Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), and Rule 19b-4 thereunder, notice is hereby given that on December 31, 2001, the New York Stock Exchange, Inc. (“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 Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to amend NYSE Rule 51, Hours for Business, to make emergency procedures more flexible and more responsive to the Exchange's current organizational structure and to the kinds of challenges that the Exchange may face. The text of the proposed rule change is below. Proposed new language is in italics; deletions are in brackets.
Rule 51. Hours for Business
Except as may be otherwise determined by the Board of Directors as to particular days, the Exchange shall be open for the transaction of business on every business day, excluding Saturdays,
(a) for a 9:30 a.m. to 4:00 p.m. trading session, and
(b) for the purposes of “Off-Hours Trading” (as Rule 900 (Off-Hours Trading: Applicability and Definitions) defines that term), during such hours as the Exchange may from time to time specify.
[The Chairman, Vice-Chairman and the Senior Floor Director or in the absence from the Floor of any of them, the next senior Floor Director present on the Floor acting by a majority shall have the power to suspend trading in all securities whenever in their opinion such suspension would be in the public interest. A special meeting of the Board Start Printed Page 1530of Directors to consider the continuation or termination of such suspension or closing the market shall be held as soon thereafter as a quorum of Directors can be assembled.]
Except as may be otherwise determined by the Board of Directors, the Chairman of the Board shall have the power to halt or suspend trading in some or all securities traded on the Exchange, to close some or all Exchange facilities, and to determine the duration of any such halt, suspension or closing, when he deems such action to be necessary or appropriate for the maintenance of a fair and orderly market or the protection of investors, or otherwise in the public interest, due to extraordinary circumstances, such as (1) actual or threatened physical danger, severe climatic conditions, civil unrest, terrorism, acts of war, or loss or interruption of facilities utilized by the Exchange, or (2) a request by a governmental agency or official, or (3) a period of mourning or recognition for a person or event. In considering such action, the Chairman of the Board shall consult with the Vice Chairmen, if available, and such available Floor Directors as he deems appropriate under the circumstances. The Chairman of the Board shall notify the Board of actions taken pursuant to this Rule, except for a period of mourning or recognition for a person or event, as soon thereafter as is feasible.
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 that 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
The NYSE proposed to amend NYSE Rule 51 to make emergency procedures more flexible and more responsive to the Exchange's current organizational structure and to the kinds of challenges that the Exchange may face.
NYSE Rule 51 sets forth the Exchange's trading hours, provides for “off-hours” trading hours and provides procedures for the suspension of trading. (NYSE Rule 80B provides for trading halts due to extraordinary market volatility.)
While NYSE Rule 51 has been modified from time to time, e.g., to adjust trading hours and to change holidays, the procedures for suspension of trading have not been substantially revised since the Exchange's incorporation in 1971 or since the development and implementation of its numerous computerized systems. These procedures are provided in the second paragraph of the Rule
NYSE Rule 51's current procedure to suspend trading requires (1) action by a majority of the Chairman, Vice Chairman and most senior Floor Director available and (2) a meeting of the Board to consider continuation or termination or the suspension or closing the market. The current procedures provide only for suspension of trading of all securities traded on the Exchange.
The existing procedures under NYSE Rule 51 contemplate a Board that is in a position to meet quickly and, perhaps, more often in emergency situations. The Rule does not explicitly permit a suspension of some, but not all, securities, which partial suspension might be the most appropriate response in a future emergency. The current suspension procedures also do not adequately deal with situations involving the kind of unexpected, quick and devastating actions that the nation, and particularly the securities industry, faced on September 11, 2001, and days following. Nor are the current procedures effective in the face of the kind of system outages the Exchange experienced on June 8, 2001.
The NYSE proposes that the Chairman, in consultation with the Vice Chairmen of available and with such available Floor Directors as he deems appropriate under the circumstances, be authorized under amended NYSE Rule 51 to respond to future extraordinary circumstances by halting or suspending trading in some or all securities traded on the Exchange or by closing some or all Exchange facilities, and to determine the duration of any such halt or suspension or closing. The Chairman would be required to notify the Board of actions taken, other than for a period of mourning or recognition for a person or event, as soon as feasible after the actions.
Under the proposed rule change, action would be taken only as a result or extraordinary circumstances and only as the Chairman deems it necessary or appropriate for the maintenance of a fair and orderly market or the protection of investors or otherwise in the public interest. Examples of possible extraordinary circumstances include action or threatened physical danger, severe climatic conditions, civil unrest, terrorism, and act of war, or loss or interruption of facilities utilized by the Exchange. The Chairman would also be able to take action in the event of a request by a governmental agency or official, and for a period of mourning or recognition of a person or event.
The Board continues to have the power to take action it deems necessary or appropriate in particular situations and special Board meetings can be convened.
2. Statutory Basis
The NYSE believes the proposed rule change is consistent with the requirement under Section 6(b)(5) of the Act  that an Exchange have rules that are designed to remove impediments to and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest. The proposed rule change is designed to accomplish these ends by strengthening the Exchange's ability to respond appropriately and in a timely fashion to future extraordinary circumstances.
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 written comments on the proposed rule change.
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,Start Printed Page 1531
(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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 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. Copies of such filing will also be available for inspection and copying at the principal office of the NYSE. All submissions should refer to file number SR-NYSE-2001-55 and should be submitted by February 1, 2002.Start Signature
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Margaret H. McFarland,
[FR Doc. 02-809 Filed 1-10-02; 8:45 am]
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