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Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change Relating to Format Requirements for Securities Certificates

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Information about this document as published in the Federal Register.

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Start Preamble August 25, 2000.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] notice is hereby given that on May 1, 2000, the New York Stock Start Printed Page 53249Exchange (“NYSE”) filed with the Securities and Exchange Commission (“Commission”) and on July 24, 2000, amended the proposed rule change as described in Items I, II, and III below, which items have been prepared primarily by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The proposed rule change consists of an amendment to Section 5 of the NYSE's Listed Company Manual (“Manual”).[2] Section 5 of the Manual pertains to certificate forms and printing and engraving requirements.

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 NYSE 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 Items IV below. The NYSE has prepared summaries, set forth in sections (A), (B) and (C) below, of the most significant aspects of these statements.[3]

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

In the past, the NYSE has applied specific criteria to the production of certificates of listed issuers to guard against the counterfeiting of certificates. However, in light of the continued move toward dematerialization and the evolving technology to support the movement of securities, the NYSE has reviewed its current requirements contained in the Manual. The NYSE notes that no comparable requirements exist in the NASDAQ rules. The NYSE also notes that the Commission has recently approved an American Stock Exchange (“Amex”) rule filing that eliminated the existing Amex certificate requirements.[4] Furthermore, public companies not listed on any exchange often use certificates which do not comply with the traditional NYSE criteria which results in additional compliance expense when those companies week an NYSE listing. In light of all the foregoing, the NYSE proposes to eliminate its requirements pertaining to the appearance of certificates and retain only the requirements that specify what must be contained on the face of each certificate (e.g., company name, par value if required by law, proper form of assignment, etc.).

In its internal discussions, the NYSE reviewed the rationale behind the various printing and engraving policies and is aware that in the past counterfeiting and other security concerns prompted many of the requirements. While the NYSE believes that for the reasons referred to above it is appropriate to go forward with this proposal, it appreciates that others in the industry may have issues or questions that they would like to raise. The NYSE is of course ready to discuss relevant issues and is prepared to appropriately address concerns that may be raised during the comment period.

The NYSE notes that as a result of discussions with both the Commission staff and representatives from The Depository Trust Company (“DTC”), the NYSE is proposing to amend Section 501 of the Manual. Specifically, the NYSE is proposing to add new language to Section 501 and to add a new Section 501.13 so that the certificate requirements address both security (counterfeiting) concerns and control or processing concerns raised by DTC.[5]

The NYSE believes that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act and the rules and regulations thereunder applicable to the NYSE because the proposed rule change is designed to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest.

(B) Self-Regulatory Organization's Statement on Burden on Competition

The NYSE does not believe that the proposed rule change will have any impact, or impose any burden, on competition.

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

Written comments relating to the proposed rule change have not yet been solicited or received. The NYSE will notify the Commission of any written comments received by the NYSE.

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

Within thirty-five days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will:

(A) By order approve such proposed rule change or

(B) Institute proceedings to determine whether the proposed rule change should be disapproved.

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 Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 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 NYSE. All submissions should refer to File No. SR-NYSE-00-17 and should be submitted by September 22, 2000.

Start Signature
Start Printed Page 53250

For the Commission by the Division of Market Regulation, pursuant to delegated authority.[6]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble


2.  A copy of the text of the NYSE's proposed rule change and the attached exhibit are available at the Commission's Public Reference Section or through the NYSE.

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3.  The Commission has modified the text of the summaries prepared by the NYSE.

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4.  Securities Exchange Act Release No. 42539 (March 17, 2000), 65 FR 15672.

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5.  By way of clarification, the Commission notes that NYSE is proposing to entirely eliminate Section 502 of the Manual which pertains to certificate printing and engraving requirements. Certain provisions contained in Section 502 that address security and processing have been retained in the proposed additions to Section 501. The text of the proposed rule change is set forth in Exhibit A to the filing, which may be obtained by contacting the NYSE or through the Commission's Public Reference Room.

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[FR Doc. 00-22486 Filed 8-31-00; 8:45 am]