[Federal Register Volume 66, Number 172 (Wednesday, September 5, 2001)]
[Notices]
[Pages 46488-46490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-22240]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44750; File No. SR-NYSE-2001-22]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange, Inc.; 
Extending the Pilot Fee Structure Governing the Reimbursement of Member 
Organizations for Costs Incurred in the Transmission of Proxy and Other 
Shareholder Communication Materials

August 29, 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 August 13, 2001, the New York Stock Exchange, Inc. (``Exchange'' or 
``NYSE'') filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the NYSE. 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 NYSE is proposing to extend the pilot fee structure (``Pilot 
Fee Structure'') regarding Exchange Rules 451 and 465 (the 
``Rules'').\3\ Among other things, the Rules establish guidelines for 
the reimbursement of expenses by NYSE issuers to NYSE member 
organizations for the processing of proxy materials and other issuer 
communications (collectively, ``Material'') with respect to security 
holders whose securities are held in street name. The current pilot 
period regarding the Rules is scheduled to expire on September 1, 
2001.\4\ NYSE proposes extending the pilot through April 1, 2002.
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    \3\ The text of NYSE Rule 451 also is included at Paragraph 
402.10(A) of the Exchange's Listed Company Manual.
    \4\ See Securities Exchange Act Release No. 43603 (November 21, 
2000), 65 FR 75751 (December 4, 2000).
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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

[[Page 46489]]

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

I. Purpose
    Among other things, the Pilot Fee Structure lowers certain 
guidelines concerning the reimbursement of fees for the distribution of 
Material, creates incentive fees to eliminate duplicative mailings, and 
establishes a supplemental fee for intermediaries that coordinate 
multiple nominees. The proposed rule change would extend the Pilot Fee 
Structure's termination date from September 1, 2001, to April 1, 2002.
    An extension of the Pilot Fee Structure will give the Commission 
additional time to consider the pilot program, without a lapse in the 
current Rules. Absent an extension of the Pilot Fee Structure, the fees 
in effect prior to the pilot program would return to effectivness after 
September 1, 2001, which could create confusion in the market.\5\
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    \5\ The Commission notes that a Proxy Voting review Committee 
was established as a private initiative to review the proxy voting 
process, which includes fees. The Committee has been meeting and 
plans to ultimately submit a report to the Commission, self-
regulatory organizations, and the public. Accordingly, the extension 
will provide additional time to consider the committee's comments on 
this issue. See also Item II.C.infra.
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2. Basis
    The Exchange believes that the basis under the Act for the proposed 
rule change is the requirement under Section 6(b)(4) of the Act \6\ 
that an exchange have rules that provide for the equitable allocation 
of reasonable dues, fees and other charges among its members and other 
persons using its facilities. In addition, the Exchange believes that 
the basis for the proposed rule change is the requirement under Section 
6(b)(5) of the Act \7\ 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)(4).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that 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

    NYSE has engaged in an on-going dialogue regarding the Pilot Fee 
Structure as well as other aspects of its proxy reimbursement 
guidelines with Commission staff as well as with the Proxy Voting 
Review Committee, which is a private initiative designed to review the 
proxy process that includes representatives of the securities industry, 
corporate issuers, institutional investors, NYSE and the largest 
provider of proxy intermediary services. The only written comment 
received by NYSE is a copy of a letter sent to the Commission from the 
Proxy Voting Review Committee, which unanimously supports NYSE's 
request for the extension.\8\ NYSE has not otherwise solicited, and 
does not intend to solicit, comments on this proposed rule change. NYSE 
has not otherwise received any unsolicited written comments from 
members or other interested parties.
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    \8\ See letter from Stephen P. Norman, Chairman, Proxy Review 
Committee, to Kelly Riley, Division of Market Regulation, SEC, dated 
August 10, 2001.
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III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Because the foregoing proposed 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) does not become operative for 30 days after the date of filing, 
or such shorter time that the Commission may designate if consistent 
with the protection of investors and the public interest, the proposed 
rule change has become effective pursuant to Section 19(b)(3)(A) of the 
Act \9\ and Rule 19b-4(f)(6) \10\ thereunder.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ As required under Rule 19b-4(f)(6)(iii), the Exchange 
provided the Commission with written notice of its intent to file 
the proposed rule change.
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    A proposed rule change filed under Rule 19b-4(f)(6) may not become 
operative prior to 30 days after the date of filing or such shorter 
time as the Commission may designate if such action is consistent with 
the protection of investors and the public interest. NYSE seeks to have 
the proposed rule change become operative on or before September 1, 
2001, in order to allow the Pilot Fee Structure to continue in effect 
on an uninterrupted basis.
    The Commission, consistent with the protection of investors and the 
public interest, has determined to make the proposed rule change to 
extend the Pilot Fee Structure until April 1, 2002 operative 
immediately. The extension of the Pilot Fee Structure will provide the 
Commission with additional time to review and evaluate the pilot fees. 
Further, the Commission notes that it received a letter from the Proxy 
Review Committee, which supports the NYSE's extension request.\12\
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    \12\ See note 8 supra.
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    The Commission notes that unless the current expiration date of the 
Pilot Fee Structure is extended, the reimbursement rates for Material 
distributed after September 1, 2001, will revert to those in effect 
prior to March 14, 1997. The Commission believes that such a result 
could be confusing and counterproductive.
    Based on these reasons, the Commission believes that it is 
consistent with the protection of investors and the public interest 
that the proposed rule change become operative immediately through 
April 1, 2002. At any time within 60 days of the filing of the proposed 
rule change, the Commission may summarily abrogate such proposed 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, 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

[[Page 46490]]

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 NYSE. All 
submissions should refer to File No. SR-NYSE-2001-22 and should be 
submitted by September 26, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 01-22240 Filed 9-4-01; 8:45 am]
BILLING CODE 8010-01-M