[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Notices]
[Pages 20302-20304]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11143]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37151; File No. SR-NYSE-96-10]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the New York Stock Exchange,
Inc. Relating to Six-Month Extension of Pilot Program To Display Price
Improvement on the Execution Report Sent to the Entering Firm
April 29, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on April
19, 1996, the New York Stock Exchange, Incorporated (``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 prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
I. Self-Regulatory Organizations's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change extends for six months the program filed
as a pilot in Securities Exchange Act Release Nos. 36421 (October 26,
1995), 60 FR 55625 (November 1, 1995) (File No. SR-NYSE-95-35) and
36489 (November 16, 1995), 60 FR 58123 (November 24, 1995) (File
[[Page 20303]]
No. SR-NYSE-95-37). This is a program to calculate and display, on the
execution reports sent to member firms, the dollar amounts realized as
savings to their customers as a result of price improvement in the
execution of their orders on the Exchange.
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 self-regulatory organization
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 self-regulatory organization
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 purpose of this proposed rule change is to extend for six
months a pilot program for calculating and displaying, on execution
reports sent to member firms entering orders, the dollar value saved by
their customers as a result of price improvement of orders executed on
the Exchange. The program does not in any way affect the actual
execution of orders. The Exchange refers to this calculated dollar
savings as the ``NYSE PRIMESM.''
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\SM\ NYSE PRIME is a service mark of the New York Stock
Exchange, Inc.
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NYSE PRIME is available to all member organizations \1\ for intra-
day market orders entered via the Exchange's SuperDOT system that are
not tick-sensitive and are entered from off the Floor.\2\ In
calculating the dollar value of price improvement, NYSE PRIME utilizes
the Best Pricing Quote (``BPQ'') as approved by the Commission in
connection with the Exchange's pricing of odd-lot orders.\3\
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\1\ The Commission notes that member organizations electing to
receive NYSE PRIME information are required to enter into an
agreement with the Exchange regarding the use of NYSE PRIME
information and the NYSE PRIME service mark. Among other things, the
agreement provides that in any publication or use of NYSE PRIME
information (unless the Exchange otherwise agrees), the member
organization must employ the NYSE PRIME service mark.
As of April 29, 1996, the following NYSE member organization are
receiving and utilizing NYSE PRIME information: Merrill Lynch,
Pierce, Fenner, and Smith, Inc.; Charles Schwab & Co., Inc.; and
Kalb, Voorhis & Co.
\2\ Also excluded from the NYSE PRIME feature are booth entered
or booth routed orders, booked orders, combination orders (e.g.,
switch orders) and orders diverted to sidecar.
\3\ See Securities Exchange Act Release No. 27981 (May 2, 1990),
55 FR 19407 (May 9, 1990) (File No. SR-NYSE-90-06). The BPQ is the
highest bid and lowest offer, respectively, disseminated by the
Exchange or another market center participating in the Intermarket
Trading System (``ITS'') at the time the order is received by the
Exchange. In order to protect against the inclusion of incorrect or
stale quotations in the BPQ, however, the Exchange includes
quotations in a stock from other markets only if: (1) the stock is
included in ITS in that other market; (2) the quotation size is for
more than 100 shares: (3) the bid or offer is not more than one-
quarter point away from the NYSE's bid or offer; (4) the quotation
conforms to NYSE Rule 62 governing minimum variations; (5) the
quotation does not create a locked or crossed market; (6) the market
disseminating the quotation is not experiencing operational or
system problems with respect to the dissemination of quotation
information; and, (7) the quotation is ``firm'' pursuant to Rule
11Ac1-1 under the Act, 17 CFR 240.11Ac1-1, and the market's rules.
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Data from the operation of the pilot during the first quarter of
1996 show price improvement on 25.6% of the execution reports for
eligible post-opening market orders entered on the Exchange. The
Exchange believes that the NYSE PRIME enhances the information made
available to investors and improves their understanding of the auction
market.
The initial NYSE PRIME pilot program was commenced on October 24,
1995 \4\ and ran until April 24, 1996. The proposed rule change extends
the pilot program for an additional six months, to October 24, 1996.
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\4\ See NYSE Notice to Members (November 17, 1995).
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2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \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. This proposed rule change is
designed to perfect the mechanism of a free and open market in that it
enhances the information provided to investors by displaying to them
the dollar value of the price improvement their orders may have
received when executed on the NYSE.
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\5\ 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
The Exchange has neither solicited nor received any 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: (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 any Exchange order entry or trading system, the NYSE
PRIME program has become effective pursuant to Section 19(b)(3)(A) of
the Act \6\ and subparagraph (e)(5) of Rule 19b-4 thereunder.\7\ 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.
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\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4(e)(5).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
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 at the
Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such filing will also be available
for inspection and copying at the principal office of the Exchange. All
submissions should refer to File No. SR-NYSE-96-10 and should be
submitted by May 28, 1996.
[[Page 20304]]
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-11143 Filed 5-3-96; 8:45 am]
BILLING CODE 8010-01-M
