[Federal Register Volume 64, Number 22 (Wednesday, February 3, 1999)]
[Notices]
[Pages 5332-5333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-2534]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40979; File No. SR-NYSE-99-02]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Partial Accelerated Approval of Proposed Rule Change by the
New York Stock Exchange, Inc. Instituting a Pilot Program Relating to
the Listing Eligibility Criteria for Closed-End Management Investment
Companies Registered Under The Investment Company Act of 1940
January 26, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 26, 1999, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``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 and order to solicit
comments on the proposed rule change from interested persons and to
grant accelerated approval to the portion of the proposal instituting a
pilot program relating to the listing eligibility criteria for closed-
end investment companies registered under the Investment Company Act of
1940.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange proposes to implement a pilot program (``Pilot'')
amending Section 1 of its Listed Company Manual (``Manual'') to codify
the specific eligibility listing criteria as applied to certain
investment companies registered under the Investment Company Act of
1940. The proposed three-month Pilot would expire on April 29, 1999, or
such earlier time as the Commission approves the Exchange's request for
permanent approval of the program.\3\ The text of the proposed rule
change is available at the Office of the Secretary, NYSE and at the
Commission.
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\3\ Telephone conversation between N. Amy Bilbija, Counsel,
NYSE, and Richard Strasser, Assistant Director, Division of Market
Regulation, SEC, on January 26, 1999.
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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
The Exchange proposed to codify a policy regarding the listing of
newly organized closed-end management investment companies (``Funds'').
The Exchange generally lists Funds either in connection with an initial
public offering or shortly thereafter, when the Fund does not have a
three-year operating history and is thus considered newly formed.
If the Fund has at least $60 million in net assets, as evidenced by
a firm underwriting commitment, the Exchange will generally authorize
the listing of the Fund. In this regard, the Exchange notes that this
requirement is the minimum net asset requirement for listing. The
Exchange retains the discretion to deny listing to a Fund if it
determines that, based upon a comprehensive financial analysis, it is
unlikely that the particular Fund will be able to maintain its
financial status. Any Fund with less than $60 million in net assets
will not be considered for listing.
In applying this test, the Exchange recognizes that in most cases
the applicant Fund is not a traditional operating entity. Thus, it
would not be possible to apply the earnings standards specified in the
Listed Company Manual at the time of listing. Of course, Funds are
subject to continued financial listing criteria, as are all NYSE-listed
companies. In this regard, an exception report is generated monthly to
identify companies below the Exchange's continued listing standards. If
a Fund is so identified by the Exchange's Financial Compliance
Department, it will be subject to the same compliance and monitoring
procedures imposed upon any other NYSE-listed company so identified.
2. Statutory Basis
The basis under the Act for the proposed rule change is the
requirement under Section 6(b)(5) \4\ 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.
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\4\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange represents that the proposed rule change will 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 neither solicited nor received 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 date of publication of this notice in the
Federal Register or within such longer 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.
The Exchange has requested that the Commission find good cause,
pursuant to Section 19(b)(2) \5\ of the Act, for approving the
establishment of the Pilot for a three-month period ending on April 29,
1999 (or until such earlier time as the Commission grants the
Exchange's request for permanent approval of the program), prior to the
thirtieth day after publication in the Federal Register.
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\5\ 15 U.S.C. 78s(b)(2).
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[[Page 5333]]
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, 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. 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-99-02 and
should be submitted by February 24, 1999.
V. Commission's Findings and Order Granting Partial Accelerated
Approval of Proposed Rule Change
The Commission finds that the proposed rule change relating to the
establishment of the Pilot is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to a national
securities exchange. Specifically, the Commission believes the proposal
is consistent with the Section 6(b)(5) \6\ requirements that the rules
of an exchange be designed to promote just and equitable principles of
trade, to remove impediments to and perfect the mechanisms of a free
and open market and a national market system, and, in general, to
protect investors and the public.\7\
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\6\ 15 U.S.C. 78f(b)(5).
\7\ In approving this rule change, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
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The Commission finds good cause for approving the Pilot prior to
the thirtieth day after the date of publication of notice thereof in
the Federal Register. The Commission believes that the Exchange's
listing standard serves as a means for a marketplace to screen Funds
and to provide listed status only to bona fide Funds with sufficient
net assets. The Commission further believes that the proposed Pilot
strikes a reasonable balance between the Exchange's obligation to
protect investors and their confidence in the market and the Exchange's
obligation to perfect the mechanism of a free and open market by
listing Funds on the Exchange. In addition, the Commission believes
that accelerated approval of the Pilot will enable the Exchange to
minimize the interruption in its listing of these securities while
allowing the Commission adequate time to consider the Exchange's
proposal seeking permanent approval of the Pilot.\8\
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\8\ Approval of the three-month Pilot should not be interpreted
as suggesting that the Commission is predisposed to approving the
proposal on a permanent basis.
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the Pilot program proposed by the Exchange (File No. SR-
NYSE-99-02) is approved until April 29, 1999, or until the Commission
approves the proposal permanently.
\9\ 15 U.S.C. 78s(b)(2).
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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. 99-2534 Filed 2-2-99; 8:45 am]
BILLING CODE 8010-01-M
