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SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-56819; File No. SR-NYSEArca-2007-115]
NOTICE: NOTICES
ACTION: Self-regulatory organizations; proposed rule changes:
SUBJECT CATEGORY: Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of a Proposed Rule Change Relating to Rule 6.87--Obvious Error
DOCUMENT SUMMARY: November 19, 2007.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on November 8, 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, II, and III below, which
Items have been substantially prepared by the Exchange. 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 240.19b4.
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to amend NYSE Arca Rule 6.87 governing
obvious errors. Specifically, the Exchange proposes a revised review
procedure for contesting decisions made pursuant to the options obvious
error rule. The text of the proposed rule change is available at the
Exchange, the Commission's Public Reference Room, and http://www.nyse.com .
[[Page 66215]]
II. SelfRegulatory 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. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend NYSE Arca Rule 6.87 governing
options obvious errors. Specifically, the Exchange proposes a revised
review procedure for contesting decisions made pursuant to the obvious
error rule. Currently, NYSE Arca Rule 6.87 provides that the Exchange
will determine whether an ``Obvious Error'' \3\ has occurred after a
market maker believes and notifies the Exchange that it participated in
a transaction that was the result of an Obvious Error. If the Exchange
believes that an Obvious Error has occurred, the Exchange will take one
of the following actions depending on the parties to the trade: (1)
Adjust the price with an adjustment; (2) bust the trade; or (3) adjust
the trade without an adjustment penalty. Currently, if a party does not
agree with the action taken by the Exchange, the party may appeal the
decision to the Exchange's Board of Directors (``Board'') pursuant to NYSE Arca Rule 10.14.
\3\ ``Obvious Error'' is defined in NYSE Arca Rule 6.87(a)(1).
The Exchange proposes to amend Rule 6.87 by removing the Board
appeal process pursuant to Rule 10.14 and replacing it with a revised
appeal process. Proposed NYSE Arca Rule 6.87 would permit a party
affected by the determination of an Obvious Error to request an appeal
to the Obvious Error Panel (``OE Panel'') to review the determination
made by the Exchange's representative pursuant to Rule 6.87(a)(3). The
OE Panel would be comprised of the NYSE Arca Chief Regulatory Officer
(``CRO''), or a designee of the CRO,\4\ and representatives from two
options and trading permit firms (``OTP Firms'').\5\ One representative
on the OE Panel will be from an OTP Firm directly engaged in market
making activities and one representative on the OE Panel will be from
an OTP Firm directly engaged in the handling of options orders for public customers.
\4\ The Exchange represents that a designee of the CRO would be
an employee of the Exchange, working closely with and reporting
directly to, the CRO, such as one of the Directors of Options
Regulation. The Exchange notes that the International Securities
Exchange, LLC (``ISE'') designates an obvious error panel to
independently make appeals decisions and also to overturn or modify actions taken by the ISE. See ISE Rule 720.
\5\ The Exchange proposes to designate at least ten (10) OTP
Firm representatives to be called upon to serve on the OE Panel. In
no case would the OE Panel include a person related to a party to
the trade in question. To the extent reasonably possible, the
Exchange proposes to call upon the designated representatives to participate on an OE Panel on an equally frequent basis.
In addition, requests for an appeal would have to be made via facsimile or email within thirty minutes after the party requesting the appeal is given notification of the initial determination. Thereafter, the OE Panel would review the information and may overturn or modify the action taken by the Officer. Such determination by the OE Panel would be considered a final action by the Exchange on the matter at issue. All final determinations made by the OE Panel would be rendered, without prejudice, as to the rights of the parties to the transaction to submit their dispute to arbitration. The Exchange states that the revised process is intended to provide a timely appeal for OTP Firms and options and trading permit holders (``OTP Holders'') in place of the lengthy Board appeals process currently provided in Rule 10.14.
Finally, if the OE Panel upholds the Exchange's decision made pursuant to Rule 6.87(a)(4) to bust or adjust a trade, the Exchange would assess a $500.00 fee against the OTP Holder or OTP Firm that initiated the request for appeal. The Exchange believes that assessing a $500.00 fee would discourage frivolous and abusive practices of the appeal process.
The Exchange is also proposing amendments to Rule 10.14 to remove the Board appeals process for Rule 6.87, and remove the appeals process from Commentary .02 of Rule 6.87.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
section 6(b) of the Act,\6\ in general, and furthers the objectives of
section 6(b)(5) of the Act,\7\ in particular, because it is designed to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in facilitating transactions in
securities, and to remove impediments and perfect the mechanisms of a
free and open market and to protect investors and the public interest. \6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
B. SelfRegulatory 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. SelfRegulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others
No written comments were solicited or received by the Exchange with respect to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or (ii) as to which the Exchange consents, the Commission will:
A. By order approve the proposed rule change; or
B. Institute proceedings to determine whether the proposed rule change should be disapproved.
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
Paper Comments
All submissions should refer to File Number SRNYSEArca2007115. This file number should be included on the
[[Page 66216]]
subject line if email 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 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 SRNYSEArca2007115 and should be submitted on or before December 18, 2007.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\8\
\8\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E722979 Filed 112607; 8:45 am]
BILLING CODE 801101P
SUMMARY: NYSE Arca, Inc.,
DOCUMENT BODY 2: November 19, 2007.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on November 8, 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, II, and III below, which
Items have been substantially prepared by the Exchange. 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 240.19b4.
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to amend NYSE Arca Rule 6.87 governing
obvious errors. Specifically, the Exchange proposes a revised review
procedure for contesting decisions made pursuant to the options obvious
error rule. The text of the proposed rule change is available at the
Exchange, the Commission's Public Reference Room, and http://www.nyse.com .
[[Page 66215]]
II. SelfRegulatory 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. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend NYSE Arca Rule 6.87 governing
options obvious errors. Specifically, the Exchange proposes a revised
review procedure for contesting decisions made pursuant to the obvious
error rule. Currently, NYSE Arca Rule 6.87 provides that the Exchange
will determine whether an ``Obvious Error'' \3\ has occurred after a
market maker believes and notifies the Exchange that it participated in
a transaction that was the result of an Obvious Error. If the Exchange
believes that an Obvious Error has occurred, the Exchange will take one
of the following actions depending on the parties to the trade: (1)
Adjust the price with an adjustment; (2) bust the trade; or (3) adjust
the trade without an adjustment penalty. Currently, if a party does not
agree with the action taken by the Exchange, the party may appeal the
decision to the Exchange's Board of Directors (``Board'') pursuant to NYSE Arca Rule 10.14.
\3\ ``Obvious Error'' is defined in NYSE Arca Rule 6.87(a)(1).
The Exchange proposes to amend Rule 6.87 by removing the Board
appeal process pursuant to Rule 10.14 and replacing it with a revised
appeal process. Proposed NYSE Arca Rule 6.87 would permit a party
affected by the determination of an Obvious Error to request an appeal
to the Obvious Error Panel (``OE Panel'') to review the determination
made by the Exchange's representative pursuant to Rule 6.87(a)(3). The
OE Panel would be comprised of the NYSE Arca Chief Regulatory Officer
(``CRO''), or a designee of the CRO,\4\ and representatives from two
options and trading permit firms (``OTP Firms'').\5\ One representative
on the OE Panel will be from an OTP Firm directly engaged in market
making activities and one representative on the OE Panel will be from
an OTP Firm directly engaged in the handling of options orders for public customers.
\4\ The Exchange represents that a designee of the CRO would be
an employee of the Exchange, working closely with and reporting
directly to, the CRO, such as one of the Directors of Options
Regulation. The Exchange notes that the International Securities
Exchange, LLC (``ISE'') designates an obvious error panel to
independently make appeals decisions and also to overturn or modify actions taken by the ISE. See ISE Rule 720.
\5\ The Exchange proposes to designate at least ten (10) OTP
Firm representatives to be called upon to serve on the OE Panel. In
no case would the OE Panel include a person related to a party to
the trade in question. To the extent reasonably possible, the
Exchange proposes to call upon the designated representatives to participate on an OE Panel on an equally frequent basis.
In addition, requests for an appeal would have to be made via facsimile or email within thirty minutes after the party requesting the appeal is given notification of the initial determination. Thereafter, the OE Panel would review the information and may overturn or modify the action taken by the Officer. Such determination by the OE Panel would be considered a final action by the Exchange on the matter at issue. All final determinations made by the OE Panel would be rendered, without prejudice, as to the rights of the parties to the transaction to submit their dispute to arbitration. The Exchange states that the revised process is intended to provide a timely appeal for OTP Firms and options and trading permit holders (``OTP Holders'') in place of the lengthy Board appeals process currently provided in Rule 10.14.
Finally, if the OE Panel upholds the Exchange's decision made pursuant to Rule 6.87(a)(4) to bust or adjust a trade, the Exchange would assess a $500.00 fee against the OTP Holder or OTP Firm that initiated the request for appeal. The Exchange believes that assessing a $500.00 fee would discourage frivolous and abusive practices of the appeal process.
The Exchange is also proposing amendments to Rule 10.14 to remove the Board appeals process for Rule 6.87, and remove the appeals process from Commentary .02 of Rule 6.87.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
section 6(b) of the Act,\6\ in general, and furthers the objectives of
section 6(b)(5) of the Act,\7\ in particular, because it is designed to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in facilitating transactions in
securities, and to remove impediments and perfect the mechanisms of a
free and open market and to protect investors and the public interest. \6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
B. SelfRegulatory 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. SelfRegulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others
No written comments were solicited or received by the Exchange with respect to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or (ii) as to which the Exchange consents, the Commission will:
A. By order approve the proposed rule change; or
B. Institute proceedings to determine whether the proposed rule change should be disapproved.
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
Paper Comments
All submissions should refer to File Number SRNYSEArca2007115. This file number should be included on the
[[Page 66216]]
subject line if email 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 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 SRNYSEArca2007115 and should be submitted on or before December 18, 2007.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\8\
\8\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E722979 Filed 112607; 8:45 am]
BILLING CODE 801101P
Common CFR Searches
14 CFR Part 39 40 CFR Part 52 14 CFR Part 71 33 CFR Part 165 50 CFR Part 679 26 CFR Part 1 40 CFR Part 180 47 CFR Part 73 50 CFR Part 17 33 CFR Part 117 44 CFR Part 67 50 CFR Part 648 14 CFR Part 97 33 CFR Part 100 40 CFR Part 63 50 CFR Part 622 26 CFR Part 301 39 CFR Part 111 40 CFR Part 300 50 CFR Part 660 44 CFR Part 65 40 CFR Parts 52 and 81 40 CFR Part 271 47 CFR Part 64 50 CFR Part 665 47 CFR Part 76 50 CFR Part 229 14 CFR Part 23 14 CFR Part 25 21 CFR Part 522