[Federal Register Volume 71, Number 54 (Tuesday, March 21, 2006)]
[Notices]
[Pages 14278-14279]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-4057]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53487; File No. SR-NYSE-2006-21]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Extension of the Pilot Until March 24, 2006 To Put Into 
Operation Phase 1 of the NYSE HYBRID MARKETSM

March 15, 2006.
    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 March 13, 2006, the New York Stock Exchange LLC (``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. NYSE filed 
the proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ 
and Rule 19b-4(f)(6) thereunder,\4\ 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).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NYSE proposes to extend the pilot which put into operation Phase 1 
of the NYSE HYBRID MARKET\SM\ (``Hybrid Market'') initiative 
(``Pilot'') \5\ proposed in SR-NYSE-2004-05 \6\ and amendments thereto 
(``Hybrid Market filings'').
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    \5\ See Securities Exchange Act Release No. 52954 (December 14, 
2005), 70 FR 75519 (December 20, 2005) (SR-NYSE-2005-87). See also 
Securities Exchange Act Release No. 53359 (February 24, 2006), 71 FR 
10736 (March 2, 2006) (SR-NYSE-2006-09) (amending the Pilot to 
provide for the automatic conversion of CAP-DI orders in certain 
situations).
    \6\ See Securities Exchange Act Release Nos. 50173 (August 10, 
2004), 69 FR 50407 (August 16, 2004); 50667 (November 15, 2004), 69 
FR 67980 (November 22, 2004); and 51906 (June 22, 2005), 70 FR 37463 
(June 29, 2005). See also Amendment No. 6, filed on September 16, 
2005 and Amendment No. 7, filed on October 11, 2005.
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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 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 self-regulatory organization 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
    On December 14, 2005, the Commission approved the Pilot to put into 
operation Phase 1 of the Hybrid Market initiative with respect to a 
group of securities, known as Phase 1 Pilot securities (``Pilot 
securities'').\7\ The approval provided that the Pilot would terminate 
the earlier of: (1) March 14, 2006 or (2) Commission action on the 
Hybrid Market proposal.\8\
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    \7\ See Securities Exchange Act Release No. 51906 (June 22, 
2005), 70 FR 37463 (June 29, 2005) (Amendment No. 5 to SR-NYSE-2004-
05); see also Securities Exchange Act Release No. 52954 (December 
14, 2005), 70 FR 75519 (December 20, 2005) (SR-NYSE-2005-87).
    \8\ See Telephone conversation between Jeffrey Rosenstrock, 
Principal Rule Counsel, NYSE, and Steve L. Kuan, Special Counsel, 
Division of Market Regulation, Commission, on March 14, 2006.
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    The Exchange proposes to extend the Pilot through March 24, 2006, 
while the Commission continues to review the Hybrid Market filings.
    The Exchange believes that an extension of the Pilot through March 
24, 2006 will allow the Exchange to continue to conduct real-time 
system and user testing of certain features of the Hybrid Market 
filings in order to be in a position to comply with the implementation 
of Regulation NMS.\9\
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    \9\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005).
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    The Exchange believes the Pilot has proven beneficial from both a 
technology and a training perspective. It has given the Exchange the 
opportunity to identify and address any system problems and to identify 
and incorporate beneficial system changes that become apparent as a 
result of usage in real time and under real market conditions. The 
ability to have such real time user interface is invaluable, as it is 
impossible to accurately anticipate behavioral changes in a development 
or mock-trading environment. In addition, the Pilot has allowed users 
to gain essential practical experience with the new systems and 
processes in a well-modulated way.
    The Pilot has operated with minimal problems given the amount and 
degree

[[Page 14279]]

of testing and training that has occurred to date.\10\
    Therefore, the Exchange believes it is appropriate to extend the 
Pilot through March 24, 2006.
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    \10\ See Telephone conversation between Jeffrey Rosenstrock, 
Principal Rule Counsel, NYSE, and Steve L. Kuan, Special Counsel, 
Division of Market Regulation, Commission, on March 14, 2006.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \11\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \12\ in particular, in that it 
is designed to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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 Exchange believes that the proposed rule change is also designed to 
support the principles of Section 11A(a)(1) of the Act \13\ in that it 
seeks to assure economically efficient execution of securities 
transactions, make it practicable for brokers to execute investors' 
orders in the best market, and provide an opportunity for investors' 
orders to be executed without the participation of a dealer.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 15 U.S.C. 78k-1(a)(1).
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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 foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest; does not 
impose any significant burden on competition; and by its terms, does 
not become operative for 30 days from the date on which it was filed, 
or such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \16\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the five-day pre-filing notice requirement and the 30-
day operative delay and designate the proposed rule change immediately 
operative upon filing. The Commission believes that waiver of the five-
day pre-filing notice requirement and the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it would allow the Pilot to continue without interruption. 
Accordingly, the Commission designates the proposal to be effective and 
operative upon filing with the Commission.\17\
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    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ 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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    At any time within 60 days of the filing of the 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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change 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-2006-21 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2006-21. 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 such 
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 Number SR-NYSE-2006-21 and should be submitted on or before April 
11, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-4057 Filed 3-20-06; 8:45 am]
BILLING CODE 8010-01-P