Federal Register: January 23, 2008 (Volume 73, Number 15)
DOCID: fr23ja08-98 FR Doc E8-1055
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-57156; File No. SR-NYSE-2007-120]
NOTICE: NOTICES
DOCID: fr23ja08-98
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 To Amend NYSE Rules 13, 60, and 1000 To Allow for the Automatic Execution of G-Quotes in the Display Book
DOCUMENT SUMMARY:
January 15, 2008.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b4 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 orderentry or trading system 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 NYSE proposes to amend NYSE Rules 13 and 1000 to allow for the
automatic execution of GQuotes 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. SelfRegulatory 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. SelfRegulatory 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 GQuotes 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 (``autoex'') 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 autoex 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 (``eQuotes''), specialist interest (``sQuotes''), and CAPDI orders. The current rule does not include GQuotes 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 GQuote 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 nonG orders.
\6\ 15 U.S.C. 78k(a)(1).
In current market conditions, if a GQuote hits the Display Book as a marketable order, it is not eligible for automatic execution. In order to execute a marketable GQuote 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 GQuote. In other words, the receipt of a marketable GQuote suspends autoexecution 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 GQuotes 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 GQuotes as automatically executable orders. Aside from now being automatically executed, GQuotes will be executed in the same manner as they are today, i.e., they still must yield priority, parity and precedence to all other nonG orders.
The Exchange also seeks to amend NYSE Rule 1000 to make GQuotes 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 GQuotes. The Exchange notes that in all
situations discussed above, the GQuote will trade as the last interest
at a price point, yielding priority, parity and precedence to all other nonG 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. 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 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 19b4(f)(5) thereunder.\9\
\8\ 15 U.S.C. 78s(b)(3)(A)(iii).
\9\ 17 CFR 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
Paper Comments
[[Page 4038]]
Securities and Exchange Commission, 100 F Street, NE., Washington, DC 205491090.
All submissions should refer to File Number SRNYSE2007120. 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 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 SRNYSE2007120 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 200.303(a)(12).
[FR Doc. E81055 Filed 12208; 8:45 am]
BILLING CODE 801101P
SUMMARY:
New York Stock Exchange LLC,
DOCUMENT BODY 2:
January 15, 2008.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b4 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 orderentry or trading system 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 NYSE proposes to amend NYSE Rules 13 and 1000 to allow for the
automatic execution of GQuotes 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. SelfRegulatory 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. SelfRegulatory 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 GQuotes 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 (``autoex'') 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 autoex 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 (``eQuotes''), specialist interest (``sQuotes''), and CAPDI orders. The current rule does not include GQuotes 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 GQuote 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 nonG orders.
\6\ 15 U.S.C. 78k(a)(1).
In current market conditions, if a GQuote hits the Display Book as a marketable order, it is not eligible for automatic execution. In order to execute a marketable GQuote 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 GQuote. In other words, the receipt of a marketable GQuote suspends autoexecution 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 GQuotes 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 GQuotes as automatically executable orders. Aside from now being automatically executed, GQuotes will be executed in the same manner as they are today, i.e., they still must yield priority, parity and precedence to all other nonG orders.
The Exchange also seeks to amend NYSE Rule 1000 to make GQuotes 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 GQuotes. The Exchange notes that in all
situations discussed above, the GQuote will trade as the last interest
at a price point, yielding priority, parity and precedence to all other nonG 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. 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 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 19b4(f)(5) thereunder.\9\
\8\ 15 U.S.C. 78s(b)(3)(A)(iii).
\9\ 17 CFR 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
Paper Comments
[[Page 4038]]
Securities and Exchange Commission, 100 F Street, NE., Washington, DC 205491090.
All submissions should refer to File Number SRNYSE2007120. 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 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 SRNYSE2007120 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 200.303(a)(12).
[FR Doc. E81055 Filed 12208; 8:45 am]
BILLING CODE 801101P