Federal Register / Vol. 63, No. 18 /Wednesday, January 28, 1998 / Notices 4337

3NSCC members use the delete of original trade

input to delete any item for which the comparison

process resulted in an uncompared trade.

4The demand withhold service deletes

previously compared OTC transactions which have

been canceled by mutual agreement of the buyer

and the seller.

5OTC trade data submitted by members which is

uncompared may be resubmitted through the

demand as of service.

6Advisory listings indicate trades which were

submitted by another party against the member but

which did not match any trade the member

submitted. 7 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. 39288

(October 30, 1997) 62 FR 60297.

4See Letter from Agnes M. Gautier, Vice

President, Market Surveillance, NYSE to Sharon

Lawson, Senior Special Counsel, Division of Market

Regulation (‘‘Division’’), Commission, dated

December 26, 1997 (‘‘Amendment No. 1’’). In

Amendment No. 1, the NYSE clarified the proposal

with respect to: (1) Exchange representation at

interviews between specialist units and listing

companies; (2) Exchange review of written

materials supplied by specialist units to listing

companies; and (3) specialist unit contact with a

listing company. In addition, Amendment No. 1

deletes the sentence inviting listing companies to

express in a letter sent to the Exchange’s Allocation

Committee any preference not to be traded by

specialist units which trade the stock of the listing

companies’ competitors.

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The proposed rule change will modify

NSCC’s procedures regarding its trade

comparison service. The proposed rule

change will discontinue the following

instructions: the ‘‘delete of original

trade input,’’3 the ‘‘demand withold,’’4

and the ‘‘demand as of.’’5 Such

instructions are used very infrequently

by NSCC members due to the growth of

automated processing systems. Their

elimination will result in reduced costs

to members.

Additionally, the change will

eliminate the ability to submit an

advisory listing after the first day after

trade date (‘‘T+1’’) for original input and

as of trades.6 This change results from

extremely limited acceptances of

advisories of T+2 and will also reduce

costs.

Under the third change, the

supplemental contract lists and the

added trade contract lists will no longer

carry forward totals. The supplemental

contract lists show all compared trades

resulting from adjustments submitted on

T+1. The added trade contract lists

show trades that are compared on T+2

and thereafter. NSCC has been advised

that due to the increasingly automated

processing environment, totalled

information is no longer necessary. This

will reduce computer processing time

and therefore will also diminish

production costs. These modifications

are scheduled to take place in April of

1998.

NSCC believes that the proposed rule

change is consistent with the

requirements of the Act and the rules

and regulations thereunder since it will

facilitate the prompt and accurate

clearance and settlement of securities

transactions and, in general, will protect

investors and the public interest.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

NSCC does not believe that the

proposed rule change will have an

impact on or impose a burden on

competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants, or Others

No written comments relating to the

proposed rule change have been

solicited or received. NSCC will notify

the Commission of any written

comments received by NSCC.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within thirty-five 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 ninety 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 NSCC 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.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 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 in

the Commission’s Public Reference

Room, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of NSCC. All submissions should

refer to the file number SR–NSCC–97–

14 and should be submitted by February

28, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–1976 Filed 1–27–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39564; File No. SR–NYSE–

97–30]

Self-Regulatory Organizations; New

York Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change and Notice of Filing and Order

Granting Accelerated Approval of

Amendment No. 1 to Proposed Rule

Change To Amend and To Make

Permanent the Allocation Policy and

Procedures Pilot Program

January 20, 1998.

I. Introduction

On October 20, 1997, the New York

Stock Exchange, Inc. (‘‘NYSE’’ or

‘‘Exchange’’) submitted to 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 and to obtain permanent

approval of the Exchange’s Allocation

Policy and Procedures pilot program.

The proposed rule change was

published for comment in the Federal

Register on November 7, 1997.3 No

comments were received on the

proposal. On January 2, 1998, the NYSE

submitted Amendment No. 1 to the

proposed rule change.4 This order

approves the proposed rule change and

approves Amendment No. 1 on an

accelerated basis.

II. Background and Description of the

Proposal

The Exchange’s Allocation Policy and

Procedures (‘‘Policy’’) are intended: (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 ongoing

enhancement of performance by
4338 Federal Register / Vol. 63, No. 18 /Wednesday, January 28, 1998 / Notices

5See Securities Exchange Act Release No. 38372,

62 FR 13421 (March 21, 1997) (notice of filing and

immediate effectiveness of File No. SR–NYSE–97–

04). On April 16, 1997, the Exchange filed another

proposed change to its Policy not covered under the

pilot program. See Securities Exchange Act Release

No. 38828 (July 9, 1997) 62 FR 39043 (July 21, 1997)

(order approving File No. SR–NYSE–97–12).

6See Securities Exchange Act Release Nos. 39206

(October 6, 1997) 62 FR 53679 (October 15, 1997)

(notice of filing and order granting accelerated

approval of File No. SR–NYSE–97–27); and 39368

(November 26, 1997) 62 FR 64613 (December 8,

1997) (notice of filing and immediate effectiveness

of File No. SR–NYSE–97–32).

7The current Policy does require specialist units

to describe in their allocation applications any

contacts with the listing company with regard to its

prospective listing on the Exchange within six

months prior to the date that allocation applications

are solicited. According to the NYSE, such contacts

are among the factors considered by the Allocation

Committee in allocating a stock to a specialist unit

or selecting a unit to be interviewed by the listing

company. See Amendment No. 1, supra note 4.

8See Amendment No. 1 supra note 4.

9According to the NYSE, staff of its Listing

Department will continue to attend interviews

between listing companies and specialist units. In

addition, Exchange Regulatory staff will randomly

attend interviews for two listings each month and

conduct meetings with members of the Exchange’s

Listings staff to educate them on regulatory issues.

See Amendment No. 1, supra note 4.

10The NYSE also proposed to amend the Policy

to invite a listing company to include in its letter

any preference that its stock not be traded by

specialist units which trade competitors’ stock. In

Amendment No. 1, the NYSE deleted all reference

to any preferences the listing company may have

with respect to the units trading competitors’ stock.

Listing companies will not, however, be prohibited

from stating such a preference in letters sent to the

Allocation Committee. See Amendment No. 1,

supra note 4.

specialist units; (3) to provide the best

possible match between specialist unit

and security; and (4) to contribute to the

strength of the specialist system. On

February 28, 1997, the Exchange

proposed to change the Policy to allow

greater listing company input. On

March 7, 1997, the Commission

approved the proposal as a seven-month

pilot program, effective until October 7,

1997.5 Subsequently, the Commission

has approved two extensions of the

Exchange’s pilot program; the current

extension expires January 16, 1998.6

Under the pilot program, listing

companies may: (1) Have the Allocation

Committee select their specialist unit

(‘‘Option 1’’); or (2) make the final

selection of a specialist unit from among

a group of three of five specialist units

selected by the Allocation Committee

(‘‘Option 2’’). In either case, the listing

company may submit a generic letter to

the Allocation Committee which may

describe desired general characteristics

of a specialist unit, but may not mention

particular specialist units. Under Option

2, the listing company meets, either in

person or by teleconference, with the

specialist units selected by the

Allocation Committee within two

business days after their selection. The

listing company must make its decision

as to a specialist unit by the next

business day.

The Exchange is proposing several

changes to the Policy in addition to

requesting permanent approval of the

pilot permitting Option 2. First, when

the listing company selects Option 2,

currently the Allocation Committee will

select a group of three, four or five units

that are the most qualified specialist

units among the units that apply. It is

proposed that if three units are selected,

the Allocation Committee may select an

alternate specialist unit to be among the

group of units that a company may

interview in the event a unit is

eliminated. A specialist unit could be

eliminated if it cannot meet with the

listing company at the appointed time.

A unit chosen as an alternate will be

informed of its status as such. Currently,

the policy is silent regarding this

procedure.

Second, the Exchange is proposing

several changes covering contacts

between specialist units and listing

companies. The NYSE is proposing to

codify in its Policy its prohibition on

contact between listing companies and

specialist units from the time allocation

applications are solicited until

Allocation Committee meetings. The

current Policy is silent regarding contact

between listing companies and

specialist units. However, the NYSE’s

Information Memo No. 97–13 states that

once allocation applications are

distributed, the Exchange expects that

specialist units will have no contact

with the listing companies. The

proposed change would codify this

existing restriction into the Policy

itself.7

The proposal also would allow

specialist units to provide written

material to Exchange staff from the time

of selection of an interviewing pool to

no later than two hours before the

scheduled interview. Exchange staff

would provide the written material to

the listing company on the day of the

interview. The proposal further would

require written material to be limited to

information pertaining to the specialist

unit, and would not permit any

reference to another specialist unit or

units, except overall floorwide statistics.

In addition, the amended proposal

would require periodic, random reviews

of such material by Exchange staff after

the allocation process has been

completed. The NYSE represents that it

will take appropriate regulatory action

should problems with the written

materials provided to listing companies

be disclosed.8

Under the terms of the proposal, a

specialist unit may not supply

information at the interview 9

concerning another specialist unit or

units either orally or in writing, except

it may refer to overall floorwide

statistics. The proposal would permit

any information contained in Exchange

documents to be provided by the unit

orally or in writing on the unit’s

letterhead. Following its interview, the

proposal would prohibit a specialist

unit from having any contact with

listing company and any follow-up

questions by the company regarding

publicly available information on a unit

would be required to be sent to the

Exchange. If the Exchange approves, a

response would be provided. The

proposal provides that the specialist

units in the group of units interviewed

would be advised of such requests.

Third, under the Policy, the listing

company’s letters to the Allocation

Committee can describe characteristics

that focus on the specialist unit rather

than the listing company. According to

the NYSE, letters which describe the

listing company are more helpful to the

Allocation Committee in assessing the

type of specialist unit that would be

appropriate for the company. Therefore,

the Exchange proposes to change the

Policy to require that any letter

submitted by the listing company to the

Allocation Committee focus on the

history and background of the company

and its industry; how the company

historically has funded its operations;

characteristics of its shareholder base

and any unusual trading patterns that

may result therefrom; and any public

information regarding the company’s

plans for the future. The letter may also

include the company’s specific views on

being traded by a specialist unit with

experience in trading in its industry or

country.10

Fourth, under the current policys

within two business days after the

selection of a group of specialist units

by the Allocation Committee, the listing

company must meet with the specialist

unit’s representative. In addition, the

listing company must select its

specialist unit within one business day

of the interview. The Exchange believes

that these time frames have been, at

times, too compressed for company

travel arrangements or preparation by

the specialist units. Accordingly, the

NYSE is proposing to amend this

portion of the policy to permit the listed

company to meet with the selected

group of specialist units’ representatives

up until the close of business on the last

Exchange business day of the week in

which the selection of the group was
Federal Register / Vol. 63, No. 18 /Wednesday, January 28, 1998 / Notices 4339

11This is similar to the Policy’s current approach

to relisting and listed company mergers.

12 15 U.S.C. 78f.

13 In approving this rule, the Commission notes

that it has considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

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

14 15 U.S.C. 78f(b)(5).

15Under the Policy, the Allocation Committee is

required to base allocation decisions on: (1) the

results of the Specialist Performance Evaluation

Questionnaire (‘‘SPEQ’’); (2) objective performance

measures; and (3) the Allocation Committee’s

expert professional judgment in considering the

SPEQ, objective measures of performance, and other

enumerated criteria, such as professional judgment,

listing company input, allocations received, capital

deficiency, disciplinary actions, justifiable

complaints and foreign listing considerations. The

SPEQ includes several facets, including ratings in

the current quarter, improved ratings, and ratings

over time. Objective measures of performance

considered by the Allocation Committee include

dealer participation rates, stabilization, capital

utilization, and near neighbor analysis, as well as

timeliness of regular openings, promptness in

seeking Floor official approval of non-regulatory

delayed openings, timelessness of DOT turnaround,

and response to administrative messages.

16 Id.

17See Amendment No. 1, supra note 4.

made by the Allocation Committee.

Further, the amended proposal provides

that as soon as practicable, following its

meeting with representatives of the

specialist units, the listing company

would be required to select its specialist

unit. If a listing company meets with

any of its specialist units on the last

Exchange business day of the week, it

would be required to make its decision

on that day.

Fifth, the Policy currently permits

telephone interviews at the request of a

listing company. According to the

NYSE, in-person interviews have been

shown to be more effective. Therefore,

under the proposal, telephone

interviews would not be permitted for

domestic listing companies, unless

approved by the Exchange for

compelling circumstances. Telephone

interviews would continue to be

permitted for non-U.S. listing

companies.

Finally, the NYSE is proposing to

change the Policy concerning spin-offs

and related companies. Under the

proposed revisions to the Policy, a

listing company that is a spin-off or

related company may choose to stay

with the specialist unit registered in the

related listed company. Currently,

situations in which a listing company is

a spin-off of or related to a listed

company are handled as new listings,

with allocation open to all specialist

units. Under the terms of the proposal,

if a listing company that is a spin-off or

related company chooses to have the

Allocation Committee select its

specialist, the listing company may

request, and the Allocation Committee

will honor, that it not be traded by the

unit that trades the related listed

company. Alternatively, the proposal

would permit the listing company to

choose Option 2 and request that the

Allocation Committee include or

exclude the specialist unit registered in

the related listed stock from the pool of

specialist units.11

III. Discussion

The Commission finds that the

proposed rule change, as amended, is

consistent with the requirements of

Section 6 of the Act 12 and the rules and

regulations thereunder applicable to a

national securities exchange.13 The

Commission believes that the proposed

rule change is consistent with and

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

of the Act 14 in that it is designed to

perfect the mechanism of a free and

open market and to protect investors

and the public interest.

From the outset, the Commission has

had two primary concerns relating to

the Exchange’s pilot program: (1)

whether the resulting allocations would

be based on objective factors, such as

specialist performance, or influenced by

such factors as promotional efforts of

specialist units; and (2) whether this

new procedure would create the

appearance of impropriety between the

specialist and the listing company and

thereby undermine public confidence in

the integrity of the marketplace. The

Commission approved the new

procedures as a pilot program to give

the NYSE time to gain experience with

the new procedures and to allow both

the Exchange and the Commission

additional time to evaluate the merits of

the program.

After assessing the results of the

NYSE’s pilot program, the Commission

has determined to approve on a

permanent basis the proposed changes

to the Policy. The Commission notes

that there is no evidence of any

problems with the pilot program during

its ten months of operation and the

Commission believes that the Exchange

is applying the established criteria

appropriately. In addition, the

Commission believes that the proposed

amendments implement and enforce

safeguards which should ensure that

inappropriate or prohibited

relationships between specialist units

and listing companies do not develop.

Specifically, the Commission believes

that it is appropriate to continue to

permit listing companies to have the

choice to have greater input in the

selection of the specialist unit that will

trade the companies’ stock. The

Commission notes that listing

companies retain the right to request the

Allocation Committee to select a

specialist unit on their behalf based on

the criteria specified in the Policy.15

The Commission further notes that

under Option 2, where a listing

company has the opportunity to select

its own specialist unit, it must do so

from a group of three to five units that

are selected by the Allocation

Committee as the most qualified

specialist units among the units that

apply based on the criteria in the

Policy.16 Because under either Option,

the allocation criteria, which focuses

primarily on specialist performance,

must be applied by the Allocation

Committee, the Commission believes

that the allocation process will continue

to ensure that the best qualified and

performing units will be rewarded with

allocations.

Second, the NYSE’s proposal contains

several safeguards to ensure the

continued integrity of the allocation

process and that contacts between

specialists and listing companies are

appropriately monitored when Option 2

is used. In this regard, the NYSE’s

proposal codifies in its Policy its

prohibition on contact between listing

companies and specialist units from the

time allocation applications are

solicited until Allocation Committee

meetings. This should help to maintain

the integrity of the allocation process

and ensure that inappropriate contacts

and solicitations are not permitted. The

Commission also notes that the current

Policy requires specialist units to

disclose all contacts with the listing

company within six months of the date

that allocation applications are

solicited. The Commission believes that

it is appropriate for the Allocation

Committee, in allocating a stock to a

specialist unit or selecting units to be

interviewed by the listing company, to

consider prior contacts between the

listing company and the specialist units

as a factor in the decisionmaking

process.17

The Commission further believes that

the provisions of the proposal restricting

written material to information

pertaining to the specialist unit, except

overall floorwide statistics, is reasonable

as it allows specialist units to provide

evidence of their own perceived

strengths and historical performance,

and will help to prevent

unsubstantiated claims against other

units also competing for the allocation.

The NYSE has stated that it will

randomly review the written materials

supplied by specialist units to listing

companies after the allocation process
4340 Federal Register / Vol. 63, No. 18 /Wednesday, January 28, 1998 / Notices

18See Amendment No. 1, supra note 4.

19Regulatory action which the NYSE could

consider would include reallocation of the stock.

20As noted above, under the amended Policy, if

a listing company meets with any of its specialist

units on the last Exchange business day of the

week, it must make its decision on that day.

21Telephone conversation between Donald

Siemer, Director, Rule Development, NYSE, and

Deborah Flynn, Attorney, Division, Commission, on

November 3, 1997.

22The Exchange stated in its filing that in-person

interviews have shown to be more effective.

Accordingly, telephone interviews generally are not

permitted unless the NYSE approves of it for

compelling circumstances. The Exchange has stated

that compelling circumstances would include bad

weather, which may severely hamper a listing

company’s ability to attend a scheduled interview.

Telephone conversation between Donald Siemer,

Director, Rule Development, NYSE, and Deborah

Flynn, Attorney, Division, Commission, on

November 3, 1997.

has been completed to discover any

inaccuracies in the material.18 While the

Commission believes that prior review

by Exchange staff of all written

materials provided to listing companies

would help to ensure that information

provided by specialist units is not false,

misleading, or ambiguous, we note that

specialists are still under a duty to

ensure that their statements, both oral

and written, are not misleading or false.

In light of the NYSE’s representations

that appropriate regulatory action will

be taken in the event that any problems

are discovered, the Commission believes

that it is reasonable for the NYSE to

initially start with a random review by

Exchange staff of written material

provided to listing companies by

specialist units after the allocation

process has been completed.19 If such

reviews disclose problems with

communications, we would expect the

NYSE to consider replacing its review

process with a more comprehensive one

to be conducted prior to the allocation.

In addition, the NYSE represents that

all interviews between specialist units

and listing companies will continue to

be attended by staff of the Exchange’s

Listing Department. Moreover, members

of the Exchange’s Regulatory staff will

randomly attend interviews for two

listings each month and conduct

meetings with members of the

Exchange’s Listings staff to educate

them on regulatory issues. The

Commission believes that the proposed

procedures, without placing too great of

an administrative burden on the

Exchange’s Regulatory staff, should

ensure that any specialist units making

inappropriate remarks to listing

companies at interviews will be subject

to appropriate regulatory action.

Third, the Commission notes, as

described above, that the proposal

would change the requirements for

listing company letters submitted to the

Allocation Committee. Instead of

requiring such letters to describe the

desired characteristics of the specialist

unit, the Policy would be amended to

require such letters to contain detailed

information regarding the background

and operations of the listing company

and its industry. The Commission

agrees with the NYSE that specific

information about the listing company

may better assist the Allocation

Committee in selecting the appropriate

specialist unit(s). The Policy also will

continue to prohibit the listing company

from identifying a specific specialist

unit in its letter to the Allocation

Committee. These requirements together

should ensure that the Allocation

Committee will be able to select the

most qualified units based on the

allocation criteria. Accordingly, the

Commission finds that the proposed

provisions relating to the company’s

letter are consistent with the Act.

Fourth, the Commission notes that the

proposal would generally relax the time

frames during which a listing company

must meet with and select a specialist

unit from the group of units selected by

the Allocation Committee. The

proposed rule allows the listing

company to meet with the selected

group of specialist units’ representatives

by the close of business on the last

Exchange business day of the week in

which the selection of the group was

made, rather than within two business

days. In addition, the Policy is being

changed to permit the listing company

to select its specialist unit as soon as

practicable, as opposed to within one

business day, following its meeting with

representatives of the specialist units.20

The NYSE has represented that most

Allocation Committee meetings occur

on Mondays.21 Accordingly, for most

allocations, listing companies will have

more time to meet (a total of five

business days between Monday and

Friday, rather than two) and select their

specialist unit. The Commission further

notes that should compelling

circumstances prevent the required

meetings within the established time

frames, the proposal grants the

Exchange discretion to permit telephone

interviews for domestic listing

companies.22 Otherwise, the proposal

would permit telephone interviews

solely for non-U.S. listing companies.

The Commission believes that the

proposed time frames are reasonable

and should allow, in most cases,

sufficient opportunity for specialist

units to prepare for the interviews and

for listing companies to arrange to meet

with representatives of the selected

specialist units.

Fifth, the Commission believes that

the Exchange’s deletion of the proposed

sentence in the Policy inviting a listing

company to include in its letter to the

Allocation Committee its preference not

to be traded by specialist units trading

competitors’ stock is appropriate and

consistent with the Act. The

Commission believes that the existence

of the provision would serve only to

encourage the expression of such

preferences and consequently, to

unnecessarily limit the pool of specialist

units to be selected by the Allocation

Committee. In addition, the Commission

does not believe there is any regulatory

reason to prohibit a specialist unit from

trading competitors’ stock. Indeed, a

specialist’s market making expertise in

a certain industry may actually prove to

be a benefit to a listing company.

Although the Policy will not prohibit

listing companies from expressing such

preferences in letters to the Allocation

Committee, the Commission believes

that the absence of the provision in the

Exchange’s Policy should enhance

competition among specialist units to

the benefit of both listing companies

and the Exchange.

Sixth, the proposal allows the

Allocation Committee to select an

alternate unit in cases in which only

three units are selected to be

interviewed. The Commission

recognizes that based on the established

time frames, situations may arise in

which either the listing company or a

particular specialist unit cannot meet at

the appointed time. Accordingly, the

Commission believes that when only

three specialist units are selected by the

Allocation Committee, the selection of

an alternate unit to be interviewed by

the listing company is reasonable and

will ensure an adequate pool from

which to select a specialist.

Finally, the Commission believes that

the NYSE’s proposal to allow a listing

company that is a spin-off of or related

to a listed company to choose to stay

with the specialist unit for the related

company is reasonable because of the

relationship between the spun-off

company and the former company. The

proposal also requires the Allocation

Committee to honor the spin-off

company’s request not to be allocated to

the specialist unit that had traded the

related company’s stock. The

Commission recognizes that both

allowing the spin-off company to stay

with the original specialist unit and

barring the original specialist unit from

receiving the listing does raise some

concerns about ensuring that all

specialist units will be allowed to
Federal Register / Vol. 63, No. 18 /Wednesday, January 28, 1998 / Notices 4341

23 15 U.S.C. 78f(b)(5).

24 15 U.S.C. 78f.

25 15 U.S.C. 78s(b)(2).

26 17 CFR 200.30–3(a)(12).

compete for the allocation on an equal

basis. Nonetheless, the Commission

believes that there may be legitimate

reasons why an unlisted company may

want to remain with the related

company’s specialist unit or may

believe it is more appropriate to be

allocated to a new specialist unit rather

than the one that has dealings with the

related company. For the same reasons,

the Commission believes that the

provisions which allow a listing

company to choose Option 2 and

request that the Allocation Committee

include or exclude the specialist unit

registered in the related listed stock are

reasonable. Accordingly, the

Commission finds these provisions are

consistent with the Act.

The Commission finds good cause for

approving proposed Amendment No. 1

prior to the thirtieth day after the date

of publication of notice of filing thereof

in the Federal Register. The

Commission notes that Amendment No.

1 further clarifies the process by which

listings are allocated to specialist units

and raises no new regulatory issues.

Specifically, Amendment No. 1

interprets the Policy’s provisions

relating to interviews between listing

companies and specialist units, written

materials provided to listing companies

by specialist units, and specialist units’

contact with listing companies during

the six month period prior to the

solicitation of allocation applications

and helps to strengthen the proposal

and ensure compliance with the Policy.

Regarding the deletion of the proposal

to permit listing companies to state their

preference not to be traded by units

trading competitors’ stock, the

Commission notes that the elimination

of this provision, which would have

further restricted the pool of specialist

units to be allocated a particular listing,

raises no issues of regulatory concern.

Finally, the Commission notes that no

comments were received on the

publication of the proposal or at the

time of the approval and subsequent

extensions of the pilot program.

Accordingly, the Commission believes

that good cause exists, consistent with

Section 6(b)(5) of the Act,23 to approve

Amendment No. 1 to the NYSE’s

proposed rule change on an accelerated

basis.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

1. Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 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 in

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of all

such filings will also be available for

inspection and copying at the principal

office of the NYSE. All submissions

should refer to File No. SR–NYSE–97–

30 and should be submitted by February

18, 1998.

V. Conclusion

The Commission believes that the

Exchange’s amended pilot program,

which allow greater listing company

input, has been crafted to ensure that

allocation decisions continue to be

based primarily on specialist

performance and objective criteria. In

addition, the Commission believes that

the procedures adopted by the NYSE in

the Policy will help to identify,

minimize and penalize potential

conflicts arising out of the relationships

between specialist units and listing

companies and ensure the continued

integrity of the allocation process. Based

on this, we believe the permanent

approval of Option 2, along with the

amendments to the Policy, are

reasonable and consistent with the

requirements of the Act applicable to a

national securities exchange, and in

particular, with the requirements of

Section 6 of the Act 24 and the rules and

regulations thereunder.

It is therefore ordered, pursuant to

section 19(b)(2) of the Act,25 that the

proposed rule change (SR–NYSE–97–

30), including Amendment No. 1, is

approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.26

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–1974 Filed 1–27–98; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Deadline for Submission of Application

for Airport Grant Funds Under the

Airport Improvement Program (AIP) for

Fiscal Year 1998

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Notice.

SUMMARY: The Federal Aviation

Administration (FAA) announces May

1, 1998, as the deadline for having on

file with the FAA an acceptable

application for airport grant funds under

the AIP for fiscal year 1998.

FOR FURTHER INFORMATION CONTACT:

Mr. Stanley Lou, Manager, Programming

Branch, Airports Financial Assistance

Division, Office of Airport Planning and

Programming, APP–520, on (202) 267–

8809.

SUPPLEMENTARY INFORMATION: Section

47105(f) of Title 49, United States Code,

provides that the sponsor of each airport

to which entitlement funds are

apportioned shall notify the Secretary,

by such time and in a form as prescribed

by the Secretary, of the sponsor’s intent

to apply for passenger and cargo

entitlement funds. Notification of the

sponsor’s intent to apply during fiscal

year 1998 for any of its entitlement

funds, including those unused from

prior years, shall be in the form of a

project application (SF 424) submitted

to the FAA field office no later than May

1, 1998.

This notice is promulgated to

expedite and prioritize grants in the

final quarter of the fiscal year. Absent an

acceptable application by May 1, FAA

intends to defer an airport’s entitlement

funds until the next fiscal year.

Issued in Washington, DC, January 22,

1998.

Stan Lou,

Manager, Programming Branch.

[FR Doc. 98–2015 Filed 1–27–98; 8:45 am]

BILLING CODE 4910–13–M

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Notice of Passenger Facility Charge

(PFC) Approvals and Disapprovals

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Monthly Notice of PFC

Approvals and Disapprovals. In

December 1997, there were seven

applications approved. This notice also

includes information on two