[Federal Register Volume 68, Number 214 (Wednesday, November 5, 2003)]
[Notices]
[Pages 62645-62646]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-27854]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48720; File No. SR-NYSE-2003-23]


Self-Regulatory Organizations; Order Granting Approval of 
Proposed Rule Change and Amendment No. 1 Thereto by the New York Stock 
Exchange, Inc. Repealing Exchange Rule 500 and Amending Section 806 of 
the Listed Company Manual

October 30, 2003.

I. Introduction

    On August 20, 2003, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission''), pursuant to section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'')\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to delete Exchange Rule 500 in 
its entirety and amend Section 806 of the Exchange's Listed Company 
Manual regarding the application by an issuer to delist its securities 
from the Exchange. Notice of the proposed rule change was published for 
comment in the Federal Register on September 10, 2003.\3\ The 
Commission received four comments regarding the proposal.\4\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 48435 (September 3, 
2003), 68 FR 53413 (``Notice'').
    \4\ See letters to Jonathan G. Katz, Secretary, Commission, from 
Craig S. Tyle, General Counsel, Investment Company Institute 
(``ICI'') dated October 1, 2003 (``ICI Letter''); John Endean, 
President, American Business Conference (``ABC''), dated September 
30, 2003; Edward S. Knight, Executive Vice President, Nasdaq Stock 
Market (``Nasdaq''), dated October 6, 2003 (``Nasdaq Letter''); and 
Junius Peake, Professor, University of Northern Colorado, dated 
September 29, 2003 (``Peake Letter'').

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[[Page 62646]]

    On October 28, 2003, the NYSE filed Amendment No. 1 to the proposed 
rule change.\5\ This order approves the proposed rule change, as 
amended.
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    \5\ See letter from Darla C. Stuckey, Corporate Secretary, NYSE, 
to Nancy J. Sanow, Esq., Assistant Director, Division of Market 
Regulation, Commission, dated October 27, 2003 (``Amendment No. 
1''). In Amendment No. 1, the NYSE proposes to delete the words 
``apply to'' from the rule text and to add the following sentence 
regarding suspension of trading to the Purpose section of the 
filing: ``The Exchange notes that in the case of a voluntary 
transfer to another listed market, the Exchange would suspend 
trading the security being voluntarily delisted as of the close of 
business on the trading day preceding the date the issuer has 
arranged to commence trading in the other market. This is the 
process followed by other listed markets when an issuer traded there 
transfers its listing to the Exchange.'' Because this is a technical 
amendment, it is not subject to notice and comment.
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II. The Amended Proposal

    As more fully discussed in the Commission's Notice,\6\ the 
Exchange's amended proposal removes previous requirements that an 
issuer seeking to voluntarily delist a security from the NYSE obtain 
approval of its audit committee; notify 35 of its largest shareholders 
of the proposed delisting; and publish a press release announcing the 
proposed delisting. Under the amended proposal, the issuer is required 
only to furnish the Exchange with a certified board resolution 
evidencing board approval of the delisting.
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    \6\ See supra note 3, at 7-10. A full description of the 
proposal is contained in the Notice.
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    In simplifying the voluntary delisting process, the amended 
proposal continues an evolution that began in 1999 when the Exchange 
amended its Rule 500 to remove the requirement of a shareholder vote 
(``1999 Amendment'').\7\ In approving the 1999 Amendment, the 
Commission directed the Exchange to review periodically the shareholder 
notification requirement of NYSE Rule 500 to determine whether it 
remained warranted and consistent with the protection of investors.
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    \7\ See Securities Exchange Act Release No. 41634 (July 21, 
1999), 64 FR 40633 (July 27, 1999) (SR-NYSE-97-31).
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III. Summary of Comments

    Two of the commenters supported the proposal,\8\ noting that 
eliminating the delisting requirements in NYSE Rule 500 should create a 
more level playing field for markets trading securities currently 
listed on the NYSE by bringing the NYSE's requirements in line with the 
requirements of other exchanges.\9\ The other of these commenters 
expresses its view that NYSE Rule 500, even after the 1999 Amendment, 
still represents a significant impediment to delisting by functioning 
as an anti-competitive tool by which the NYSE has prevented the 
migration of listed companies to other exchanges.\10\
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    \8\ See ICI Letter and ABC Letter, supra note 4.
    \9\ See ICI Letter, supra note 4.
    \10\ See ABC Letter, supra note 4.
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    Two of the commenters argue that the proposal does not go far 
enough to facilitate voluntary delisting from the Exchange.\11\ One of 
these commenters suggests that the proposal should require the NYSE to 
approve delisting notifications by issuers in good standing as a 
routine item.\12\ The other commenter suggests that the NYSE clarify 
two issues in its proposal. First, NYSE should make clear that when an 
issuer applies to the Commission for voluntary delisting, trading of 
the stock on the NYSE would be suspended during the pendency of the 
application. Second, this commenter recommends that NYSE amend the 
proposal to delete the requirements that the issuer apply for delisting 
on the Exchange and provide a certification of the resolution of the 
board of directors regarding delisting.
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    \11\ See Peake Letter and Nasdaq Letter, supra note 4.
    \12\ See Peake Letter, supra note 4. In addition, this commenter 
makes several points regarding Commission Rule 12d2-2 under the Act 
and separating regulation from trading on the NYSE. As neither issue 
is squarely raised by the proposal, this order will not address 
those comments.
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    In response to the concerns expressed by the commenters, NYSE 
submitted Amendment No. 1 to the proposal. In Amendment No. 1, NYSE 
proposes to add a representation to clarify its policy with respect to 
the suspension of securities during the pendency of an issuer's 
application to delist from the Exchange.

IV. Discussion

    After careful consideration, the Commission finds that the proposed 
rule change, as amended, is consistent with the requirements of the Act 
and the rules and regulations thereunder applicable to a national 
securities exchange.\13\ Specifically, the Commission believes that the 
amended proposal is consistent with section 6(b)(5) of the Act,\14\ 
which requires, among other things, that the rules of an exchange be 
designed 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 Commission also believes 
the amended proposal is consistent with section 11A(a)(1)(C)(ii) of the 
Act, which states that it is in the public interest and appropriate for 
the protection of investors and the maintenance of fair and orderly 
markets to assure fair competition between exchange markets.\15\ 
Specifically, by reducing the restrictions imposed on issuers that wish 
to delist their securities from the Exchange, the Commission believes 
that the amended proposal should remove a significant barrier to 
intermarket competition within the national market system.
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    \13\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78(c)(f).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ 15 U.S.C. 78k-1(a)(1)(C)(ii).
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V. Conclusion

    For the reasons discussed above, the Commission finds that the 
amended proposal is consistent with the Act and the rules and 
regulations thereunder.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\16\ that the proposed rule change, as amended (SR-NYSE-2003-23), 
be, and hereby is, approved.
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    \16\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-27854 Filed 11-4-03; 8:45 am]
BILLING CODE 8010-01-P