[Federal Register Volume 73, Number 15 (Wednesday, January 23, 2008)]
[Notices]
[Pages 4036-4038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-1055]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57156; File No. SR-NYSE-2007-120]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend NYSE Rules 13, 60, and 1000 To Allow for the Automatic Execution 
of G-Quotes in the Display Book

January 15, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on December 24, 2007, 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, II, 
and III below, which Items have been substantially prepared by the 
NYSE. The proposed rule change has been filed by the NYSE as effecting 
a change in an existing order-entry or trading system pursuant to 
Section 19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(5) 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.
---------------------------------------------------------------------------

    \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)(5).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NYSE proposes to amend NYSE Rules 13 and 1000 to allow for the 
automatic execution of G-Quotes in the Display Book[supreg] (the 
``Display Book''). The Exchange is also seeking to make conforming 
changes to NYSE Rule 60. The text of the proposed rule change is 
available on the Exchange's Web site (http://www.nyse.com), at the 
Exchange, 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 NYSE 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 NYSE has

[[Page 4037]]

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
    The Exchange proposes to amend NYSE Rules 1000 and 13 to allow for 
the automatic execution of G-Quotes in the Display Book.\5\ The 
Exchange is also seeking to make conforming changes to NYSE Rule 60.
---------------------------------------------------------------------------

    \5\ The Display Book[supreg] system is an order management and 
execution facility. The Display Book system receives and displays 
orders to the specialists, contains the Book, and provides a 
mechanism to execute and report transactions and publish the results 
to the Consolidated Tape. The Display Book system is connected to a 
number of other Exchange systems for the purposes of comparison, 
surveillance, and reporting information to customers and other 
market data and national market systems.
---------------------------------------------------------------------------

Background

    An automatically executable (``auto-ex'') order is an order in a 
security, other than a bond traded in NYSE Bonds, that initiates an 
automatic execution in accordance with and to the extent provided by 
NYSE Rule 1000, immediately upon entry into Exchange systems. 
Currently, NYSE Rule 13 lists the categories of auto-ex orders and NYSE 
Rule 1000 permits automatic execution of orders reflected in the 
Exchange published quotation, orders on the Book, Floor broker agency 
file interest (``e-Quotes''), specialist interest (``s-Quotes''), and 
CAP-DI orders. The current rule does not include G-Quotes as an order 
type eligible order for automatic execution.
    Section 11(a)(1) of the Act \6\ generally prohibits a member of a 
national securities exchange from effecting transactions on that 
exchange for its own account, the account of an associated person, or 
any account over which it or an associated person exercises discretion. 
Subsection (G) of Section 11(a)(1) provides an exemption allowing an 
exchange member to have its own floor broker execute a proprietary 
transaction (``G order''). A G-Quote is an electronic method for Floor 
brokers to represent G orders. G orders on NYSE yield priority, parity 
and precedence based on size to all other non-G orders.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78k(a)(1).
---------------------------------------------------------------------------

    In current market conditions, if a G-Quote hits the Display Book as 
a marketable order, it is not eligible for automatic execution. In 
order to execute a marketable G-Quote once it is received in the 
Display Book, the Display Book in that security is converted to a slow 
market to allow for manual execution of the G-Quote. In other words, 
the receipt of a marketable G-Quote suspends auto-execution of the 
Display Book until it is manually traded out of the Display Book. In 
order to reduce the amount of times that the Exchange must set their 
markets slow, the Exchange is seeking this rule change to add G-Quotes 
as an order eligible for automatic execution in order to maintain 
optimum market conditions and prevent further temporary disruptions in 
the flow of the market by having it go ``slow'' when a marketable G-
Quote hits the Book. Accordingly, the Exchange seeks to amend NYSE Rule 
1000 and NYSE Rule 13 to add G-Quotes as automatically executable 
orders. Aside from now being automatically executed, G-Quotes will be 
executed in the same manner as they are today, i.e., they still must 
yield priority, parity and precedence to all other non-G orders.
    The Exchange also seeks to amend NYSE Rule 1000 to make G-Quotes 
eligible for sweeps following existing rules for sweeps. Specifically, 
during a sweep, the unfilled balance (``residual'') of an automatically 
executing order that is not filled in its entirety due to the volume 
available in the Exchange best bid and offer, may trade with broker 
proprietary interest files on the Book capable of execution in 
accordance with Exchange Rules, at each successive price lower than the 
displayed bid (in the case of a sweeping sell order) or higher than the 
displayed offer (in the case of a sweeping buy order) as long as the 
sweep continues.
    The Exchange further seeks to make conforming changes to NYSE Rule 
60 to provide that the Exchange will autoquote the NYSE's highest bid 
or lowest offer to reflect G-Quotes. The Exchange notes that in all 
situations discussed above, the G-Quote will trade as the last interest 
at a price point, yielding priority, parity and precedence to all other 
non-G orders.\7\
---------------------------------------------------------------------------

    \7\ Telephone conference among Daniel Labovitz, Managing 
Director, NYSE Regulation, Inc.; Deanna G. W. Logan, Associate 
General Counsel, NYSE; Jennifer D. Kim, Counsel, NYSE; Richard 
Holley, Senior Special Counsel, Division of Trading and Markets 
(``Division''), Commission; Nathan Saunders, Special Counsel, 
Division, Commission; and Jan Woo, Special Counsel, Division, 
Commission, on January 10, 2008.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the basis under the Act is the 
requirement under Section 6(b)(5) that an exchange have rules that are 
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.

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 effects a change in an 
existing order entry or trading system that (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 
have the effect of limiting access to or availability of the system, it 
has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act 
\8\ and Rule 19b-4(f)(5) thereunder.\9\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 19b-4(f)(5).
---------------------------------------------------------------------------

    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.

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-2007-120 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary,

[[Page 4038]]

Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549-1090.

All submissions should refer to File Number SR-NYSE-2007-120. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the NYSE. 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-2007-120 and should be 
submitted on or before February 13, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Florence E. Harmon,
Deputy Secretary.
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

 [FR Doc. E8-1055 Filed 1-22-08; 8:45 am]
BILLING CODE 8011-01-P