[Federal Register Volume 71, Number 83 (Monday, May 1, 2006)]
[Notices]
[Pages 25621-25623]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-6503]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53702; File No. SR-NSX-2005-09]


Self-Regulatory Organizations; National Stock Exchange; Order 
Granting Approval of Proposed Rule Change and Notice of Filing and 
Order Granting Accelerated Approval to Amendment Nos. 1 and 2 Thereto 
to Amend Exchange Delisting Rules to Conform to Recent Amendments to 
Commission Rules Regarding Removal from Listing and Withdrawal from 
Registration

 April 21, 2006.

I. Introduction

    On October 24, 2005, the National Stock Exchange (``NSX'' 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 amend Exchange delisting rules 
to conform to recent amendments to Commission rules regarding removal 
from listing and withdrawal from registration. The proposed rule change 
was published for comment in the Federal Register on March 22, 2006.\3\ 
No comments were received regarding the proposal. On March 23, 2006, 
NSX filed Amendment No. 1 to the proposed rule change.\4\ On April 12, 
2006, NSX filed Amendment No. 2 to the proposed rule change.\5\ This 
order approves the proposed rule change, publishes notice of Amendment 
Nos. 1 and 2 to the proposed rule change, and grants accelerated 
approval to Amendment Nos. 1 and 2.
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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. 53508 (March 17, 
2006), 71 FR 14562.
    \4\ In Amendment No. 1, NSX added an interpretation and policy 
to Section 3.2A to Article IV of the NSX Bylaws to: (i) Clarify the 
effective date of the proposal; (ii) clarify the use of Form 25 as a 
delisting application; and (iii) state that an issuer that is below 
the continued listing policies and standards of the Exchange and 
seeks to voluntarily apply to withdraw a class of securities from 
listing must disclose that it is no longer eligible for continued 
listing in its statement of material facts relating to the reason 
for withdrawal from listing, its public press release, and its Web 
site notice.
    \5\ In Amendment No. 2, NSX made technical changes to its Form 
19b-4, Exhibit 1, and Exhibits that clarify the changes proposed in 
Amendment No. 1.
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II. Description of the Proposed Rule Change

    Section 12 of the Act \6\ and SEC Rule 12d2-2 govern the process 
for the delisting and deregistration of securities listed on national 
securities exchanges. Recent amendments to SEC Rule 12d2-2 (``amended 
SEC Rule 12d2-2'') and other Commission rules require the electronic 
filing of revised Form 25 \7\ on the Commission's Electronic Data 
Gathering, Analysis, and Retrieval (``EDGAR'') system by exchanges and 
issuers for all delistings, other than delistings of standardized 
options and securities futures, which are exempted.\8\
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    \6\ 15 U.S.C. 78l.
    \7\ 17 CFR 249.25.
    \8\ See Securities Exchange Act Release No. 52029 (July 14, 
2005), 70 FR 42456 (July 22, 2005) (``SEC Rule 12d2-2 Approval 
Order'').
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    In the case of exchange-initiated delistings, amended SEC Rule 
12d2-2(b) states that a national securities exchange may file an 
application on Form 25 to strike a class of securities from listing 
and/or withdraw the registration of such securities, in accordance with 
its rules, if the rules of such exchange, at a minimum, provide for:
    (i) Notice to the issuer of the exchange's decision to delist its 
securities;
    (ii) An opportunity for appeal to the exchange's board of 
directors, or to a committee designated by the board; and
    (iii) Public notice of the national securities exchange's final 
determination to remove the security from listing and/or registration, 
by issuing a press release and posting notice on its Web site. Public 
notice must be disseminated no fewer than 10 days before the delisting 
becomes effective pursuant to amended SEC Rule 12d2-2(d)(1), and must 
remain posted on its Web site until the delisting is effective.
    The Exchange's current provisions with respect to the delisting of 
securities are contained in Article IV, Section 3 of the NSX Bylaws. 
The Exchange proposes to amend Section 3.1(b) of the Bylaws to comply 
with new requirements set forth in amended SEC Rule 12d2-2(b). The 
provisions set forth in current Section 3 of the Bylaws, which provide 
for notification to the issuer in the event that the Exchange 
determines to delist the issuer's securities and the right to appeal 
the Exchange's determination, satisfy the minimum provisions set forth 
in amended SEC Rule 12d2-2(b)(1)(i)-(ii). NSX rules do not currently 
provide for public notice of the delisting, as mandated by amended SEC 
Rule 12d2-2(b)(1)(iii). Therefore, proposed Section 3.1(b) of the 
Bylaws would require the Exchange to provide public notice, in 
accordance with amended SEC Rule 12d2-2(b)(1)(iii), of a final 
determination by the Exchange to strike an issuer's securities from 
listing and/or withdraw the registration of such securities on the 
Exchange.
    The criteria the Exchange would employ for issuers that desire to 
delist their security from the Exchange are contained in Section 3.2 of 
the NSX Bylaws. Currently, Section 3.2 of the NSX Bylaws requires that 
an issuer seeking to voluntarily delist its security submit a certified 
copy of the issuer's board resolution authorizing withdrawal from 
listing and registration and a statement of the reasons for the 
withdrawal and supporting facts. NSX is retaining these provisions. The 
Exchange proposes to amend Section 3.2 of the NSX Bylaws to add new 
requirements that an issuer certify that it is in compliance with the 
Exchange's rules for delisting and applicable state law (in conformity 
with amended SEC Rule 12d2-2(c)(2)(i)) and certify that the issuer is 
in compliance with the public notice requirements under amended SEC 
Rule 12d2-2(c)(2)(iii). The proposed rule filing sets forth a new 
requirement separate from those set forth in amended SEC Rule 12d2-2(c) 
that would require the issuer to notify the Exchange in writing that it 
has filed Form 25 with the SEC simultaneously with such filing. Such 
notification would include the date the issuer expects the delisting to 
become effective. In addition, NSX proposes to amend Section 3.2 of the 
Bylaws to add provisions requiring the issuer to submit written notice 
that is in conformity with the requirements of amended SEC Rule 12d2-
2(c)(2)(ii) to the Exchange no fewer than ten days before the issuer 
files its application to delist with the Commission and another notice 
when such application becomes effective. The proposal would also 
eliminate the provision in Section 3.2 of the NSX Bylaws that requires 
the issuer to submit the proposed voluntary delisting of its security 
to the security holders for their vote in a meeting for which proxies 
are submitted.
    The Exchange also proposes in Interpretations and Policies .01 to 
new Section 3.2A to the NSX Bylaws to require any issuer seeking to 
voluntarily apply to withdraw a class of securities from listing on the 
Exchange pursuant to Section 3.2A that has received notice from the 
Exchange, pursuant to Section 3.1A or otherwise, that it is below the

[[Page 25622]]

Exchange's continued listing policies and standards, or that is aware 
that it is below such continued listing policies and standards 
notwithstanding that it has not received such notice from the Exchange, 
must disclose that it is no longer eligible for continued listing 
(including the specific continued listing policies and standards that 
the issue is below) in: (i) Its statement of all material facts 
(pursuant to Section 3.2A(d)) relating to the reasons for withdrawal 
from listing provided to the Exchange along with written notice of its 
determination to withdraw from listing required by amended SEC 
Rule12d2-2(c)(2)(ii) under the Act and; (ii) its public press release 
and web site notice required by amended SEC Rule 12d2-2(c)(2)(iii) 
under the Act.\9\
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    \9\ See Amendment No. 1, supra note 4.
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    Finally, the Exchange has made changes in its rules to clarify that 
the Form 25 serves as the application to remove a security from listing 
and/or registration and to specify that the proposed changes will be 
effective as of April 24, 2006 as required by amended SEC Rule 12d2-2.

III. Discussion

    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 
\10\ and, in particular, the requirements of Section 6 of the Act.\11\ 
Specifically, as discussed below, the Commission finds that the 
proposal, as amended, is consistent with Section 6(b)(5) of the 
Act,\12\ which requires, in part, that the rules of an exchange be 
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, and 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. Further, as 
noted in more detail below, the changes being adopted by the NSX meet 
the requirements of amended SEC Rule 12d2-2.
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    \10\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(5).
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A. Exchange Delisting

    Amended SEC Rule 12d2-2(b) states that a national securities 
exchange may file an application on Form 25 to strike a class of 
securities from listing and/or withdraw the registration of such 
securities, in accordance with its rules, if the rules of such 
exchange, at a minimum, provide for notice to the issuer of the 
exchange's decision to delist, opportunity for appeal, and public 
notice of the exchange's final determination to delist. The Commission 
believes that NSX's current rules and proposal comply with the dictates 
of amended SEC Rule 12d2-2(b).
    NSX rules currently provide the requisite issuer notice as well as 
an opportunity to appeal such action by following Chapter X of the 
Exchange Rules governing adverse actions.\13\ Specifically, a person 
who is or will be aggrieved by any action of the Exchange can submit an 
application for hearing and review to the Secretary of the Exchange, 
who promptly forwards such request to the Appeals Committee.\14\ The 
decision of the Appeals Committee is subject to further review by the 
Board of Directors upon its own motion or upon written request by the 
aggrieved party.\15\ Finally, the proposed rule change will provide for 
public notice of the Exchange's final determination to remove the 
security from listing and/or registration. This should ensure that 
investors have adequate notice of an exchange delisting and is 
consistent with the protection of investors under Section 6(b)(5) of 
the Act.\16\
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    \13\ See Section 3.1 of the NSX By-Laws.
    \14\ NSX Rule 10.3.
    \15\ NSX Rule 10.5.
    \16\ 15 U.S.C. 78f(b)(5).
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B. Issuer Voluntary Delisting

    The Exchange proposes to set forth in its Exchange rules the 
general requirements of amended SEC Rule 12d2-2(c) regarding issuer 
voluntary delisting. In addition, new Section 3.2 of the NSX Bylaws 
would require the issuer to certify its compliance with Exchange rules 
for delisting and other applicable laws. Further, the Commission notes 
that NSX also proposes to amend Section 3.2 of the Bylaws to conform to 
amended SEC Rule 12d2-2(c) which requires issuers to notify the 
Exchange in case it elects to delist its securities from the Exchange, 
and upon such notification, the Exchange would be required to issue a 
public notice of such determination. The Commission believes that these 
provisions will inform issuers of the requirements for voluntary 
delisting of their securities under Exchange rules and federal 
securities laws and ensure the Exchange and shareholders are adequately 
notified of an issuer delisting.
    The proposal also sets forth a new requirement not in amended SEC 
Rule 12d2-2 that would require an issuer seeking to voluntarily delist 
its security to notify the Exchange in writing that it has filed Form 
25 with the Commission simultaneously with such filing. The issuer 
would also be required to notify the Exchange in writing immediately 
after the delisting actually becomes effective. The Commission believes 
that this requirement will allow the Exchange to be fully informed of 
the filing of a Form 25 and be prepared to take timely action to delist 
the security in accordance with the filing of the Form.
    The Exchange also proposes to add an interpretation and policy to 
Section 3.2A to the Bylaws to require any issuer seeking to voluntarily 
apply to withdraw a class of securities from listing on the Exchange 
pursuant to Section 3.2A that has received notice from the Exchange, 
pursuant to Section 3.1A or otherwise, that it is below the Exchange's 
continued listing policies and standards, or that is aware that it is 
below such continued listing policies and standards notwithstanding 
that it has not received such notice from the Exchange, must disclose 
that it is no longer eligible for continued listing (including the 
specific continued listing policies and standards that the issue is 
below) in: (i) Its statement of all material facts (pursuant to Section 
3.2A (d)) relating to the reasons for withdrawal from listing provided 
to the Exchange along with written notice of its determination to 
withdraw from listing required by amended SEC Rule 12d2-2(c)(2)(ii) 
under the Act and; (ii) its public press release and web site notice 
required by amended SEC Rule 12d2-2(c)(2)(iii) under the Act.\17\ The 
Commission believes that this requirement will allow shareholders to be 
informed and aware that the issuer has failed to meet Exchange listing 
standards and is voluntarily delisting with the consent of the 
Exchange. Issuers will therefore not be permitted to delist voluntarily 
without public disclosure of their noncompliance with Exchange listing 
standards.
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    \17\ See Amendment No. 1, supra note 4.
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C. Accelerated Approval of Amendment Nos. 1 and 2

    Pursuant to Section 19(b)(2) of the Act,\18\ the Commission may not 
approve

[[Page 25623]]

any proposed rule change, or amendment thereto, prior to the 30th day 
after the date of publication of notice of the filing thereof, unless 
the Commission finds good cause for so doing and publishes its reasons 
for so finding. The Commission hereby finds good cause for approving 
Amendment Nos. 1 and 2 to the proposal, prior to the 30th day after 
publishing notice of Amendment Nos. 1 and 2 in the Federal Register.
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    \18\ 15 U.S.C. 78s(b)(2).
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    As previously discussed, the revisions made to the proposal in 
Amendment No. 1 \19\ will allow shareholders to be informed and aware 
that the issuer has failed to meet Exchange listing standards and is 
voluntarily delisting with the consent of the Exchange. The other 
revisions in Amendment No. 1 are clarifications. In Amendment No. 2, 
the Exchange made technical changes that clarify the revisions set 
forth in Amendment No. 1. The Commission believes that granting 
accelerated approval of Amendment Nos. 1 and 2 will permit the Exchange 
to implement these new provisions as expeditiously as possible, to the 
benefit of investors. Further, no comments were received on the 
original proposal, as published.\20\ The Commission also believes that 
accelerating approval of Amendment Nos. 1 and 2 is appropriate because 
these revisions do not raise new regulatory issues.
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    \19\ See Amendment No. 1, supra note 4 and Section III.B herein.
    \20\ See Securities Exchange Act Release No. 53508, supra note 
3.
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    Accordingly, pursuant to Section 19(b)(2) of the Act,\21\ the 
Commission finds good cause to approve Amendment Nos. 1 and 2 prior to 
the thirtieth day after notice of Amendment Nos. 1 and 2 are published 
in the Federal Register.
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    \21\ 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 Nos. 1 and 2, including whether 
Amendment Nos. 1 and 2 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 No. SR-NSX-2005-09 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NSX-2005-09. 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 Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the Exchange. 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-NSX-2005-09 and should be submitted on or before May 22, 
2006.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\22\ that the proposed rule change (File No. SR-NSX-2005-09) is 
approved, and Amendment Nos. 1 and 2 to the proposed rule change are 
approved on an accelerated basis.
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    \22\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6-6503 Filed 4-28-06; 8:45 am]
BILLING CODE 8010-01-P