[Federal Register Volume 59, Number 21 (Tuesday, February 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2123]


[[Page Unknown]]

[Federal Register: February 1, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33521; File No. SR-NYSE-93-53]

 

Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Notice of Filing and Order Granting Accelerated Approval to Proposed 
Rule Change Relating to its Stock Allocation Policy and Procedures

January 25, 1994.
    On December 30, 1993, the New York Stock Exchange, Inc. (``NYSE'' 
or ``Exchange'') submitted to 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 as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The NYSE requests accelerated approval of the proposal.
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    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\17 CFR 240.19b-4 (1992).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change consists of a clarification of the 
Exchange's intent with respect to Section V of the Exchange's 
Allocation Policy and Procedures (``Allocation Policy'').

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 III 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

(a) Purpose
    The purpose of the proposed rule change is to clarify the 
Exchange's intent with respect to Section V of the Exchange's 
Allocation Policy. The intent of the Exchange's Allocation Policy, as 
amended in File No. SR-NYSE-92-15, with respect to spin-offs, listings 
of related companies and relistings of companies, is to honor the 
request of a listing company that its stock not be allocated to its 
former specialist unit, or the specialist in the parent or related 
company.\3\
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    \3\The Commission recently approved a NYSE proposal on a one-
year pilot basis that revised, among other things, the allocation 
criteria, the composition of the Allocation Committee and Allocation 
Panel, and the Committee's disclosure policy. See Securities 
Exchange Act Release No. 33121 (October 29, 1993), 58 FR 59085 
(November 5, 1993) (order approving File No. SR-NYSE-92-15). The 
pilot expires on October 28, 1994.
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    The Exchange emphasizes that specialist performance is, and will 
continue to be, the key determinant in allocation decisions. In 
honoring the request of a listing company not to be allocated to its 
former specialist unit, it should be emphasized that a review of the 
applicants for listing will continue to be based on specialist 
performance.
(b) 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. The 
Allocation Policy acts to provide for the public interest in 
emphasizing that specialist performance is the key determinant in 
allocation decisions.

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 comments on the 
proposed rule change.

III. 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 Room, 450 Fifth Street, NW., Washington, 
DC 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-93-53 and should be submitted by February 22, 
1994.

IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Rule Change

    The Commission finds that this clarifying amendment to Section V of 
the NYSE Allocation Policy is consistent with Section 6(b)(5) of the 
Act,\4\ which requires, among other things, that the rules of an 
exchange be designed to promote just and equitable principles of trade, 
and, in general, to protect investors and the public interest. Further, 
the Commission finds that the proposal is consistent with Section 11(b) 
of the Act\5\ and Rule 11b-1 thereunder,\6\ which allow exchanges to 
promulgate rules relating to specialists in order to maintain fair and 
orderly markets.
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    \4\15 U.S.C. 78f(b)(5) (1988).
    \5\15 U.S.C. 78k(b) (1988).
    \6\17 CFR 240.11b-1 (1993).
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    The Allocation Policy was approved for a one year pilot period and 
expires on October 28, 1994. Approval of this clarifying amendment is 
also made on a temporary basis and will expire on October 28, 1994, the 
same date as the expiration of the Allocation Policy as amended in File 
No. SR-NYSE-92-15.
    The Commission believes that the recently amended Allocation Policy 
should enhance the Exchange's allocation process, encourage improved 
specialist performance and, thereby, protect investors and the public 
interest. The Commission believes that the NYSE's clarifying amendment 
is consistent with the Exchange's Allocation Policy.
    The NYSE's amendment clarifies that the Allocation Policy, as it 
relates to spin-offs, listing of related companies and relistings, 
provides that the Exchange will honor a listing company's request that 
its stock not be allocated to its former specialist unit or the 
specialist in the parent or related company. The Commission notes that 
the Exchange emphasizes that a review of the applicants for listing 
will continue to be based on specialist performance and that the 
Exchange will continue to use performance as the key determimant in 
allocation decisions.
    In its order approving the NYSE's revised Allocation Policy, the 
Commission stated that a listing company's preference should not be 
allowed to take significance over or negate the specialist's 
performance.\7\ The Commission continues to believe that performance is 
the most significant determinant in allocation decisions. In the 
Commission's view, performance-based stock allocations not only help to 
ensure that stocks are allocated to specialists who will make the best 
markets, but will provide an incentive for specialists to improve their 
performance or maintain superior performance.
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    \7\See Securities Exchange Act Release No. 33121, supra note 3.
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    The Commission believes that the NYSE's amendment is consistent 
with the order approving the Allocation Policy, because the Exchange 
will continue to use specialist performance as a key determinant while 
at the same time honoring a listing company's request not to be 
assigned to its former specialist unit or the specialist in the parent 
or related company. The Commission recognizes that in making listing 
decisions, companies involved in a spin-off or the listing of related 
companies or former listed companies, having had direct prior 
experience with a particular specialist, might have legitimate reasons 
to request that the specialist not be allocated to its securities. The 
Commission is confident that the NYSE specialist base is broad enough 
to ensure that the NYSE can continue to use specialist performance as 
the key determinant, while at the same time responding to a listing 
company's request with respect to a specialist with whom the company 
has had prior experience.\8\
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    \8\According to the Exchange, there are currently 40 specialist 
units registered with the NYSE. Telephone conversation between 
Donald Siemer, Market Surveillance, NYSE, and Louis A. Randazzo, 
Attorney, Commission, on January 25, 1994.
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    The Commission finds good cause for accelerated approval of the 
proposed rule change prior to the thirtieth day after publication of 
notice of filing thereof. This will permit the Exchange to continue to 
efficiently administer its stock allocation process, especially with 
respect to listing of spin-offs or related companies. Furthermore, the 
NYSE's proposal clarifies amendments that are identical to amendments 
in File No. SR-NYSE-92-15 that were published in the Federal Register 
for the full comment period and no comments were received.\9\
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    \9\See Securities Exchange Act Release No. 31427 (November 10, 
1992), 57 FR 54433 (November 18, 1992).
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    It is therefore ordered, pursuant to Section 19(b)(2) under the 
Act,\10\ that the proposed rule change (SR-NYSE-93-53) is hereby 
approved until October 28, 1994.

    \10\15 U.S.C. 78s(b)(2) (1988).
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    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) (1991).
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Margaret M. McFarland,
Deputy Secretary.
[FR Doc. 94-2123 Filed 1-31-94; 8:45 am]
BILLING CODE 8010-01-M