[Federal Register Volume 60, Number 106 (Friday, June 2, 1995)]
[Notices]
[Pages 28817-28818]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13534]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35773; File No. SR-NYSE-95-19]


Self-Regulatory Organizations; New York Stock Exchange, Inc., 
Notice of Filing of Proposed Rule Change Regarding Depository 
Eligibility Requirements

May 26, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 16, 1995, the New York 
Stock Exchange, Inc. (``NYSE'') 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 primarily by 
NYSE. The Commission is publishing this notice to solicit comments from 
interested persons.

    \1\15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NYSE proposes to adopt a new Rule 227 which will set forth 
depository eligibility requirements for issuers that apply to list 
their securities on NYSE.

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.\2\

    \2\The Commission has modified the language in these sections.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Under the proposed rule change, NYSE will adopt a uniform 
depository eligibility rule, proposed new Rule 227, for issuers that 
desire to list their securities on NYSE. The uniform rule has been 
developed by the Legal and Regulatory Subgroup of the U.S. Working 
Committee of the Group of Thirty in coordination with each of the 
national securities exchanges and the National Association of 
Securities Dealers (``NASD''). It is anticipated that each national 
securities exchange and the NASD will file rule changes proposing 
adoption of depository eligibility standards substantially similar to 
NYSE's proposed rule and will seek to make such changes effective 
contemporaneously with the effective date of the transition from a 
five-day (``T+5'') to a three-day (``T+3'') settlement cycle. The 
transition is set to occur June 7, 1995.\3\

    \3\Securities Exchange Act Release Nos. 33023 (October 6, 1993), 
58 FR 52891 (adoption of Rule 15c6-1) and 34952 (November 9, 1994), 
59 FR 59137 (change of effective date of Rule 15c6-1 from June 1, 
1995 to June 7, 1995).
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    The proposed rule change will require domestic issuers to represent 
to the NYSE before issues of securities are listed that the CUSIP 
numbers identifying the securities have been included in the file of 
eligible issues maintained by a securities depository registered as a 
clearing agency under section 17A of the Act.\4\ This requirement will 
not apply to a security if the terms of such security cannot be 
reasonably modified to meet the criteria for depository eligibility at 
all securities depositories.

    \4\15 U.S.C. 78q-1 (1988).
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    The proposed rule change sets forth additional requirements that 
must be met before a security will be deemed to be ``depository 
eligible,'' as such term is used in Rule 226 of the NYSE rules.\5\ The 
proposed rule specifies different requirements for depository 
eligibility depending upon whether a new issue is distributed by an 
underwriting syndicate before or after the date a securities depository 
system is available for monitoring repurchases of the distributed 
shares by syndicate members (``flipping tracking system'').

    \5\The term ``depository eligible securities'' is defined in 
Rule 226(d) as securities that (i) are part of an issue (securities 
identified by a single CUSIP number) of securities that is eligible 
for deposit at a securities depository and (ii) with respect to a 
particular transaction, are eligible in book-entry transfer at the 
depository at the time of settlement of the transaction.
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    Currently, a flipping tracking system is being developed that will 
include a securities depository service that (i) can be activated upon 
the request of the managing underwriter for a period of time that the 
managing underwriter specifies, (ii) in certain circumstances, will 
require the delivering participant to provide to the depository 
information sufficient to identify the seller of such shares as a 
precondition to the processing of book-entry delivery instructions for 
distributed shares, and (iii) will report to the managing underwriter 
the identity of any other syndicate member or selling group member 
whose customer(s) sold distributed shares (but will not report to the 
managing underwriter the identity of such customer[s]), and in certain 
circumstances, will report to such syndicate member or selling group 
member the identity of such customer(s). Prior to the availability of a 
flipping tracking system, the managing underwriter may delay the date a 
security is deemed ``depository eligible'' for up to three months after 
trading has commenced in the security. After the availability of a 
flipping tracking system, a new issue will be deemed to be depository 
eligible upon commencement of trading on NYSE.
    The proposed rule change is consistent with Section 6(b)(5) of the 
Act\6\ in that it protects investors and the public interest by 
reducing the risk inherent in settling securities transactions to 
clearing corporations, their members, and public investors. This is 
accomplished because the new rule will promote book-entry settlement 
for the vast majority of initial public offerings and will reduce risk 
in the U.S. national market system.

    \6\15 U.S.C. 78f(b)(5) (1988).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    NYSE 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

    NYSE has neither solicited nor received comments on the proposed 
rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period (i) as the 
Commission may designate up to ninety 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 NYSE consents, the Commission will:
    (a) By order approve such proposed rule change or [[Page 28818]] 
    (b) Institute proceedings to determine whether the proposed rule 
change should be disapproved.
    NYSE has requested accelerated approval of the proposed rule change 
in order that the rule can become effective on June 7, 1995.\7\

    \7\Supra note 3 and accompanying text.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submission 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549. 
Copies of the submissions, 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 in the 
Commission's Public Reference Section, 450 5th Street, NW., Washington, 
DC 20549. Copies of such filings will also be available for inspection 
and copying at the principal office of NYSE. All submissions should 
refer to file number SR-NYSE-95-19 and should be submitted by June 23, 
1995.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\

    \8\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-13534 Filed 6-1-95; 8:45 am]
BILLING CODE 8010-01-M