[Federal Register Volume 63, Number 36 (Tuesday, February 24, 1998)]
[Notices]
[Pages 9275-9276]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4573]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39672; File No. SR-NYSE-98-04]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the New York Stock Exchange,
Inc., Relating to the Reimbursement of Member Organizations for Costs
Incurred in the Transmission of Proxy and Other Shareholder
Communication Material
February 17, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on February 12, 1998, the New
York Stock Exchange, Inc. (the ``Exchange'' or ``NYSE'') 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 Exchange. The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange seeks to modify Exchange Rule 451, ``Transmission of
Proxy Material,'' and Exchange Rule 465, ``Transmission of Interim
Reports and Other Material'' (collectively the ``Rules''). The Rules
establish guidelines for the reimbursement of expenses incurred by NYSE
member organizations for the processing of proxy materials and other
issuer communications with respect to security holders whose securities
are held in street name.
The Exchange proposes to reduce one of the fee reimbursement
guidelines \2\ that concerns charges for initial proxy and/or annual
report mailings. In addition, the Exchange proposes to extend the pilot
regarding the Rules, which currently is due to expire on May 13, 1998,
through July 31, 1998.\3\
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\2\ The specific fees listed in Rule 451 also are listed in
Paragraph 402.10 of the Exchange's Listed Company Manual. The
proposed rule change makes conforming changes to that paragraph.
\3\ See Securities Exchange Act Release No. 38406 (Mar. 14,
1997), 62 FR 13922 (Mar. 24, 1997) (the ``Previous Filing''). The
Previous Filing contains a detailed description regarding the
background and history of the Rules.
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The text of the proposed rule change is available at the Office of
the Secretary, the Exchange, 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
Among other things, the Previous Filing lowered the reimbursement
guidelines, created incentive fees to eliminate duplicative mailings,
and established a supplemental fee for intermediaries that coordinate
multiple nominees. The Commission approved the Previous Filing as a
one-year pilot, and designated May 13, 1998, as the date of expiration.
The purpose of the proposed rule change is to lower the rate of
reimbursement for mailing each set of initial proxies and annual
reports from $.55 to $.50. The Exchange is proposing this lower fee
based on the experience over the last year, which indicates that the
lower fee better approximates proxy handling costs. This reduced fee
would be effective through the end of the current pilot period.
In addition, the pilot period presently is scheduled to expire in
the midst of the current proxy season, on May 13, 1998. The proposed
rule change would extend the pilot period through the end of the
current proxy season to July 31, 1998.\4\
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\4\ On February 6, 1998, the Exchange submitted a companion
filing to this proposed rule change that would extend the pilot
period through June 30, 2001. See SR-NYSE-98-05.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b)(4) of the Act \5\ in that it provides for the equitable
allocation of reasonable dues, fees, and other charges among its
members and other persons using its facilities. The Exchange further
believes that the proposed rule change satisfies the requirement under
Section 6(b)(5) \6\ that an exchange have rules that are designed to
prevent fraudulent and manipulative acts and practices; promote just
and equitable principles of trade; foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities; remove impediments to and perfect the mechanism of a free
and open market and a national market system; and, in general, protect
investors and the public interest.
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\5\ 15 U.S.C. 78f(b)(4).
\6\ 15 U.S.C. 78f(b)(5).
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[[Page 9276]]
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposed rule change does not 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 not solicited, and does not intend to solicit,
comments on the proposed rule change. The Exchange has not received any
unsolicited written comments from members or other interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change: (1) does not significantly
affect the protection of investors or the public interest; (2) does not
impose any significant burden on competition; and (3) the Exchange
provided the Commission with written notice of its intent to file the
proposed rule change at least five business days prior to the filing
date (or such shorter time period as designated by the Commission), the
proposed rule change has become effective pursuant to Section
19(b)(3)(A) of the Exchange Act \7\ and Rule 19b-4(e)(6) \8\
thereunder.
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(e)(6).
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A proposed rule change filed pursuant to Rule 19b-4(e)(6) normally
does not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(e)(6)(iii) \9\ permits the Commission to designate
such shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested, in order
to allow the fee reduction to be available for the 1998 proxy season,
that the Commission designate such shorter time period so that the
proposed rule change may take effect immediately upon its filing.
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\9\ 17 CFR 240.19b-4(e)(6)(iii).
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The Commission finds that the proposed rule change is consistent
with the protection of investors and the public interest and therefore
has determined to make the proposed rule change effective immediately
upon filing. The proposed rule change reduces the reimbursement fee
which Exchange member organizations are entitled to receive for mailing
initial proxies and annual reports. The fee reduction should benefit
issuers and public investors in the form of lower costs and expenses.
The fee reduction is based upon the Exchange's experience during the
pilot period and should better reflect the actual costs incurred by
member organizations.
The proposed rule change also extends the expiration date of the
pilot period from May 13, 1998, through July 31, 1998. The Commission
recognizes that the current expiration date intersects the time period
when proxy materials traditionally are distributed to shareholders. As
a result, member organizations would potentially be reimbursed at two
different rates--the rates established by the Previous Filing, and the
rates in effect prior to the implementation of the Previous Filing (the
default rates)--if the expiration date were not extended. The
Commission believes such a result would be confusing and
counterproductive. The Commission also believes the extension of the
expiration date will enable the Exchange to evaluate the effectiveness
of the reimbursement guidelines based on their application during an
entire proxy season.
The Commission notes that the pilot period reimbursement guidelines
were conditionally approved in the Previous Filing following a full
notice and comment period. As part of its approval, the Commission
carefully considered all submitted comments concerning the pilot
reimbursement guidelines and their impact on affected parties.
Furthermore, the Exchange provided the Commission with advance written
notice of the proposed rule change and implemented changes in responses
to staff comments. Therefore, the Commission believes it is reasonable
that the proposed rule change become immediately effective upon the
date of filing, February 12, 1998.
At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
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, 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. 552, will be available for inspection and copying in 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 Exchange. All
submissions should refer to File No. SR-NYSE-98-04 and should be
submitted by March 17, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-4573 Filed 2-23-98; 8:45 am]
BILLING CODE 8010-01-M
