

    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-NYSE-2005-54) be, and hereby 
is approved on an accelerated basis.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
Jonathan G. Katz,
Secretary.
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    \9\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 05-18666 Filed 9-19-05; 8:45 am]
BILLING CODE 8010-01-P