[Federal Register Volume 66, Number 160 (Friday, August 17, 2001)]
[Notices]
[Pages 43281-43282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-20768]



[[Page 43281]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44676;File No. SR-NYSE-2001-17]


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

August 9, 2001.
    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 July 3, 2001, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') 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).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposed to amend the Exchange's Allocation Policy and 
Procedures to allow a listing company to send a separate letter to the 
Allocation Committee indicating the role that one specialist unit has 
played in helping the company to reach its listing decision. The text 
of the proposed rule change is available at the Office of the 
Secretary, the NYSE and 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.

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 (1) to ensure that the allocation process is based on 
fairness and consistency, and that all specialist units have a fair 
opportunity for allocations based on established criteria and 
procedures; (2) to provide an incentive for ongoing enhancement of 
performance by specialist units; (3) to provide the best possible match 
between a specialist unit and security; and (4) to contribute to the 
strength of the specialist system.
    The Policy currently permits a listing company to send a letter to 
the Exchange's Allocation Committee indicating the general 
characteristics it believes would be appropriate as to the specialist 
unit ultimately selected to trade its stock. Such letter may not name 
any particular specialist unit, and the characteristics so indicated 
may not be so specific as to apply to a readily identifiable specialist 
unit. The listing company's letter is distributed with a memorandum 
prepared by the Exchange staff describing the listing company, 
underwriters, recent market activity, and other details soliciting 
specialist units to apply for the allocation of the listing company's 
stock.
    In certain situations, specialist units have met with companies 
prior to the company making a listing decision and have played a 
significant role in a company's decision to list on the Exchange. The 
listing company may then have an expectation that a particular 
specialist unit should be included in the group of units to be 
interviewed by the listing company, but the Exchange does not require 
such a result under the current Policy. Under the Policy, the 
Allocation Committee cannot directly know from the listing company a 
specialist unit's role, if any, in its listing decision.
    The Exchange believes it is appropriate to amend the Policy to 
allow the listing company to send a separate letter to the Allocation 
Committee indicating the role that one specific specialist unit has 
played in helping the listing company to reach its listing decision. 
This letter would be separate and distinct from the general 
characteristics letter that the company would send to the Allocation 
Committee, which is then distributed to all specialist units, as noted 
above.
    The Allocation Committee would then assemble a pool of specialist 
units to meet with the listing company in accordance with the 
performance-based criteria of the Policy, and would include the 
specialist unit named in the separate letter in the pool, unless the 
unit is prohibited under the Policy from applying for allocation of a 
stock. The separate letter would not have any influence on a decision 
by other specialist units to apply for allocation of the company's 
stock because these units would not know its existence. The listing 
company would then interview all units, and make the final decision as 
to its specialist unit.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b)(5) of the Act,\3\ which provides 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 a national market system and, in general, to 
protect investors and the public interest. The Exchange believes the 
proposed rule change is consistent with these objectives because it 
will enable the Exchange to further enhance the process by which stocks 
are allocated to ensure fairness and equal opportunity in the process.
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    \3\ 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 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 longer 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 Exchange consents, the Commission will:
    (A) By order approve such 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, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions

[[Page 43282]]

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 available for inspection and copying in the 
Commission's Public Reference Room. 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-2001-17 and 
should be submitted by September 7, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to the delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-20768 Filed 8-16-01; 8:45 am]
BILLING CODE 8010-10-M