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Notice

Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the New York Stock Exchange, Inc. to Eliminate References to Quoting in Fractions

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Start Preamble March 12, 2002.

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 March 5, Start Printed Page 130322002, 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 NYSE. 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 NYSE proposes to amend its rules to eliminate references to fractional pricing increments and to make such rules compatible with quoting in decimals. The text of the proposed rule change is available at the NYSE and at the Commission.

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 its rules to change references to fractional pricing increments to decimal pricing of equities as described herein. This submission is in accordance with the Commission's order [3] requiring self-regulatory organizations to submit rule filings regarding decimal pricing pursuant to section 19(b)(2) of the Act.[4] The Commission previously reviewed the Exchange's filing proposing amendments to Exchange rules to accommodate phasing in the quoting of decimals commencing August 28, 2000.[5] The Exchange completed the conversion to quoting all listed stocks in decimals on January 29, 2001.

In SR-NYSE-2000-22,[6] the Exchange proposed a Minimum Price Variation (“MPV”) of one cent (0.01) for equities. The Exchange proposes to continue the MPV for equities of one cent (0.01). The rule changes proposed herein, therefore, primarily delete references to quoting in fractions that were retained in Exchange rules to accommodate securities that continued quoting in fractions during the phase in of full decimalization.

Summary of Rule Amendments: Other rules proposed to be amended are summarized below.

Rule 15 (ITS and Pre-Opening Application). The changes to Rule 15 remove references to fractions in the sections dealing with Intermarket Trading System procedures for openings.

Rule 64 (Bonds, Rights and 100 Share-Unit Stocks). Floor Official approval must be obtained for a non-regular way trade that is 2/16 or .10 away from the regular way bid or offer. For trades during the last calendar week of the year, the approval level is 1/4 or .25. The fractional references will be removed.

Rule 72(b) (Clean Agency Cross). Decimals will replace fractions used in the two examples.

Rule 79A.30 (Miscellaneous Requirements on Stock and Bond Market Procedures). Examples in fractions will be deleted.

Rule 105 (Guidelines For Specialists' Specialty Stock Option Transactions Pursuant to Rule 105). References to fractions in the example will be deleted.

Rule 123A.30 (Percentage Orders). Percentage orders may be converted on a destabilizing tick if the order meets certain requirements of size (10,000 shares or more or $500,000 in market value) and the execution price of the converted percentage order is no more than 1/4 or .25 point away from the last sale. Percentage orders may also be converted on a destabilizing tick to narrow a quotation spread as long as the bid is no more than 1/8 or .10 higher than the last sale. The 1/8 and 1/4 parameters will be removed.

Rule 123A.40 (Stop Orders). Floor Official approval must be obtained when a specialist's transaction for his or her own account elects stop orders and the transaction is more than 2/16 or .10 away from the previous transaction. The 2/16 parameter will be removed.

Rule 192 (Part-Paid Securities). Examples in fractions will be deleted.

Rule 440B.15 (Short Sale Rule Interpretations). The examples in the last paragraph that delineate the prices at which short sales may be made are amended to show a one cent MPV for stocks.

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with the objectives of section 6(b)(5) of the Act,[7] which requires an exchange to have rules that are designed to prevent fraudulent and manipulative acts and practices, 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. 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

No written comments were solicited or received with respect to 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

(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 Start Printed Page 13033Commission, 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 the filing will also be available for inspection and copying at the principal offices of the Exchange. All submissions should refer to File No. SR-NYSE-2002-12 and should be submitted by April 10, 2002.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[8]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See Securities Exchange Act Release No. 44846 (September 25, 2001), 66 FR 49983 (October 1, 2001).

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5.  See Securities Exchange Act Release No. 43230 (August 30, 2000), 65 FR 54589 (September 8, 2000) (SR-NYSE-2000-22).

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[FR Doc. 02-6641 Filed 3-19-02; 8:45 am]

BILLING CODE 8010-01-P