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SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-56858; File No. SR-NYSE-2007-103]
NOTICE: NOTICES
ACTION: Self-regulatory organizations; proposed rule changes:
SUBJECT CATEGORY: Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to NYSE Rule 124 (Odd-Lot Orders)
DOCUMENT SUMMARY: November 28, 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 14, 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 Exchange has filed the proposal pursuant to section
19(b)(3)(A) of the Act,\3\ and Rule 19b4(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 240.19b4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b4(f)(5).
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to amend Exchange Rule 124 (OddLot Orders)
to clarify the manner in which Exchange systems price and execute odd
lot orders \5\ at the opening and at the reopening after a halt in
trading on the Exchange. The text of the proposed rule change is
available on the Exchange's Web site (http://www.nyse.com), at the
Exchange's Office of the Secretary, and at the Commission's Public Reference Room.
\5\ Oddlot orders are orders for a size less than the standard
unit (roundlot) of trading, which is 100 shares for most stocks, although some stocks trade in 10 share units.
II. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, 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 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
This filing is submitted to amend Exchange Rule 124 in order to
clarify that for the opening transaction in a subject security, oddlot
market orders and all oddlot limit orders that are eligible to receive an execution based on
[[Page 68936]]
the price of the opening transaction \6\ shall be executed at the price
of the opening transaction. Similarly, in the event of a halt in
trading on the Exchange in the subject security, oddlot market orders
and all oddlot limit orders eligible to receive an execution based on
the reopening price that are accepted by Exchange systems prior to the
halt in trading or are received during the halt in trading shall be executed at the price of the reopening transaction.
\6\ Pursuant to Exchange Rule 124(b), an oddlot limit order is
considered marketable when its limit price is at or higher than the
current National best offer (in the case of an oddlot limit to buy)
and when its limit price is at or lower than the current National best bid (in the case of an oddlot limit to sell).
On September 6, 2007, the Exchange amended Exchange Rule 124 to
modify the way in which Exchange systems priced and executed oddlot
orders (the ``Oddlot Filing'').\7\ As it pertains to openings and
halts in trading, the Oddlot Filing was intended to provide that odd
lot orders entered into the Exchange systems before the opening
transaction of the subject security that would be eligible for
execution based on the price of the opening transaction would be
executed at the price of the opening transaction.\8\ With respect to
halts in trading on the Exchange, the Oddlot Filing was also to
provide that oddlot orders accepted by Exchange systems prior to, or
during, a halt in trading that are subsequently eligible to receive an
execution based on the reopening price would be executed at the price of the reopening transaction.\9\
\7\ See Securities Exchange Act Release No. 56551 (September 27, 2007), 72 FR 56415 (October 3, 2007) (SRNYSE200782).
\8\ See Exchange Rule 124 subsections (c)(vi) (relating to openings) and (c)(vii) (relating to trading halts).
\9\ The Commission made minor clarifications to this paragraph
pursuant to a telephone call with the Exchange. See telephone call
among Jennifer Dodd, Special Counsel, Division of Trading and
Markets, Commission, Rahman Harrison, Special Counsel, Division of
Trading and Markets, Commission, and Gillian Rowe, Principal Rule Counsel, NYSE, on November 19, 2007.
Currently, Exchange systems handle oddlot orders at the opening
and reopening after a halt in trading as intended and as described
above. However, the Exchange states that the use of the word
``marketable'' \10\ in the rule text of subsections (c)(vi) and
(c)(vii) is not accurate. Specifically as it pertains to the open, an
order is neither marketable or nonmarketable until the specialist
determines the opening price. As such, the rule text of subsection
(c)(vi) and (c)(vii) should not include the word marketable. Moreover,
the use of the term marketable in (c)(vii) technically excludes non
marketable oddlot limit orders accepted by Exchange systems prior to a
halt in trading that are subsequently eligible to receive an execution
based on the reopening price from receiving an execution.\11\ This
would occur because the definition of marketable in the rule requires
the oddlot limit order to have been marketable ``upon receipt by the system.''
\10\ See Exchange Rule 124(c) which defines ``marketable oddlot
orders'' as oddlot market orders and oddlot limit orders that are marketable upon receipt.
\11\ Exchange Rule 124(d) governs the execution and pricing of
oddlot limit orders that are nonmarketable upon receipt that become marketable.
Accordingly, the Exchange proposes in this filing to amend subsection (c)(vi) of Exchange Rule 124 to clarify that oddlot orders entered into the Exchange systems before the opening transaction of the subject security that would be eligible for execution based on the price of the opening transaction shall be executed at the price of the opening transaction. The Exchange further proposes to amend subsection (c)(vii) to clarify that, in the event of a halt in trading on the Exchange, oddlot orders accepted by Exchange systems prior to, or during, a halt in trading that are subsequently eligible to receive an execution based on the reopening price shall be executed at the price of the reopening transaction.
The Exchange believes these amendments will accurately align the rule text with the operation of Exchange systems in the handling of oddlot orders under these specific circumstances. However, the Exchange will continue to monitor the recent changes to the processing of oddlots and confer with our constituents in order to evaluate whether further change is necessary.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of section 6(b) of the Act,\12\ in general, and
with section 6(b)(5) of the Act,\13\ in particular, in that it is
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. The Exchange also states that the proposed rule change
also is designed to support the principles of section 11A(a)(1) \14\ 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. \12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ 15 U.S.C. 78k1(a)(1).
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
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 orderentry or trading system of a selfregulatory
organization that does not (1) Significantly affect the protection of
investors of the public interest, (2) impose any significant burden on
competition, and (3) have the effect of limiting the access to or
availability of the system, it has become effective pursuant to section
19(b)(3)(A)(iii) of the Act \15\ and Rule 19b4(f)(5) thereunder.\16\ \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
\16\ 17 CFR 240.19b4(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
[[Page 68937]]
Paper Comments
All submissions should refer to File Number SRNYSE2007103. This file number should be included on the 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 the 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 SRNYSE2007103 and should be submitted on or before December 27, 2007.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\17\
\17\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E723651 Filed 12507; 8:45 am]
BILLING CODE 801101P
SUMMARY: New York Stock Exchange LLC,
DOCUMENT BODY 2: November 28, 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 14, 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 Exchange has filed the proposal pursuant to section
19(b)(3)(A) of the Act,\3\ and Rule 19b4(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 240.19b4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b4(f)(5).
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to amend Exchange Rule 124 (OddLot Orders)
to clarify the manner in which Exchange systems price and execute odd
lot orders \5\ at the opening and at the reopening after a halt in
trading on the Exchange. The text of the proposed rule change is
available on the Exchange's Web site (http://www.nyse.com), at the
Exchange's Office of the Secretary, and at the Commission's Public Reference Room.
\5\ Oddlot orders are orders for a size less than the standard
unit (roundlot) of trading, which is 100 shares for most stocks, although some stocks trade in 10 share units.
II. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, 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 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
This filing is submitted to amend Exchange Rule 124 in order to
clarify that for the opening transaction in a subject security, oddlot
market orders and all oddlot limit orders that are eligible to receive an execution based on
[[Page 68936]]
the price of the opening transaction \6\ shall be executed at the price
of the opening transaction. Similarly, in the event of a halt in
trading on the Exchange in the subject security, oddlot market orders
and all oddlot limit orders eligible to receive an execution based on
the reopening price that are accepted by Exchange systems prior to the
halt in trading or are received during the halt in trading shall be executed at the price of the reopening transaction.
\6\ Pursuant to Exchange Rule 124(b), an oddlot limit order is
considered marketable when its limit price is at or higher than the
current National best offer (in the case of an oddlot limit to buy)
and when its limit price is at or lower than the current National best bid (in the case of an oddlot limit to sell).
On September 6, 2007, the Exchange amended Exchange Rule 124 to
modify the way in which Exchange systems priced and executed oddlot
orders (the ``Oddlot Filing'').\7\ As it pertains to openings and
halts in trading, the Oddlot Filing was intended to provide that odd
lot orders entered into the Exchange systems before the opening
transaction of the subject security that would be eligible for
execution based on the price of the opening transaction would be
executed at the price of the opening transaction.\8\ With respect to
halts in trading on the Exchange, the Oddlot Filing was also to
provide that oddlot orders accepted by Exchange systems prior to, or
during, a halt in trading that are subsequently eligible to receive an
execution based on the reopening price would be executed at the price of the reopening transaction.\9\
\7\ See Securities Exchange Act Release No. 56551 (September 27, 2007), 72 FR 56415 (October 3, 2007) (SRNYSE200782).
\8\ See Exchange Rule 124 subsections (c)(vi) (relating to openings) and (c)(vii) (relating to trading halts).
\9\ The Commission made minor clarifications to this paragraph
pursuant to a telephone call with the Exchange. See telephone call
among Jennifer Dodd, Special Counsel, Division of Trading and
Markets, Commission, Rahman Harrison, Special Counsel, Division of
Trading and Markets, Commission, and Gillian Rowe, Principal Rule Counsel, NYSE, on November 19, 2007.
Currently, Exchange systems handle oddlot orders at the opening
and reopening after a halt in trading as intended and as described
above. However, the Exchange states that the use of the word
``marketable'' \10\ in the rule text of subsections (c)(vi) and
(c)(vii) is not accurate. Specifically as it pertains to the open, an
order is neither marketable or nonmarketable until the specialist
determines the opening price. As such, the rule text of subsection
(c)(vi) and (c)(vii) should not include the word marketable. Moreover,
the use of the term marketable in (c)(vii) technically excludes non
marketable oddlot limit orders accepted by Exchange systems prior to a
halt in trading that are subsequently eligible to receive an execution
based on the reopening price from receiving an execution.\11\ This
would occur because the definition of marketable in the rule requires
the oddlot limit order to have been marketable ``upon receipt by the system.''
\10\ See Exchange Rule 124(c) which defines ``marketable oddlot
orders'' as oddlot market orders and oddlot limit orders that are marketable upon receipt.
\11\ Exchange Rule 124(d) governs the execution and pricing of
oddlot limit orders that are nonmarketable upon receipt that become marketable.
Accordingly, the Exchange proposes in this filing to amend subsection (c)(vi) of Exchange Rule 124 to clarify that oddlot orders entered into the Exchange systems before the opening transaction of the subject security that would be eligible for execution based on the price of the opening transaction shall be executed at the price of the opening transaction. The Exchange further proposes to amend subsection (c)(vii) to clarify that, in the event of a halt in trading on the Exchange, oddlot orders accepted by Exchange systems prior to, or during, a halt in trading that are subsequently eligible to receive an execution based on the reopening price shall be executed at the price of the reopening transaction.
The Exchange believes these amendments will accurately align the rule text with the operation of Exchange systems in the handling of oddlot orders under these specific circumstances. However, the Exchange will continue to monitor the recent changes to the processing of oddlots and confer with our constituents in order to evaluate whether further change is necessary.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of section 6(b) of the Act,\12\ in general, and
with section 6(b)(5) of the Act,\13\ in particular, in that it is
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. The Exchange also states that the proposed rule change
also is designed to support the principles of section 11A(a)(1) \14\ 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. \12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ 15 U.S.C. 78k1(a)(1).
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
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 orderentry or trading system of a selfregulatory
organization that does not (1) Significantly affect the protection of
investors of the public interest, (2) impose any significant burden on
competition, and (3) have the effect of limiting the access to or
availability of the system, it has become effective pursuant to section
19(b)(3)(A)(iii) of the Act \15\ and Rule 19b4(f)(5) thereunder.\16\ \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
\16\ 17 CFR 240.19b4(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
[[Page 68937]]
Paper Comments
All submissions should refer to File Number SRNYSE2007103. This file number should be included on the 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 the 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 SRNYSE2007103 and should be submitted on or before December 27, 2007.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\17\
\17\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E723651 Filed 12507; 8:45 am]
BILLING CODE 801101P
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