Document ID: SEC-2008-0185-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2008-02-05T05:00Z

[Federal Register: February 5, 2008 (Volume 73, Number 24)]
[Notices]               
[Page 6755-6757]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05fe08-97]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57232; File No. SR-NYSE-2008-08]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to Listed Company Manual Section 806.01 (Change of Specialist 
Unit Upon Request of Company)

January 30, 2008.
    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 January 22, 2008, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by the Exchange. 
The Exchange has designated the proposed rule change as ``non-
controversial'' under Section 19(b)(3)(A)(iii)\3\ of the Act and Rule 
19b-4(f)(6) thereunder,\4\ which renders the proposal effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend Listed Company Manual Section 
806.01 to eliminate the mediation procedure required when a listed 
company requests a change of its specialist firm.
    The text of the proposed rule changes is available on the 
Exchange's Web site (http://www.nyse.com), at the Exchange's Office of 

the Secretary, and at the Commission's Public Reference Room.

[[Page 6756]]

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. The 
text of these statements may be examined at the places specified in 
Item IV below. NYSE has prepared summaries, set forth in Sections A, B, 
and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Through this filing, the NYSE seeks to amend Listed Company Manual 
Section 806.01 to eliminate the mediation procedure required when a 
listed company requests a change of its specialist firm.
Current Operation of Section 806.01
    Listed Company Manual Section 806.01 currently provides that a 
listed company (or issuer) must file written notice with the Corporate 
Secretary of the Exchange in order to request a change of the 
specialist firm assigned to trade its security.\5\ The NYSE currently 
notifies the subject specialist firm that a Change of Specialist 
Mediation will commence, and a copy of the issuer's written notice is 
provided to the specialist firm.\6\ The specialist firm then has two 
weeks from receipt of the notice of the listed company's request to 
submit a written response to the Exchange's Corporate Secretary.\7\ The 
Corporate Secretary provides copies of the listed company's notice and 
any response submitted by the specialist firm to the Exchange's New 
Listings & Client Service Division and to the Regulatory Group.\8\ The 
Regulatory Group reviews the notice from the listed company and any 
specialist response to consider any regulatory issues.\9\
---------------------------------------------------------------------------

    \5\ Listed Company Manual Section 806.01(a).
    \6\ Listed Company Manual Section 806.01(b).
    \7\ Listed Company Manual Section 806.01(b).
    \8\ Listed Company Manual Sections 806.01(a) and (b).
    \9\ Listed Company Manual Section 806.01(c) provides that the 
Regulatory Group may refer the matter for review by the Regulatory 
Oversight Committee. In the event of review by the Regulatory 
Oversight Committee, no change of specialist firm may occur until 
the Regulatory Oversight Committee makes its final determination. 
See id. In February 2006, after NYSE's business combination with 
Archipelago Holdings, Inc., the Exchange's Regulatory Group was 
incorporated as a separate not-for-profit entity, NYSE Regulation, 
Inc., with an independent board of directors. See Securities 
Exchange Act Release No. 53382 (February 27, 2006), 71 FR 11251 
(March 6, 2006) (SR-NYSE-05-77). Pursuant thereto, the oversight 
functions performed by the Regulatory Oversight Committee are now 
vested in the Board of Directors of NYSE Regulation, Inc. (``NYSER 
Board of Directors''). See id.
---------------------------------------------------------------------------

    Concurrent with the regulatory review, the Exchange facilitates a 
mediation of the issues that have arisen between the listed company and 
the specialist firm by appointing a committee of senior members of the 
Exchange's constituency, including at least one floor broker 
representative from the Exchange's Board of Executives (``BOE''), one 
BOE investor representative, and one BOE listed company 
representative.\10\ The Committee meets with both the listed company 
and the specialist firm to mediate the matters indicated in the listed 
company's notice.\11\ During the mediation process, the listed company 
may file with the Exchange's Corporate Secretary its desire to remain 
with the specialist firm and conclude the mediation.\12\
---------------------------------------------------------------------------

    \10\ Listed Company Manual Section 806.01(c) and (d). Pursuant 
to the NYSE's business combination with Archipelago Holdings, Inc., 
the BOE was dissolved. Duties previously assigned to the BOE were 
generally assumed by the Executive Floor Governors. See Securities 
Exchange Act Release No. 53382 (February 27, 2006), 71 FR 11251 
(March 6, 2006) (SR-NYSE-05-77).
    \11\ Listed Company Manual Sections 806.01(d) and (e).
    \12\ Listed Company Manual Section 806.01(f).
---------------------------------------------------------------------------

    If the issues have not been resolved within three months after the 
Specialist Response Date, the listed company may file written notice 
signed by the company's chief executive officer that it wishes to 
proceed with the change of its specialist firm.\13\ Once the listed 
company confirms its request to change its specialist firm after the 
mediation period, the security will be put up for reallocation as soon 
as practicable, in accordance with Exchange Rule 103B.\14\
---------------------------------------------------------------------------

    \13\ Listed Company Manual Section 806.01(g). The specialist 
firm has two weeks from receipt of the notice of the listed 
company's request to change firms to submit a written response to 
the Exchange's Corporate Secretary. See Listed Company Manual 
Section 806.01(b). The last day of that two-week period is referred 
to as the ``Specialist Response Date.'' See id.
    \14\ Listed Company Manual Section 806.01(g).
---------------------------------------------------------------------------

Proposed Changes to Mediation Process
    The Exchange seeks to simplify the existing procedures for 
reallocating securities based upon the request of the listed company by 
eliminating the mediation process contained in Section 806.01 as 
described above.
    NYSE proposes to amend Section 806.01 to permit a listed company 
that seeks to change the specialist firm responsible for making a 
market in its security to simply file a written notice with the 
Exchange's Corporate Secretary requesting the change. The notice should 
include the reasons for the change. The Exchange's Corporate Secretary 
will provide copies of the notice to NYSE Regulation, Inc. (``NYSER'') 
and the Exchange's Global Corporate Client Group. Upon receipt of the 
notice, the Exchange would proceed to reallocate the security in 
accordance with the procedures of Exchange Rule 103B.
    The proposed amendment would retain the mechanism for NYSER to 
review such requests or refer the matter for consideration of the 
relevant regulatory issues to the NYSER Board of Directors. NYSE also 
proposes to amend Section 806.01 to reflect the current structure of 
NYSER.
    The Exchange believes that the management of the business 
relationship between a specialist firm and its listed company is more 
appropriately left to direct communications between the specialist firm 
and the listed company. Currently, specialist firms maintain corporate 
relations groups that serve to provide listed companies with 
information and act as liaisons between the listed company and the 
specialist firm. Listed company concerns are usually first raised with 
the specialist firms in this forum. Once the listed company has taken 
the affirmative step to formally request reallocation, it is clear that 
further mediation will not be productive. The Exchange therefore seeks 
to promote a more efficient administration of the NYSE reallocation 
process by allowing the listed companies to proceed directly to 
reallocation without a required intervention period by the Exchange.
    Finally, within Section 806.01, the Exchange seeks to change the 
word ``unit,'' as it relates to specialist corporate entities, to the 
word ``firm.''\15\ The Exchange believes that the word ``firm'' more 
accurately describes the specialist corporate entity.
---------------------------------------------------------------------------

    \15\ For other Sections of the Listed Company Manual, the 
Exchange will change references to specialist ``units'' as those 
Sections are updated.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the basis under the Act for this 
proposed rule change is the requirement under Section 6(b)(5)\16\ 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

[[Page 6757]]

general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
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 proposed rule change does not: (i) Significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days after the date of filing, or such shorter time as the Commission 
may designate if consistent with the protection of investors and the 
public interest, the proposed rule change has become effective pursuant 
to Section 19(b)(3)(A) of the Act\17\ and subparagraph (f)(6) of Rule 
19b-4 thereunder.\18\
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing.\19\ 
However, Rule 19b-4(f)(6)(iii)\20\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has satisfied the five-
day prefiling requirement.\21\ In addition, the Exchange has requested 
that the Commission waive the 30-day pre-operative delay and designate 
the proposed rule change to become operative upon filing.
---------------------------------------------------------------------------

    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ Id.
    \21\ Id.
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it would allow the Exchange to immediately implement this 
proposal and would simplify the existing procedures for reallocating 
securities based upon the request of the listed company by eliminating 
the mediation process contained in Section 806.01. The Commission 
designates the proposal to become effective and operative upon 
filing.\22\
---------------------------------------------------------------------------

    \22\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the impact of the proposed rule on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in the 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, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
 ); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-NYSE-2008-08 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2008-08. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml 

). Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room on official business days between 
the hours of 10 a.m. and 3 p.m. Copies of such filing also will be 
available for inspection and copying at the principal office of NYSE. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-NYSE-2008-08 
and should be submitted on or before February 26, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
---------------------------------------------------------------------------

    \23\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-1999 Filed 2-4-08; 8:45 am]

BILLING CODE 8011-01-P