[Federal Register Volume 60, Number 84 (Tuesday, May 2, 1995)]
[Notices]
[Pages 21578-21580]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10789]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35650; File No. SR-NYSE-95-08]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc., Relating to Listed Company 
Relations Proceedings

April 26, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on March 3, 
1995, the New York Stock Exchange, Inc. (``NYSE'' 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 self-regulatory 
organization. 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 proposed rule change consists of new Rule 103C concerning 
procedures relating to initiation and conduct of a review of the 
relationship between a listed company and its specialist organization. 
The text of the proposed Rule 103C is attached as Exhibit A.

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 Exchange proposes to adopt new Rule 103C (Listed Company 
Relations Proceedings) to provide its listed companies and specialist 
units with a procedure for resolving non-regulatory issues that may 
arise between them. The Exchange believes that the relationship between 
a listed company and its specialist unit is a significant one.
    Specialist units work to foster and promote sound mutual 
understanding and effective communications with their listed companies, 
but situations may occasionally arise in which one or both sides cannot 
easily resolve differences with respect to non-regulatory issues. Such 
issues might include, for example, misunderstandings with respect to 
the frequency and adequacy of communications between a company and its 
specialist unit. Proposed new Rule 103C contains a formal procedure by 
which a listed company could make a written notification (known as an 
``Issuer Notice'') to the Exchange's New Listings and Client Services 
Division of its desire to commence a proceeding to mediate and resolve 
such issues. The Exchange's Quality of Markets Committee (``QOMC''), a 
Board of Directors level committee, would be responsible for oversight 
of the Listed Company Relations Proceeding (``LCRP'') through a 
subcommittee consisting of the two Exchange vice-chairmen, a senior 
Exchange official, and two listed company representatives, all of whom 
would be appointed from the QOMC membership. This subcommittee would 
work with the listed company and the specialist unit through written 
submissions and meetings designed to produce an action plan with 
specific steps for resolution of the matter. At regular intervals of 
three, six and nine months, the subcommittee would work with the 
parties to resolve their issues. The listed company could conclude the 
LCRP at any time during the process if it believed that matters had 
been satisfactorily addressed. [[Page 21579]] 
    If matters were not resolved at the end of one year from the 
commencement of the LCRP, the listed company could formally request a 
reassignment of its stock to another specialist unit. The subcommittee 
would prepare a recommendation to the QOMC as to whether it is 
appropriate to reassign the stock. The QOMC would review the 
recommendation and give the parties an additional opportunity to 
present their views in writing. It would then make a recommendation to 
the Exchange's Board of Directors. The Board could also afford the 
parties an opportunity to present their views in writing. The Board 
would then determine whether the stock should be reassigned. If the 
stock were to be reassigned, the Board would direct the Exchange's 
Allocation Committee to reallocate it. The then current specialist unit 
and the unit of any specialist member of the Board would not be 
permitted to apply for allocation of the stock. Proposed Rule 103C also 
provides that no reference to the LCRP or the Board's action would be 
retained in the information maintained by the Allocation Committee 
regarding the then current specialist unit. The rule further provides 
that the specialist unit subject to a reallocation would not be 
afforded any preferential treatment in subsequent allocations as a 
result of a reallocation pursuant to the rule.
2. Statutory Basis
    The basis under the Act for the 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, in general, to protect investors and the public interest. The 
adoption of Rule 103C is consistent with these objectives in that it 
would enhance the Exchange's ability to foster closer relationships 
between its specialists and their listed 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 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

    Within 35 days of the publication of this notice in the Federal 
Register or within such other period (i) as the Commission may 
designate up to 90 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 the self-regulatory organization consents, the Commission will:
    (A) By order approve the 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 coping at the 
Commission's Public Reference Section, 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 the NYSE. All 
submissions should refer to File No. SR-NYSE-95-08 and should be 
submitted by May 23, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.

Exhibit A--New Rule 103C: Listed Company Relations Proceedings

    (a) A listed company may file with the New Listings & Client 
Service Division a written notification (``Issuer Notice''), signed 
by the company's chief executive officer, that it wishes to commence 
a proceeding whereby the Quality of Markets Committee (``QOMC'') 
shall attempt to mediate and resolve non-regulatory issues that have 
arisen between the company and its assigned specialist unit. The 
Issuer Notice shall indicate the specific issues sought to be 
mediated and resolved, and what steps, if any, have been taken to 
try to address them before the filing of the Issuer Notice.
    (b) The QOMC shall refer the Issuer Notice to its Listed Company 
Relations Subcommittee (the ``Subcommittee'') which shall consist of 
two listed company members of the QOMC, as well as a senior officer 
and two vice-chairmen of the Exchange, provided these individuals 
are also members of the QOMC. The Subcommittee shall review the 
Issuer Notice and shall notify the subject specialist unit that a 
Listed Company Relations Proceeding (``LCRP'') is being commenced 
pursuant to this rule, and that the LCRP shall run for one year from 
the date of notice to the specialist unit, unless concluded earlier 
by the listed company. The specialist unit shall be provided with a 
copy of the Issuer Notice, and shall be given two weeks within which 
to submit a written response to the Subcommittee.
    (c) After the two-week period for a response from the subject 
specialist unit, the Subcommittee shall meet with representatives of 
the listed company and the specialist unit that are parties to the 
LCRP, and shall identify specific steps that may be taken to mediate 
and resolve matters indicated in the Issuer Notice.
    (d) The parties to the LCRP shall each submit a written report 
to the Subcommittee no later than three months from the date the 
LCRP is commenced with respect to all matters indicated in the 
Issuer Notice, and any other matter that either party believes may 
have a bearing on the LCRP. The listed company may give written 
notice that it is concluding the LCRP at any time if it believes 
matters have been satisfactorily addressed. If the listed company 
wishes the LCRP to continue, it must so state. After receiving the 
written reports from the parties to the LCRP, the Subcommittee shall 
then advise the QOMC, as appropriate. The Subcommittee may meet 
further with the parties to the LCRP, and identify such other 
specific steps that may be taken to resolve matters, as it deems 
appropriate. The same process shall be followed at six and nine 
month intervals from the date the LCRP is commenced, unless the 
listed company has chosen to conclude the LCRP.
    (e) At the end of one year from the commencement of the LCRP, 
the listed company shall, in writing, either (i) inform the 
Subcommittee that it wishes to conclude the LCRP; or (ii) inform the 
Subcommittee that matters between it and its specialist unit remain 
unresolved, and that it wishes that its stock be assigned to a 
different specialist unit. The Subcommittee shall prepare a report 
to the QOMC recommending either that (i) the LCRP should be 
concluded; or (ii) that the listed company's stock should be 
assigned to a different specialist unit.
    (f) The QOMC shall review the report prepared by the 
Subcommittee and shall give the parties to the LCRP an opportunity 
to present their views in writing. The QOMC shall then make a 
recommendation to the Exchange's Board of Directors as to the 
disposition of the LCRP, including a recommendation as to whether 
the listed company's stock should be assigned to a different 
specialist unit.
    (g) The Exchange's Board of Directors shall review the QOMC's 
recommendation and may give the parties to the LCRP an 
[[Page 21580]] opportunity to present their views in writing. The 
Board of Directors shall then determine the appropriate disposition 
of the LCRP, and may, if it deems such action to be in the best 
interests of the Exchange, direct that the Allocation Committee 
reallocate the listed company's stock to a different specialist 
unit. The currently-assigned specialist unit and the member 
organization of any specialist member of the Board of Directors 
shall be precluded from applying to be allocated the stock. No 
reference to the LCRP or the Board's action shall be retained in the 
information maintained by the Allocation Committee with respect to 
the currently-assigned specialist unit, and the currently-assigned 
specialist unit shall not be afforded preferential treatment in 
subsequent allocations as a result of a reallocation pursuant to 
this rule.

[FR Doc. 95-10789 Filed 5-1-95; 8:45 am]
BILLING CODE 8010-01-M