[Federal Register: July 29, 2008 (Volume 73, Number 146)]
[Notices]
[Page 43970-43971]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29jy08-93]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58212; File No. SR-NYSEArca-2008-56]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving
Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Amend
the Pilot Program Expiring on November 30, 2008 for Listing Standards
To Provide That Currently Traded Issuers Will Be Required To Meet Each
of the $5 Per Share Closing Price Requirement and the $150 Million
Market Value of Listed Securities Requirement on the Basis of a 90
Trading Day Average of the Closing Price of the Issuer's Common Stock
Prior To Applying for Initial Listing
July 23, 2008.
I. Introduction
On May 28, 2008, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``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
amend its pilot program for listing standards expiring on November 30,
2008 (``Pilot'') \3\ for initial listing standards applicable to
currently traded issuers. The proposed rule change, as modified by
Amendment No. 1, was published in the Federal Register on June 20,
2008.\4\ The Commission received no comments on the proposal. This
order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ The Commission initially approved the Pilot for six months,
until May 29, 2007. See Securities Exchange Act Release No. 54796
(November 20, 2006), 71 FR 69166 (November 29, 2006) (SR-NYSEArca-
2006-85). The Pilot was subsequently extended for an additional six
months, until November 30, 2007. See Securities Exchange Act Release
No. 55838 (May 31, 2007), 72 FR 31642 (June 7, 2007) (SR-NYSEArca-
2007-51). The Pilot was then extended for an additional six months,
until May 31, 2008. See Securities Exchange Act Release No. 56885
(December 3, 2007), 72 FR 69272 (December 7, 2007) (SR-NYSEArca-
2007-123). The Pilot was most recently extended for an additional
six months, until November 30, 2008. See Securities Exchange Act
Release No. 57922 (June 4, 2008), 73 FR 33137 (June 11, 2008) (SR-
NYSEArca-2008-55).
\4\ See Securities Exchange Act Release No. 57958 (June 12,
2008), 73 FR 35184.
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II. Description of the Proposal
The Exchange proposes to amend NYSE Arca Equities Rule 5.2(c) to
provide that a currently traded issuer will be required to, among other
things, have: (1) Met each of the $5 closing
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price requirement \5\ and the $150 million market value of listed
securities requirement \6\ on the basis of a 90 trading day average of
the closing price of the issuer's common stock prior to applying for
listing on the Exchange; (2) at least $5 closing price and $150 market
value at the time it applies for listing; \7\ and (3) a closing price
of at least $1 per share in each day of the 90 trading day period.\8\
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\5\ See proposed NYSE Arca Equities Rule 5.2(c)(ii).
\6\ See proposed NYSE Arca Equities Rule 5.2(c)(vi).
\7\ See proposed NYSE Arca Equities Rules 5.2(c)(ii) and
5.2(c)(vi).
\8\ See proposed NYSE Arca Equities Rule 5.2(c)(iii).
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III. Discussion
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 and, in
particular, the requirements of section 6(b) of the Act and the rules
and regulations thereunder. Specifically, the Commission finds that the
proposal is consistent with section 6(b)(5) of the Act,\9\ which
requires that an exchange have rules designed, among other things, 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, to protect investors and the public interest, and to not
permit unfair discrimination between customers, issuers, brokers, or
dealers.\10\
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\9\ 15 U.S.C. 78f(b)(5).
\10\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rules' impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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The development and enforcement of adequate standards governing the
initial listing of securities on an exchange is an activity of critical
importance to financial markets and the investing public. Listing
standards, among other things, serve as a means for an exchange to
screen issuers and to provide listed status only to bona fide companies
that have sufficient public float, investor base, and trading interest
to provide the depth and liquidity necessary to promote fair and
orderly markets. Adequate standards are especially important given the
expectations of investors regarding exchange trading and the imprimatur
of listing on a particular market.
Under the proposal, issuers with currently listed securities on
other markets would have to meet the proposed standards to list their
common stock on the Exchange. First, instead of meeting the closing
price per share of $5 or more for 90 consecutive trading days prior to
applying for listing, the closing price per share must be met over a 90
trading day average prior to applying for listing. In addition, instead
of meeting the market value of listed securities of $150 million or
more for 90 consecutive trading days prior to applying for listing, the
market value of listed securities must be met over a 90 trading day
average prior to applying for listing. Second, the common stock must
have at least $5 closing price and the $150 million market value at the
time the issuer applies for listing. Finally, the issuers must have
closing price per share of $1 or more for 90 consecutive trading days
prior to applying for listing.
Originally, the Commission approved the Pilot's initial listing
standards, with three alternative listing standards, based on
similarity to the Nasdaq Global Market initial listing standards.\11\
The Exchange subsequently amended the Pilot's initial listing standards
to eliminate two alternative listing standards and, among other things,
increase the market value of listed securities from $75 million to $150
million.\12\ The Nasdaq Global Market--Entry Standard 3, which forms
the foundation of the Exchange's Pilot initial listing standards,
requires, among other things, a currently traded issuer to have a
market value of listed securities of $75 million for 90 consecutive
trading days and a bid price per share of $5 or more.\13\ The
Commission notes that the proposed initial listing standards are
substantially similar to the Nasdaq Global Market initial listing
standards.\14\The Exchange's proposed market value of listed securities
requirement, albeit calculated differently, remains higher than
Nasdaq's comparable standard.\15\
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\11\ See Securities Exchange Act Release No. 54796 (November 20,
2006), 71 FR 69166 (November 29, 2006) (SR-NYSEArca-2006-85). See
also Nasdaq Rule 4420(a)-(c).
\12\ See Securities Exchange Act Release No. 56606 (October 3,
2007), 72 FR 57982 (October 11, 2007) (SR-NYSEArca-2007-69).
\13\ See Nasdaq Rule 4420(c).
\14\ See Nasdaq Rule 4420(c).
\15\ In addition, the Commission notes that the Exchange
requires a higher amount of public float ($45 million) versus the
comparable Nasdaq standard ($20 million). See NYSE Arca Equities
Rule 5.2(c)(iv) and Nasdaq Rule 4420(c)(2).
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The Commission notes that under the proposal, while the closing
price could fall below $5 per share during the 90 trading day period
before applying for listing, it cannot fall below $1 per share. In
addition, the closing price must be at least $5 per share at the time
the issuer applies to list on the Exchange. The Commission believes
that the combination of the $1 per share floor and $5 per share at the
time of applying to list should help to ensure that currently traded
issuers have some meaningful minimum price history to qualify for
listing. In addition, the Commission notes that under the proposal,
while the market value could fall below $150 million during the 90
trading day period before applying for listing, it must be at least
$150 million at the time the issuer applies to list. The Commission
believes that the proposed market value requirements are sufficient to
demonstrate meaningful depth and liquidity for these securities.
Based on the above, the Commission believes the proposed rule
change is reasonable and should continue to provide only for the
listing of securities with sufficient depth and liquidity to maintain
fair and orderly markets. Accordingly, the Commission believes that the
changes are consistent with the requirements of the Act.
IV. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\16\ that the proposed rule change, as modified by Amendment No. 1
(SR-NYSEArca-2008-56) is hereby approved.
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\16\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-17308 Filed 7-28-08; 8:45 am]
BILLING CODE 8010-01-P