[Federal Register Volume 67, Number 107 (Tuesday, June 4, 2002)]
[Notices]
[Pages 38538-38539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-13869]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45987; File No. SR-NYSE-2001-30]


Self-Regulatory Organizations; The New York Stock Exchange, Inc.; 
Order Granting Approval of a Proposed Rule Change to Amend Rule 227 
Regarding Depository Eligibility

May 28, 2002.
    On August 21, 2001, the New York Stock Exchange, Inc. (``NYSE'') 
filed with the Securities and Exchange Commission (``Commission'') a 
proposed rule change (File No. SR-NYSE-2001-30) pursuant to Section 
19(b)(1) of the Securities Exchange Act of 1934 (``Act'').\1\ Notice of 
the proposed rule change was published in the Federal Register on April 
25, 2002.\2\ No comment letters were received. For the reasons 
discussed below, the Commission is granting approval of the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 45789 (April 19, 2002), 
67 FR 20568.
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I. Description

    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.\3\ 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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    \3\ 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'') \4\ allowing DTC to implement its Initial 
Public Offering (``IPO'') Tracking System.\5\ 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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    \4\ DTC is a securities depository registered with the 
Commission under Sections 17A and 19 of the Act as a clearing 
agency.
    \5\ 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

[[Page 38539]]

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.

II. Discussion

    Section 6(b)(5) \6\ of the Act requires that the rules of a 
national securities exchange be designed to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system. Deleting differences relating to ``domestic'' and ``foreign'' 
issuers with respect to depository eligibility of listed issues 
eliminates an unnecessary difference in the treatment of U.S. issuers 
and foreign issuers and thereby helps to perfect the mechanism of a 
free and open market and a national market system. Therefore, the 
Commission finds that the rule change is consistent with the NYSE's 
obligations under Section 6(b)(5).
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    \6\ 15 U.S.C. 78f(b)(5).
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III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular Section 6 of the Act and the rules and regulations 
thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-NYSE-2001-30) be and hereby 
is approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-13869 Filed 6-3-02; 8:45 am]
BILLING CODE 8010-01-P