Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Notices 13421

3 17 U.S.C. 78s(b)(2) (1988).

4 17 CFR 200.30–3(a)(12) (1996).

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

2On March 3, 1997, the NYSE filed Amendment

No. 1 to its proposal. See letter from James E. Buck,

Senior vice President and Secretary, NYSE, to Ivette

Lo ́pez Assistant director, Division of Market

Regulation, SEC, dated February 28, 1997. In

Amendment No. 1, the NYSE withdrew certain

proposed amendments to the following sections of

the NYSE’s Allocation Policy and Procedures: I.

Purpose; III. Allocation Panel, composition; IV.

Allocation Criteria; and V. Policy Notes. Id. The

Exchange has filed a separate proposal under

Section 19(b)(2) of the Act to amend the abovereferenced items. See File No. SR–NYSE–97–06.

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to the file

number in the caption above and should

be submitted by April 10, 1997.

IV. Commission’s Findings and Order

Granting Accelerated Approval of the

Proposed Rule Change

The Commission finds that the NASD’

proposal is consistent with the Act and

the rules and regulations thereunder

applicable to a registered national

securities association. Specifically, the

provisions of Section 15A(b)(2) of the

Act which requires that an association

enforce compliance with Securities

Exchange Act Rules in addition to the

rules of the association. The

Commission believes that the proposal

will enforce and facilitate compliance

by NASD members with the

requirements of Regulation M, SEC

Rules 100 through 105.

In addition, the Commission finds

that the NASD’s proposal is consistent

with the provisions of Section 15A(b)(6)

of the Act which requires, in part, that

an association have rules that are

designed to prevent fraudulent and

manipulative acts and practices,

promote just and equitable principals of

trade, and in general, to protect

investors. The Commission believes that

the NASD’s proposal is consistent with

Section 15A(b)(6) of the Act in that the

amendments to Nasdaq and OTCBB

Rules, in addition to the establishment

of a requirement to provide pricing

information with respect to offerings of

exchange-listed and ‘‘actively-traded’’

securities under SEC Rule 101, provide

a regulatory framework that will assist

members in complying with the

obligations under Regulation M. The

Commission, therefore, finds good cause

for approving the proposed rule change

prior to the thirtieth day after the date

of publication of filing thereof in the

Federal Register.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,3 that the

proposed rule change be and hereby is

approved. The proposed rule change is

effective March 14, 1997, with the

exception of the provisions of Rule 4623

and Rule 5460 that implement the

notification requirements adopted under

Regulation M Rule 104 with respect to

penalty bids and syndicate covering

transactions that will become effective

on the date that the notification

requirements under SEC Rule 104

become effective.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.4

Jonathan G. Katz,

Secretary.

[FR Doc. 97–7054 Filed 3–19–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38372; File No. SR–NYSE–

97–04]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the New

York Stock Exchange, Inc. Relating to

Amendments to the Exchange’s

Allocation Policy and Procedures

March 7, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’), 1 notice is hereby given that on

February 21, 1997, as amended on

March 3, 1997, the New York Stock

Exchange, Inc. (‘‘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 selfregulatory organization. 2 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, pursuant to Rule 19b–

4 of the Act, submits a proposed rule

change amending the NYSE’s Allocation

Policy and Procedures. The text of the

proposed rule change is as follows [new

text is italicized; deleted text is

bracketed].

Allocation Policy and Procedures

* * * * *

Listing company input

[Listing on the New York Stock

Exchange is a significant development

for a company, and the assignment of a

specialist to make a market in the

company’s shares via the allocation

process is an important step. The listing

company may wish to communicate its

views for consideration by the

Allocation Committee in selecting the

best possible specialist for the

company’s stock.

The Allocation Committee will

consider a letter from the listing

company requesting specific units and/

or specifying particular expertise in one

or more aspects of the specialist’s role.

While specialist performance continues

to be the most significant criterion, the

committee will use its professional

judgment in giving appropriate weight

to all relevant factors, including

company letters, to determine the

selection of a specialist unit.

From time to time a listing company

may choose to interview specialist

units. The Exchange takes a neutral

position on this practice and as such

will neither arrange interviews nor

recommend units to be interviewed.]

Listing on the New York Stock

Exchange is a significant development

for a company, and the assignment of a

specialist through the allocation process

is an important step. The Exchange’s

Allocation Policy is intended to provide

listing companies with a choice of

alternatives as to how their specialist

unit may be selected. The listing

company may choose to have its

specialist unit selected by the Allocation

Committee, in accordance with the

criteria specified in the Allocation

Policy, and the exercise of the

Committee’s expert professional

judgment. Alternatively, the listing

company may choose to become more

directly involved in the selection

process. In that case, the company may

request that the Allocation Committee

select specialist units that would be

appropriate to trade the company’s

stock, with the company then making

the final selection from among the

group of units as chosen by the

Allocation Committee. Such a group

shall consist of three, four, or five units,

selected by the Committee as

demonstrably deemed to be the most

qualified to receive such allocation from

among the units that apply, based upon

the criteria set forth in this policy. These

procedures shall apply to the allocation

of a newly-listing company, as well as

the reallocation of an already listed

company.

Specialist Unit Selected by Allocation

Committee. If the listing company so

chooses, the Allocation Committee shall

select the specialist unit to be allocated

the company’s stock based on the

Committee’s expert assessment of the

type of specialist unit that would be

most appropriate for the company, and

the Committee’s professional evaluation

of performance data and other relevant
13422 Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Notices

3Securities Exchange Act Release No. 27803

(Mar. 14, 1990), 55 FR 10740 (Mar. 22, 1990) (order

approving File No. SR–NYSE–88–32).

4Securities Exchange Act Release No. 33121 (Oct.

29, 1993), 58 FR 59085 (Nov. 5, 1993) (order

approving File No. SR–NYSE–92–15).

5Securities Exchange Act Release No. 34906 (Oct.

27, 1994), 59 FR 55142 (Nov. 3, 1994) (order

approving File No. SR–NYSE–94–30).

information as specified in the

Allocation Policy. The listing company

may submit a letter to the Allocation

Committee describing the characteristics

(e.g., trading philosophy, policies on

maintaining communications with its

listed companies, etc.) it believes would

be appropriate for the unit that would

be selected to trade its stock. The listing

company may not, however, identify

any particular specialist unit in its

letter, or specify characteristics so

unique as to be applicable only to a

readily identifiable specialist unit.

Specialist Unit Selected by Listing

Company. If the listing company so

chooses, it may request that the

Allocation Committee select specialist

units that would be appropriate to trade

the company’s stock, with the company

then making the final selection. If the

listing company chooses this

alternative, the company may either

make no communication to the

Allocation Committee, or it may submit

a letter (as noted in the preceding

paragraph) to the Committee describing

the characteristics the company believes

would be appropriate for the units to be

selected by the Committee. The listing

company may not, however, identify

any particular specialist unit in its

letter, or specify characteristics so

unique as to be applicable only to a

readily identifiable specialist unit.

Meetings Between Listing Company

and Specialist Units. Within two

business days after the selection of a

group of specialist units as described

above (unless the exchange has

determined to permit a longer time

period in a particular case), the listing

company shall meet, either in person or

by teleconference, with representatives

of each of the specialist units. Meetings

to be held in person shall normally be

held at the Exchange, unless the

Exchange has agreed that they may be

held elsewhere. At least one

representative of the listing company

must be a senior official of the rank of

Corporate Secretary or above of that

company. No more than three

representatives of each specialist unit

may participate in the meeting, each of

whom must be employees of the

specialist unit, and one of whom must

be the individual who is proposed to

trade the company’s stock.

Listing Company’s Selection of

Specialist Unit. Within one business day

following its meeting with

representatives of the specialist units (or

such longer time period as the Exchange

may permit in a particular case), the

listing company shall select its

specialist unit in writing, signed by a

senior official of the rank of Corporate

Secretary or higher duly authorized to

so act on behalf of the company. The

Allocation Committee shall then

confirm the allocation of the stock to

that unit, at which time the stock shall

be deemed to have been so allocated.

Allocation Applications. In their

applications for the allocation of a

listing company’s stock, specialist units

must describe all pertinent factors as to

why they believe they should be

allocated the stock. At a minimum, such

factors should include a description of

the unit’s capital base; identity and

experience of the individual proposed to

trade the stock, with a description of

other securities traded by that

individual; and a discussion of why that

individual is appropriate to trade the

listing company’s stock. If the listing

company has submitted a letter to the

Allocation Committee as permitted

herein, a copy of such letter shall be

made available to all specialist units. In

their applications to be allocated the

stock of such company, specialist units

shall be expected to indicate how they

meet the characteristics described in the

company’s letter. If, within six months

of the date a newly-listed company

begins trading on the Exchange (or a

company which has been reallocated

begins trading with its new unit), the

specialist unit determines that the

individual specialist who trades the

company’s stock should be an

individual other than the one named in

the allocation application, the specialist

unit shall so inform the Allocation

Committee, in writing, and disclose its

reasons therefor. These letters shall be

maintained in the permanent records of

the Committee.

In addition, specialist units must

describe in their applications to be

allocated the stock of a listing company

any contracts they, or any individual

acting on their behalf, have had with

any employee of that company, or any

individual acting on behalf of that

company with regard to its prospective

listing on the Exchange, within six

months prior to the date that allocation

applications are solicited with respect to

that company.

* * * * *

Blanket applications

[A]All specialist units [may also] shall

be deemed to have filed with the

Exchange a blanket application

pursuant to which the applicant agrees

to accept the allocation of any security.

Any security allocated to a specialist

unit on the basis of its blanket

application shall not be reflected in the

records of the Exchange as a ‘‘security

gained’’ not shall it prejudice that unit’s

eligibility for future allocations.

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 self-regulatory organization 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

The intent of the Exchange’s

Allocation Policy and Procedures is: (1)

to ensure that securities are allocated in

an equitable and fair manner and that

all specialist units have a fair

opportunity for allocations based on

established criteria and procedures; (2)

to provide an incentive for onging

enhancement of performance by

specialist units; (3) to provide the best

possible match between a specialist unit

and a security; and (4) to contribute to

the strength of the specialist system.

In September 1987, the Quality of

Markets Committee (‘‘QOMC’’)

appointed the first Allocation Review

Committee (‘‘ARC’’) to undertake a

comprehensive review of the Exchange’s

then-existing allocation procedures

which had been in effect since 1976.

ARC’s recommendations were filed with

the SEC in 1988 and approved in 1990.3

In April 1991, the QOMC determined

that the Allocation Policy and

Procedures should be re-examined and

appointed a new committee, ARC II, to

do so. The Committee’s

recommendations were subsequently

filed with the Commission, and

approved in 1993 as a one-year pilot.4

In August 1994, the Exchange filed for

and subsequently received permanent

approval of that pilot.5 In accordance

with the Exchange’s commitment to

preserve the integrity of the existing

allocation system while refining the

allocation policy as necessary, ARC III
Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Notices 13423

6Securities Exchange Act Release No. 34626

(Sept. 1, 1994), 59 FR 46457 (Sept. 8, 1994) (order

approving File No. SR–NYSE–94–18).

convened in November 1993. The

Committee’s recommendations were

filed with the Commission, and

approved in September 1994.6 In

December 1995, the QOMC appointed

ARC IV to continue to review the

allocation process. The Committee’s

recommendations are embodied in this

proposed rule change.

The principle changes to the

Exchange’s Allocation Policy and

Procedures are described below.

Listing Company Input

Currently, listed companies do not

have the option of selecting their

specialist units. Instead, the Exchange’s

Allocation Committee selects the

specialist unit to be assigned to a listed

company.

Under the proposal, listing companies

will have two options, either: (1) to have

their specialist unit selected by the

Allocation Committee according to

existing allocation criteria, with

company input permitted in the form of

a ‘‘generic letter’’ which may describe

desired general characteristics of a

specialist unit, but may not mention

particular units or describe

characteristics that would be applicable

to a readily identifiable specialist unit;

or (2) to make the final selection of a

specialist unit from among three to five

units selected by the Allocation

Committee, based partly on the generic

letter from the company describing

desired specialist unit characteristics. In

the case of both options, if a generic

letter is submitted, the letter would be

distributed to all specialist units along

with allocation data sheets (‘‘green

sheets’’).

The Exchange is not proposing any

change to the criteria by which the

Allocation Committee makes its

allocation decisions. Such decisions

would continue to be made pursuant to

the criteria specified in the policy,

which include review and consideration

of the results of the Specialist

Performance Evaluation Questionnaire,

objective measures of specialist

performance, and the professional

judgment of the members of the

Allocation Committee. If a listing

company selects the second option

discussed above, the Allocation

Committee would be required to select

only those units demonstrably deemed

to be the most qualified to receive such

allocation from among the units that

apply, based upon the criteria set forth

in the policy.

Meetings With Specialist Units

Currently, the Allocation Committee

selects a specialist unit, with a letter

from the listing company to be assessed

in accordance with the Committee’s

professional judgment; the letter may

name specific units. A listing company

may choose to interview specialist

units; the Exchange takes a neutral

position on this practice and will

neither arrange interviews nor

recommend units to be interviewed.

Under the proposal, companies

selecting option two would meet with

units chosen by the Allocation

Committee (in person at the Exchange or

by teleconference) within two business

days (or such longer time period as

permitted by the Exchange in a

particular case) of the Allocation

Committee meeting, and would select

one unit within one business day

thereafter. The number of company

representatives attending would not be

limited, but at least one must be a senior

official for the company of the rank of

Corporate Secretary or higher. Specialist

units are limited to three attendees, all

of whom must be employees of the unit

and at least one of whom must be the

specialist designated to trade the stock.

Specialist Unit Applications/Company

Contracts

Currently, company letters are not

distributed to specialist units. If a unit

is requested in a company letter, the

unit must submit a statement describing

any meetings or discussions held with

the company, including any

representations or commitments made.

There is no requirement that units

advise the Committee of a change of

specialists.

Under the proposal, if a generic letter

is distributed, specialist units must

indicate how they meet the

characteristics described. Specialist

units must disclose all contacts by them

or any individual acting on their behalf

pertaining to a listing on the Exchange

with any employee of the listing

company, or any individual acting on

the company’s behalf, within six

months prior to distribution of the

‘‘green sheets.’’ If a specialist unit

wishes to change specialists within six

months of the date a company begins

trading, the unit must inform the

Allocation Committee in writing and

disclose its reasons therefor. These

letters shall be maintained in the

permanent records of the Committee.

‘‘Blanket’’ Applications

Currently, specialist units may choose

to file blanket applications (and all have

done so), at their discretion. There will

be no change to the policy that any

security allocated to a unit on the basis

of its blanket application shall not

prejudice that unit’s eligibility for future

allocations.

Under the proposal, all specialist

units shall be deemed to have filed with

the Exchange a blanket application

pursuant to which the applicant agrees

to accept the allocation of any security.

Pilot Basis

The Exchange intends to implement

the amendments to the Allocation

Policy discussed herein as a pilot to run

for seven months from the date of

effectiveness. The Exchange shall

submit to the Commission a report

discussing its experiences with the pilot

program prior to the seven-month

expiration date, in conjunction with any

request for modification, or permanent

approval, of the policy.

2. Statutory Basis

The basis under the Securities

Exchange Act of 1934 (the ‘‘Act’’) for

this proposed rule change is the

requirement under Section 6(b)(5) that

an Exchange have rules that are

designed to promote just and equitable

principles of trade, 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

amendments are consistent with these

objectives in that they enable the

Exchange to further enhance the process

by which stocks are allocated to ensure

fairness and equal opportunity in the

process.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The proposed rule change does not

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

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 foregoing proposed rule

change: (1) Does not significantly affect

the protection of investors or the public

interest; (2) does not impose any

significant burden on competition; (3)

does not become operative for 30 days

from March 3, 1997, the date on which
13424 Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Notices

7The Commission notes that any substantive

amendment to a proposed rule change filed under

Rule 19b–4(e)(6) causes the 30 day delayed

implementation period to be restarted from the date

of the filing of the amendment. See Securities

Exchange Act Release No. 35123 (Dec. 20, 1994), 59

FR 66692 (Dec. 28, 1994).

8 17 CFR 240.19b–4(e)(6).

9See supra note 7.

10The 60 day abrogation period commences from

March 3, 1997, the date of the submission of

Amendment No. 1.

11 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1) (1988).

2 17 CFR 240.19b–4 (1991).

it was filed, or such shorter time as the

Commission may designate if consistent

with the protection of investors and the

public interest; 7 and (4) the Exchange

provided the Commission with written

notice of its intent to file the proposed

rule change at least five business days

prior to the filing date, it has become

effective pursuant to Section 19(b)(3)(A)

of the Act and Rule 19b–4(e)(6)

thereunder.8

The Commission finds good cause for

accelerating the operative date of the

proposed rule change from the thirtieth

day following the date of the amended

filing on March 3, 1997 consistent with

investor protection and the public

interest.9 By accelerating the operative

date of the proposed rule change to

March 7, 1997, the NYSE will be able

to provide issuers, whose stock will be

listed on the Exchange, with the ability

to make the final selection of a specialist

unit from among three to five units

selected by the Allocation Committee.

This will prevent newly listed

companies from delaying their listing on

the Exchange until such time as they

may avail themselves of the alternative

approaches described herein. Moreover,

the Commission notes that the proposal

is only being implemented on a pilot

basis for a period of seven months

ending on October 7, 1997. Based on the

above, the Commission believes that

accelerating the operative date for

implementation of the proposal to

March 7, 1997 is consistent with the

protection of investors and the public

interest.

In furtherance of the public interest

and investor protection, the

Commission expects the NYSE to

provide the Commission with a report

describing its experience with the pilot

program. This report should include, for

the period in which the pilot is in

operation, the following information:

the total number of allocations; the total

number of allocations in which the

issuer chose its own specialist unit from

a list of three to five; the total number

of allocations in which the Allocation

Committee chose the specialist unit; the

number of units provided to the issuer

by the Allocation Committee in those

cases where the issuer selects for each

such allocation; and, for each allocation,

the number of specialist units applying

for the allocations in both issuerselected and Allocation Committeeselected allocations. The Exchange also

should include in the report information

that would permit the Commission to

evaluate whether the number of units

applying for allocations increased or

decreased when compared to the period

prior to the adoption of the pilot. The

Exchange also should include in the

report any other information that may

be useful to the Commission in

evaluating the program. The report

should be submitted to the Commission

at least two months prior to the

expiration of the pilot (by August 7,

1997) along with any request to modify,

extend, or permanently approve the

pilot.

At any time within 60 days of the

filing of the amended proposed rule

change,10 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 Act.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 20549. 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 at

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 New York Stock Exchange.

All submissions should refer to File No.

SR–NYSE–97–04 and should be

submitted by May 12, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–6968 Filed 3–19–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38403; File No. SR–PSE–

97–08]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Pacific Exchange Relating to Changing

the Corporate Name From Pacific

Exchange to Pacific Exchange, Inc.

March 14, 1997.

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 March 10,

1997, the Pacific Exchange

(‘‘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. 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 is proposing to amend

its Article I, Section 1 of the

Constitution and the first Section of the

Certificate of Incorporation to reflect a

change in the corporate name from

Pacific Exchange to Pacific Exchange,

Inc.

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

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

The purpose of the proposed rule

change is to effect a change in the

corporate name of the Exchange from