[Federal Register Volume 59, Number 210 (Tuesday, November 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27037]


[[Page Unknown]]

[Federal Register: November 1, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34889; File No. SR-NYSE-94-35]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. Relating to Rollup 
Transactions

October 25, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. Sec. 78s(b)(1), notice is hereby given that on 
October 6, 1994, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') 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 Exchange is proposing to adopt listing standards for securities 
issued in limited partnership rollup transactions. The proposal 
responds to the requirements of the Limited Partnership Rollup Reform 
Act of 1993 (``Reform Act''). The rule will become effective on 
December 17, 1994, the date on which the Reform Act takes effect. The 
text of the proposed rule follows (italics reflects proposed additions 
to the rules; deletions are in [brackets]):

105.00  Limited Partnerships Rollups

The Exchange will not list a security issued in a limited partnership 
rollup transaction, as that term is defined in paragraphs (4) and (5) 
of section 14(h) of the Securities Exchange Act of 1934, unless such 
transaction was conducted in accordance with procedures designed to 
protect the rights of limited partners. The Exchange will consider a 
rollup transaction to have been conducted in accordance with such 
procedures only if: (a) a broker-dealer registered with the Securities 
and Exchange Commission participates in the transaction; and (b) the 
Exchange receives a written opinion of outside counsel stating that 
such broker-dealer's participation in the rollup transaction was 
conducted in compliance with rules of a national securities association 
designed to protect the rights of limited partners, as specified in the 
Limited Partnership Rollup Reform Act of 1993.

[105.00]  106.00 Miscellaneous Matters
* * * * *
[105.01]  106.01 Stock Symbol Allocation
* * * * *
[105.02]  106.02 Specialist Allocation
* * * * *
[105.03]  106.03 Original Listing Ceremonies
* * * * *

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 Reform Act requires that a national securities exchange adopt 
rules prohibiting ``the listing of any security issued in a limited 
partnership rollup transporation * * * unless such tranaction was 
conducted in accordance with procedures designed to protect the rights 
of limited partners * * *.''\1\ The purpose of the proposed rule change 
is to comply with the requirements of the Reform Act.
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    \1\See Section 303(b) of the Reform Act (which also specifies 
the manner in which the rights of limited partners are to be 
protected).
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    The Reform Act contains three related requirements regarding SRO 
rollup rules: the exchange listing standard discussed above; a similar 
requirement for national securities associations regarding the 
authorization of quotations in rollup securities on an automated 
interdealer quotation system; and a requirement that national 
securities associations adopt rules prohibiting its members from 
participating in a limited partnership rollup transaction unless the 
transaction is conducted in accordance with procedures designed to 
protect the rights of limited partners.
    As a result of these requirements, a broker-dealer that 
participates in a rollup transaction will be subject to national 
securities association rules governing its participation in the 
transaction.\2\ Those rules will contain the same substantive 
requirements that the Reform Act requires exchanges to impose before 
listing a rollup security. Accordingly, if a broker-dealer participates 
in a rollup transaction, the rules governing a broker-dealer's 
participation in the transaction will ensure that the transaction is 
conducted in a manner consistent with the requirements of the Reform 
Act.
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    \2\With limited exceptions not relevant here, Section 15(b)(8) 
of the Act requires that all broker-dealers be members of a national 
securities association.
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    The proposed rule provides that the Exchange will list a rollup 
transaction only if a broker-dealer participates in the transaction. 
Such participation will result in the triggering of the national 
securities association rollup rules governing rollup transactions. The 
proposed rule will also require that the Exchange receive a written 
opinion of outside counsel stating that the broker-dealer conducted its 
participation in the rollup transaction in compliance with the 
applicable rules. Thus, the Exchange will not list securities issued in 
rollup transactions unless investors are provided with the substantive 
protections required by the Reform Act.
2. Statutory Basis
    The basis under the 1934 Act for this proposed rule change is the 
requirement under Section 6(b)(5) that an exchange have rules that are 
designed to prevent fraudulent and manipulative acts and practices, 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, 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 approriate 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 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, 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 person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. Sec. 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-94-35 and should be 
submitted by November 22, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 94-27037 Filed 10-31-94; 8:45 am]
BILLING CODE 8010-01-M