[Federal Register Volume 72, Number 25 (Wednesday, February 7, 2007)]
[Notices]
[Pages 5780-5782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-2000]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55214; File No. SR-NYSEArca-2006-50]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change and Amendment No. 1 Thereto Relating to
Amendments to Registration Rules of NYSE Arca Equities, Inc.
January 31, 2007.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on November 14, 2006, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange''),
through its wholly owned subsidiary NYSE Arca Equities, Inc. (``NYSE
Arca Equities'' or ``Corporation''), 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 Exchange filed Amendment
No. 1 to the proposed rule change on January 12, 2007. The Commission
is publishing this notice to solicit comments on the proposed rule
change, as amended, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.2
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange, through its wholly owned subsidiary NYSE Arca
Equities, proposes to amend certain NYSE Arca Equities Rules governing
registration of employees of Equity Trading Permit (``ETP'') Holders
\3\ in order to clarify registration procedures and make them
consistent with the procedures of other self-regulatory organizations
(``SROs''). The text of the proposed rule change is available at NYSE
Arca, the Commission's Public Reference Room, and www.nysearca.com/regulation/filings.asp.
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\3\ See NYSE Arca Equities Rule 1.1(n).
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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 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. 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 Arca Equities Rules 2.4, 2.21,
and 9.27 (referred to herein as Rules 2.4, 2.21 and 9.27) in order to
clarify registration procedures and ongoing compliance obligations for
ETP Holders and their registered persons. Further, the Exchange
proposes to amend these rules so that they are consistent with industry
practices and with the operation of the Central Registration Depository
(``CRD'') system maintained by the National Association of Securities
Dealers, Inc. (``NASD''). The proposed rule changes are similar to the
rules of other SROs.\4\
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\4\ See NASD Rules 1070(d) and 1120(a) and (b) and New York
Stock Exchange LLC (``NYSE'') Rule 345A and Supplementary Material
.15(1)(b) to NYSE Rule 345.
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Consideration of Requests for Waivers of Examination Requirements
The Exchange proposes to amend Rule 2.4(c), which governs requests
from ETP Holder applicants to waive applicable examinations
requirements prescribed by the Exchange. Specifically, the Exchange
proposes to add new waiver standards under which the Corporation has
discretion to grant waivers so that the Exchange's practices are
generally consistent with the criterion set forth in NASD Rule 1070(d)
and Supplementary Material .15(1)(b) to NYSE Rule 345.
Filing of Registration Documentation with the Exchange
The Exchange proposes to amend Rule 2.21, which governs
registration procedures for employees of ETP Holders. Specifically, the
Exchange proposes to amend the rule to provide manual registration
procedures for registration categories (e.g., floor clerk) for which
CRD does not provide electronic registration.\5\
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\5\ In 2005, NYSE Arca (formerly Pacific Exchange, Inc.) became
a participant of the CRD system for maintenance of certain
registration categories with the Exchange. As part of this
implementation, applicable rules of the Exchange were amended to
address filing appropriate registration documentation electronically
with the CRD system for employees of ETP Holders. These amended
rules, however, inadvertently omitted certain registration
procedures for positions not available on the CRD system.
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Continuing Education Requirements
Currently, employees of ETP Holders who wish to initiate and
maintain registration with the Corporation must follow two separate
rules--Rules 2.21 and 9.27. Rule 2.21 sets forth initial registration
requirements, whereas Rule 9.27 sets forth the continuing education
requirements that must be satisfied to maintain registration with the
Corporation.
In order to simplify compliance for employees of ETP Holders, the
Exchange proposes to provide continuing registration requirements in
the same rule as initial registration requirements. Specifically, the
Exchange proposes to add continuing education requirements to new Rule
2.21(d) and certain definitions and clarifications with respect thereto
to new Commentary .01-.06 to Rule 2.21.
The continuing education requirements in proposed new Rule 2.21(d)
and related Commentary .01-.06
[[Page 5781]]
to Rule 2.21 are substantially similar to those contained in current
Rule 9.27(c) and (d) and related Commentary .01-.06 to Rule 9.27(c) and
(d), except that the Exchange has made certain clarifications so that
the continuing education requirements and related definitions and
clarifications are more closely aligned with NASD Rule 1120 and NYSE
Rule 345A and other clean-up changes, as set forth in detail below.
Specifically, the Exchange proposes in Rule 2.21(d)(1) that the
content of the Regulatory Element of the program shall be consistent
with the standards set forth by the Corporation and other SROs, rather
than just determined by the Corporation as is set forth in the current
Rule 9.27(c). In addition, the Exchange proposes to add language in
Rule 2.21(d)(2)(B)(i) providing that if an ETP Holder's analysis
establishes the need for supervisory training for persons with
supervisory responsibilities, such training must be included in the ETP
Holder's training plan. Such language is not included in the current
Rule 9.27(d)(2)(A).
The Exchange has not proposed for inclusion NASD's continuing
education requirements applicable to research analysts because the
Corporation does not provide for research analyst registration.
Additionally, unlike current NASD Rule 1120(a)(6), the Corporation is
not proposing to permit ETP Holders to self-administer the Regulatory
Element of continuing education, as the Corporation does not have the
resources or capability to offer an approval process or monitoring of
such self-administered programs. ETP Holders will be responsible for
ensuring continuing education information related to their associated
persons is received by the firm in a timely manner and, as such, shall
designate a person or persons to receive applicable information via
electronic mail directly from the CRD system. ETP Holders will not be
required to submit to the Corporation the names of such designated
persons, as is required by the current NASD rule. This is based on the
fact that the Corporation does not have a contact management system
comparable to that of NASD.
With respect to the proposed new Commentary to Rule 2.21, the
Exchange proposes to add a definition of ``registered person'' to
Commentary .01 to Rule 2.21 as is currently set forth in Commentary .01
to Rule 9.27(c) and (d), except that the definition that the Exchange
is proposing does not include the carve-out for ``any such person whose
activities are limited solely to the transaction of business on the
facilities of the Corporation with ETP Holders or registered broker-
dealers.'' In addition, the Exchange proposes in Commentary .04 to Rule
2.21 to correct a mistake in the language in Commentary .04 to Rule
9.27(c) and (d) to provide that reassociated registered persons shall
participate in the Regulatory Element at intervals based on their
initial base date, rather than their new base date. Lastly, the
Exchange proposes in Commentary .06 to Rule 2.21 to change the
reference of ``any registered member who is an ETP Holder,'' which is
currently in Commentary .06 to Rule 9.27(c) and (d), to ``any
registered person associated with an ETP Holder'' in order to be
consistent with the language of other SROs.
In connection with the addition of proposed new Rule 2.21(d) and
Commentary .01-.06 to Rule 2.21 as set forth above, the Exchange
proposes to delete the specific continuing education requirements in
Rule 9.27(c) and (d) and the related Commentary .01-.06 to Rule 9.27(c)
and (d). The purpose for deleting the continuing education requirements
in Rule 9.27(c) and (d) is to avoid needless repetition and risk of
inconsistencies. The Exchange proposes to include cross-reference
language in Rule 9.27(c) that provides that registered persons shall
follow the continuing education requirements set forth in Rule 2.21(d).
In addition, the Exchange proposes to delete current Rule 2.21(i)
with respect to transition to the CRD system because registration with
CRD is already provided for in Rule 2.21(a).
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) \7\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, 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 to and perfect the mechanism of a free and open
market and a national market system.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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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
Written comments on the proposed rule change were neither solicited
nor received.
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 such 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
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-NYSEArca-2006-50 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2006-50. 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
[[Page 5782]]
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. Copies of such
filing also will be available for inspection and copying at the
principal office of NYSE Arca. 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-NYSEArca-2006-50 and should be submitted on or before
February 28, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-2000 Filed 2-6-07; 8:45 am]
BILLING CODE 8010-01-P