[Federal Register Volume 59, Number 21 (Tuesday, February 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2123]
[[Page Unknown]]
[Federal Register: February 1, 1994]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33521; File No. SR-NYSE-93-53]
Self-Regulatory Organizations; New York Stock Exchange, Inc.;
Notice of Filing and Order Granting Accelerated Approval to Proposed
Rule Change Relating to its Stock Allocation Policy and Procedures
January 25, 1994.
On December 30, 1993, the New York Stock Exchange, Inc. (``NYSE''
or ``Exchange'') submitted to the Securities and Exchange Commission
(``SEC'' or ``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 as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The NYSE requests accelerated approval of the proposal.
---------------------------------------------------------------------------
\1\15 U.S.C. 78s(b)(1) (1988).
\2\17 CFR 240.19b-4 (1992).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change consists of a clarification of the
Exchange's intent with respect to Section V of the Exchange's
Allocation Policy and Procedures (``Allocation Policy'').
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 III 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
(a) Purpose
The purpose of the proposed rule change is to clarify the
Exchange's intent with respect to Section V of the Exchange's
Allocation Policy. The intent of the Exchange's Allocation Policy, as
amended in File No. SR-NYSE-92-15, with respect to spin-offs, listings
of related companies and relistings of companies, is to honor the
request of a listing company that its stock not be allocated to its
former specialist unit, or the specialist in the parent or related
company.\3\
---------------------------------------------------------------------------
\3\The Commission recently approved a NYSE proposal on a one-
year pilot basis that revised, among other things, the allocation
criteria, the composition of the Allocation Committee and Allocation
Panel, and the Committee's disclosure policy. See Securities
Exchange Act Release No. 33121 (October 29, 1993), 58 FR 59085
(November 5, 1993) (order approving File No. SR-NYSE-92-15). The
pilot expires on October 28, 1994.
---------------------------------------------------------------------------
The Exchange emphasizes that specialist performance is, and will
continue to be, the key determinant in allocation decisions. In
honoring the request of a listing company not to be allocated to its
former specialist unit, it should be emphasized that a review of the
applicants for listing will continue to be based on specialist
performance.
(b) Statutory Basis
The basis under the Act for the proposed rule change is the
requirement under Section 6(b)(5) 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. The
Allocation Policy acts to provide for the public interest in
emphasizing that specialist performance is the key determinant in
allocation decisions.
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 comments on the
proposed rule change.
III. 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, NW., Washington DC 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. 552, will be available for inspection and copying at the
Commission's Public Reference Room, 450 Fifth Street, NW., Washington,
DC 20549. Copies of the 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-93-53 and should be submitted by February 22,
1994.
IV. Commission's Findings and Order Granting Accelerated Approval
of Proposed Rule Change
The Commission finds that this clarifying amendment to Section V of
the NYSE Allocation Policy is consistent with Section 6(b)(5) of the
Act,\4\ which requires, among other things, that the rules of an
exchange be designed to promote just and equitable principles of trade,
and, in general, to protect investors and the public interest. Further,
the Commission finds that the proposal is consistent with Section 11(b)
of the Act\5\ and Rule 11b-1 thereunder,\6\ which allow exchanges to
promulgate rules relating to specialists in order to maintain fair and
orderly markets.
---------------------------------------------------------------------------
\4\15 U.S.C. 78f(b)(5) (1988).
\5\15 U.S.C. 78k(b) (1988).
\6\17 CFR 240.11b-1 (1993).
---------------------------------------------------------------------------
The Allocation Policy was approved for a one year pilot period and
expires on October 28, 1994. Approval of this clarifying amendment is
also made on a temporary basis and will expire on October 28, 1994, the
same date as the expiration of the Allocation Policy as amended in File
No. SR-NYSE-92-15.
The Commission believes that the recently amended Allocation Policy
should enhance the Exchange's allocation process, encourage improved
specialist performance and, thereby, protect investors and the public
interest. The Commission believes that the NYSE's clarifying amendment
is consistent with the Exchange's Allocation Policy.
The NYSE's amendment clarifies that the Allocation Policy, as it
relates to spin-offs, listing of related companies and relistings,
provides that the Exchange will honor a listing company's request that
its stock not be allocated to its former specialist unit or the
specialist in the parent or related company. The Commission notes that
the Exchange emphasizes that a review of the applicants for listing
will continue to be based on specialist performance and that the
Exchange will continue to use performance as the key determimant in
allocation decisions.
In its order approving the NYSE's revised Allocation Policy, the
Commission stated that a listing company's preference should not be
allowed to take significance over or negate the specialist's
performance.\7\ The Commission continues to believe that performance is
the most significant determinant in allocation decisions. In the
Commission's view, performance-based stock allocations not only help to
ensure that stocks are allocated to specialists who will make the best
markets, but will provide an incentive for specialists to improve their
performance or maintain superior performance.
---------------------------------------------------------------------------
\7\See Securities Exchange Act Release No. 33121, supra note 3.
---------------------------------------------------------------------------
The Commission believes that the NYSE's amendment is consistent
with the order approving the Allocation Policy, because the Exchange
will continue to use specialist performance as a key determinant while
at the same time honoring a listing company's request not to be
assigned to its former specialist unit or the specialist in the parent
or related company. The Commission recognizes that in making listing
decisions, companies involved in a spin-off or the listing of related
companies or former listed companies, having had direct prior
experience with a particular specialist, might have legitimate reasons
to request that the specialist not be allocated to its securities. The
Commission is confident that the NYSE specialist base is broad enough
to ensure that the NYSE can continue to use specialist performance as
the key determinant, while at the same time responding to a listing
company's request with respect to a specialist with whom the company
has had prior experience.\8\
---------------------------------------------------------------------------
\8\According to the Exchange, there are currently 40 specialist
units registered with the NYSE. Telephone conversation between
Donald Siemer, Market Surveillance, NYSE, and Louis A. Randazzo,
Attorney, Commission, on January 25, 1994.
---------------------------------------------------------------------------
The Commission finds good cause for accelerated approval of the
proposed rule change prior to the thirtieth day after publication of
notice of filing thereof. This will permit the Exchange to continue to
efficiently administer its stock allocation process, especially with
respect to listing of spin-offs or related companies. Furthermore, the
NYSE's proposal clarifies amendments that are identical to amendments
in File No. SR-NYSE-92-15 that were published in the Federal Register
for the full comment period and no comments were received.\9\
---------------------------------------------------------------------------
\9\See Securities Exchange Act Release No. 31427 (November 10,
1992), 57 FR 54433 (November 18, 1992).
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) under the
Act,\10\ that the proposed rule change (SR-NYSE-93-53) is hereby
approved until October 28, 1994.
\10\15 U.S.C. 78s(b)(2) (1988).
---------------------------------------------------------------------------
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------
\11\17 CFR 200.30-3(a)(12) (1991).
---------------------------------------------------------------------------
Margaret M. McFarland,
Deputy Secretary.
[FR Doc. 94-2123 Filed 1-31-94; 8:45 am]
BILLING CODE 8010-01-M
