[Federal Register Volume 59, Number 177 (Wednesday, September 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-22660]


[[Page Unknown]]

[Federal Register: September 14, 1994]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34644; File No. SR-NYSE-94-30]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by New York Stock Exchange, Inc., Relating to Permanent Approval 
of Revisions to the Exchange's Allocation Policy and Procedures

September 7, 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 August 
12, 1994, 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 request for 
permanent approval of revisions to its Allocation Policy and Procedures 
that were implemented on a one year pilot basis.

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 intent of the Allocation Policy and Procedure (the ``Policy'') 
is to ensure that each security listed on the Exchange is allocated in 
the fairest manner possible to the best specialist unit for that 
security. In its continuing efforts to enhance allocation decisions, 
the Exchange conducts periodic reviews of the allocation process.\1\ As 
the result of one such review, the Exchange filed proposed revisions 
with the Commission on June 17, 1992 (see SR-NYSE-92-15). At the 
request of the Commission, the Exchange requested that the proposed 
rule changes take effect on a one year pilot basis. The Commission 
approved the filing on October 29, 1993 (see Release No. 34-33121). The 
Exchange fully integrated the changes to the Policy in February 1994. 
The Exchange is now seeking permanent approval of the proposed rule 
change. The changes to the Policy are summarized below.
---------------------------------------------------------------------------

    \1\Subsequent to implementation of the pilot program discussed 
below, the Exchange conducted another comprehensive review of the 
allocation process and filed further revisions to the Policy (see 
SR-NYSE-94-18).
---------------------------------------------------------------------------

    The revisions to the Policy:
     Limit, to no more than one-third, the weight that the 
Specialist Performance Evaluation Questionnaire (``SPEQ'') may be 
afforded in the allocation decision making process.
     Require that SPEQ performance data be presented to the 
Allocation Committee in four tiers, with units listed alphabetically in 
each comparable group.
     Require information about a specialist unit's contracts 
during the prior six and 12 month periods with listed companies and 
Exchange member organizations to be included in the Allocation 
Application.
     Require the allocation panel to consist of a core group of 
experienced, senior professionals.
     Eliminate specialist representation on the Allocation 
Committee.
     Require that the Allocation Committee list be kept 
confidential and prohibit Exchange members and investment bankers from 
initiating contact with Allocation committee members regarding pending 
allocations.
     State that the Exchange will honor the request of a 
listing company that it not be allocated to its former specialist unit, 
or the specialist in the parent or related company.
     Permit current Allocation Committee members, including 
outgoing members, to vote for an incoming Committee chairman.
     Delete, as obsolete, the objective performance measure 
pertaining to the Opening Automated Report Service contained in the 
policy.
     Discontinue the practice of distributing a summary of 
reasons for each allocation decision to Exchange Floor members.
     Delete the reference to specific aspects of trading 
foreign issues on the Exchange Floor.
     Standardize the agenda used to educate Allocation 
Committee chairman and members.
    The Exchange has reviewed the changes to the Policy as they have 
impacted on the allocation process and it believes that there has been 
a beneficial effect in terms of the way in which stocks are allocated. 
The Exchange continues to subject this vital function to rigorous 
scrutiny, looking to refine the process, as is evidenced by the filing 
of further changes to the Policy cited earlier.
2. Statutory Basis
    The Exchange believes that 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 proposed rule changes are consistent with these 
objectives in that they enable the Exchange to further enhance the 
process by which stocks are allocated to ensure fairness and equal 
opportunity in the process.

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. 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 within such longer period (i) as the Commission may 
designated 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, N.W., Washington, D.C. 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 persons, 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, N.W., 
Washington, D.C. 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-94-30 and should be 
submitted by October 5, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-22660 Filed 9-13-94; 8:45 am]
BILLING CODE 8010-01-M