[Federal Register Volume 70, Number 96 (Thursday, May 19, 2005)]
[Notices]
[Pages 28973-28974]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2503]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51691; File No. SR-CSE-2003-06]


Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Order Approving Proposed Rule Change and Notice of Filing and Order 
Granting Accelerated Approval to Amendment No. 3 to the Proposed Rule 
Change Relating to Corporate Governance of Listed Issuers

May 12, 2005.

I. Introduction

    On September 12, 2003, the Cincinnati Stock Exchange, now known as 
National Stock Exchange (``Exchange'' or ``NSX''), filed with the 
Securities and Exchange Commission (``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 amend Article 
IV of its By-Laws pertaining to its listing standards, including the 
addition of new corporate governance standards applicable to listed 
companies. Among other things, the Exchange also proposed to amend 
Article IV, Section 2 of the By-Laws, relating to unlisted trading 
privileges.
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    \1\ 5 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change was published for comment in the Federal 
Register on October 20, 2003.\3\ The Commission received no comments on 
the proposal. On November 19, 2003, the Exchange submitted Amendment 
No. 1 to the proposed rule change. On November 21, 2003, the Exchange 
submitted Amendment No. 2 to the proposed rule change.
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    \3\ Id.
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    On November 25, 2003, the Commission partially approved the 
proposed rule change as amended by Amendment Nos. 1 and 2. The portion 
of the proposal that remained unapproved was the proposed change to 
Article IV, Section 2 of the By-Laws relating to unlisted trading 
privileges.\4\
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    \4\ Securities Exchange Act Release No. 48832 (November 25, 
2003), 68 FR 67715 (December 3, 2003) (``Partial Approval Order''). 
In the Partial Approval Order, the Commission granted accelerated 
approval to Amendment No. 1, and solicited comments from interested 
persons on Amendment No. 1. The Commission received no comments on 
Amendment No. 1. Amendment No. 2 was a technical amendment that was 
not subject to notice and comment.
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    On April 19, 2005, the Exchange filed Amendment No. 3 to the 
proposal, revising the proposed change to Article IV, Section 2. This 
Order approves this remaining portion of the proposed rule

[[Page 28974]]

change by granting accelerated approval to Amendment No. 3, and 
solicits comments from interested persons on Amendment No. 3.

II. Description of the Proposal

    Currently, Article IV, Section 2, of the Exchange's By-Laws 
provides that no application shall be made by the Exchange to the 
Commission for the extension of unlisted trading privileges with 
respect to any security unless the issuer of the security meets the 
requirements for listing on the Exchange that are set forth in Section 
1.3 of Article IV. It further provides that in the event that an issuer 
whose security has been the subject of a grant of unlisted trading 
privileges to the Exchange ceases to meet the listing requirements of 
Section 1.3, the Exchange shall terminate such unlisted trading. An 
exception is provided that permits the Exchange to seek and continue 
unlisted trading privileges on any security for which the primary 
trading market is the New York Stock Exchange or the American Stock 
Exchange.
    The proposed rule change, as amended by Amendment No. 3, would 
broaden the ability of the Exchange to extend unlisted trading 
privileges by revising Article IV, Section 2, simply to state: 
``Notwithstanding the requirements for listing set forth in Section 1.3 
of this Article IV, the Exchange may seek and continue unlisted trading 
privileges on any security as to which unlisted trading privileges may 
be extended in accordance with Section 12(f) of the Act and the rules 
thereunder.'' \5\
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    \5\ The italicized text reflects Amendment No. 3 to the proposed 
rule change. The original proposal, as published in the Notice, used 
the phrase ``as to which unlisted trading privileges have been 
granted pursuant to section 12(f) of the Act.''
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III. Discussion

    After careful review, 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.\6\ In particular, the Commission believes that the 
proposed rule change, as amended, is consistent with section 6(b)(5) 
and section 12(f) of the Act \7\ in that it permits the Exchange to 
extend unlisted trading privileges to the extent permitted by section 
12(f) and the rules thereunder.\8\
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    \6\ 15 U.S.C. 78f(b). In approving this proposal, the Commission 
has considered the proposed rule's impact on efficiency, competition 
and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5) and 15 U.S.C. 78l(f). Section 6(b)(5) 
requires that the rules of an exchange be designed, among other 
things, to facilitate transactions in securities, to prevent 
fraudulent and manipulative acts and practices, 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, and not permit unfair discrimination among issuers. 
Section 12(f) sets forth the requirements in accordance with which a 
national securities exchange may extend unlisted trading privileges.
    \8\ In approving the proposed rule change, the Commission notes 
that, among other things, the extension of unlisted trading 
privileges is subject to Rule 12f-5, which prohibits a national 
securities exchange from extending unlisted trading privileges to a 
security unless the exchange has in effect a rule or rules providing 
for transactions in the class or type of security to which the 
exchange extends unlisted trading privileges. 17 CFR 240.12f-5.
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    The Exchange has requested that the Commission grant accelerated 
approval to Amendment No. 3 to the proposed rule change. The Commission 
believes that Amendment No. 3 improves the text of the proposed rule 
change by revising it to mirror the terminology of the statute and to 
include a reference to the rules thereunder. Acceleration of the 
amendment will permit the Exhange to implement the proposed rule change 
without further delay. The Commission therefore finds good cause, 
consistent with Section 19(b)(2) of the Act,\9\ to approve Amendment 
No. 3 to the proposed rule change prior to the thirtieth day after the 
date of publication of notice of filing thereof in the Federal 
Register.
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    \9\ 15 U.S.C. 78s(b)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 3, including whether the Amendment 
is consistent with the Act. Comments may be submitted by any of the 
following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-CSE-2003-06 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.

    All submissions should refer to File Number SR-CSE-2003-06. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 Section, 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 
NSX. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-CSE-
2003-06 and should be submitted on or before June 9, 2005.

V. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change, as amended, is consistent with the Act and the rules and 
regulations thereunder applicable to a national securities exchange.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\10\ that the remaining portion of the proposed rule change (SR-
CSE-2003-06), as amended, be, and hereby is, approved, and that 
Amendment No. 3 to the proposed rule change be, and hereby is, approved 
on an accelerated basis.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-2503 Filed 5-18-05; 8:45 am]
BILLING CODE 8010-01-P