[Federal Register Volume 63, Number 36 (Tuesday, February 24, 1998)]
[Notices]
[Pages 9275-9276]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4573]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39672; File No. SR-NYSE-98-04]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the New York Stock Exchange, 
Inc., Relating to the Reimbursement of Member Organizations for Costs 
Incurred in the Transmission of Proxy and Other Shareholder 
Communication Material

February 17, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on February 12, 1998, the New 
York Stock Exchange, Inc. (the ``Exchange'' or ``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 by the Exchange. The Commission is publishing this notice 
to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange seeks to modify Exchange Rule 451, ``Transmission of 
Proxy Material,'' and Exchange Rule 465, ``Transmission of Interim 
Reports and Other Material'' (collectively the ``Rules''). The Rules 
establish guidelines for the reimbursement of expenses incurred by NYSE 
member organizations for the processing of proxy materials and other 
issuer communications with respect to security holders whose securities 
are held in street name.
    The Exchange proposes to reduce one of the fee reimbursement 
guidelines \2\ that concerns charges for initial proxy and/or annual 
report mailings. In addition, the Exchange proposes to extend the pilot 
regarding the Rules, which currently is due to expire on May 13, 1998, 
through July 31, 1998.\3\
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    \2\ The specific fees listed in Rule 451 also are listed in 
Paragraph 402.10 of the Exchange's Listed Company Manual. The 
proposed rule change makes conforming changes to that paragraph.
    \3\ See Securities Exchange Act Release No. 38406 (Mar. 14, 
1997), 62 FR 13922 (Mar. 24, 1997) (the ``Previous Filing''). The 
Previous Filing contains a detailed description regarding the 
background and history of the Rules.
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    The text of the proposed rule change is available at the Office of 
the Secretary, the Exchange, and at the Commission.

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 Exchange 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 Exchange 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
    Among other things, the Previous Filing lowered the reimbursement 
guidelines, created incentive fees to eliminate duplicative mailings, 
and established a supplemental fee for intermediaries that coordinate 
multiple nominees. The Commission approved the Previous Filing as a 
one-year pilot, and designated May 13, 1998, as the date of expiration.
    The purpose of the proposed rule change is to lower the rate of 
reimbursement for mailing each set of initial proxies and annual 
reports from $.55 to $.50. The Exchange is proposing this lower fee 
based on the experience over the last year, which indicates that the 
lower fee better approximates proxy handling costs. This reduced fee 
would be effective through the end of the current pilot period.
    In addition, the pilot period presently is scheduled to expire in 
the midst of the current proxy season, on May 13, 1998. The proposed 
rule change would extend the pilot period through the end of the 
current proxy season to July 31, 1998.\4\
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    \4\ On February 6, 1998, the Exchange submitted a companion 
filing to this proposed rule change that would extend the pilot 
period through June 30, 2001. See SR-NYSE-98-05.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b)(4) of the Act \5\ in that it provides for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and other persons using its facilities. The Exchange further 
believes that the proposed rule change satisfies the requirement under 
Section 6(b)(5) \6\ that an exchange have rules that are designed to 
prevent fraudulent and manipulative acts and practices; promote just 
and equitable principles of trade; foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities; remove impediments to and perfect the mechanism of a free 
and open market and a national market system; and, in general, protect 
investors and the public interest.
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    \5\ 15 U.S.C. 78f(b)(4).
    \6\ 15 U.S.C. 78f(b)(5).

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[[Page 9276]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes the proposed rule change does not 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 not solicited, and does not intend to solicit, 
comments on the proposed rule change. The Exchange has not received any 
unsolicited written comments from members or other interested parties.

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

    Because the foregoing rule change: (1) does not significantly 
affect the protection of investors or the public interest; (2) does not 
impose any significant burden on competition; and (3) the Exchange 
provided the Commission with written notice of its intent to file the 
proposed rule change at least five business days prior to the filing 
date (or such shorter time period as designated by the Commission), the 
proposed rule change has become effective pursuant to Section 
19(b)(3)(A) of the Exchange Act \7\ and Rule 19b-4(e)(6) \8\ 
thereunder.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(e)(6).
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    A proposed rule change filed pursuant to Rule 19b-4(e)(6) normally 
does not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(e)(6)(iii) \9\ permits the Commission to designate 
such shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested, in order 
to allow the fee reduction to be available for the 1998 proxy season, 
that the Commission designate such shorter time period so that the 
proposed rule change may take effect immediately upon its filing.
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    \9\ 17 CFR 240.19b-4(e)(6)(iii).
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    The Commission finds that the proposed rule change is consistent 
with the protection of investors and the public interest and therefore 
has determined to make the proposed rule change effective immediately 
upon filing. The proposed rule change reduces the reimbursement fee 
which Exchange member organizations are entitled to receive for mailing 
initial proxies and annual reports. The fee reduction should benefit 
issuers and public investors in the form of lower costs and expenses. 
The fee reduction is based upon the Exchange's experience during the 
pilot period and should better reflect the actual costs incurred by 
member organizations.
    The proposed rule change also extends the expiration date of the 
pilot period from May 13, 1998, through July 31, 1998. The Commission 
recognizes that the current expiration date intersects the time period 
when proxy materials traditionally are distributed to shareholders. As 
a result, member organizations would potentially be reimbursed at two 
different rates--the rates established by the Previous Filing, and the 
rates in effect prior to the implementation of the Previous Filing (the 
default rates)--if the expiration date were not extended. The 
Commission believes such a result would be confusing and 
counterproductive. The Commission also believes the extension of the 
expiration date will enable the Exchange to evaluate the effectiveness 
of the reimbursement guidelines based on their application during an 
entire proxy season.
    The Commission notes that the pilot period reimbursement guidelines 
were conditionally approved in the Previous Filing following a full 
notice and comment period. As part of its approval, the Commission 
carefully considered all submitted comments concerning the pilot 
reimbursement guidelines and their impact on affected parties. 
Furthermore, the Exchange provided the Commission with advance written 
notice of the proposed rule change and implemented changes in responses 
to staff comments. Therefore, the Commission believes it is reasonable 
that the proposed rule change become immediately effective upon the 
date of filing, February 12, 1998.
    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. 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. 552, will be available for inspection and copying in 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 Exchange. All 
submissions should refer to File No. SR-NYSE-98-04 and should be 
submitted by March 17, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-4573 Filed 2-23-98; 8:45 am]
BILLING CODE 8010-01-M