[Federal Register Volume 59, Number 13 (Thursday, January 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-1340]


[[Page Unknown]]

[Federal Register: January 20, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33475; File No. SR-NYSE-93-45]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. Relating to the Exchange's 
Specialist Combination Review Policy

January 13, 1994.
    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 December 
3, 1993, the New York Stock Exchange, Inc. (``NYSE'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') 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 the Exchange's Specialist 
Combination Review Policy. The full text of the Policy is available at 
the NYSE and at the Commission.

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 purpose of the Policy is to ensure that the Exchange maintains 
a uniform process for reviewing specialist unit combinations that might 
result in levels of concentration that could be detrimental to the 
Exchange's operation of a marketplace.
    The Policy requires Exchange approval of proposed specialist unit 
combinations. In any instance where a proposed combination will result 
in a specialist unit accounting for more than five percent of any 
``concentration measure,''\1\ as defined in the Policy, the Exchange's 
Quality of Markets Committee (the ``Committee'') is required to conduct 
a review of the proposed combination. This review includes an analysis 
of specialist performance and market quality in the stocks subject to 
the proposed combination. The Committee looks at the effects of the 
proposed combination in terms of strengthening the capital base of the 
new unit, minimizing the potential for financial failure of the unit 
and maintaining or increasing operational efficiencies within the unit. 
The Committee also considers the proposed unit's commitment to the 
Exchange market and the effect of the proposed combination on overall 
concentration of specialist organizations.
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    \1\The concentration measures include specialist share of:
     listed common stocks
     the 250 most active listed stocks
     total share volume of stock trading on the Exchange
     total dollar value of stock trading on the Exchange.
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    Where a proposed combination would result in a specialist unit 
which accounts for more than ten percent of a concentration measure, 
the primary consideration during the Committee's review is the effect 
of the proposed combination on overall concentration of specialist 
units. If the new unit accounts for more than ten percent, but less 
than or equal to 155, of a concentration measure, the Policy requires 
the proponents of the combination to prove, by a preponderance of the 
evidence, that the proposed combination:
    (i) Would not cause detrimental concentration to the Exchange and 
its markets;
    (ii) Would foster competition among specialist units; and
    (iii) Would enhance the performance of the constituent specialist 
unit and the quality of the markets in the stocks involved.
    The Policy also requires the proponents of any combination greater 
than ten percent, but less than or equal to 15%, to prove, by a 
preponderance of the evidence, that the proposed combination, if 
approved, is otherwise in the public's interest.
    Where the proposed combination would result in a specialist unit 
which accounts for greater than 15% of a concentration measure, the 
Policy requires the proponents of the combination to provide clear and 
convincing evidence of the factors stated in (i) through (iii) above. 
The proponents of the combination would also be required to provide 
clear and convincing evidence that the proposed combination is 
otherwise in the public's interest.
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.

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 not 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 written 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-93-45 and should be 
submitted by February 10, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-1340 Filed 1-19-93; 8:45 am]
BILLING CODE 8010-01-M