[Federal Register Volume 60, Number 109 (Wednesday, June 7, 1995)]
[Notices]
[Pages 30135-30136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13894]
[[Page 30135]]
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35776; File No. SR-NYSE-95-13]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the New York Stock Exchange, Inc. Relating to Amendments to
the Exchange's Allocation Policy and Procedures
May 30, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on March
31, 1995, the New York Stock Exchange, Inc. (``NYSE'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'' or
``SEC'') the proposed rule change, and on May 17, 1995, filed Amendment
No. 1 to the proposed rule change,\1\ 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.
\1\See Letter from James E. Buck, Senior Vice President and
Secretary, NYSE, to Elisa Metzger, Staff Attorney, SEC dated May 16,
1995.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change consists of amendments to the Exchange's
Allocation Policy and Procedures which would permit Floor broker Senior
Floor Officials to replace Governors for quorum purposes.
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 intent of the Exchange's Allocation Policy and Procedures
(``Policy'') is to ensure that each security is allocated in the
fairest manner possible to the best specialist unit for that security.
In accordance with this intent, the Exchange recently amended the
Policy to increase the number of Floor broker Governors\2\ on the
Allocation Committee from one to three.\3\ Formerly, only one Floor
broker Governor served as a member of the Allocation Committee. The
Exchange believes that the Floor broker Governors on the Allocation
Committee add a comprehensive knowledge of specialist performance and a
broad perspective and expertise relating to the Exchange. In
conjunction with this amendment, the Exchange amended the Policy's
quorum requirement to require at least two Floor broker Governors to be
present at Allocation Committee meetings. Prior to the amendment, the
Policy required only one such Governor to be present.\4\ These rule
changes were implemented by the Exchange in October, 1994.
\2\A Floor broker Governor is an individual, designated as such
by the Chairman of the Exchange's Board of Directors, who is
empowered to perform any duty, make any decision or take any action
assigned to or required of a Floor Director as prescribed by the
rules of the Exchange's Board of Directors.
\3\This committee determines which specialist unit will
specialize in a particular security. See Securities Exchange Act
Release No. 34626 (September 1, 1994), 59 FR 46457.
\4\See Securities Exchange Act Release No. 34626 (September 1,
1994), 59 FR 46457.
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In order to avoid the appearance of a conflict of interest on the
part of an Allocation Committee member, the Policy requires an
Allocation Committee member whose firm has an investment banking/
underwriting relationship with a listing company or is affiliated with
a specialist unit applicant, to abstain from deliberations with respect
to that particular stock. Since the implementation of the amendments
discussed above, the Exchange has found that the conflict of interest
exclusion may, at times, impede the Exchange's efforts to maintain the
maximum presence of three Floor broker Governors on the Allocation
Committee. The Exchange believes that conflict of interest abstentions,
among other matters, could lead to situations in which the quorum
requirement for Floor broker Governors could not be met. In order to
respond to this concern, the Exchange is proposing to amend the Policy
to permit Senior Floor Officials\5\ to substitute for Floor broker
Governors on the Allocation Committee for purposes of satisfying quorum
requirements.
\5\A Senior Floor Official is a former Governor or a former
Floor Director.
The Allocation Committee membership is drawn from the Allocation
Panel, which consists of 28 Floor brokers, 8 allied members,\6\ the 8
Floor broker Governors (who are part of the Allocation Panel by virtue
of their appointment as Governors), and the 4 allied members serving on
the Exchange's Market Performance Committee.\7\ The Exchange would also
amend the Policy to expand the Allocation Panel by appointing a minimum
of 5 Senior Floor Officials each year. The Senior Floor Officials on
the Allocation Panel would constitute a separate category,
distinguished from the 28 Floor brokers.
\6\An allied member is a general partner, principal executive
officer or employee who controls a member firm or member
organization. See New York Stock Exchange, Inc., Constitution, Art.
1, Sec. 3(c).
\7\The Allocation Panel comprises the pool of individuals from
which the Allocation Committee is formed. The Allocation Panel
members are selected through an annual appointment process with
input from the membership. Panel members are appointed to serve a
one-year term; Floor broker Governors, however, remain on the
Allocation Panel for as long as they are Floor broker Governors.
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In the event that any of the Floor broker Governors on the standing
Allocation Committee were not able to attend an Allocation Committee
meeting, or to participate in the allocation of a particular stock, the
Exchange would first seek to substitute for such Governor(s) with
another Floor broker Governor on the Allocation Panel. If no such
Governor was available, in order to maximize the seniority of the
Allocation Committee membership, a Senior Floor Official broker on the
Allocation Panel that is not a standing member of the Allocation
Committee would be sought as a substitute for the absent Governor(s).
In instances where no Senior Floor Official broker was available from
the Allocation Panel, any Senior Floor Official broker on the standing
Allocation Committee may substitute for the absent Governor(s) for
purposes of meeting the Governor quorum requirement.
In the event that no current Floor broker or allied member is
available from the Allocation Panel, a former Allocation Committee
chairman may substitute for a standing Allocation Committee member who
cannot attend a meeting or participate in a particular allocation
decision. However, a former Allocation Committee chairman may not
substitute for a Floor broker Governor for the purpose of meeting the
Floor broker Governor quorum requirement unless such former Allocation
Committee chairman is a Senior Floor Official.
The Exchange is also amending the ``Term of Service'' provision for
Panel members to include a provision for Senior Floor Officials. Senior
Floor [[Page 30136]] Officials are subject to annual reappointment, but
are not subject to the two committee term restriction that floor
brokers and allied members are subject to, and are not limited to a
maximum of six consecutive one-year terms.
2. 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
proposed rule changes are consistent with these objectives in that they
enable the Exchange to further enhance the process by which stocks are
allocated.
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 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, 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 Section, 450 Fifth Street, NW.,
Washington, DC 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-95-13 and should be
submitted by June 28, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-13894 Filed 6-6-95; 8:45 am]
BILLING CODE 8010-01-M
