Document ID: SEC-2008-1410-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2008-10-10T04:00Z

[Federal Register: October 10, 2008 (Volume 73, Number 198)]
[Notices]               
[Page 60378-60380]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10oc08-146]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58741; File No. SR-NYSE-2008-97]

 
Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by New York Stock Exchange LLC To Adopt an Initial Listing 
Standard Applicable Only to Companies Transferring From NYSE Arca

 October 6, 2008.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on October 1, 2008, New York Stock Exchange LLC (the 
``NYSE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission the proposed rule changes 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 changes from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Section 102.01C of the Exchange's 
Listed Company Manual (the ``Manual'') to adopt an initial listing 
standard that will be applicable only to companies that are listed on 
NYSE Arca, Inc. (``NYSE Arca'') as of October 1, 2008 and that transfer 
to the Exchange on or before March 31, 2009. The Exchange also proposes 
to apply the continued listing standard applicable under Section 
802.01B to companies listed under the Earnings Test to companies listed 
under the proposed new initial listing standard.\4\
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    \4\ The Commission notes that NYSE is also proposing to adopt a 
new initial listing standard for operating companies. See Securities 
Exchange Act Release No. 58740 (October 6, 2008) (SR-NYSE-2008-98).

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[[Page 60379]]

    The text of the proposed rule change is available at http://
www.nyse.com, the NYSE, and the Commission's Public Reference Room.

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 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
    The Exchange proposes to amend Section 102.01C of the Manual to 
adopt an initial listing standard that will be applicable only to 
companies that are listed on NYSE Arca, Inc. (``NYSE Arca'') as of 
October 1, 2008 and that transfer to the Exchange on or before March 
31, 2009. The Exchange also proposes to apply the continued listing 
standard applicable under Section 802.01B to companies listed under the 
Earnings Test \5\ to companies listed under the proposed new initial 
listing standard.
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    \5\ As set forth in Section 802.01B(1) of the Manual.
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    Upon completion of its acquisition of the American Stock Exchange 
(to be renamed NYSE Alternext US LLC at the time of the acquisition), 
NYSE Euronext will have three equity listing markets: The NYSE; NYSE 
Arca; and NYSE Alternext US. NYSE Euronext management has made a 
strategic business decision to move forward with only two operating 
company equity listing markets and, consequently, has decided to 
discontinue the operating company equity listing program on NYSE Arca. 
As part of this transition, the Exchange wishes to offer the 
opportunity to list on the NYSE to all suitable NYSE Arca companies. 
NYSE Arca listed companies wishing to transfer to the NYSE will be 
required to submit a listing application and be subject to the same 
listing application process as all other applicant companies. Most 
companies currently listed on NYSE Arca would meet the NYSE's continued 
listing requirements set forth in Section 802.01B of the Manual for 
companies listed under the Exchange's Earnings Test.\6\ However, a 
number of these companies that meet the NYSE's continued listing 
standards do not qualify to list under any of the existing NYSE initial 
listing standards. In order to list these companies, the Exchange 
proposes to adopt a special listing standard applicable only to those 
companies listed on NYSE Arca on the date of initial submission of this 
filing and the Exchange would only utilize this standard for a brief 
period, ending on March 31, 2009.
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    \6\ Companies listed under the Earnings Test are considered to 
be below compliance standards if their average global market 
capitalization over a consecutive 30 trading-day period is less than 
$75,000,000 and, at the same time, total stockholders' equity is 
less than $75,000,000. In addition Section 802.01B requires all 
listed companies to maintain a minimum of $25 million in global 
market capitalization and Section 802.01C requires all listed 
companies to maintain a $1.00 minimum stock price. The Exchange 
represents that the holders, trading volume and publicly-held shares 
requirements of Section 802.01A along with the requirements of 
Sections 802.01D (``Other Criteria'') and 802.01E (``SEC Annual 
Report Timely Filing Criteria'') would also apply. Telephone 
conversation between John Carey, Chief Counsel, NYSE and David J. 
Michehl, Special Counsel, Division of Trading and Markets, 
Commission on October 6, 2008.
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    Companies transferring from NYSE Arca under the proposed standard 
(the ``NYSE Arca Transfer Standard'') would be required to have $75 
million in total market capitalization for 90 consecutive days prior to 
applying for listing and $20 million in market value of publicly-held 
shares (but not the $100 million market value of publicly-held shares 
requirement of Section 102.01B). Such companies would have to meet the 
holders, publicly-held shares and trading volume requirements as set 
forth in Section 102.01A as companies that list under the existing 
initial listing standards and the $4 stock price requirement of Section 
102.01B.\7\
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    \7\ The total market capitalization and market value of 
publicly-held shares requirements of the NYSE Arca Transfer Standard 
equal those of Amex Initial Listing Standard 4 (Amex Company Guide 
Section 101(d)).
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    The Exchange believes it is appropriate to adopt a short-term 
listing standard applicable only to NYSE Arca companies. These 
companies listed on NYSE Arca on the assumption that it would exist as 
a permanent listing market and it is solely because of a business 
decision made by NYSE Euronext that these companies will need to 
transfer their listings. Many of these companies listed on NYSE Arca 
because of its association with the NYSE and in the expectation that 
they would ultimately switch their listing to the NYSE when they met 
the NYSE's listing standards. As such, the Exchange believes that 
fairness dictates that it should seek to list these companies on the 
NYSE where such a listing is appropriate and in the interests of the 
investing public.
    The NYSE will only list companies under the NYSE Arca Transfer 
Standard if it believes that those companies are suitable for trading 
on the NYSE. All of the companies that would be listed under the NYSE 
Arca Transfer Standard will far exceed the NYSE's continued listing 
standards at the time of initial listing and will be in compliance with 
NYSE Arca continued listing standards. In addition, the same staff in 
NYSE Regulation's Financial Compliance and Corporate Governance groups 
is responsible for ongoing compliance reviews of both NYSE and NYSE 
Arca companies. As such, the NYSE Regulation staff involved in making 
initial listing determinations on the NYSE is extremely familiar with 
the companies currently listed on NYSE Arca and is uniquely positioned 
to determine whether those companies are suitable for listing on the 
NYSE. The Exchange believes its depth of knowledge with respect to NYSE 
Arca companies makes it appropriate to list them on this one time basis 
under a less onerous standard than the Exchange applies to other 
listing applicants. Companies listing under the NYSE Arca Transfer 
Standard will be subject to the standard listing application and review 
process applicable to all listing applicants and, if Exchange staff 
determine that an NYSE Arca company is not suitable for listing on the 
NYSE--notwithstanding its qualification under the numerical 
requirements of the NYSE Arca Transfer Standard--the Exchange will not 
list that company.
    The requirements of the NYSE Arca Transfer Standard will exceed 
those established by the Exchange Act Rule 3a51-1(a)(2) (the ``Penny 
Stock Rule'').\8\ The proposed standard's requirement that an applicant 
have $75 million in global market capitalization for 90 days prior to 
transferring from NYSE Arca exceeds the $50 million market 
capitalization for 90 days prior to listing option in the Penny Stock 
Rule, as well as the $50 million market capitalization requirement of 
Rule 3a51-1(a)(2)(i)(B). In addition, companies listing under the NYSE 
Arca Transfer Standard will be required at the time of transfer to have 
a $4 stock price, 400 round lot holders and 1.1 million publicly held 
shares, thereby meeting or exceeding all of the

[[Page 60380]]

Penny Stock Rule's remaining requirements.
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    \8\ 17 CFR 240.a51-1(a)(ii).
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    Companies listing under the NYSE Arca Transfer Standard will have 
to comply with all other applicable Exchange listing rules, including 
the Exchange's corporate governance requirements. As with all other 
listing applicants, the Exchange reserves the right to deny listing to 
any company seeking to list under the NYSE Arca Transfer Standard if 
the Exchange determines that the listing of any such company is not in 
the interests of the Exchange or the public interest.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \9\ that an exchange have rules that 
are designed to prevent fraudulent and manipulative acts and practices, 
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 
Exchange believes that the proposed amendment is consistent with the 
protection of investors and the public interest in that the 
requirements of the NYSE Arca Transfer Standard are sufficiently 
stringent that the proposed amendment will not lead to the listing of 
any companies that are not suited for listing on the NYSE. In addition, 
the proposal applies for a very brief period to a small number of 
companies that are subject to unique and disadvantageous circumstances.
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    \9\ 15 U.S.C. 78f(b)(5).
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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 purpose of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 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 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, including whether the proposed rule 
change is consistent with the Exchange 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-2008-97 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2008-97. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. 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-2008-97 and should be 
submitted on or before October 31, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-24178 Filed 10-9-08; 8:45 am]

BILLING CODE 8011-01-P