42348 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Notices 

9 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4 17 CFR 240.a51–1(a). 

5 17 CFR 240.a51–1(a)(2). 

Electronic Comments 

• Use the Commission’s Internet 

comment form http://www.sec.gov/ 

rules.sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–BX–2009–046 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–BX–2009–046. 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 business days between the 

hours of 10 a.m. and 3 p.m., located at 

100 F Street, NE., Washington, DC 

20549. 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–BX–2009–046 and should 

be submitted on or before September 11, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20063 Filed 8–20–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60501; File No. SR–NYSE– 

2009–80] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change to Amend its 

Public Float Requirement for Initial 

Public Offerings 

August 13, 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 August 5, 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, II and III 

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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

market value of publicly-held shares 

requirement for initial public offerings 

(‘‘IPOs’’), spin-offs and companies listed 

under the Exchange’s Affiliated 

Company standard. The text of the 

proposed rule change is available at the 

Exchange, the Commission’s Public 

Reference Room, and http:// 

www.nyse.com. 

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 102.01B of the Manual 

requires that a company listing at the 

time of its IPO or as a result of a spinoff or under the Affiliated Company 

standard of Section 102.01C(iii) must 

demonstrate an aggregate market value 

of publicly-held shares (‘‘public float’’) 

of $60 million at the time of listing. The 

Exchange proposes to reduce this 

requirement from $60 million to $40 

million. A reduction in the public float 

requirement to $40 million for 

companies that are new to the public 

markets will enable companies to list 

that would not meet the current $60 

million public float requirement but that 

otherwise qualify to list. The proposed 

lowering of the public float requirement 

would be applicable to real estate 

investment trusts listed under Section 

102.05, but not closed-end funds listed 

under Section 102.04 (which will 

continue to be subject to a $60 million 

public float requirement) or special 

purpose acquisition companies 

(‘‘SPACs’’) listed under Section 102.06 

(which are subject to a $200 million 

public float requirement). As closed-end 

funds and SPACs are subject to their 

own separate listing standards and have 

characteristics that make them 

significantly different from operating 

companies, the Exchange does not 

believe that it is unfairly discriminatory 

to apply different public float 

requirements to them than are 

applicable to operating companies. 

The Exchange believes that the 

proposed rule change is consistent with 

the protection of investors and the 

public interest and does not raise any 

novel regulatory issues. The Exchange 

notes that the proposed $40 million 

public float requirement is higher than 

the public float requirements under the 

various Nasdaq Global Market initial 

listing standards, which range from $8 

million to $20 million. 

The Exchange believes that the 

proposed amendment does not affect the 

status of NYSE listed securities under 

Securities Exchange Act Rule 3a51–1(a) 

(the ‘‘Penny Stock Rule’’),4 as the 

amended standards satisfy the 

requirements of Exchange Act Rule 

3a51–1(a)(2).5

All of the NYSE’s equity listing 

standards meet the stock price and 

distribution requirements of Rule 3a51– 

1(a)(2), as all of the standards require 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Notices 42349 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78a. 

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(6). In addition, the 

Commission notes that Rule 19b–4(f)(6)(iii) requires 

a self-regulatory organization to give the 

Commission written notice of its intent to file 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. 

companies to have a minimum stock 

price of $4.00 and at least 1.1 million 

publicly-held shares at the time of 

initial listing. Companies are generally 

required to have 400 round lot holders 

at the time of listing, except that 

companies listing in connection with a 

transfer or quotation listing may list on 

the basis of (a) 2,200 total stockholders 

plus an average monthly trading volume 

of 100,000 shares (for the most recent 

six months) or (b) 500 total stockholders 

plus an average monthly trading volume 

of one million shares (for the most 

recent 12 months). 

The Exchange believes that, in 

addition to meeting the stock price and 

distribution requirements of Rule 3a51– 

1(a)(2), all of the Exchange’s equity 

listing standards meet or exceed the 

other applicable requirements of that 

rule. The three-year earnings 

requirement of the Earnings Test 

exceeds the net income prong of Rule 

3a51–1(a)(2)(i)(A)(3) and the operating 

history prong of Rule 3a51–1(a)(2)(i)(B). 

The $50 million stockholders’ equity 

requirement of the Assets and Equity 

Test exceeds the $5 million in 

stockholders’ equity required by Rule 

3a51–1(a)(2)(i)(A)(1) and its $150 

million global market capitalization 

requirement exceeds the $50 million 

required by the market value of listed 

securities prong of Rule 3a51– 

1(a)(2)(i)(B). The Exchange’s Valuation/ 

Revenue Test, Pure Valuation/Revenue 

Test, Affiliated Company Test and 

Assets and Equity Test require a global 

market capitalization of $500 million, 

$750 million, $500 million and $150 

million, respectively. The Exchange 

notes that Rule 3a51–1(a)(2)(i)(A)(2) 

requires a market value of listed 

securities of $50 million calculated over 

a 90 consecutive day period, while the 

global market capitalization 

requirements of the Valuation/Revenue 

Test, Pure Valuation/Revenue Test, 

Affiliated Company Test and Assets and 

Equity Test are measured at a single 

point in time. However, the $50 million 

in market value of listed securities 

requirement of Rule 3a51– 

1(a)(2)(i)(A)(2) is far lower than the 

global market capitalization 

requirements of the Exchange’s 

Valuation/Revenue Test, the Pure 

Valuation/Revenue Test, the Affiliated 

Company Test and the Assets and 

Equity test. Consequently, the Exchange 

believes that the global market 

capitalization requirements of the 

Valuation/Revenue Test, the Pure 

Valuation/Revenue Test, the Affiliated 

Company Test and the Assets and 

Equity Test are comparable to, and 

arguably more stringent than, the $50 

million market value of listed securities 

requirement of Rule 3a51–1(a)(2). 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) 6 of the Securities Exchange 

Act of 1934 (the ‘‘Act’’),7 in general, and 

furthers the objectives of Section 6(b)(5) 

of the 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 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, and is 

not designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. The 

Exchange believes that the proposed 

amendment is consistent with the 

investor protection objectives of the Act 

in that the proposed public float 

requirement is set at a high enough level 

that only companies that are suitable for 

listing on the Exchange will qualify to 

list. As closed-end funds and SPACs are 

subject to their own separate listing 

standards and have characteristics that 

make them significantly different from 

operating companies, the Exchange does 

not believe that it is unfairly 

discriminatory to apply different public 

float requirements to them than are 

applicable to operating companies. 

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 

The Exchange has neither solicited 

nor received written comments on the 

proposed rule change. 

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, provided that the selfregulatory organization has given the 

Commission written notice of its intent 

to file 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 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 The 

Exchange’s initial listing standards for 

equity listings after adoption of the 

proposed amendment will continue to 

be as stringent as, or more stringent 

than, those of other national securities 

exchanges. Consequently, the Exchange 

believes the proposed rule change does 

not raise any novel regulatory issues or 

significantly affect the protection of 

investors or the public interest. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission may summarily abrogate 

such 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 Exchange 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 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 rulecomments@sec.gov. Please include File 

Number SR–NYSE–2009–80 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. 


srobinson on DSKHWCL6B1PROD with NOTICES
42350 Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / Notices 

11 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 59435 

(February 23, 2009), 74 FR 9115 (‘‘Notice’’). 

4See Letter from Michael J. Simon, Secretary, 

International Securities Exchange, LLC (‘‘ISE’’), to 

Nancy M. Morris, Secretary, Commission dated 

March 25, 2009 (‘‘ISE Letter’’). 

5See Letter from Jennifer M. Lamie, Assistant 

General Counsel, CBOE, to Elizabeth M. Murphy, 

Secretary, Commission dated August 11, 2009 

(‘‘CBOE Letter’’). 

6According to the Exchange, if the orders that 

comprise a solicited transaction are not suitably 

exposed to the order interaction process on the 

CBOE floor, the execution of such orders would not 

be consistent with CBOE rules designed to promote 

order interaction in an open-outcry auction. For 

example, CBOE Rule 6.43, Manner of Bidding and 

Offering, requires bids and offers to be made at the 

post by public outcry, and Rule 6.74 imposes 

specific order exposure requirements on floor 

brokers seeking to cross buy orders with sell orders. 

See Notice, supra note 3, at 9116. 

7CBOE Rule 6.9(e) defines ‘‘related instrument’’ 

to mean ‘‘in reference to an index option, an order 

to buy or sell securities comprising ten percent or 

more of the component securities in the index or 

an order to buy or sell a futures contract on any 

economically equivalent index. With respect to an 

SPX option, an OEX option is a related instrument, 

and vice versa.’’ 

8See Notice, supra note 3, at 9116 (discussing 

CBOE’s rationale behind its proposal). 

9See id. at 9120. 

All submissions should refer to File 

Number SR–NYSE–2009–80. 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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

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–NYSE–2009–80 and should 

be submitted on or before September 11, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20130 Filed 8–20–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60499; File No. SR–CBOE– 

2009–007] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing of 

Amendment No. 1 and Order Granting 

Accelerated Approval to a Proposed 

Rule Change, as Modified by 

Amendment No. 1 Thereto, Relating to 

Tied Hedge Transactions 

August 13, 2009. 

I. Introduction 

On February 13, 2009, the Chicago 

Board Options Exchange, Incorporated 

(‘‘CBOE’’ or the ‘‘Exchange) filed with 

the Securities and Exchange 

Commission (‘‘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 allow hedging stock, security 

futures, or futures contract positions to 

be represented currently with option 

facilitations or solicitations in the 

trading crowd (‘‘tied hedge’’ orders). 

The proposed rule change was 

published for comment in the Federal 

Register on March 2, 2009.3 The 

Commission received one comment 

letter on the proposal.4 CBOE responded 

to the comment letter on August 11, 

2009.5 CBOE filed Amendment No. 1 to 

the proposed rule change on August 11, 

2009. This notice and order provides 

notice of filing of Amendment No. 1 to 

the proposed rule change, and grants 

accelerated approval to the proposed 

rule change, as modified by Amendment 

No. 1. 

II. Description of the Proposal 

CBOE Rule 6.74 generally sets forth 

the procedures by which a floor broker 

may cross an order with a contra-side 

order. Transactions executed pursuant 

to Rule 6.74 are subject to the 

restrictions of paragraph (e) of Rule 6.9, 

Solicited Transactions, which prohibits 

trading based on knowledge of 

imminent undisclosed solicited 

transactions (commonly referred to as 

‘‘anticipatory hedging’’). 

A. Anticipatory Hedging Rule 

CBOE Rule 6.9, adopted in 1994, was 

originally designed to preserve the right 

to solicit orders in advance of 

submitting a proposed trade to the 

crowd, while at the same time assuring 

that orders that are the subject of a 

solicitation are exposed to the auction 

market in a meaningful way.6 In 

addition to requiring disclosure of 

orders and clarifying the priority 

principles applicable to solicited 

transactions, CBOE Rule 6.9 provides 

that it is inconsistent with just and 

equitable principles of trade for any 

member or associated person who has 

knowledge of all the material terms of 

an original order and a solicited order 

(including a facilitation order) that 

matches the original order’s price to 

enter an order to buy or sell an option 

of the same class as any option that is 

the subject of the solicitation prior to 

the time the original order’s terms are 

disclosed to the crowd or the execution 

of the solicited transaction can no 

longer reasonably be considered 

imminent. This prohibition extends to 

orders to buy or sell the underlying 

security or any ‘‘related instrument.’’7

B. Proposed Exception to Anticipatory 

Hedging Rule 

In order to address CBOE’s perceived 

concerns associated with increased 

volatility and decreased liquidity and to 

more effectively compete with the overthe-counter market,8 the Exchange is 

now proposing to adopt a limited 

exception to its anticipatory hedging 

restrictions that would permit the 

representation of hedging stock 

positions in conjunction with option 

orders, including complex orders, in the 

options trading crowd (a ‘‘tied hedge’’ 

transaction). The Exchange believes this 

limited exception would be consistent 

with the original design of CBOE Rule 

6.9(e), but would set forth a more 

practicable approach that would 

facilitate hedging in today’s trading 

environment while still encouraging 

meaningful competition among upstairs 

and floor traders.9

With a tied hedge transaction, 

Exchange members would be permitted 

to first hedge an option and then 

forward the option order and the 

hedging position to an Exchange floor 

broker with instructions to represent the 

option order together with the hedging 

position to the options trading crowd. 

Under the proposal, the original option 

order must be within designated size 

parameters, which would be determined 

by the Exchange and could not be 

smaller than 500 contracts. In addition, 

the original option order must be in a 


srobinson on DSKHWCL6B1PROD with NOTICES