[Federal Register Volume 74, Number 66 (Wednesday, April 8, 2009)]
[Notices]
[Pages 16029-16031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-7870]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59684; File No. SR-NYSE-2009-32]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC To 
Extend Until August 31, 2009, the Application of the NYSE Arca Transfer 
Standard

April 1, 2009.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Exchange Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is 
hereby given that on March 17, 2009, New York Stock Exchange LLC (the 
``NYSE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Exchange has designated this proposal eligible for immediate 
effectiveness pursuant to Rule 19b-4(f)(6) \4\ under the Exchange Act. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Section 102.01C of the Listed 
Company Manual (the ``Manual'') to extend until August 31, 2009, the 
application of the special initial listing standard applicable only to 
companies that are listed on NYSE Arca, Inc. (``NYSE Arca'').
    The text of the proposed rule change is available on the Exchange's 
Web site (http://www.nyse.com), at the Exchange's Office of the 
Secretary and at the Commission's Public Reference room.

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

    In its filing with the Commission, the self-regulatory organization 
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. The NYSE has prepared summaries, 
set forth in Sections A, B and C below, of the most significant aspects 
of such statements.

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

1. Purpose
    Section 102.01C of the Manual includes an initial listing standard 
that is applicable only to companies that are listed on NYSE Arca, Inc. 
(``NYSE Arca'') as of October 1, 2008 and that transfer to the Exchange 
on or before March 31, 2009 (the ``NYSE Arca Transfer Standard'').\5\ 
The NYSE Arca Transfer Standard was adopted in connection with NYSE 
Euronext's business strategy of consolidating its equities listings on 
two of the three U.S. registered securities exchanges it owns--the NYSE 
and NYSE Alternext US LLC. As part of this transition, the Exchange 
wished to offer the opportunity to list on the NYSE to all suitable 
NYSE Arca companies. Most companies currently listed on NYSE Arca would 
meet the NYSE's continued listing requirements set forth in Section 
802.01B of the Manual for companies listed under the Exchange's 
Earnings Test.\6\ However, a number of these companies that meet the 
NYSE's continued listing standards do not qualify to list under any of 
the existing

[[Page 16030]]

NYSE initial listing standards. In order to list these companies, the 
Exchange adopted the NYSE Arca Transfer Standard.\7\
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    \5\ See Securities Exchange Act Release No. 58741 (October 6, 
2008), 73 FR 60378 (October 10, 2008) (SR-NYSE-2008-97).
    \6\ Companies listed under the Earnings Test are considered to 
be below compliance standards if their average global market 
capitalization over a consecutive 30-trading-day period is less than 
$75,000,000 and, at the same time, total stockholders' equity is 
less than $75,000,000. In addition Section 802.01B requires all 
listed companies to maintain a minimum of $25 million in global 
market capitalization and Section 802.01C requires all listed 
companies to maintain a $1.00 minimum stock price.
    \7\ Companies transferring from NYSE Arca under the NYSE Arca 
Transfer Standard are required to have $75 million in total market 
capitalization for 90 consecutive days prior to applying for listing 
and $20 million in market value of publicly-held shares (but not the 
$100 million market value of publicly-held shares requirement of 
Section 102.01B). Such companies have to meet the holders, publicly-
held shares and trading volume requirements set forth in Section 
102.01A and the $4 stock price requirement of Section 102.01B.
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    At the time of initial adoption of the NYSE Arca Transfer Standard, 
the Exchange believed that all of the NYSE Arca companies that were 
suitable for NYSE listing would be able to transfer prior to March 31, 
2009. However, due to the turbulent market conditions of recent months, 
a number of these companies have experienced significant reductions in 
their stock prices and, consequently, are not currently qualified for 
listing on the NYSE. Companies whose total market capitalization has 
fallen below $75 million are particularly problematic, as the NYSE Arca 
Transfer Standard requires companies to exceed this threshold for at 
least 90 consecutive days prior to applying for listing. Any company 
whose total market capitalization is currently below $75 million would 
not have sufficient time prior to March 31 to meet this requirement 
even if its total market capitalization exceeded $75 million on the 
date of this filing. In light of the extraordinary market conditions, 
the Exchange proposes to extend from March 31 to August 31, 2009, the 
life of the NYSE Arca Transfer Standard. The Exchange believes that 
this extension will enable companies to transfer from NYSE Arca to the 
NYSE that, but for the overall decline in the equities markets, would 
have qualified to transfer during the life of the NYSE Arca Transfer 
Standard as initially adopted.
    The Exchange believes it is appropriate to extend the time period 
during which it can apply the NYSE Arca Transfer Standard as a short-
term listing standard applicable only to NYSE Arca companies. These 
companies listed on NYSE Arca on the assumption that it would exist as 
a permanent listing market and it is solely because of a business 
decision made by NYSE Euronext that these companies will need to 
transfer their listings. Many of these companies listed on NYSE Arca 
because of its association with the NYSE and in the expectation that 
they would ultimately switch their listing to the NYSE when they met 
the NYSE's listing standards. As such, the Exchange believe that 
fairness dictates that it should seek to list these companies on the 
NYSE where such a listing is appropriate and in the interests of the 
investing public.
    The NYSE will only list companies under the NYSE Arca Transfer 
Standard if it believes that those companies are suitable for trading 
on the NYSE. All of the companies that would be listed under the NYSE 
Arca Transfer Standard will far exceed the NYSE's continued listing 
standards at the time of initial listing and will be in compliance with 
NYSE Arca continued listing standards. In addition, the same staff in 
NYSE Regulation's Financial Compliance and Corporate Governance groups 
is responsible for ongoing compliance reviews of both NYSE and NYSE 
Arca companies. As such, the NYSE Regulation staff involved in making 
initial listing determinations on the NYSE is extremely familiar with 
the companies currently listed on NYSE Arca and is uniquely positioned 
to determine whether those companies are suitable for listing on the 
NYSE. The Exchange believes its depth of knowledge with respect to NYSE 
Arca companies makes it appropriate to list them on this one time basis 
under a less onerous standard than the Exchange applies to other 
listing applicants. Companies listing under the NYSE Arca Transfer 
Standard will be subject to the standard listing application and review 
process applicable to all listing applicants and, if Exchange staff 
determine that an NYSE Arca company is not suitable for listing on the 
NYSE--notwithstanding its qualification under the numerical 
requirements of the NYSE Arca Transfer Standard--the Exchange will not 
list that company.
    The requirements of the NYSE Arca Transfer Standard exceed those 
established by Exchange Act Rule 3a51-1(a)(2) (the ``Penny Stock 
Rule'').\8\ The NYSE Arca Transfer Standard's requirement that an 
applicant have $75 million in global market capitalization for 90 days 
prior to transferring from NYSE Arca exceeds the $50 million market 
capitalization for 90 days prior to listing option in the Penny Stock 
Rule, as well as the $50 million market capitalization requirement of 
Rule 3a51-1(a)(2)(i)(B). In addition, companies listing under the NYSE 
Arca Transfer Standard will be required at the time of transfer to have 
a $4 stock price, 400 round lot holders and 1.1 million publicly held 
shares, thereby meeting or exceeding all of the Penny Stock Rule's 
remaining requirements.
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    \8\ 17 CFR 240.a51-1(a)(ii).
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    Companies listing under the NYSE Arca Transfer Standard will have 
to comply with all other applicable Exchange listing rules, including 
the Exchange's corporate governance requirements. As with all other 
listing applicants, the Exchange reserves the right to deny listing to 
any company seeking to list under the NYSE Arca Transfer Standard if 
the Exchange determines that the listing of any such company is not in 
the interests of the Exchange or the public interest.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \9\ of the Exchange Act, in general, and furthers the 
objectives of Section 6(b)(5) of the Exchange Act \10\ in particular in 
that it is designed to promote just and equitable principles of trade, 
to foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, 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. The Exchange believes that the proposed amendment is 
consistent with the protection of investors and the public interest in 
that the requirements of the NYSE Arca Transfer Standard are 
sufficiently stringent that the proposed amendment will not lead to the 
listing of any companies that are not suited for listing on the NYSE. 
In addition, the proposal applies for a limited period to a small 
number of companies that are subject to unique and disadvantageous 
circumstances.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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 Exchange Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change: (i) Does not significantly affect 
the

[[Page 16031]]

protection of investors or the public interest; (ii) does not impose 
any significant burden on competition; and (iii) does not become 
operative for 30 days after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest, the proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \11\ and 
Rule 19b-4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii) 
under the Act, the Exchange is required to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \13\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \14\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay.
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it would allow the exchange to keep in place, without 
interruption, the operation of the NYSE Arca Transfer Standard.
    The Commission expects that the Exchange will deny listing to any 
company seeking to list pursuant to the proposed rule change if the 
Exchange determines that the listing of any such company is not in the 
interests of the Exchange or the public interest. In accordance with 
the terms of the proposed rule, the Exchange will apply this standard 
only for the very narrow category of companies, listed on NYSE Arca as 
of October 1, 2008, that transfer to the Exchange on or before August 
31, 2009. Since NYSE Regulation's Financial Compliance and Corporate 
Governance groups are responsible for ongoing compliance reviews of 
both NYSE and NYSE Arca companies, the Commission believes the Exchange 
should be sufficiently familiar with companies seeking to transfer to 
be able to determine if any such company is an appropriate transfer 
candidate. The Commission expects the NYSE to only list those NYSE Arca 
transfers which they believe, through their past expertise reviewing 
these companies, are suitable for trading on the NYSE and the 
maintenance of fair and orderly markets. For these reasons, the 
Commission designates that the proposed rule change become operative 
immediately upon filing.\15\
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    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate the rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

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 Exchange 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-NYSE-2009-32 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2009-32. 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, on official business 
days between the hours of 10 a.m. and 3 p.m. Copies of the 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-
NYSE-2009-32 and should be submitted on or before April 29, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-7870 Filed 4-7-09; 8:45 am]
BILLING CODE 8010-01-P