

[Federal Register: February 15, 2008 (Volume 73, Number 32)]
[Notices]               
[Page 8916-8917]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15fe08-117]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57305; File No. SR-NYSE-2007-119]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving Proposed Rule Change Relating to the Adoption of New Exchange 
Rule 309 (Failure To Pay Fees)

February 11, 2008.

I. Introduction

    On December 21, 2007, the New York Stock Exchange LLC (``NYSE'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
adopt new Exchange Rule 309, which delineates procedures for the 
collection of fee arrearages due to the Exchange. The proposed rule 
change was published for comment in the Federal Register on January 7, 
2008.\3\ The Commission received no comment letters on the proposed 
rule change. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 57065 (December 28, 
2007), 73 FR 1248 (``Notice'').
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II. Description of the Proposal

    The Exchange has proposed to establish new procedures to address 
members, member organizations, and allied members who fail to pay 
``fee[s] or any other sums due to the Exchange.'' \4\ Types of payments 
that the Exchange would consider to be a ``fee'' under proposed Rule 
309 include, but are not limited to, regulatory fees (i.e., Gross 
Financial and Operational Combined Uniform Single Report (FOCUS) 
revenue fees and trading floor regulatory fees), trading license fees, 
and transaction charges. Types of payments that the Exchange would 
consider to be covered by the term ``any other sums'' include, but are 
not limited to, charges for using Exchange Floor

[[Page 8917]]

facilities and equipment and phone service charges.\5\
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    \4\ See proposed Rule 309. Currently, Exchange Rule 476(k) sets 
forth the procedures for addressing the failure of members, member 
organizations, or allied members to pay ``a fine, or any other sums 
due to the Exchange.'' Rule 476(k) provides that upon written notice 
to such members, member organizations, or allied members and 
notification of the Chairman of the Board of Directors of the 
Exchange of the arrearage, the Board of Directors may suspend the 
member, member organization, or allied member for failure to pay the 
arrearages due the Exchange until payment is made.
    \5\ Telephone bills for Exchange-provided portable phones are 
paid by the Exchange and thereafter the Exchange submits an invoice 
to the member, member organization, or allied member for 
reimbursement.
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    Pursuant to proposed Rule 309, if a member, member organization, or 
allied member fails to make payment within forty-five days after the 
fee or other sum becomes payable, notice of the arrearage will be given 
to the member and the member will be reported to the Chief Financial 
Officer (``CFO'') of the Exchange or a designee. The CFO or designee 
will be responsible for taking any remedial action he or she deems 
appropriate, including suspension of the delinquent member's, member 
organization's, or allied member's access to some or all Exchange 
facilities.
    In its filing, the Exchange stated that the terms ``fees'' and 
``any other sums'' in the text of proposed Rule 309 will not include 
fines levied in connection with a disciplinary proceeding. The proposed 
rule provides that failure to pay such disciplinary fines will continue 
to be governed by the provisions of Exchange Rule 476(k) (Disciplinary 
Proceedings Involving Charges Against Members, Member Organizations, 
Allied Members, Approved Persons, Employees, or Others).\6\
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    \6\ The Exchange stated that in the context of Rule 476(k), 
``fine'' includes a fine levied in connection with a disciplinary 
proceeding and related fees also associated with a disciplinary 
proceeding.
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III. Discussion and Commission Findings

    After careful consideration, the Commission finds that the proposed 
rule change, as amended, is consistent with the requirements of the Act 
and the rules and regulations thereunder applicable to a national 
securities exchange \7\ and, in particular, the requirements of section 
6 of the Act.\8\ Specifically, the Commission finds that the proposed 
rule change is consistent with section 6(b)(5) of the Act,\9\ which 
requires, among other things, that the rules of a national securities 
exchange be 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.
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    \7\ In approving this proposed rule change the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(5).
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    Currently, under Exchange Rule 476(k), the ability to suspend 
members, member organizations, and allied members for non-payment of 
sums due to the Exchange becomes operative after 45 days. According to 
the Exchange, this provision currently is not utilized by the Exchange; 
instead, arrearages are referred to the Exchange's collections 
department for resolution, which generally does not avail itself of the 
recourse provided in Exchange Rule 476(k). The Exchange has proposed to 
have notice of certain overdue fees (other than disciplinary fines and 
fees) reported to the CFO (or his or her designee), and to vest in the 
CFO (or his or her designee) the authority to determine what if any 
remedial action should be taken upon receipt of a report that a member, 
member organization, or allied member failed to pay a fee. 
Specifically, the CFO, or his or her designee, would be empowered to 
suspend access to some or all of the facilities of the Exchange until 
payment of the arrearage is made.
    The Commission believes that the Exchange's proposal to empower its 
Chief Financial Officer, or his or her designee, to consider and 
address non-payment of certain fees and other sums due to the Exchange, 
other than disciplinary fines, after notice has been given of the 
arrearage to such member, member organization, or allied member, is 
consistent with the Act.
    The proposed rule would not preclude the Exchange's CFO from 
presenting notice of any arrearage to the Board pursuant to Exchange 
Rule 476(k) where appropriate, but rather provides a more efficient 
process for the Exchange's senior management to address non-payment of 
certain fees and other sums due to the Exchange, other than 
disciplinary fines, without the need to involve the Exchange's Board of 
Directors in what is normally a purely business matter.
    In approving the proposed rule change, the Commission has relied on 
the Exchange's representation that failure to pay disciplinary fines 
and any fees assessed in connection with disciplinary matters will 
continue to be governed solely by Rule 476(k), and that suspension of 
members for failure to pay fines or fees arising out of disciplinary 
actions continues to be subject to consideration by the Exchange's 
Board of Directors pursuant to that rule.

IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\10\ that the proposed rule change (File No. SR-NYSE-2007-119) be, 
and it hereby is, approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-2866 Filed 2-14-08; 8:45 am]

BILLING CODE 8011-01-P
