regulatory organizations; proposed rule changes: New York Stock Exchange, Inc.,
[Federal Register: June 26, 2000 (Volume 65, Number 123)]
[Notices]
[Page 39459-39461]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26jn00-121]
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-42954; File No. SR-NYSE-100-8]
Self-Regulatory Organizations; Notice of Filing and Order Granting Accelerated Approval of Proposed rule Change and Amendment No. 1 Thereto by the New York Stock Exchange, Inc. Relating to the Exchange's Pride-Based Continued Listing Standards
June 19, 2000.
Pursuant to Section 19(b)(12) of the Securities Exchange Act \1\ of 1934 (``Act''), and Rule 19b-4 thereunder,\2\ notice is hereby given that on February 22, 2000, the New York Stock Exchange, Inc. (``NYSE'' or ``Exchange'') filedwith the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed; rule change as described in Items I, and II below, which Items have been prepared by the Exchange. On May 3, 2000, the Exchange submitted Amendment No. 1 to the proposed rule change.\3\ The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons and to grant accelerated approval to the proposed rule change and Amendment No. 1.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17i CFR 240.19b-4.
\3\ In Amendment No. 1, the NYSE made technical changes to the proposed rule text. See letter from Daniel P. Odell, Assistant Secretary, NYSE, to Nancy dSanow, Senior Special Counsel, Division of Market Regulation, SEC, dated May 1, 2000 (``Amendment No. 1'').
1. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The proposed rule change consists of an amendment to Section 802.01C of the Listed Company Manual (``Manual'') of the Exchange and corresponding changes to NYSE Rule 499. The text of the proposed rule change, as amended, is as follows. New text is italicized.
NYSE Listed Company Manual
Section 8
Suspension and Delisting
801.00Policy * * * * * 802.00Continued Listing 802.01 Continued Listing Criteria * * * * * 802.01C. Price Criteria
Average closing price of a security is less than $1.00over a consecutive 30-trading-day period (D).
(D) Once notified, the company must bring its average share price back above $1.00by the later of its subsequent annual meeting date or six months following receipt of the notification. If this is the only criteria that makes the company below the Exchange's continued listing standards, the procedures outlined in Paras. 802.20 and 802.03 do not apply. The company must, however, notify the Exchange, within 10 business days of receipt of the notification, of its intent to cure this deficiency or be subject to suspension and delisting procedures. In the event that at the expiration of the cure period, a $1.00average share price over the preceding 30 trading days is not attained, the Exchange will commence suspension and delisting procedures. Notwithstanding the foregoing, if the subject security is not the primary trading common stock of the company (e.g., a tracking stock or a preferred class) or is a stock listed under the Affiliated Company standard where the parent remains in ``control'' as that term is used in that standard, the Exchange may determine whether to apply the Price Criteria to such security after evaluating the financial status of the company and/or the parent/affiliated company, as the case may be. * * * * *
NYSE Rules
Delisting of Securities
Suspension From Dealings or Removal From List by Action of the Exchange
The aim of the New York Stock Exchange is to provide the foremost auction market for securities of well-established companies in which there is a broad public interest and ownership.
Rule 499. * * * * *
.20 NUMERICAL AND OTHER CRITERIA--WHEN A COMPANY FALLS BELOW ANY OF THESE CRITERIA, THE EXCHANGE MAY GIVE CONSIDERATION TO ANY DEFINITIVE ACTION THAT A COMPANY WOULD PROPOSE TO TAKE THAT WOULD BRING IT ABOVE CONTINUED LISTING STANDARDS. * * * * *
9. Average closing price of a security is less than $1.00over a consecutive 30 trading-day period. Once notified, the company must bring its average share price back above $1.00by the later of its subsequent annual meeting date or six months following receipt of the notification. If this is the only criteria that makes the company below the Exchange's continued listing standards, the procedures outlined in Paras. .50 and .60 of this Rule 499 do not apply. The company must, however notify the Exchange, within 10 business days of receipt of the notification, of its intent to cure this deficiency. In the event that at the expiration of the cure period, a $1.00average share price over the preceding 30 trading days is not attained, the Exchange will commence suspension and delisting procedures. Notwithstanding the foregoing, if the subject security is not the primary trading common stock of the company (e.g., a tracking stock or a preferred class) or is a stock listed under the Affiliated Company standard where the parent remains in ``control'' as that term is used in that standard, the Exchange may determine whether to apply the Price Criteria to such security after evaluating the financial status of the company and/or the parent/affiliated company, as the case may be.\1\
\4\ When the Exchange amended Section 802.01C of the Manual in SR-NYSE-00-12, the Exchange did not amend NYSE Rule 499 to reflect the corresponding changes. Accordingly, the Exchange proposes to do so now. See Securities Exchange Act Release No. 42671 (April 12, 2000), 65 FR 21227 (April 20, 2000).
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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 III below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
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Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange recently adopted and revised a series of standards and procedures regarding the continued listing of securities for both domestic and non-U.S. issuers.\5\ One of the new standards is a price- based criterion of $1 over the span of 30 consecutive days. Once a company triggers this standard, it must re-establish its trading price above $1 within the later of its next annual meeting date or six months of notification. The Exchange represents that since the implementation of this new standard, several issuers (both listed and prospective) have questioned whether the standard is applicable to classes of securities other than the company's primary trading vehicle.\6\
\5\ See Securities Exchange Act Release No. 42194 (December 1, 1999), 64 FR 69311 (December 10, 1999).
\6\ For example, a company with a Class A common stock trading at $30 and several tracking stocks, one of which is below $1, would take the position that it is inappropriate to apply the price-based standard to this tracking stock because the low price of that stock is not indicative of the overall financial health and valuation of the company. In addition, the Exchange believes that delisting only the one low-priced security would result in the company's equity securities being traded in multiple markets, a situation undesirable to most issuers.
Therefore, the Exchange proposes to modify the price-based criteria so that the Exchange will have the discretion to determine whether the $1 standard is applicable to all of an issuer's listed classes of securities. In making such a determination, the Exchange would evaluate the overall financial status of a company, including the price of the primary trading common stock and its other listed securities. 2. Statutory Basis
The Exchange represents that the proposed rule change is consistent with the requirement under Section 6(b)(5)\7\ of the Act 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, in general, to protect investors and the public interest.
\7\ 15 U.S.C. 78f(b)(5).
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Self-Regulatory Organization's Statement on Burden on Competition
The Exchanges 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.
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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.
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Solicitation of Comments
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filedwith 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 No. SR-NYSE-00-08 and should be submitted by July 17, 2000.
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Commission's Findings and Order Granting Approval of Proposed Rule Change
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, and in particular, with the requirements of Section 6(b)(5),\8\ because the proposed rule is designed to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest.\9\
\8\ 15 U.S.C. 78f(b)(5).
\9\ In approving this rule, the Commission has considered its impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
Specifically, the Commission believes that the proposed rule change to the Exchange's price-based standard will allow for a more appropriate application of the criteria to classes of stock other than a company's primary trading stock by allowing the Exchange to evaluate the overall financial status of a company before determining whether the $1 standard should apply. The Commission further believes that the proposed rule change, as amended, is consistent with the Exchange's obligation to remove impediments to and perfect the mechanism of a free and open market. The Commission believes that the proposed rule will increase the Exchange's ability to retain listings that would otherwise not qualify under its current price-based criteria.
The NYSE has requested that the Commission find good cause for approving the proposed rule change, as amended, prior to the thirtieth day after the date of publication of notice in the Federal Register. The NYSE contends that accelerated approval would enable the Exchange to uniformly implement the amendments to all affected listed companies and not disadvantage those possibly subject to the rule during the full commentary period. The Commission believes that it is reasonable to grant accelerated approval to allow the Exchange to uniformly implement the amendments to all affected listed companies at the same time, thereby eliminating any confusion or the possibility of inconsistent application of the new rule. Accordingly, the Commission finds good cause, consistent with Sections 6(b)(5) and 19(b)(2) of the Act,\10\ to approve the proposed rule change, as amended, on an accelerated basis.
\10\ 15 U.S.C. 78f(b)(5) and 78s(b)(2).
It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act,\11\ that the proposed rule change (SR-NYSE-00-08), as amended, is hereby approved on an accelerated basis.
\11\ 15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\12\
\12\ 17 CFR 200.30-3(a)(12).
Margaret H. McFarland, Deputy Secretary.
[FR Doc. 00-16026Filed6-23-00; 8:45 am]
BILLING CODE 8010-01-M
