[Federal Register Volume 60, Number 109 (Wednesday, June 7, 1995)]
[Notices]
[Pages 30135-30136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13894]



[[Page 30135]]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35776; File No. SR-NYSE-95-13]


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

May 30, 1995.
    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 March 
31, 1995, the New York Stock Exchange, Inc. (``NYSE'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'' or 
``SEC'') the proposed rule change, and on May 17, 1995, filed Amendment 
No. 1 to the proposed rule change,\1\ 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.

    \1\See Letter from James E. Buck, Senior Vice President and 
Secretary, NYSE, to Elisa Metzger, Staff Attorney, SEC dated May 16, 
1995.
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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 amendments to the Exchange's 
Allocation Policy and Procedures which would permit Floor broker Senior 
Floor Officials to replace Governors for quorum purposes.

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 Exchange's Allocation Policy and Procedures 
(``Policy'') is to ensure that each security is allocated in the 
fairest manner possible to the best specialist unit for that security. 
In accordance with this intent, the Exchange recently amended the 
Policy to increase the number of Floor broker Governors\2\ on the 
Allocation Committee from one to three.\3\ Formerly, only one Floor 
broker Governor served as a member of the Allocation Committee. The 
Exchange believes that the Floor broker Governors on the Allocation 
Committee add a comprehensive knowledge of specialist performance and a 
broad perspective and expertise relating to the Exchange. In 
conjunction with this amendment, the Exchange amended the Policy's 
quorum requirement to require at least two Floor broker Governors to be 
present at Allocation Committee meetings. Prior to the amendment, the 
Policy required only one such Governor to be present.\4\ These rule 
changes were implemented by the Exchange in October, 1994.

    \2\A Floor broker Governor is an individual, designated as such 
by the Chairman of the Exchange's Board of Directors, who is 
empowered to perform any duty, make any decision or take any action 
assigned to or required of a Floor Director as prescribed by the 
rules of the Exchange's Board of Directors.
    \3\This committee determines which specialist unit will 
specialize in a particular security. See Securities Exchange Act 
Release No. 34626 (September 1, 1994), 59 FR 46457.
    \4\See Securities Exchange Act Release No. 34626 (September 1, 
1994), 59 FR 46457.
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    In order to avoid the appearance of a conflict of interest on the 
part of an Allocation Committee member, the Policy requires an 
Allocation Committee member whose firm has an investment banking/
underwriting relationship with a listing company or is affiliated with 
a specialist unit applicant, to abstain from deliberations with respect 
to that particular stock. Since the implementation of the amendments 
discussed above, the Exchange has found that the conflict of interest 
exclusion may, at times, impede the Exchange's efforts to maintain the 
maximum presence of three Floor broker Governors on the Allocation 
Committee. The Exchange believes that conflict of interest abstentions, 
among other matters, could lead to situations in which the quorum 
requirement for Floor broker Governors could not be met. In order to 
respond to this concern, the Exchange is proposing to amend the Policy 
to permit Senior Floor Officials\5\ to substitute for Floor broker 
Governors on the Allocation Committee for purposes of satisfying quorum 
requirements.

    \5\A Senior Floor Official is a former Governor or a former 
Floor Director.
    The Allocation Committee membership is drawn from the Allocation 
Panel, which consists of 28 Floor brokers, 8 allied members,\6\ the 8 
Floor broker Governors (who are part of the Allocation Panel by virtue 
of their appointment as Governors), and the 4 allied members serving on 
the Exchange's Market Performance Committee.\7\ The Exchange would also 
amend the Policy to expand the Allocation Panel by appointing a minimum 
of 5 Senior Floor Officials each year. The Senior Floor Officials on 
the Allocation Panel would constitute a separate category, 
distinguished from the 28 Floor brokers.

    \6\An allied member is a general partner, principal executive 
officer or employee who controls a member firm or member 
organization. See New York Stock Exchange, Inc., Constitution, Art. 
1, Sec. 3(c).
    \7\The Allocation Panel comprises the pool of individuals from 
which the Allocation Committee is formed. The Allocation Panel 
members are selected through an annual appointment process with 
input from the membership. Panel members are appointed to serve a 
one-year term; Floor broker Governors, however, remain on the 
Allocation Panel for as long as they are Floor broker Governors.
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    In the event that any of the Floor broker Governors on the standing 
Allocation Committee were not able to attend an Allocation Committee 
meeting, or to participate in the allocation of a particular stock, the 
Exchange would first seek to substitute for such Governor(s) with 
another Floor broker Governor on the Allocation Panel. If no such 
Governor was available, in order to maximize the seniority of the 
Allocation Committee membership, a Senior Floor Official broker on the 
Allocation Panel that is not a standing member of the Allocation 
Committee would be sought as a substitute for the absent Governor(s). 
In instances where no Senior Floor Official broker was available from 
the Allocation Panel, any Senior Floor Official broker on the standing 
Allocation Committee may substitute for the absent Governor(s) for 
purposes of meeting the Governor quorum requirement.
    In the event that no current Floor broker or allied member is 
available from the Allocation Panel, a former Allocation Committee 
chairman may substitute for a standing Allocation Committee member who 
cannot attend a meeting or participate in a particular allocation 
decision. However, a former Allocation Committee chairman may not 
substitute for a Floor broker Governor for the purpose of meeting the 
Floor broker Governor quorum requirement unless such former Allocation 
Committee chairman is a Senior Floor Official.
    The Exchange is also amending the ``Term of Service'' provision for 
Panel members to include a provision for Senior Floor Officials. Senior 
Floor [[Page 30136]] Officials are subject to annual reappointment, but 
are not subject to the two committee term restriction that floor 
brokers and allied members are subject to, and are not limited to a 
maximum of six consecutive one-year terms.
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. 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.

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 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-95-13 and should be 
submitted by June 28, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-13894 Filed 6-6-95; 8:45 am]
BILLING CODE 8010-01-M