[Federal Register Volume 65, Number 138 (Tuesday, July 18, 2000)]
[Notices]
[Pages 44556-44558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18089]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43027; File No. SR-NYSE-00-27]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change and Amendment No. 
1 by the New York Stock Exchange, Inc. Amending Global Market 
Capitalization Listing Standards

July 12, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 14, 2000, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II, below, which Items have been prepared by the Exchange. 
On July 3, 2000, the NYSE submitted an amendment to the proposed rule 
filing (``Amendment No. 1'').\3\ The Commission is publishing this 
notice to solicit comments on the proposed rule change, as amended, 
from interested persons and to grant accelerated approval to the 
proposed rule change and Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Daniel P. Odell, Assistant Secretary, NYSE 
to Nancy Sanow, Assistant Director, Division of Market Regulation, 
Commission, dated June 29, 2000 (``Amendment No. 1''). In Amendment 
No. 1, the NYSE requests accelerated approval to accommodate the 
timetable of certain issuers wishing to list on the NYSE.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to amend its global market capitalization 
original listing standard to reduce the minimum revenue requirements 
from $250 million to $100 million. The NYSE further proposes to amend 
the related continued listing standard to reduce the minimum total 
revenue requirement from $50 million to $20 million. These changes 
would amend Sections 102, 103, and 802 of the NYSE's Listed Company 
Manual and a corresponding amendment would be made to NYSE Rule 499. 
The text of the proposed rule change is as follows. Proposed additions 
are italicized and proposed deletions are in brackets.

NYSE Listed Company Manual

* * * * *
    Section: 102.1--Minimum Numerical Standards--Domestic Companies--
Equity Listings.
* * * * *
    102.01C--A company must meet one of the following financial 
standards:
* * * * *
    (II) For companies with not less than $1 billion in total worldwide 
market capitalization and with not less than [$250] $100 million in 
revenues in the most recent fiscal year, there are no additional 
financial requirements.
* * * * *
    Section: 103.01--Minimum Numerical Standards Non-US Companies 
Equity Listings Distribution.
* * * * *

[[Page 44557]]

    103.01B--A company must meet one of the following financial 
standards:
* * * * *
    (III) For companies with not less than $1 billion in total 
worldwide market capitalization and with not less than [$250] $100 
million in revenues in the most recent fiscal year, there are no 
additional financial requirements.
* * * * *
Section: 8
    Section 802.01--Continued Listing Criteria.
* * * * *
    802.01B Numerical Criteria for Capital or Common Stock. If a 
company falls below any of the following criteria, it is subject to the 
procedures outlined in Para. 802.02 and 802.03:
* * * * *
     For companies that qualify under the ``global market 
capitalization'' standard:
    Total global market capitalization is less than $500,000,000 and 
total revenues are less than [$50,000,000] $20,000,000 over the last 12 
months (unless the resultant entity qualifies as an original listing 
under one of the other standards)(C)

    or

    Average global market capitalization over a consecutive 30 trading-
day period is less than $100,000,000.

NYSE Rules

Rule 499--Supplementary Material
* * * * *
    .20 Numerical and Other Criteria.
* * * * *
    6. For companies that qualify under the ``global market 
capitalization'' standard:
     Total global market capitalization is less than 
$500,000,000 and total revenues are less than [$50,000,000] $20,000,000 
over the last 12 months.
* * * * *

II. Self-Regulatory Organization's Statement Regarding the Purpose 
of, and the Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the NYSE 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 III below. The NYSE 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
    Last year, the NYSE implemented a new stand-alone listing criterion 
for extremely large companies, both domestic and non-U.S., with $1 
billion in total global market capitalization and revenues in their 
most recent fiscal year of $250 million.\4\ The Exchange did so in the 
belief that companies of such size were appropriate for listing and 
trading on the Exchange, regardless of any short-term variations in 
profitability. The Exchange also believed that its then-current 
numerical criteria placed too much emphasis on a company's earnings to 
the exclusion of other relevant factors.
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    \4\ See Securities Exchange Act Release No. 41834 (September 3, 
1999), 64 FR 50129 (September 15, 1999).
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    Currently, the NYSE believes that the new criteria has worked well 
and has permitted the Exchange to qualify and list companies that 
otherwise would not have qualified under the traditional criteria. 
However, after a year's experience under the new standard, the 
Exchange's analysis of the universe of companies considered suitable 
for Exchange listing suggests that the Exchange was too conservative in 
its initial approach, and that a criterion of $1 billion in total 
global market capitalization and a reduction in the requirement for 
$250 million to $100 million in revenues in the most recent fiscal year 
would be more appropriate. The NYSE believes that such a standard would 
better enable it to offer listing to companies of suitable size and 
scope, even though their business model differs from the traditional.
    In connection with the new original listing criterion implemented 
last year, the Exchange also constructed new continued listing criteria 
applicable specifically to companies listed under the global market 
capitalization standard.\5\ Such companies are currently considered 
below standards if their global market capitalization falls below $500 
million and total revenues are below $50 million over the previous 
twelve months. Of course, if the company can qualify under one of the 
other original listing criteria, it is not considered below standards. 
Alternatively, companies that listed under the global market 
capitalization standard are considered below standards if their average 
global market capitalization is below $100 million over 30 consecutive 
trading days. In connection with amending the original listing 
criterion as discussed above, the Exchange proposes to proportionately 
reduce the minimum revenue requirement from $50 million to $20 million. 
The $500 million and $100 million market capitalization minimums would 
remain unchanged.
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    \5\ Id.
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2. Statutory Basis
    The Exchange believes that the basis under the Act for this 
proposed rule change is the requirement under Section 6(b)(5) \6\ 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 foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, 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.
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    \6\ 15 U.S.C. 78f(b)(5).
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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 any written 
comments on the proposal.

III. Solicitation of Comments

    Interested person are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Act. Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW, Washington, 
DC 20549-0609. 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

[[Page 44558]]

available for inspection and copying in the Commission's Pubic 
Reference Room. 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-00-27 and should be 
submitted by August 8, 2000.

IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Rule Change

    The Commission finds, for the reasons set forth below, that the 
NYSE's proposal is consistent with the requirements of the Act and the 
rules and regulations thereunder.\7\ Specifically, the Commission finds 
that the proposal is consistent with Section 6(b)(5) of the Act.\8\ 
Section 6(b)(5) of the Act requires that the rules of the exchange 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.
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    \7\ The Commission has considered its impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposal is consistent with the 
Act because the NYSE's alternative financial listing standards with $1 
billion in market capitalization and $100 million in revenues, reduced 
from $250 million, in the most recent fiscal year, should still allow 
the Exchange to list companies that the Exchange believes will prove to 
be financially successful in the future, although recently they may not 
have been as profitable. The Commission believes that the reduction in 
the continued listing standard from $50 million in revenues in the last 
fiscal year to $20 million is not inconsistent with the Act for the 
same reason. The Commission also believes that, by providing issuers 
another alternative forum for their securities in the U.S. marketplace, 
the proposed rule change is consistent with the requirements of the Act 
to remove impediments to and perfect the mechanism of a free and open 
market.
    In addition, the Commission finds good cause for approving the 
proposed rule change, as amended, prior to the 30th day after the date 
of publication of notice in the Federal Register. The Exchange 
represents that certain issuers are eager to list on the Exchange under 
the proposed standards. To ensure that such issuers are permitted to 
list on the Exchange in a timely basis, the Commission approves the 
proposed rule change, as amended, on an accelerated basis, pursuant to 
Sections 6(b)(5) and 19(b)(2) of the Act.\9\
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    \9\ See 15 U.S.C. 78f(b)(5); 15 U.S.C. 78s(b)(2).
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    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change and Amendment No. 1 (SR-NYSE-00-
27) are approved on an accelerated basis.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-18089 Filed 7-17-00; 8:45 am]
BILLING CODE 8010-01-M