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[Federal Register Volume 74, Number 19 (Friday, January 30, 2009)]
[Notices]
[Pages 5709-5711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-2016]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59299; File No. SR-NYSE-2009-06]

Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC To 
Temporarily Lower Its Average Global Market Capitalization Continued 
Listing Standard

January 27, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on January 22, 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 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\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to lower temporarily from $25 million to $15 
million the average market capitalization required of listed companies 
under Section 802.01B of the Exchange's Listed Company Manual (the 
``Manual''). This temporary reduction will apply through April 22, 
2009. 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.

[[Page 5710]]

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

1. Purpose
    Section 802.01B of the Manual provides that the Exchange will 
promptly delist any company (including limited partnerships and real 
estate investment trusts (``REITs'')) if it is determined that the 
company has an average global market capitalization over a consecutive 
30 trading-day period of less than $25 million, regardless of the 
original listing standard under which it listed. A company is not 
eligible to utilize the cure procedures set forth in Sections 802.02 
and 802.03 with respect to this criterion and instead is immediately 
subject to the Exchange's delisting procedures set forth in Section 804 
of the Manual. Through April 22, 2009, this provision will apply only 
to companies (including limited partnerships and REITs) whose average 
global market capitalization over a consecutive 30 trading-day period 
falls below $15 million.\3\ Companies that fall below the $25 million 
market capitalization requirement but not below the $15 million level 
will benefit from this modified requirement to the extent that they are 
not otherwise subject to suspension under the Exchange's other 
continued listing criteria.\4\ All of the Exchange's other continued 
listing criteria will continue to apply during this period and 
companies that meet the modified average global market capitalization 
requirement during this period may be deemed to be below compliance or 
delisted for falling below other quantitative standards or pursuant to 
the ``Other Criteria'' set forth in Section 802.01D.
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    \3\ Any company whose consecutive 30 trading-day average global 
market capitalization has fallen below $15 million prior to the date 
of submission of this filing will continue to be subject to 
delisting. Any company whose 30 consecutive trading-day average 
global market capitalization falls below $15 million at any time 
after the submission of this filing will be subject to delisting, 
including if that 30 trading-day period includes trading days prior 
to the submission of this filing. For example, a company whose 30 
consecutive trading-day average global market capitalization falls 
below $15 million 10 days after submission of this filing (so that a 
portion of that 30 trading-day period preceded and a portion of the 
period followed submission of this filing) will be subject to 
delisting.
    \4\ Section 804 of the Manual provides that a request for review 
of a delisting determination will ordinarily stay the suspension of 
the subject security pending the review, but the Exchange staff may 
immediately suspend from trading any security pending review should 
it determine that such immediate suspension is necessary or 
appropriate in the public interest, for the protection of investors, 
or to promote just and equitable principles of trade. The lowered 
$15 million standard will be applied to any company for which the 
Exchange has not yet announced a suspension of trading pending 
delisting by the date of this filing, including any company whose 
suspension under the $25 million standard had been stayed pending 
appeal which is trading on the Exchange pending the outcome of the 
appeal process. Such companies will benefit from the lowered 
standard, assuming they are and remain above the requisite $15 
million average market cap. If the sole basis for delisting in such 
a case is the company's noncompliance with the $25 million market 
capitalization requirement, NYSE Regulation will inform the company 
in writing that it is withdrawing its delisting determination and 
that the company's appeal is now moot. As noted above, any such 
company remains subject to suspension and delisting under the 
Exchange's other continued listing standards.
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    In the past several months, the U.S. and global equities markets 
have experienced extreme volatility and a precipitous decline in 
trading prices of many securities. The Commission has acknowledged in 
several recent emergency Orders that these unusual market conditions 
threaten the fair and orderly functioning of the securities markets and 
can lead to a crisis of confidence among investors regarding the 
viability of companies whose stock prices have declined 
significantly.\5\ As a consequence of this market crisis, the number of 
companies listed on the Exchange whose average global market 
capitalization has fallen below $25 million over a 30 trading-day 
period has been significantly higher than the historical norm. The 
Exchange believes that, in many cases, these companies have experienced 
precipitous stock price declines not due to company-specific issues, 
but because of the general decline in investor confidence and other 
unusual circumstances affecting the broad market. Consequently, the 
Exchange believes that many of these companies may remain suitable for 
continued listing and that their market capitalizations may well return 
to prior levels once the current market turbulence passes.
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    \5\ See, e.g., Securities Exchange Act Release No. 58588 
(September 18, 2008), 73 FR 55174 (September 24, 2008) (``The 
Commission is aware of the continued potential of sudden and 
excessive fluctuations of securities prices and disruption in the 
functioning of the securities markets that could threaten fair and 
orderly markets. Given the importance of confidence in our financial 
markets as a whole, we have also become concerned about sudden and 
unexplained declines in the prices of securities. Such price 
declines can give rise to questions about the underlying financial 
condition of an issuer, which in turn can create a crisis of 
confidence without a fundamental underlying basis. This crisis of 
confidence can impair the liquidity and ultimate viability of an 
issuer, with potentially broad market consequences.'').
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    The Exchange believes that temporarily lowering the 30 trading-day 
average global market capitalization requirement from $25 million to 
$15 million will facilitate the retention, during this period of market 
turbulence, of companies whose size and quality makes them suitable for 
continued listing on the NYSE. The proposed modified requirement will 
enable these companies to remain listed in the current difficult market 
conditions with the prospect of a future recovery in their stock prices 
enabling them to comply with the $25 million market capitalization 
requirement upon its reinstatement. The Exchange has chosen to 
temporarily lower this listing standard rather than to impose a 
complete moratorium on application of the standard, because it 
continues to believe that, even at this time, companies whose market 
capitalization deteriorates to a level below $15 million are not 
suitable for continued listing on the Exchange.
    The Exchange notes that it adopted its $25 million average global 
market capitalization requirement as recently as 2004--at a time when 
stock prices and the overall market were far higher than they are 
currently--and that the requirement prior to that date was $15 
million.\6\ Consequently, the Exchange has recent experience with the 
continued listing of companies whose average global market 
capitalization exceeds $15 million but is lower than $25 million, and 
is comfortable allowing these companies to continue to be listed on the 
Exchange for a temporary period. The Exchange notes that, unlike with 
the Exchange's other quantitative listing standards, Section 802.01B 
does not provide companies with any period of time to take steps to 
attempt to regain compliance with the standard. The Exchange believes 
that temporarily lowering the level at which a company's average global 
market capitalization subjects it to automatic delisting is appropriate 
in light of the extreme volatility in companies' stock prices in the 
current market and the absence of any cure provisions in the rule.
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    \6\ See Securities Exchange Act Release No. 49154 (January 29, 
2004), 69 FR 5633 (February 5, 2004) (SR-NYSE-2003-43).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \7\ of the Exchange Act, in general, and furthers the 
objectives of Section 6(b)(5) of the Exchange Act \8\ 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

[[Page 5711]]

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 proposed rule change is 
designed to remove uncertainty regarding the ability of certain 
companies to remain listed on the NYSE during the current highly 
unusual market conditions, thereby protecting investors, facilitating 
transactions in securities, and removing an impediment to a free and 
open market.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 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 \9\ and 
Rule 19b-4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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 \11\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \12\ 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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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 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 will allow the NYSE to immediately implement a temporary 
measure to lower its continued listing requirement relating to average 
global market capitalization to respond to recent market volatility and 
conditions. The Commission notes that the Exchange's current standard 
does not provide companies with a period of time to regain compliance 
and, instead, companies failing to meet this standard are immediately 
subject to the Exchange's delisting procedures in Section 804 of the 
Manual. As such, the Commission believes that waiving the 30-day 
operative delay will provide certain companies with immediate relief 
from being delisted as a result of the current market conditions, 
provided that their average global market capitalization over a 
consecutive 30-day trading period remains at $15 million or above. For 
these reasons, the Commission designates that the proposed rule change 
become operative immediately upon filing.\13\
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    \13\ 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-2009-06 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-2009-06. 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 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-2009-06 and should be submitted on or before 
February 20, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-2016 Filed 1-29-09; 8:45 am]
BILLING CODE 8011-01-P
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