[Federal Register Volume 61, Number 223 (Monday, November 18, 1996)]
[Notices]
[Page 58728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29441]


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

SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37937; File No. SR-NYSE-96-29]


Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Order Granting Accelerated Approval of Proposed Rule Change Relating to 
Stock Distributions

November 8, 1996.
    On October 11, 1996, the New York Stock Exchange, Inc. (``NYSE'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change (File No. SR-NYSE-96-29) pursuant to Section 
19(b)(1) of the Securities Exchange Act of 1934 (``Act``).\1\ Notice of 
the proposal was published in the Federal Register on October 18, 
1996.\2\ No comment letters were received. For the reasons discussed 
below, the Commission is granting approval of the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1) (1988).
    \2\ Securities Exchange Act Release No. 37809 (October 10, 
1996), 61 FR 54476.
---------------------------------------------------------------------------

I. Description

    The proposed rule change will allow listed companies engaged in 
distributions to offer shareholders whose ownership of stock is 
directly registered with them or their transfer agents the choice of 
receiving either certificates or account statements. The NYSE is 
rescinding its policy which required listed companies to supply stock 
certificates to recordholders for all distributions, such as stock 
splits, mergers, and spin-offs, other than those relating to dividend 
reinvestment plans (``DRIPs'') and dividend reinvestment stock purchase 
plans (``DRSPPs''). The NYSE is rescinding the current policy due to 
the decreasing importance of physical certificates, the technological 
enhancements in the automation of stock ownership records, and a recent 
rule filing by The Depository Trust Company (``DTC'') to implement an 
electronic ``direct registration system'' (``DRS'').\3\
---------------------------------------------------------------------------

    \3\ For a complete description of DRS, refer to Securities 
Exchange Act Release No. 35038 (December 1, 1994), 59 FR 63652 
(concept release on a transfer agent operated book-entry 
registration system) and DTC Important Notice B# 1811-96 (October 7, 
1996) and Important Notice B# 1841-96 (October 7, 1996), which are 
attached as Exhibits A and B to Securities Exchange Act Release No. 
37800 (October 9, 1996), 61 FR 54473.
---------------------------------------------------------------------------

    DRS will provide a linkage between transfer agents, broker-dealers, 
and the depositories and will allow investors to move stock position 
from transfer agent to broker-dealers in connection with their sales of 
stock. As a condition of allowing issuers to provide investors with the 
option of obtaining either certificates or account statements for 
distributions in addition to those associated with DRIPs and DRSPPs, 
NYSE is requiring issuers to include their stock in a DRS. Such a DRS 
must be operated by a registered clearing agency and must be available 
for exchange-traded stock.

II. Discussion

    Section 6(b)(5) \4\ of the Act requires that an exchange have rules 
that are designed to foster cooperation and coordination with persons 
engaged in regulating, clearing, settling, processing information with 
respect to, and facilitating transactions in securities. The Commission 
believes that NYSE's proposed rule change rescinding its policy will 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities. By rescinding its policy, NYSE 
listed companies will have the opportunity to participate in DRS, which 
a joint industry committee comprised of representatives from the 
transfer agent, broker-dealer, and depository communities. DRS will 
provide significant efficiencies in the processing of securities and 
should contribute to the cooperation and coordination between the 
various groups involved in the clearance and settlement process.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f (1988).
---------------------------------------------------------------------------

    NYSE has requested that the Commission find good cause for 
approving the proposed rule change prior to the thirtieth day after the 
date of publication of notice of the filing. The Commission finds good 
cause for approving the proposed rule change prior to the thirtieth day 
after the date of publication because accelerated approval will allow 
NYSE listed issuers to participate in the DRS pilot program which 
begins on November 11, 1996.

III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular Section 6 of the Act and the rules and regulations 
thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-NYSE-96-29) be and hereby is 
approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
---------------------------------------------------------------------------

    \5\ 17 CFR 200.30-3(a)(12) (1996).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-29441 Filed 11-15-96; 8:45 am]
BILLING CODE 8010-01-M