[Federal Register Volume 72, Number 24 (Tuesday, February 6, 2007)]
[Notices]
[Pages 5483-5485]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-1861]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55186; File No. SR-NYSEArca-2007-08]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating to Further
Extending the Time Period by Which the Exchange Will Enter Into the
NASD/NYSE Arca Options Agreement Pursuant to Rule 17d-2
January 29, 2007.
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 January 23, 2007, NYSE Arca, Inc. (``NYSE Arca'' 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 filed the proposal as
a ``non-controversial'' 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.\5\ 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).
\5\ The Exchange has asked the Commission to waive the 5-day
pre-filing notice requirement and the 30-day operative delay. See 15
U.S.C. 78s(b)(3)(A), 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to amend its undertaking \6\ to extend
for 90 days from the date of this filing the time period by which the
Exchange will enter into an agreement with the National Association of
Securities Dealers, Inc. (``NASD'') pursuant to Rule 17d-2 under the
Act \7\ (the ``NASD/NYSE Arca Options Agreement'' or ``Agreement'').
The Agreement would expand the allocation to NASD of regulatory
responsibility to encompass all the regulatory oversight and
enforcement responsibilities with respect to the options activities of
Archipelago Securities, L.L.C. (``Archipelago Securities''),\8\ except
for ``real-time market surveillance.''
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\6\ See Securities Exchange Act Release No. 54238 (July 28,
2006), 71 FR 44758 (August 7, 2006) (SR-NYSEArca-2006-13) (OX
Approval Order). See Securities Exchange Act Release No. 54690
(November 2, 2006), 71 FR 66211 (November 13, 2006) (SR-NYSEArca-
2006-79) (90-Day Extension).
\7\ 17 CFR 240.17d-2.
\8\ Archipelago Securities, a wholly-owned subsidiary of
Archipelago Holdings, Inc. and a registered broker-dealer, acts as
the outbound order router for the NYSE Arca Marketplace (formerly
known as the Archipelago Exchange) and, as such, is regulated as an
exchange ``facility'' of NYSE Arca and NYSE Arca Equities, Inc. See
15 U.S.C. 78c(a)(2). As such, any proposed rule change relating to
Archipelago Securities' order-routing function must be filed with
the Commission, and must operate in a manner that is consistent with
the provisions of the Act applicable to exchanges and with NYSE Arca
rules.
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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 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
In connection with the Commission's approval of the Exchange's new
electronic options trading platform, OX, Archipelago Securities became
a routing broker for OX options orders on the Exchange.\9\ In Amendment
No. 3 to its filing seeking approval of the OX platform,\10\ the
Exchange proposed to
[[Page 5484]]
clarify that NASD, a self-regulatory organization unaffiliated with the
Exchange or any of its affiliates, would continue to carry out
oversight and enforcement responsibilities as the Designated Examining
Authority designated by the Commission pursuant to Rule 17d-1 under the
Act \11\ with the responsibility for examining Archipelago Securities
for compliance with the applicable financial responsibility rules.
Furthermore, the Exchange represented that it would enter into the
NASD/NYSE Arca Options Agreement pursuant to Rule 17d-2 under the
Act,\12\ to expand the allocation to NASD of regulatory responsibility
to encompass all the regulatory oversight and enforcement
responsibilities with respect to the options activities of Archipelago
Securities, except for ``real-time market surveillance.'' \13\ The
Exchange agreed to submit the NASD/NYSE Arca Options Agreement to the
Commission under Rule 17d-2 within 90 days of the date of the
Commission's approval of the OX trading platform (July 28, 2006), which
was October 26, 2006.\14\
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\9\ See OX Approval Order, supra note 6. Pursuant to NYSE Arca
Rule 6.1A(a)(15), which was adopted in connection with the
establishment of the new OX trading platform, the term ``OX Routing
Broker'' refers to the broker-dealer affiliate of the Exchange that
acts as agent for routing orders entered into OX of OTP Holders, OTP
Firms and OTP Firms' Sponsored Participants to other Market Centers
for execution whenever such routing is permitted by Exchange Rules.
Archipelago Securities is the Exchange's only OX Routing Broker.
\10\ See OX Approval Order, supra note 6.
\11\ 17 CFR 240.17d-1.
\12\ 17 CFR 240.17d-2.
\13\ See OX Approval Order, supra note 6.
\14\ Id.
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On October 20, 2006, the Exchange submitted to the Commission a
draft NASD/NYSE Arca Options Agreement and requested a ninety day
extension \15\ of the October 26, 2006 deadline to January 24, 2007, in
order for the Commission to review the proposed NASD/NYSE Arca Options
Agreement. Based on the recommendation of the staff, the Exchange
hereby seeks a further extension of time, permitting an additional 90
days from the date of this filing to enter into the NASD/NYSE Arca
Options Agreement. NYSE Arca believes this will afford the Commission
staff sufficient time to review, publish, and take action on the
proposal.
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\15\ See 90-Day Extension, supra note 6.
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The Exchange believes that the requested extension of time is
consistent with the Act and the rules and regulations thereunder, will
not significantly affect the protection of investors or the public
interest, and does not impose any significant burden on competition.
The Exchange notes that NASD already carries out oversight and
enforcement responsibilities as the Designated Examining Authority
designated by the Commission pursuant to Rule 17d-1 with the
responsibility for examining Archipelago Securities for compliance with
the applicable financial responsibility rules.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\16\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\17\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
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.
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\16\ 15 U.S.C. 78f(b).
\17\ 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
Written comments on the proposed rule change were neither solicited
nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule: (i) Does not significantly affect the
protection of investors or the public interest; (ii) does not impose
any significant burden on competition; and (iii) 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,\18\ the proposed
rule change has become effective pursuant to Section 19(b)(3)(A) of the
Act \19\ and Rule 19b-4(f)(6) thereunder.\20\
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\18\ Pursuant to Rule 19b-4(f)(6)(iii) under the Act, the
Exchange is required to give the Commission 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 requested that the Commission waive the 5-day pre-
filing notice requirement. The Commission has determined to waive
this requirement for this filing.
\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f)(6).
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The Exchange has requested that the Commission waive the 30-day
operative delay, which would make the rule change effective and
operative upon filing. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest. Such waiver will allow the Exchange to comply with its
undertaking made in connection with the OX Approval Order to submit the
NASD/NYSE Arca Options Agreement to the Commission. The Exchange
requests a waiver of the 30-day period on the basis that the current
deadline for entering into the NASD/NYSE Arca Options Agreement was
January 24, 2007 and a delay of 30 days would place the Exchange out of
compliance with its undertaking. Extending the compliance date for the
Exchange's undertaking by an additional 90 days will provide time for
the Exchange to finalize and file the Agreement. For these reasons, the
Commission designates the proposal to be effective and operative upon
filing with the Commission.\21\
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\21\ 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-NYSEArca-2007-08 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-NYSEArca-2007-08. This
file number should be included on the subject line if e-mail is used.
To help the
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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 Number SR-NYSEArca-2007-08 and
should be submitted on or before February 27, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-1861 Filed 2-5-07; 8:45 am]
BILLING CODE 8011-01-P