36488 Federal Register / Vol. 65, No. 111 / Thursday, June 8, 2000 / Notices

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

2 17 CFR 240.19b–4.

3See letter from James E. Buck, Senior Vice

President and Secretary, NYSE, to Richard Strasser,

Assistant Director, Division of Market Regulation

(‘‘Division’’), Commission, dated December 21,

1999 (‘‘Amendment No. 1’’).

4See letter from James E. Buck, Senior Vice

President and Secretary, NYSE, to Richard Strasser,

Assistant Director, Division, Commission, dated

March 7, 2000 (‘‘Amendment No. 2’’).

5See letter from James E. Buck, Senior Vice

President and Secretary, NYSE, to Belinda Blaine,

Associate Director, Division, Commission, dated

March 23, 2000 (‘‘Amendment No. 3’’).

6Securities Exchange Act Release No. 42689

(April 13, 2000), 65 FR 21230.

7 In approving this rule change, the Commission

has considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

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

9 15 U.S.C. 78s(b)(2).

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42863; File No. SR–NYSE–

99–30]

Self-Regulatory Organizations; New

York Stock Exchange Inc., Order

Approving Proposed Rule Change and

Amendment Nos. 1, 2, and 3 Relating

to NYSE’s Procedures for Delisting a

Security and Related Issuer Appeals

May 30, 2000.

I. Introduction

On June 23, 1999, the New York Stock

Exchange, Inc. (‘‘NYSE’’ or ‘‘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 amend its procedures for

delisting a security and the

accompanying appeals process available

to the issuer. The Exchange submitted

Amendment No. 1 to its proposal on

December 27, 1999,3 Amendment No. 2

on March 9, 2000,4 and Amendment No.

3 on March 26, 2000.5

The proposed rule change, as

amended, was published for comment

in the Federal Register on April 20,

2000.6 No comments were received on

the proposal. This order approves the

proposal, as amended.

II. Description of the Proposal

The Exchange is proposing to modify

the Exchange’s procedures for delisting

a security and related issuer appeals.

The Exchange proposes to amend its

process by changing the composition of

the Committee for Review of the

Exchange’s Board of Directors, which

hears delisting appeals by issuers, to

consist of its Public Directors and one

of its Industry Directors and by allowing

the Committee to meet by telephone

without seeking the permission of the

Chairman of the Board.

The Exchange also proposes to issue

a press release disclosing the status of

a company that the Exchange has

determined should be removed from the

list, along with the rationale for that

determination. In addition, the

Exchange is proposing to append an

identifier suffix to the ticker symbols of

securities that have been determined by

Exchange staff to warrant suspension

and delisting. The Exchange would also

append an identifier suffix during a

transition by a listing company that falls

below the continued listing criteria to

another market.

Finally, in a change that the Exchange

believes will address both timing and

the anomaly of hearing an issuer’s

listing appeal after the suspension in

trading, the appeal would also generally

stay the suspension of trading. Reviews

would be conducted on the next

monthly review day, which is at least 25

business days from the date the issuer’s

request for review is filed with the

Exchange.

Specifically, with regard to the

changes to the appeal process and the

implementation of a press release

requirement, the Exchange proposes to

amend its Listed Company Manual

(‘‘Manual’’) and NYSE Rule 499 as

follows:

1. Implement a press release process

triggered by a staff decision to suspend

and delist security;

2. Clarify that a request for appeal

would stay the suspension unless the

staff determines that a stay is contrary

to the interest of the public and

investors;

3. Specify that issuers can request to

appear before the Committee for Review

and that the Committee may grant or

deny such request, provided that an

explicit rationale for a denial is

provided;

4. Shorten the time periods relating to

the appeal process such that (a) the

issuer must notify the Exchange of its

intent to appeal within ten business

days of receiving notice that the

Exchange staff has determined that its

security should be delisted and (b)

written submissions must be served

within seventeen business days from the

date the issuer received notice of its

right to a review; and

5. Clarify that counterparty service is

the responsibility of each party (not the

Exchange’s Office of the General

Counsel) and that such service must be

made in the same manner as service on

the Office of the General Counsel.

III. Discussion

The Commission finds that the

proposed rule change, as amended, is

consistent with the requirements of the

Act and the rules and regulations

thereunder applicable to a national

securities exchange.7 Specifically, the

Commission believes the proposal is

consistent with the Section 6(b)(5) 8

requirements that the rules of an

exchange be designed to promote just

and equitable principles of trade, to

remove impediments to and perfect the

mechanisms of a free and open market

and a national market system, and in

general, to protect investors and the

public.

The Commission believes that the

proposal strikes a reasonable balance

between the Exchange’s obligation to

protect investors and their confidence in

the market, with its parallel obligation

to perfect the mechanism of a free and

open market, by providing investors

with notice when a company is being

considered for delisting by the Exchange

by issuing a press release and

appending a suffix to the security. The

Commission believes that some

investors may consider the NYSE’s

intent to delist a security from the

Exchange an important factor in their

investment decision. The proposed rule

change allows investors to consider this

factor while continuing to allow the

securities to be traded on the Exchange

pending the listed company’s appeal.

The Commission also believes that the

proposal provides fair procedures for

issuers, while giving the Exchange the

ability to delist an issuer that has failed

to meet the Exchange’s standards for

continued listing. The Commission

believes that the proposed appeals

process is fair to issuers because it

would allow companies to appeal

suspension decisions, require written

denials for oral appeals, and generally

allow companies to trade on the NYSE

pending their appeal. The Commission

believes this process should ensure that

the issuer’s concerns are heard, yet

eliminate unreasonable delays between

the time that a company is identified as

not meeting the continued listing

requirements and the suspension of its

securities from trading.

IV. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,9 that the

proposed rule change (SR–NYSE–99–

30) is approved, as amended.

Federal Register / Vol. 65, No. 111 / Thursday, June 8, 2000 / Notices 36489

10 17 CFR 200.30–3(a)(12).

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

2Securities Exchange Act Release No. 42563

(Mar. 22, 2000), 65 FR 16679.

3OCC amended its proposed rule change to

extend the proposed change to cover foreign

currency options and cross-rate foreign currency

options. Because the amendment made no

substantive changes to OCC’s proposal other than

to include additional option products OCC clears,

republication of notice was not required.

4See Securities Exchange Act Release No. 37603

(Aug. 26, 1996) 61 FR 46500 (Sept. 3, 1996), for

amendments to OCC’s By-laws and Rules to provide

for the issuance, clearance, and settlement of

BOUNDs.

5 15 U.S.C. 78q–1(b)(3)(F).

6 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Letter from Robert P. Pacileo, Senior

Attorney, Regulatory Policy, PCX, to Nancy Sanow,

Senior Special Counsel, Division of Market

Regulations, SEC, dated March 22, 2000. The

Amendment corrects several typographical errors

and clarifies the wording of the proposed rule

change.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14448 Filed 6–7–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42884; File No. SR–OCC–

99–16]

Self Regulatory Organizations; The

Options Clearing Corporation; Order

Approving a Proposed Rule Change

Relating to Exercises by Put Holders

During a Shortage of the Underlying

Security

June 1, 2000.

On November 2, 1999, The Options

Clearing Corporation (‘‘OCC’’) filed with

the Securities and Exchange

Commission (‘‘Commission’’) a

proposed rule change (File No. SR–

OCC–99–16) pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’).1 Notice of the proposal

was published in the Federal Register

on March 29, 2000.2 On April 10, 2000,

OCC filed an amendment to the

proposed rule change.3 No comment

letters were received. For the reasons

discussed below, the Commission is

approving the proposed rule change.

I. Description

OCC is amending Article VI, Section

19 of its By-laws to eliminate OCC’s

authority to prohibit exercises by put

holders that would be unable to deliver

the underlying security due to a

shortage of the underlying security. In

lieu thereof, the amended By-laws give

OCC the right to suspend settlement

until it can determine whether the

unavailability of the underlying stock

will extend past the option expiration

date and upon making that

determination to take the appropriate

action under Article VI, Section 19(b) or

(c). Thus, the rule change allows OCC to

protect the benefit of the put holder’s

bargain and to treat puts and calls

equally when there is a shortage of the

underlying securities.

A similar change will be made to

Article XV, Section 3 and Article XX,

Section 3 with respect to dollardenominated and cross-rate foreign

currency options by deleting Article XV,

Section 3 (b)(2) and Article XX, Section

3(b)(2). The deletions will conform the

treatment of foreign currency puts to the

treatment of equity puts by eliminating

OCC’s authority to prohibit exercises by

put holders who would be unable to

deliver the underlying interest. OCC

already has the authority to fix cash

settlement prices for foreign currency

puts in appropriate circumstances.

Finally, Article XXIV, Section 5 of

OCC’s By-laws, which relates to buywrite options unitary derivatives

(BOUNDs),4 has been amended to

conform OCC’s treatment of BOUNDs

put holders in shortage situations with

its treatment of equity and foreign

currency options holders in similar

situations.

II. Discussion

Section 17A(b)(3)(F) 5 of the Act

requires that the rules of a clearing

agency not be designed to permit unfair

discrimination among participants in

the use of the clearing agency. The

Commission finds that OCC’s rule

change is consistent with OCC’s

obligation under the Act because it

amends OCC’s rules so that put and call

holders are treated similarly when there

is a shortage of the underlying security.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposal is

consistent with requirements of the Act

and in particular with the requirements

of Section 17A of the Act and the rules

and regulations thereunder.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act, that the

proposed rule change (File No. SR–

OCC–99–16) be, and hereby is,

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14408 Filed 6–7–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42861; File No. SR–PCX–

99–45]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 to the Proposed

Rule Change by the Pacific Exchange,

Inc. Relating to House-Keeping

Amendments to Rules on Floor

Brokers

May 30, 2000.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rules 19b–4 thereunder,2

notice is hereby given that on November

5, 1999, the Pacific Exchange, Inc.

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

Securities and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) the proposed

rule change as described in Items I, II

and III below, which Items have been

prepared by the Exchange. Additionally,

on March 23, 2000, the Exchange filed

with the Commission Amendment No. 1

to the proposal.3 The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons.

I. Self-Regulatory Organization’s

Statement on the Terms of Substance of

the Proposed Rule Change

The Exchange is proposing to modify

its options Floor Broker rules by

renumbering certain Options Floor

Procedure Advices (‘‘OFPAs’’),

clarifying existing provisions,

eliminating superfluous provisions, and

incorporating current policies and

procedures into the text of Rule 6. The

text of the proposed rule change is

available at the PCX and at the

Commission.

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