Document ID: SEC-2009-1187-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend its Public Float Requirement for Initial Public Offerings
Posted Date: 2009-08-21T04:00Z

[Federal Register: August 21, 2009 (Volume 74, Number 161)]
[Notices]               
[Page 42348-42350]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21au09-110]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60501; File No. SR-NYSE-2009-80]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Amend its Public Float Requirement for Initial Public Offerings

August 13, 2009.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is 
hereby given that on August 5, 2009, New York Stock Exchange LLC (the 
``NYSE'' or the ``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 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change 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 its market value of publicly-held 
shares requirement for initial public offerings (``IPOs''), spin-offs 
and companies listed under the Exchange's Affiliated Company standard. 
The text of the proposed rule change is available at the Exchange, the 
Commission's Public Reference Room, and http://www.nyse.com.

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
    Section 102.01B of the Manual requires that a company listing at 
the time of its IPO or as a result of a spin-off or under the 
Affiliated Company standard of Section 102.01C(iii) must demonstrate an 
aggregate market value of publicly-held shares (``public float'') of 
$60 million at the time of listing. The Exchange proposes to reduce 
this requirement from $60 million to $40 million. A reduction in the 
public float requirement to $40 million for companies that are new to 
the public markets will enable companies to list that would not meet 
the current $60 million public float requirement but that otherwise 
qualify to list. The proposed lowering of the public float requirement 
would be applicable to real estate investment trusts listed under 
Section 102.05, but not closed-end funds listed under Section 102.04 
(which will continue to be subject to a $60 million public float 
requirement) or special purpose acquisition companies (``SPACs'') 
listed under Section 102.06 (which are subject to a $200 million public 
float requirement). As closed-end funds and SPACs are subject to their 
own separate listing standards and have characteristics that make them 
significantly different from operating companies, the Exchange does not 
believe that it is unfairly discriminatory to apply different public 
float requirements to them than are applicable to operating companies.
    The Exchange believes that the proposed rule change is consistent 
with the protection of investors and the public interest and does not 
raise any novel regulatory issues. The Exchange notes that the proposed 
$40 million public float requirement is higher than the public float 
requirements under the various Nasdaq Global Market initial listing 
standards, which range from $8 million to $20 million.
    The Exchange believes that the proposed amendment does not affect 
the status of NYSE listed securities under Securities Exchange Act Rule 
3a51-1(a) (the ``Penny Stock Rule''),\4\ as the amended standards 
satisfy the requirements of Exchange Act Rule 3a51-1(a)(2).\5\
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    \4\ 17 CFR 240.a51-1(a).
    \5\ 17 CFR 240.a51-1(a)(2).
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    All of the NYSE's equity listing standards meet the stock price and 
distribution requirements of Rule 3a51-1(a)(2), as all of the standards 
require

[[Page 42349]]

companies to have a minimum stock price of $4.00 and at least 1.1 
million publicly-held shares at the time of initial listing. Companies 
are generally required to have 400 round lot holders at the time of 
listing, except that companies listing in connection with a transfer or 
quotation listing may list on the basis of (a) 2,200 total stockholders 
plus an average monthly trading volume of 100,000 shares (for the most 
recent six months) or (b) 500 total stockholders plus an average 
monthly trading volume of one million shares (for the most recent 12 
months).
    The Exchange believes that, in addition to meeting the stock price 
and distribution requirements of Rule 3a51-1(a)(2), all of the 
Exchange's equity listing standards meet or exceed the other applicable 
requirements of that rule. The three-year earnings requirement of the 
Earnings Test exceeds the net income prong of Rule 3a51-
1(a)(2)(i)(A)(3) and the operating history prong of Rule 3a51-
1(a)(2)(i)(B). The $50 million stockholders' equity requirement of the 
Assets and Equity Test exceeds the $5 million in stockholders' equity 
required by Rule 3a51-1(a)(2)(i)(A)(1) and its $150 million global 
market capitalization requirement exceeds the $50 million required by 
the market value of listed securities prong of Rule 3a51-1(a)(2)(i)(B). 
The Exchange's Valuation/Revenue Test, Pure Valuation/Revenue Test, 
Affiliated Company Test and Assets and Equity Test require a global 
market capitalization of $500 million, $750 million, $500 million and 
$150 million, respectively. The Exchange notes that Rule 3a51-
1(a)(2)(i)(A)(2) requires a market value of listed securities of $50 
million calculated over a 90 consecutive day period, while the global 
market capitalization requirements of the Valuation/Revenue Test, Pure 
Valuation/Revenue Test, Affiliated Company Test and Assets and Equity 
Test are measured at a single point in time. However, the $50 million 
in market value of listed securities requirement of Rule 3a51-
1(a)(2)(i)(A)(2) is far lower than the global market capitalization 
requirements of the Exchange's Valuation/Revenue Test, the Pure 
Valuation/Revenue Test, the Affiliated Company Test and the Assets and 
Equity test. Consequently, the Exchange believes that the global market 
capitalization requirements of the Valuation/Revenue Test, the Pure 
Valuation/Revenue Test, the Affiliated Company Test and the Assets and 
Equity Test are comparable to, and arguably more stringent than, the 
$50 million market value of listed securities requirement of Rule 3a51-
1(a)(2).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \6\ of the Securities Exchange Act of 1934 (the 
``Act''),\7\ in general, and furthers the objectives of Section 6(b)(5) 
of the Act,\8\ in particular in that it is designed to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, 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, and is not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers. The Exchange believes that the proposed amendment is 
consistent with the investor protection objectives of the Act in that 
the proposed public float requirement is set at a high enough level 
that only companies that are suitable for listing on the Exchange will 
qualify to list. As closed-end funds and SPACs are subject to their own 
separate listing standards and have characteristics that make them 
significantly different from operating companies, the Exchange does not 
believe that it is unfairly discriminatory to apply different public 
float requirements to them than are applicable to operating companies.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78a.
    \8\ 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 purposes of the Exchange 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: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) does not become 
operative for 30 days after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest, provided that the self-regulatory 
organization has given the Commission written notice of its intent to 
file the proposed rule change at least five business days prior to the 
date of filing of the proposed rule change or such shorter time as 
designated by the Commission, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\ The Exchange's initial listing standards for 
equity listings after adoption of the proposed amendment will continue 
to be as stringent as, or more stringent than, those of other national 
securities exchanges. Consequently, the Exchange believes the proposed 
rule change does not raise any novel regulatory issues or significantly 
affect the protection of investors or the public interest.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, the Commission notes 
that Rule 19b-4(f)(6)(iii) requires a self-regulatory organization 
to give the Commission written notice of its intent to file the 
proposed rule change at least five business days prior to the date 
of filing of the proposed rule change, or such shorter time as 
designated by the Commission. The Exchange has satisfied this 
requirement.
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    At any time within 60 days of the filing of such 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 furtherance of the purposes of the Exchange 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-2009-80 on the subject line.

Paper Comments

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

[[Page 42350]]

All submissions should refer to File Number SR-NYSE-2009-80. 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 such 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-2009-80 and should be 
submitted on or before September 11, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-20130 Filed 8-20-09; 8:45 am]

BILLING CODE 8010-01-P