[Federal Register Volume 59, Number 210 (Tuesday, November 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27037]
[[Page Unknown]]
[Federal Register: November 1, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34889; File No. SR-NYSE-94-35]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the New York Stock Exchange, Inc. Relating to Rollup
Transactions
October 25, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. Sec. 78s(b)(1), notice is hereby given that on
October 6, 1994, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') 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 Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to adopt listing standards for securities
issued in limited partnership rollup transactions. The proposal
responds to the requirements of the Limited Partnership Rollup Reform
Act of 1993 (``Reform Act''). The rule will become effective on
December 17, 1994, the date on which the Reform Act takes effect. The
text of the proposed rule follows (italics reflects proposed additions
to the rules; deletions are in [brackets]):
105.00 Limited Partnerships Rollups
The Exchange will not list a security issued in a limited partnership
rollup transaction, as that term is defined in paragraphs (4) and (5)
of section 14(h) of the Securities Exchange Act of 1934, unless such
transaction was conducted in accordance with procedures designed to
protect the rights of limited partners. The Exchange will consider a
rollup transaction to have been conducted in accordance with such
procedures only if: (a) a broker-dealer registered with the Securities
and Exchange Commission participates in the transaction; and (b) the
Exchange receives a written opinion of outside counsel stating that
such broker-dealer's participation in the rollup transaction was
conducted in compliance with rules of a national securities association
designed to protect the rights of limited partners, as specified in the
Limited Partnership Rollup Reform Act of 1993.
[105.00] 106.00 Miscellaneous Matters
* * * * *
[105.01] 106.01 Stock Symbol Allocation
* * * * *
[105.02] 106.02 Specialist Allocation
* * * * *
[105.03] 106.03 Original Listing Ceremonies
* * * * *
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 Reform Act requires that a national securities exchange adopt
rules prohibiting ``the listing of any security issued in a limited
partnership rollup transporation * * * unless such tranaction was
conducted in accordance with procedures designed to protect the rights
of limited partners * * *.''\1\ The purpose of the proposed rule change
is to comply with the requirements of the Reform Act.
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\1\See Section 303(b) of the Reform Act (which also specifies
the manner in which the rights of limited partners are to be
protected).
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The Reform Act contains three related requirements regarding SRO
rollup rules: the exchange listing standard discussed above; a similar
requirement for national securities associations regarding the
authorization of quotations in rollup securities on an automated
interdealer quotation system; and a requirement that national
securities associations adopt rules prohibiting its members from
participating in a limited partnership rollup transaction unless the
transaction is conducted in accordance with procedures designed to
protect the rights of limited partners.
As a result of these requirements, a broker-dealer that
participates in a rollup transaction will be subject to national
securities association rules governing its participation in the
transaction.\2\ Those rules will contain the same substantive
requirements that the Reform Act requires exchanges to impose before
listing a rollup security. Accordingly, if a broker-dealer participates
in a rollup transaction, the rules governing a broker-dealer's
participation in the transaction will ensure that the transaction is
conducted in a manner consistent with the requirements of the Reform
Act.
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\2\With limited exceptions not relevant here, Section 15(b)(8)
of the Act requires that all broker-dealers be members of a national
securities association.
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The proposed rule provides that the Exchange will list a rollup
transaction only if a broker-dealer participates in the transaction.
Such participation will result in the triggering of the national
securities association rollup rules governing rollup transactions. The
proposed rule will also require that the Exchange receive a written
opinion of outside counsel stating that the broker-dealer conducted its
participation in the rollup transaction in compliance with the
applicable rules. Thus, the Exchange will not list securities issued in
rollup transactions unless investors are provided with the substantive
protections required by the Reform Act.
2. Statutory Basis
The basis under the 1934 Act for this proposed rule change is the
requirement under Section 6(b)(5) that an exchange 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 approriate 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 publication of this notice in the Federal
Register or within such other 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 self-regulatory organization consents, the Commission will:
(A) by order approve the 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. 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. Sec. 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 NYSE. All
submissions should refer to File No. SR-NYSE-94-35 and should be
submitted by November 22, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 94-27037 Filed 10-31-94; 8:45 am]
BILLING CODE 8010-01-M
