[Federal Register: April 15, 2003 (Volume 68, Number 72)]
[Notices]
[Page 18317-18318]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15ap03-131]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-47652: File No. SR-NYSE-2003-08]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of a Proposed Rule Change by the New York
Stock Exchange, Inc. Relating to Listing and Trading ELDS on the
Exchange
April 8, 2003.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and rule 19b-4 thereunder,\2\ notice is hereby given
that on April 4, 2003, the New York Stock Exchange, Inc. (the
``Exchange'' or the ``NYSE'') filed with the Securities and Exchange
Commission (the ``SEC'' or the ``Commission'') the proposed rule change
as described in items I and II 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 and to
approve the proposal on an accelerated basis.
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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 NYSE proposes to amend section 703.21 of the Exchange's Listed
Company Manual relating to the listing and trading of equity-linked
debt securities (``ELDS'') on the Exchange. The text of the proposed
rule change is set forth below in its entirety. Proposed new language
is in italics; proposed deletions are in [brackets].
* * * * *
Listed Company Manual
* * * * *
703.00 Subsequent Listing Applications and Debt Securities Applications
* * * * *
703.21 Equity-Linked Debt Securities
The Exchange will consider listing equity-linked debt securities
(``ELDS'') that meet the criteria of this paragraph. ``Equity-linked
debt securities'' are non-convertible debt of an issuer where the value
of the debt is based, at least in part, on the value of another
issuer's common stock[ or], non-convertible preferred stock, common
units of a master limited partnership or any other common equity
security of a type classified for trading as stocks by the Exchange.
(A) through (D)--No change
* * * * *
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 III 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 is proposing to amend section 703.21 of the Exchange's
Listed Company Manual (the ``Manual'') relating to the listing and
trading of equity-linked debt securities (``ELDS'') on the Exchange.
The Exchange is proposing to clarify that the definition of ELDS covers
non-convertible debt of an issuer where the value of the debt is based,
at least in part, not only on the value of another issuer's common
stock or non-convertible preferred stock, but also on the value of
common units of a publicly traded master limited partnership, as well
as any other equity security of a type classified for trading as
``stocks'' by the Exchange. The Exchange represents that this
terminological clarification is consistent with the intent of the
original rule of section 703.21 and should provide issuers with greater
transparency regarding the scope of the rule. The Exchange believes
that this rule change will provide issuers with more flexibility in
developing ELDS and thus provide greater investment choices in the
market without having an adverse effect on investor protection.\3\
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\3\ In Securities Exchange Act Release No. 34545, dated August
18, 1994 (the ``Release''), the Commission stated that, except under
limited circumstances, the issuance of ELDS relating to any
underlying security may not exceed five percent of the total shares
outstanding of such underlying security. Footnote 10 of the Release
states that the only exceptions to this restriction are where either
(1) the issuer of the ELDS and the issuer of the underlying security
are affiliated; or (2) the issuer of the ELDS holds an amount of the
underlying security at least equal to the amount of the underlying
security represented by the ELDS. As required by the SEC under the
Release, the maximum percentage of ELDS that may be issued will be
evaluated by the Exchange on a case-by-case basis in consultation
with, and with the approval of, the staff of the Commission.
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The Exchange represents that its rules and policies currently
applicable to ELDS generally will apply to ELDS linked to limited
partnership units and other equity securities.\4\
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\4\ An equity security on which the value of the debt is based
must meet the requirements of Section 703.21(C) of the Manual.
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2. Statutory Basis
NYSE believes that the proposed rule change is consistent with
section 6 of the Act,\5\ in general, and furthers the objectives of
section 6(b)(5)\6\ that an exchange have rules that are designed to
prevent fraudulent and manipulative acts and practices, 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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\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(5).
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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. 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 20549-0609.
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 Room at 450 Fifth Street, NW.,
Washington, DC 20549-0609. Copies of
[[Page 18318]]
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-2003-08 and should be submitted by May 6, 2003.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\7\ In
particular, the Commission finds that the proposed rule change is
consistent with section 6(b)(5) of the Act.\8\ Specifically, The
Commission believes that the proposed change does not raise any
significant regulatory issues that were not addressed in the
Commission's prior approval orders regarding ELDS. The proposed rule
change clarifies the existing listing criteria for ELDS contained in
Paragraph 703.21 of the Manual by clarifying that the definition of
ELDS covers non-convertible debt of an issuer where the value of the
debt is based, at least in part, not only on the value of another
issuer's common stock or non-convertible preferred stock, but also on
the value of common units of a publicly traded master limited
partnership, as well as any other equity security of a type classified
for trading as ``stocks'' by the Exchange. The Commission notes that an
equity security on which the value of the debt is based must meet the
requirements of section 703.21(c). The Commission believes that this
change is consistent with the intent of the original rule of section
703.21 and will provide issuers with greater transparency regarding the
scope of the rule.
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\7\ In approving this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
\8\ 15 U.S.C. 78f(b)(5).
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NYSE has requested that the Commission find good cause for
approving the proposed rule change prior to the thirtieth day after
publication of notice thereof in the Federal Register to accommodate
the listing and trading of ELDS based on publicly traded master limited
partnerships. Accordingly, the Commission finds good cause, pursuant to
section 19(b)(2) of the Act,\9\ for approving the proposed rule change
prior to the thirtieth day after the date of publication of notice
thereof in the Federal Register because these products are similar to
other ELDS currently trading on NYSE.
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\9\ 15 U.S.C. 78s(b)(2).
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V. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-NYSE-2003-08), is hereby
approved on an accelerated basis.
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\10\ Id.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-9160 Filed 4-14-03; 8:45 am]
BILLING CODE 8010-01-P