[Federal Register Volume 67, Number 80 (Thursday, April 25, 2002)]
[Notices]
[Pages 20568-20569]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-10154]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45789; File No. SR-NYSE-2001-30]


Self-Regulatory Organizations; The New York Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change To Amend Rule 227 Regarding 
Depository Eligibility

April 19, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 21, 2001, the New 
York Stock Exchange, Inc. (``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 
primarily by NYSE. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested parties.
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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 proposed rule change seeks to amend NYSE Rule 227 by deleting 
the references to ``domestic'' and ``foreign'' issuers in paragraph (a) 
as well as additional requirements imposed pursuant to paragraph (b) of 
the rule in order for a security to be depository eligible.

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

    In its filing with the Commission, 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 IV below. NYSE has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of these 
statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The NYSE adopted Rule 227 on June 1, 1995, for the purpose of 
facilitating implementation of Rule 15c6-1 of the Act that established 
a three-day settlement period for most securities transactions.\2\ Rule 
227, which required that domestic issuers' securities be depository 
eligible before they would be listed, set forth specific requirements 
for depository eligibility for issuers in order to facilitate the book 
entry settlement of initial public offerings and to reducing the risks 
inherent in settling securities transactions.
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    \2\ Securities Exchange Act Release No. 35798 (June 1, 1995), 60 
FR 30909 (June 12, 1995) [File No. SR-NYSE-95-19] (order approving 
the adoption of NYSE Rule 227 setting forth requirements on issuers 
seeking to have their shares listed on the Exchange).
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    On May 13, 1996, approximately one year after Rule 227 was 
approved, the Commission approved a rule change filed by The Depository 
Trust Company (``DTC'') \3\ allowing DTC to implement its Initial 
Public Offering (``IPO'') Tracking System.\4\ The IPO Tracking System 
enables lead managers and syndicate members of equity underwritings to 
monitor repurchases of distributed shares in an automated book-entry 
environment.
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    \3\ DTC is a securities depository registered with the 
Commission under sections 17A and 19 of the Act as a clearing 
agency.
    \4\ Securities Exchange Act Release No. 37208 (May 13, 1996), 61 
FR 25253 (May 20, 1996) [File No. SR-DTC-95-27] (order approving 
implementation of DTC's IPO Tracking System).
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    Currently before an issue of securities can be listed, Rule 227(a) 
requires each domestic issuer to represent to the NYSE that a CUSIP 
number identifying the security has been included in the file of 
eligible issuers maintained by a securities depository registered with 
the Commission as a clearing agency. The proposed amendments would 
delete the references to ``domestic'' and ``foreign'' issuers in 
paragraph (a). Exclusion of foreign issuers is no longer necessary 
because they have the capacity to comply with Rule 227 and have been 
doing so voluntarily for several years.
    Rule 227(b) states that a security depository's inclusion of a 
CUSIP number in its file of eligible issues does not render a security 
``depository eligible'' unless (1) the securities depository has an 
electronic system for monitoring repurchases of distributed shares at 
the time such shares commence trading on the Exchange or (2) when a 
managing underwriter elects not to deposit the securities on 
distribution date, it notifies the securities depository no later than 
three months after the commencement of trading on the NYSE. Rule 227(b) 
will be deleted as it is no longer relevant since DTC has implemented 
its IPO Tracking System, which is monitoring repurchases of distributed 
shares.
    In addition, the proposed amendments to Rule 227 should facilitate 
compliance with the one-day settlement cycle (``T+1'') for securities 
transactions, which is currently scheduled to commence June 2005. The 
proposed amendments should increase the number of depository-eligible 
securities which should facilitate the timely settlement of trades and 
transition to T+1 settlement.
    The proposed rule change is consistent with the requirements of 
sections 6(b)(5) and 17A of the Act and the rules and regulations 
thereunder requiring the rules of the NYSE be designed to remove 
impediments to and perfect the mechanism of a free and open market and 
to perfect a national market system which provides, among other things, 
for the prompt and accurate clearance and settlement of securities 
transactions.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The NYSE 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 NYSE 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 thirty-five days of the date of publication of this notice 
in the Federal Register, or within such longer period (i) as the 
Commission may designate up to ninety 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 NYSE consents, the Commission will:
    (A) by order approve such proposed rule change or

[[Page 20569]]

    (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 
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, 450 Fifth Street, NW., Washington, 
DC 20549. Copies of such filing also will be available for inspection 
and copying at the principal office of the NYSE. All submissions should 
refer to File No. SR-NYSE-2001-30 and should be submitted by May 16, 
2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-10154 Filed 4-24-02; 8:45 am]
BILLING CODE 8010-01-P