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15926 Federal Register / Vol. 72, No.

63 / Tuesday, April 3, 2007 / Notices

For the Commission, by the Division of Exchange, and at the Commission’s Replenishment Point (‘‘LRP’’).12 For
Market Regulation, pursuant to delegated Public Reference Room. both of these situations, as provided in
authority.13 Rule 60(c)(2)(b), the Exchange identifies
Florence E. Harmon, II. Self-Regulatory Organization’s
its quotation as unavailable for
Statement of the Purpose of, and
Deputy Secretary. automatic execution in accordance with
Statutory Basis for, the Proposed Rule
[FR Doc. E7–6125 Filed 4–2–07; 8:45 am] Reg. NMS.
Change Through this filing, the Exchange
BILLING CODE 8010–01–P
In its filing with the Commission, the proposes to specify in Rule 60(c)(2)(b)
Exchange included statements that in addition to the two situations
SECURITIES AND EXCHANGE concerning the purpose of and basis for described in the preceding paragraph,
COMMISSION the proposed rule change. The text of the NYSE will identify its quotation as
these statements may be examined at non-firm as soon as the report template
[Release No. 34–55543; File No. SR–NYSE– is opened by the specialist to report a
2007–31] the places specified in Item IV below.
The Exchange has prepared summaries, block-sized transaction, and will
Self-Regulatory Organizations; New set forth in Sections A, B, and C below, continue to do so until the trade has
York Stock Exchange LLC; Notice of of the most significant aspects of such been reported. This change is necessary
Filing and Immediate Effectiveness of statements. because the quotation that is
Proposed Rule Change To Amend Rule disseminated when a block-sized
A. Self-Regulatory Organization’s transaction is being manually reported
60 To Allow the Exchange To Identify Statement of the Purpose of, and
Its Quotation as Slow Non-Firm During may not reflect the current state of the
Statutory Basis for, the Proposed Rule market in the stock, given the temporary
the Manual Reporting of a Block-Sized Change
Transaction suspension of autoquoting of the highest
1. Purpose bid/lowest offer that occurs during the
March 27, 2007. reporting of a block-sized transaction.
Pursuant to Section 19(b)(1) 1
of the The NYSE proposes to amend Rule 60 Thus, identifying the quotation as non-
Securities Exchange Act of 1934 (the to specify that when a specialist firm when autoquote and automatic
‘‘Act’’) and Rule 19b–4 thereunder,2 manually reports a block-sized executions are suspended by a block-
notice is hereby given that on March 20, transaction 6 that involves orders in the sized transaction will provide market
2007, the New York Stock Exchange Display Book( system (‘‘block-sized participants with more accurate
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed transaction’’), the Exchange will use an information about the state of the NYSE
with the Securities and Exchange indicator to signify that the NYSE quote quotation. Moreover, identifying the
Commission (‘‘Commission’’) the is non-firm. During the brief moment it NYSE quotation as non-firm will bring
proposed rule change as described in takes a specialist to manually report a the dissemination of the quotation
Items I and II, below, which Items have block-sized transaction in a security, during block-sized transactions more in
been substantially prepared by the autoquoting of the highest bid/lowest line with the way in which they are
Exchange. NYSE has designated the offer is suspended in that stock.7 In identified during other Exchange
proposed rule change as constituting a addition, during that same period of manual auction market activities that
‘‘non-controversial’’ rule change under time, automatic executions against the similarly cause the suspension of
Section 19(b)(3)(A) of the Act 3 and Rule displayed quotation are not available.8 autoquote and automatic executions—
19b–4(f)(6) thereunder,4 which renders After the specialist has completed the i.e., gap quotes and LRPs.
the proposal effective upon filing with report of a block-sized transaction, The Exchange completed Phase IV of
the Commission. The Commission is autoquote will resume immediately,9 the Hybrid MarketSM rollout on
publishing this notice to solicit and the NYSE quotation will similarly February 28, 2007. However, the Phase
comments on the proposed rule change again be available for automatic IV software does not contain the coding
from interested persons. executions.10 necessary to properly identify the
In the NYSE Hybrid MarketSM Exchange quotation as non-firm during
I. Self-Regulatory Organization’s the manual report of a block-sized
Statement of the Terms of Substance of (‘‘Hybrid Market’’), autoquote and the
availability of the Exchange quotation transaction that involves orders in the
the Proposed Rule Change Display Book. The NYSE has made the
for automatic executions are likewise
The Exchange is proposing to amend both disengaged for limited periods in software changes required and is
Rule 60 to provide that when the connection with two other specific currently rolling it out as part of the
Exchange quotation is not available for auction market activities: (1) When the post-Phase IV software in phases
automatic execution due to the manual specialist gaps the quotation in through March 30, 2007, the date by
reporting of a block-sized transaction, accordance with Exchange policies and which it currently expects the rollout to
the Exchange will identify such quotes procedures,11 and (2) when trading on be completed.
with an indicator signifying that they the Exchange reaches a Liquidity In addition, the NYSE notes that it has
are non-firm within the context of requested from the Commission limited
Regulation National Market System 6 NYSE Rule 127.10 defines a ‘‘block’’ size as at
no-action relief from the requirement
(‘‘Reg. NMS’’).5 The text of the rule least 10,000 shares or a quantity of stock having a that the NYSE enforce compliance by its
proposal is available on the Exchange’s market value of $200,000 or more, whichever is specialist members with NYSE Rule 19
Web site (http://www.nyse.com), at the less. (Locking or Crossing Protected
7 See NYSE Rule 60(e)(i)(B).
Quotations in NMS Stocks), with
8 See NYSE Rule 1000(a)(v).
13 17 CFR 200.30–3(a)(12). 9 See NYSE Rule 60(e)(ii)(B).
respect only to the display of a
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1 15 U.S.C. 78s(b)(1). 10 See NYSE Rule 1000(b).


quotation when a block-sized
2 17 CFR 240.19b–4.
11 See NYSE Rule 60(e)(i)(A). For a description of transaction is being manually reported,
3 15 U.S.C. 78s(b)(3)(A).
gapped quotations, see Securities Exchange Act
4 17 CFR 240.19b–4(f)(6).
Release No. 53539 (March 22, 2006), 71 FR 16353 12 See NYSE Rule 60(e)(i)(C). For a description of
5 See Securities Exchange Act Release No. 51808 (March 31, 2006) (SR–NYSE–2004–05) (the ‘‘Hybrid LRPs, see Hybrid MarketSM Approval Order, supra
(June 9, 2005), 70 FR 37496 (June 29, 2005). MarketSM Approval Order’’). note 11.

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Federal Register / Vol. 72, No. 63 / Tuesday, April 3, 2007 / Notices 15927

beginning on the Trading Phase Date 4(f)(6)(iii) 18 permits the Commission to interest, for the protection of investors,
until April 5, 2007.13 designate a shorter time if such action or otherwise in furtherance of the
is consistent with the protection of purposes of the Act.
2. Statutory Basis
investors and the public interest. The
The basis under the Act for this Exchange has requested that the IV. Solicitation of Comments
proposed rule change is the requirement Commission waive the 30-day operative
under Section 6(b)(5) of the Act 14 that Interested persons are invited to
delay and designate an operative date of
an Exchange have rules that are submit written data, views and
March 30, 2007 for the proposal. In its
designed to promote just and equitable arguments concerning the foregoing,
filing, the Exchange noted that, given
principles of trade, to remove the temporary suspension of including whether the proposed rule
impediments to and perfect the autoquoting of the highest bid/lowest change is consistent with the Act.
mechanism of a free and open market offer that occurs during the reporting of Comments may be submitted by any of
and a national market system and, in a block-sized transaction, the quotation the following methods:
general, to protect investors and the that is disseminated when a block-sized Electronic Comments
public interest. transaction is being manually reported
B. Self-Regulatory Organization’s may not reflect the current state of the • Use the Commission’s Internet
Statement on Burden on Competition market in the subject stock. Moreover, comment form (http://www.sec.gov/
identifying the NYSE quotation as non- rules/sro.shtml); or
The Exchange does not believe that firm during the manual reporting of
the proposed rule change will impose • Send an e-mail to rule-
block transactions will bring the
any burden on competition that is not dissemination of the quotation more in comments@sec.gov. Please include File
necessary or appropriate in furtherance line with the way in which quotes are Number SR–NYSE–2007–31 on the
of the purposes of the Act. identified during other Exchange subject line.
C. Self-Regulatory Organization’s manual auction market activities that Paper Comments
Statement on Comments on the similarly cause the suspension of
Proposed Rule Change Received From autoquote and automatic executions— • Send paper comments in triplicate
Members, Participants or Others i.e., gap quotes and LRPs (discussed to Nancy M. Morris, Secretary,
above). Accordingly, the Exchange Securities and Exchange Commission,
The Exchange has neither solicited
believes that this proposed rule change 100 F Street, NE., Washington, DC
nor received written comments on the
does not significantly affect the 20549–1090.
proposed rule change.
protection of investors or the public
III. Date of Effectiveness of the interest and does not impose any All submissions should refer to File
Proposed Rule Change and Timing for significant burden on competition. Number SR–NYSE–2007–31. This file
Commission Action The Commission believes that number should be included on the
The proposed rule change has become waiving the 30-day operative delay is subject line if e-mail is used. To help the
effective pursuant to Section 19(b)(3)(A) consistent with the protection of Commission process and review your
of the Act 15 and Rule 19b–4(f)(6) investors and the public interest comments more efficiently, please use
thereunder 16 because the proposal does because the proposed rule change will only one method. The Commission will
not: (i) Significantly affect the allow the NYSE to accurately identify post all comments on the Commission’s
protection of investors or the public the status of the NYSE quotation during Internet Web site (http://www.sec.gov/
interest; (ii) impose any significant the manual reporting of block rules/sro/shtml). Copies of the
burden on competition; and (iii) become transactions in line with the way in submission, all subsequent
operative for 30 days from the date on which quotes are identified during other amendments, all written statements
which it was filed, or such shorter time Exchange manual auction market with respect to the proposed rule
as the Commission may if consistent activities that similarly cause the
change that are filed with the
with the protection of investors and the suspension of autoquote and automatic
Commission, and all written
public interest.17 executions—i.e., gap quotes and LRPs.19
Accordingly, consistent with the communications relating to the
Normally, a proposed rule change proposed rule change between the
filed under 19b–4(f)(6) may not become protection of investors and the public
interest, the Commission designates the Commission and any person, other than
operative prior to 30 days after the date those that may be withheld from the
of filing. However, Rule 19b– proposed rule change to be operative on
March 30, 2007, as requested by the public in accordance with the
13 See Letter from Mary Yeager, Assistant Exchange.20 provisions of 5 U.S.C. 552, will be
Secretary, NYSE, to Nancy M. Morris, Secretary, At any time within 60 days of the available for inspection and copying in
Commission, dated March 2, 2007. In the letter, the filing of the proposed rule change, the the Commission’s Public Reference
NYSE requested that the no action relief be granted Commission may summarily abrogate Room. Copies of the filing will also be
through April 5, 2007, rather than through March
30, 2007, because at the time of the request it was such rule change if it appears to the available for inspection and copying at
contemplated that the post-Phase IV rollout would Commission that such action is the principal office of the NYSE. All
not conclude until April 5, 2007. necessary or appropriate in the public comments received will be posted
14 15 U.S.C. 78f(b)(5).
15 15 U.S.C. 78s(b)(3)(A).
without change; the Commission does
18 17 CFR 240.19b–4(f)(6)(iii).
16 17 CFR 240.19b–4(f)(6). 19 The
not edit personal identifying
Commission notes that the Exchange must
17 Rule 19b–4(f)(6)(iii) under the Act requires that
continue to conduct surveillance with respect to information from submissions. You
a self-regulatory organization submit to the manual auction market activities, including the should submit only information that
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Commission written notice of its intent to file the manual reporting of block transactions addressed in you wish to make available publicly. All
proposed rule change, along with a brief description this proposed rule change, in order to monitor for
and text of the proposed rule change, at least five abuse. submissions should refer to File number
business days prior to the date of filing of the 20 For the purposes only of waiving the 30-day SR–NYSE–2007–31 and should be
proposed rule change, or such shorter time as operative delay, the Commission has considered the submitted on or before April 24, 2007.
designated by the Commission. NYSE has satisfied proposed rule’s impact on efficiency, competition,
the pre-filing requirement. and capital formation. See 15 U.S.C. 78c(f).

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15928 Federal Register / Vol. 72, No. 63 / Tuesday, April 3, 2007 / Notices

For the Commission, by the Division of II. Description of the Proposal open market and a national market
Market Regulation, pursuant to delegated system, and, in general, to protect
The Exchange has proposed to amend
authority.21 investors and the public interest.
its ‘‘generic’’ listing standard pursuant
Florence E. Harmon, to Rule 19b–4(e) under the Act 5 for As the market for ICUs has expanded,
Deputy Secretary. ICUs (which include exchange-traded the variety of weighting and calculation
[FR Doc. E7–6082 Filed 4–2–07; 8:45 am] funds) to eliminate the requirement that methodologies for underlying indexes
BILLING CODE 8010–01–P an eligible index be calculated and has grown, limiting the applicability of
weighted according to a specific NYSE’s current generic listing standards
methodology. for ICUs. The Commission believes that
SECURITIES AND EXCHANGE The Exchange currently has listing eliminating the index methodology
COMMISSION and trading standards, which permit the requirement from the Exchange’s
Exchange either to list and trade ICUs or generic listing standards for ICUs will
trade such ICUs on the Exchange on an facilitate bringing ICUs based on
[Release No. 34–55545; File No. SR–NYSE– indexes with nontraditional weighting
2007–12] unlisted trading privileges (‘‘UTP’’)
basis, subject to the procedures techniques to the market, encourage
Self-Regulatory Organizations; New contained in Rule 19b–4(e) under the innovation in index construction,
York Stock Exchange LLC; Order Act.6 The existence of generic listing reduce costs to issuers and other market
Granting Accelerated Approval to a standards allows qualifying ICUs to list participants, and promote competition.
or trade without the need to file a rule The Commission believes that these
Proposed Rule Change as Modified by
change for each security. Section goals may be furthered without
Amendment No. 1 To Amend Section
703.16(C)(4)(a) of the NYSE Manual compromising investor protection. The
703.16 of the NYSE Listed Company
requires that, if a series of ICUs is listed Commission notes that the numerical
Manual To Eliminate Requirement
for trading on the Exchange in reliance criteria in Section 703.16(C) of the
Regarding Index Weighting and
upon Rule 19b–4(e) under the Act,7 the NYSE Manual addressing concentration,
Calculation Methodology
index underlying the series must follow diversity, and liquidity of an underlying
March 27, 2007. a market capitalization, modified market index’s components would continue to
capitalization, price, equal-dollar, or apply. For example, the generic listing
I. Introduction standards for domestic indexes will
modified equal-dollar weighting
methodology, or alternately, a continue to require, without limitation,
On February 5, 2007, the New York
methodology weighting components of that the most heavily weighted
Stock Exchange LLC (‘‘NYSE’’ or
the index based on any, some or all of component stock of an index not exceed
‘‘Exchange’’) filed with the Securities
the following: Sales, cash flow, book 30% of the weight of the index, and the
and Exchange Commission
value and dividends. The proposed rule five most heavily weighted component
(‘‘Commission’’), pursuant to Section
change would eliminate this standard, stocks of an index not exceed 65% of
19(b)(1) of the Securities Exchange Act
and, as a result, the Exchange would no the weight of the index,12 and that an
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposal to amend longer consider index methodology in index include a minimum of 13
its review of an ICU’s eligibility for component stocks.13 In addition,
Section 703.16 of the NYSE Listed
Company Manual (‘‘NYSE Manual’’), listing and trading pursuant to Rule component stocks that in the aggregate
the Exchange’s generic listing standard 19b–4(e) under the Act.8 account for at least 90% of the weight
for investment company units of the index must have a market value
III. Discussion of at least $75 million and minimum
(‘‘ICUs’’),3 to eliminate the requirement
After careful consideration, the monthly trading volume of at least
that the weighting and calculation
Commission finds that the proposed 250,000 shares for each of the last six
methodology for the index underlying a
rule change is consistent with the months.14 Similarly, the generic listing
series of ICUs must be one of those
specified in Section 703.16(C)(4)(a). On requirements of the Act and the rules standards for international or global
and regulations thereunder applicable to indexes require, without limitation, that
February 15, 2007, the NYSE submitted
a national securities exchange 9 and, in the most heavily weighted component
Amendment No. 1 to the proposed rule
particular, the requirements of Section 6 stock of an index not exceed 25% of the
change. The proposed rule change was
of the Act.10 Specifically, the weight of the index, and the five most
published for comment in the Federal
Commission finds that the proposed heavily weighted component stocks of
Register on March 5, 2007 for a 15-day
rule change is consistent with Section an index not exceed 60% of the weight
comment period.4 The Commission
6(b)(5) of the Act,11 which requires, of the index,15 and that an index
received no comments regarding the
among other things, that the rules of a include a minimum of 20 component
proposal. This order approves the
national securities exchange be stocks.16 Component stocks that in the
proposed rule change, as modified by
designed to prevent fraudulent and aggregate account for at least 90% of the
Amendment No. 1, on an accelerated manipulative acts and practices, to
basis. weight of the index must have a market
promote just and equitable principles of value of at least $100 million and
trade, to remove impediments to and minimum monthly trading volume of at
21 17 CFR 200.30–3(a)(12).
1 15
perfect the mechanism of a free and least 250,000 shares for each of the last
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
5 17 CFR 240.19b–4(e). 12 See Section 703.16(C)(2)(a)(iii) of the NYSE
3 An ICU is defined in Section 703.16 of the NYSE
6 See Section 703.16 of the NYSE Manual.
Manual as a security that represents an interest in Manual.
7 17 CFR 240.19b–4(e). 13 See Section 703.16(C)(2)(a)(iv) of the NYSE
a registered investment company that could be
organized as a unit investment trust, an open-end
8 17 CFR 240.19b–4(e). Manual.
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9 In approving this proposed rule change, the 14 See Section 703.16(C)(2)(a)(i) and (a)(ii) of the
management investment company, or a similar
entity. A registered investment company is Commission has considered the proposed rule’s NYSE Manual.
registered under the Investment Company Act of impact on efficiency, competition, and capital 15 See Section 703.16(C)(2)(b)(iii) of the NYSE

1940, 15 U.S.C. 80a et seq. formation. 15 U.S.C. 78c(f). Manual.


4 See Securities Exchange Act Release No. 55343 10 15 U.S.C. 78f. 16 See Section 703.16(C)(2)(b)(iv) of the NYSE

(February 23, 2007), 72 FR 9814. 11 15 U.S.C. 78f(b)(5). Manual.

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