Skip to Content

Notice

Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change To Clarify Amendments to “Other Securities” Initial Listing Standard

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble November 10, 2008.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] and Rule 19b-4 thereunder,[2] notice is hereby given that on October 31, 2008, New York Stock Exchange LLC (“NYSE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposal from interested persons.

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

The Exchange proposes to amend Section 703.19 of the Exchange's Listed Company Manual (the “Manual”), the Exchange's initial listing standards for “Other Securities.” The proposed amendment would clarify that companies that are not listed on the Exchange that wish to list securities under Section 703.19 must meet one of the Exchange's financial original listing standards for equity listings, but need not meet any of the other initial listing requirements set forth in Section One of the Manual.

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 Exchange 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 Exchange has prepared summaries, set forth in Sections A, B, and C below, of Start Printed Page 69707the 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

The Exchange proposes to amend Section 703.19 of the Manual, the Exchange's initial listing standards for “Other Securities.” [3] The proposed amendment would clarify that companies that are not listed on the Exchange that wish to list securities under Section 703.19 must meet one of the Exchange's financial original listing standards for equity listings, but need not meet any of the other initial listing requirements set forth in Section One of the Manual.

The Exchange has long required that unlisted companies wishing to list securities under Section 703.19 must meet its initial common stock listing standards as set forth in Sections 102.01-102.03 and 103.01-05 of the Manual. While these sections contain common stock distribution requirements (such as the requirement of Section 102.01A that companies listing in connection with an IPO must have at least 400 round lot holders and 1.1 million publicly-held shares) and public float requirements (such as the requirement of 102.01B that IPOs must have a minimum float of $60 million and all other companies must have a public float of $100 million at the time of initial listing), the Exchange has not imposed these standards with respect to an issuer's common stock when it is only listing securities under Section 703.19. Rather, the Exchange has interpreted the requirement of Section 703.19 as being simply that the company must meet the financial requirements of one of the Exchange's initial listing standards as set forth in Section 102.01C (i.e., the Earnings Test, the Valuation/Revenue Test, the Pure Valuation/Revenue Test and the Affiliated Company Test) or Section 103.01C [sic] (i.e., the Earnings Test, the Valuation/Revenue Test, the Pure Valuation/Revenue Test and the Affiliated Company Test). While the Exchange strongly believes that it needs to ensure that any company that lists its securities under Section 703.19 is of the financial caliber that is required of an NYSE company, it does not believe the common stock distribution and public float requirements are relevant to this qualitative analysis as these requirements are relevant solely with respect to the quality of the trading market in the common stock.

Recently, the Exchange amended its common stock initial listing standards in Section 102.01B and 103.01A to require listing applicants at the time of listing to have a closing price, or if listing in connection with an IPO, an IPO price of $4 at the time of initial listing.[4] The Exchange believes that the same rationale articulated above with respect to distribution and public float requirements applies in the case of this price requirement, i.e., it is relevant to the quality of the trading market for the common stock but not to the qualitative analysis the Exchange performs with respect to a company wishing to list securities under Section 703.19.

To avoid any ambiguity in the application of Section 703.19 to companies that do not have their common stock listed on the Exchange, the Exchange proposes to replace the requirement that companies must meet the Exchange's initial common stock listing standards as set forth in Sections 102.01-102.03 and 103.01-05 of the Manual with a more narrowly-tailored requirement that such companies must meet one of the financial standards in Section 102.01C or, if applicable, in the case of foreign companies, Section 103.01B. The Exchange also proposes to remove the sub-heading (“Earnings/Net Tangible Assets”) from the second paragraph of Section 703.19, as it is a remnant from a much earlier version of the rule and is a source of confusion.

2. Statutory Basis

The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) [5] that an exchange have rules that are designed 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, 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 Exchange will continue to apply stringent eligibility requirements to securities listed under Section 703.19.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that this proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.

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

Written comments on the proposed rule change were neither solicited nor received.

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

Within 35 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 90 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. Comments may be submitted by any of the following methods:

Electronic Comments

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2008-109. This file number should be included on the subject line if e-mail is used. To help the Start Printed Page 69708Commission 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, 100 F Street, NE., Washington, DC 20549, 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-2008-109 and should be submitted on or before December 10, 2008.

Start Signature

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.6

Florence E. Harmon,

Acting Secretary.

End Signature End Preamble

Footnotes

3.  Section 703.19 was adopted to provide the Exchange with the flexibility to list securities that could not be readily categorized under the Exchange's traditional listing standards for common and preferred stocks, debt securities and warrants. Section 703.19 was intended to provide flexibility to enable the Exchange to consider the listing of new securities on a case-by-case basis, in light of the suitability of the issue for auction market trading. Section 703.19 is not intended to accommodate the listing of securities that raise significant new regulatory issues, which would require a separate filing with the Commission. See Securities Exchange Act Release No. 28217 (July 18, 1990) 55 FR 30056 (July 24, 1990) (SR-NYSE-90-30).

Back to Citation

4.  See Securities Exchange Act Release No. 27597 [sic] (May 6, 2008), 73 FR 27597 (May 13, 2008) (SR-NYSE-2008-17).

Back to Citation

[FR Doc. E8-27419 Filed 11-18-08; 8:45 am]

BILLING CODE 8011-01-P