[Federal Register: November 5, 2003 (Volume 68, Number 214)]
[Notices]
[Page 62645-62646]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05no03-142]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48720; File No. SR-NYSE-2003-23]
Self-Regulatory Organizations; Order Granting Approval of
Proposed Rule Change and Amendment No. 1 Thereto by the New York Stock
Exchange, Inc. Repealing Exchange Rule 500 and Amending Section 806 of
the Listed Company Manual
October 30, 2003.
I. Introduction
On August 20, 2003, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission''), pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'')\1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to delete Exchange Rule 500 in
its entirety and amend Section 806 of the Exchange's Listed Company
Manual regarding the application by an issuer to delist its securities
from the Exchange. Notice of the proposed rule change was published for
comment in the Federal Register on September 10, 2003.\3\ The
Commission received four comments regarding the proposal.\4\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 48435 (September 3,
2003), 68 FR 53413 (``Notice'').
\4\ See letters to Jonathan G. Katz, Secretary, Commission, from
Craig S. Tyle, General Counsel, Investment Company Institute
(``ICI'') dated October 1, 2003 (``ICI Letter''); John Endean,
President, American Business Conference (``ABC''), dated September
30, 2003; Edward S. Knight, Executive Vice President, Nasdaq Stock
Market (``Nasdaq''), dated October 6, 2003 (``Nasdaq Letter''); and
Junius Peake, Professor, University of Northern Colorado, dated
September 29, 2003 (``Peake Letter'').
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[[Page 62646]]
On October 28, 2003, the NYSE filed Amendment No. 1 to the proposed
rule change.\5\ This order approves the proposed rule change, as
amended.
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\5\ See letter from Darla C. Stuckey, Corporate Secretary, NYSE,
to Nancy J. Sanow, Esq., Assistant Director, Division of Market
Regulation, Commission, dated October 27, 2003 (``Amendment No.
1''). In Amendment No. 1, the NYSE proposes to delete the words
``apply to'' from the rule text and to add the following sentence
regarding suspension of trading to the Purpose section of the
filing: ``The Exchange notes that in the case of a voluntary
transfer to another listed market, the Exchange would suspend
trading the security being voluntarily delisted as of the close of
business on the trading day preceding the date the issuer has
arranged to commence trading in the other market. This is the
process followed by other listed markets when an issuer traded there
transfers its listing to the Exchange.'' Because this is a technical
amendment, it is not subject to notice and comment.
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II. The Amended Proposal
As more fully discussed in the Commission's Notice,\6\ the
Exchange's amended proposal removes previous requirements that an
issuer seeking to voluntarily delist a security from the NYSE obtain
approval of its audit committee; notify 35 of its largest shareholders
of the proposed delisting; and publish a press release announcing the
proposed delisting. Under the amended proposal, the issuer is required
only to furnish the Exchange with a certified board resolution
evidencing board approval of the delisting.
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\6\ See supra note 3, at 7-10. A full description of the
proposal is contained in the Notice.
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In simplifying the voluntary delisting process, the amended
proposal continues an evolution that began in 1999 when the Exchange
amended its Rule 500 to remove the requirement of a shareholder vote
(``1999 Amendment'').\7\ In approving the 1999 Amendment, the
Commission directed the Exchange to review periodically the shareholder
notification requirement of NYSE Rule 500 to determine whether it
remained warranted and consistent with the protection of investors.
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\7\ See Securities Exchange Act Release No. 41634 (July 21,
1999), 64 FR 40633 (July 27, 1999) (SR-NYSE-97-31).
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III. Summary of Comments
Two of the commenters supported the proposal,\8\ noting that
eliminating the delisting requirements in NYSE Rule 500 should create a
more level playing field for markets trading securities currently
listed on the NYSE by bringing the NYSE's requirements in line with the
requirements of other exchanges.\9\ The other of these commenters
expresses its view that NYSE Rule 500, even after the 1999 Amendment,
still represents a significant impediment to delisting by functioning
as an anti-competitive tool by which the NYSE has prevented the
migration of listed companies to other exchanges.\10\
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\8\ See ICI Letter and ABC Letter, supra note 4.
\9\ See ICI Letter, supra note 4.
\10\ See ABC Letter, supra note 4.
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Two of the commenters argue that the proposal does not go far
enough to facilitate voluntary delisting from the Exchange.\11\ One of
these commenters suggests that the proposal should require the NYSE to
approve delisting notifications by issuers in good standing as a
routine item.\12\ The other commenter suggests that the NYSE clarify
two issues in its proposal. First, NYSE should make clear that when an
issuer applies to the Commission for voluntary delisting, trading of
the stock on the NYSE would be suspended during the pendency of the
application. Second, this commenter recommends that NYSE amend the
proposal to delete the requirements that the issuer apply for delisting
on the Exchange and provide a certification of the resolution of the
board of directors regarding delisting.
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\11\ See Peake Letter and Nasdaq Letter, supra note 4.
\12\ See Peake Letter, supra note 4. In addition, this commenter
makes several points regarding Commission Rule 12d2-2 under the Act
and separating regulation from trading on the NYSE. As neither issue
is squarely raised by the proposal, this order will not address
those comments.
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In response to the concerns expressed by the commenters, NYSE
submitted Amendment No. 1 to the proposal. In Amendment No. 1, NYSE
proposes to add a representation to clarify its policy with respect to
the suspension of securities during the pendency of an issuer's
application to delist from the Exchange.
IV. Discussion
After careful consideration, the Commission finds that the proposed
rule change, as amended, is consistent with the requirements of the Act
and the rules and regulations thereunder applicable to a national
securities exchange.\13\ Specifically, the Commission believes that the
amended proposal is consistent with section 6(b)(5) of the Act,\14\
which requires, among other things, that the rules of an exchange be
designed 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 Commission also believes
the amended proposal is consistent with section 11A(a)(1)(C)(ii) of the
Act, which states that it is in the public interest and appropriate for
the protection of investors and the maintenance of fair and orderly
markets to assure fair competition between exchange markets.\15\
Specifically, by reducing the restrictions imposed on issuers that wish
to delist their securities from the Exchange, the Commission believes
that the amended proposal should remove a significant barrier to
intermarket competition within the national market system.
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\13\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78(c)(f).
\14\ 15 U.S.C. 78f(b)(5).
\15\ 15 U.S.C. 78k-1(a)(1)(C)(ii).
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V. Conclusion
For the reasons discussed above, the Commission finds that the
amended proposal is consistent with the Act and the rules and
regulations thereunder.
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\16\ that the proposed rule change, as amended (SR-NYSE-2003-23),
be, and hereby is, approved.
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\16\ Id.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-27854 Filed 11-4-03; 8:45 am]
BILLING CODE 8010-01-P