[Federal Register Volume 59, Number 133 (Wednesday, July 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16896]
[[Page Unknown]]
[Federal Register: July 13, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34325; File No. SR-NYSE-94-18]
Self-Regulatory Organizations; Filing of Proposed Rule Change by
the New York Stock Exchange, Inc. Relating to Amendments to the
Allocation Policy and Procedures
July 7, 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 May
26, 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 proposed rule change consists of amendments to the Exchange's
Allocation Policy and Procedures.\1\
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\1\The exact text of the proposed rule change was attached as
Exhibit A to File No. SR-NYSE-94-18 and can be obtained at the
places specified in Item IV below.
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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 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 order to enhance its stock allocation decisions, the Exchange
conducts a periodic review of its allocation process. As the result of
the Exchange's most recent review, a number of changes to the Policy,
discussed below, are being proposed.
The Exchange proposes to change the composition of the Allocation
Committee (the committee that determines which specialist unit will
specialize in a particular security). The Committee, which consists of
nine members, would include three broker Governors\2\ (one of whom may
be an independent/two-dollar broker),\3\ four other Floor brokers from
the Allocation Panel (one of whom must be an independent/two-dollar
broker), and two allied members\4\ from the Market Performance
Committee or the Panel. For options allocations, only one Governor
would sit on the Committee. Currently, only one Governor sits as a
member of the Allocation Committee, and the policy does not require
that one member of the Committee be an independent/two-dollar broker.
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\2\A Floor 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\The Exchange defines an ``independent/two-dollar broker'' as
a member on the Exchange floor acting as a broker for other members.
\4\An allied member is a general partner, principal executive
officer or employee who controls a member firm or member
organization.
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The Exchange is proposing to change the quorum requirement for the
Allocation Committee to require that at least two Floor Broker
Governors be present out of the seven member quorum. For options
allocations, a quorum would include one Governor. Currently, only one
Governor is required for a quorum.
The Exchange is proposing to allow Governors to serve as chairman
of the Allocation Committee. Currently, they are not eligible to serve.
The Policy would also be amended to require all candidates for chairman
to have prior experience on the Allocation Committee.
The Exchange proposes to amend the Policy to state that all
incoming Allocation Committee members are expected to observe as many
Committee meetings as possible prior to beginning their terms as
Committee members.
The Exchange is proposing to change the composition of the
Allocation Panel (the 36 member group from which the Allocation
Committee is drawn). The panel would be composed of 36 members,
including 28 Floor brokers and eight allied members, plus the eight
broker Governors and four allied members serving on the Exchange's
Market Performance Committee. Currently, the four allied members of the
Market Performance Committee do not serve on the Panel.
Selection to the Allocation Panel currently occurs through an
annual appointment process which utilizes input from the membership.
The Exchange is proposing to amend the Policy to require Panel members
to be nominated by the Exchange membership.
To be eligible to serve on the Allocation Panel, the Exchange
currently requires Floor brokers to have five years of trading Floor
experience. The Policy also states that to the maximum extent possible,
the Panel should consist of a core group of experienced, senior
professionals, such as former Allocation Committee chairmen, senior
Floor Officials, and current and former Floor Governors. In the case of
allied members, the member organization is appointed to the Panel and
it selects a representative to serve. The Exchange is proposing to
amend the Policy to require that the allied members chosen to serve
have at least five years of experience in trading listed equities and
have a senior position on the trading desk. The Policy would also be
amended to permit allied members to designate one alternate who meets
the Panel qualifications, subject to approval by the Floor Directors.
The Exchange is proposing to amend the Policy to provide for a four
month term of service on the Allocation Committee for all members,
including Governors. The current terms are six months for non-Governor
members and two months for Governors. The Exchange is also proposing to
codify the existing practice of permitting Panel members to serve a
maximum of six consecutive one year terms and to stagger terms so that
every two months four or five members would rotate from the Allocation
Committee.
Finally, the Exchange is proposing to codify its practice on the
allocation of merging listed companies. The Policy would be amended to
state that when two listed companies merge, the new entity would be
assigned to the specialist in the company determined to be the
surviving/dominant company. If no surviving/dominant company could be
identified, the entity would be referred to the Allocation Committee
for allocation. Currently, the Market Performance Committee, with the
assistance of Exchange Counsel and the Marketing Division, makes the
determination of which company is the surviving/dominant company.
(2) Statutory Basis
The basis under the Act for this 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
a national market system and in general, to protect investors and the
public interest. The proposed amendments are consistent with these
objectives in that they enable the Exchange to further enhance the
process by which stocks are allocated to ensure fairness and equal
opportunity in the process.
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 date of 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 Room, 450 Fifth Street, N.W.,
Washington, D.C. 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-94-18 and should be
submitted by August 11, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-16896 Filed 7-12-94; 8:45 am]
BILLING CODE 8010-01-M
