Document ID: SEC-2009-0321-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2009-03-11T04:00Z

[Federal Register: March 11, 2009 (Volume 74, Number 46)]
[Notices]               
[Page 10636-10638]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11mr09-156]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59510; File No. SR-NYSE-2009-21]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC To 
Temporarily Suspend Its Price Continued Listing Standard and Extend the 
Period of the Temporary Lowering of Its Average Global Market 
Capitalization Continued Listing Standard

March 4, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on February 26, 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 and II below, which Items have been prepared by the Exchange. 
The Exchange has designated this proposal eligible for immediate 
effectiveness pursuant to Rule 19b-4(f)(6) \3\ under the Exchange Act. 
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\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to (i) suspend until June 30, 2009, the 
application of its price criteria for capital and common stock set 
forth in Section 802.01C of the Exchange's Listed Company Manual (the 
``Manual''), and (ii) extend until the same date the temporary lowering 
of the average market capitalization requirement of Section 802.01B of 
the Manual. The text of the proposed rule change 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.

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
    In recent months, the U.S. and global equities markets have 
experienced extreme volatility and a precipitous decline in trading 
prices of many securities. As a consequence of these market conditions, 
the Exchange has experienced an unusually high number (as compared to 
historical levels) of listed companies having stock prices that have 
either fallen below the Exchange's $1.00 price requirement for capital 
and common stock set forth in Section 802.01C of the Manual (i.e., the 
average closing price of their stock has fallen below $1.00 over a 
consecutive 30 trading day period) \4\ or having an average closing 
stock price that is below $2.00. In response, the Exchange proposes to 
suspend the application of the stock price requirement of Section 
802.01C until June 30, 2009. This proposed suspension will provide 
temporary relief to companies in response to the extreme volatility and 
a precipitous decline in trading prices of many securities experienced 
in the U.S. and global equities markets, which the Commission had 
acknowledged constituted a threat to the fair and orderly functioning 
of the securities markets and could lead to a crisis of confidence 
among investors regarding the viability of companies whose stock prices 
have declined significantly.\5\
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    \4\ Section 802.01C provides that a company will be considered 
to be below compliance standards if the average closing price of a 
security as reported on the consolidated tape is less than $1.00 
over a consecutive 30 trading day period. Once notified, the company 
must bring its share price and average share price back above $1.00 
by six months following receipt of the notification. A company is 
not eligible to follow the cure procedures outlined in Sections 
802.02 and 802.03 with respect to this criteria. The company must, 
however, notify the Exchange, within 10 business days of receipt of 
the notification, of its intent to cure this deficiency or be 
subject to suspension and delisting procedures. In the event that at 
the expiration of the six-month cure period, both a $1.00 share 
price and a $1.00 average share price over the preceding 30 trading 
days are not attained, the Exchange will commence suspension and 
delisting procedures. Notwithstanding the foregoing, if a company 
determines that, if necessary, it will cure the price condition by 
taking an action that will require approval of its shareholders, it 
must so inform the Exchange in the above referenced notification, 
must obtain the shareholder approval by no later than its next 
annual meeting, and must implement the action promptly thereafter. 
The price condition will be deemed cured if the price promptly 
exceeds $1.00 per share, and the price remains above the level for 
at least the following 30 trading days.
    \5\ See, e.g., Securities Exchange Act Release No. 58588 
(September 18, 2008), 73 FR 55174 (September 24, 2008) (``The 
Commission is aware of the continued potential of sudden and 
excessive fluctuations of securities prices and disruption in the 
functioning of the securities markets that could threaten fair and 
orderly markets. Given the importance of confidence in our financial 
markets as a whole, we have also become concerned about sudden and 
unexplained declines in the prices of securities. Such price 
declines can give rise to questions about the underlying financial 
condition of an issuer, which in turn can create a crisis of 
confidence without a fundamental underlying basis. This crisis of 
confidence can impair the liquidity and ultimate viability of an 
issuer, with potentially broad market consequences.'').
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    Under the proposed suspension of the Exchange's stock price 
continued listing standard, companies will not be notified of new 
events of noncompliance with the price requirement during the 
suspension period. Companies that are in a compliance period at the 
time of commencement of the suspension \6\ will still be deemed to have 
regained compliance during the rule suspension period if, at the 
expiration of their respective six-month cure periods established prior 
to the commencement of the rule suspension, they have a $1.00 closing 
share price on the last trading day of the period and a $1.00 average 
share price based on the preceding 30 trading days. In addition, any 
company that is in a compliance period at the time of commencement of 
the rule suspension can return to compliance during the suspension if 
at the end of any calendar month during the suspension such company has 
a $1.00 closing share price on the last

[[Page 10637]]

trading day of such month and a $1.00 average share price based on the 
30 trading days preceding the end of such month.\7\ Any company that is 
in a compliance period at the time of commencement of the rule 
suspension that does not regain compliance during the suspension period 
will recommence its compliance period upon reinstitution of the stock 
price continued listing standard and receive the remaining balance of 
its compliance period.\8\ Following the temporary rule suspension, any 
new events of noncompliance with the Exchange's stock price continued 
listing standard would be determined based on a consecutive 30 trading-
day period commencing on June 30, 2009.
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    \6\ The Exchange notes that there are not currently any 
companies in the Exchange's delisting appeal process that have been 
sent a delisting notification for noncompliance with the dollar 
price continued listing requirement. The Exchange also notes that it 
would continue to identify companies in a compliance period as below 
compliance for price, including by continuing to append an indicator 
to the company's stock ticker to identify it as being below 
compliance for price and including the company on a list of 
companies that are below compliance for price posted to the 
Exchange's Web site, unless the company regains compliance during 
the suspension. A company would continue to be subject to delisting 
for failure to comply with other listing requirements.
    \7\ A company would continue to be subject to delisting for 
failure to comply with other listing requirements.
    \8\ For example, if a company is four months into its compliance 
period for noncompliance with the price continued listing standard 
when the suspension starts and the company does not regain 
compliance during the suspension, the company would have an 
additional two months starting on June 30, 2009, to regain 
compliance.
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    In response to the current unusual market conditions, the Exchange 
previously adopted a policy (by means of an immediately effective rule 
filing \9\) providing that, through April 22, 2009, its average global 
market capitalization continued listing requirement will apply only to 
companies (including limited partnerships and real estate investment 
trusts (``REITs'')) whose average global market capitalization over a 
consecutive 30 trading-day period falls below $15 million.\10\ The 
Exchange notes that it remains the case that an unusually high number 
(as compared to historical levels) of listed companies have market 
capitalizations close to or below $25 million over a consecutive 30 
trading-day period. The Exchange considers it unlikely that the market 
conditions giving rise to this phenomenon will pass prior to April 22, 
2009, the current end date of the temporary lowering of the Exchange's 
market capitalization requirements. Consequently, the Exchange proposes 
to extend the period for which its market capitalization continued 
listing standard is lowered until June 30, 2009. This will also have 
the benefit of conforming the end dates of the suspension of the dollar 
stock price continued listing requirement and the easing of the market 
capitalization continued listing requirement, avoiding confusion in 
communicating these policies to listed companies and facilitating any 
extension of both policies in a single filing.
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    \9\ See Securities Exchange Act Release No. 59299 (January 27, 
2009), 74 FR 5709 (January 30, 2009) (SR-NYSE-2009-06).
    \10\ Section 802.01B of the Manual provides that the Exchange 
will promptly delist any company (including limited partnerships and 
REITs) if it is determined that the company has an average global 
market capitalization over a consecutive 30 trading-day period of 
less than $25 million, regardless of the original listing standard 
under which it listed. A company is not eligible to utilize the cure 
procedures set forth in Sections 802.02 and 802.03 with respect to 
this criterion and instead is immediately subject to the Exchange's 
delisting procedures set forth in Section 804 of the Manual.
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    The proposed suspension of the Exchange's price continued listing 
requirement and the proposed extension of the period of application of 
the temporary lower market capitalization requirement will each enable 
companies to remain listed in the current difficult market conditions 
with the prospect of a future recovery in their stock prices enabling 
them to comply with the applicable listing requirements upon the 
standards' reinstatement. During the period between now and June 30, 
2009, the Exchange will consider whether it is appropriate to propose 
further revisions to these requirements.
    The Exchange notes that this filing is based in part on a NASDAQ 
filing, pursuant to which NASDAQ responded to the current market 
conditions by temporarily suspending its bid price and market value of 
publicly held shares continued listing requirements through April 19, 
2009.\11\
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    \11\ See Securities Exchange Act Release 58809 (October 17, 
2008), 73 FR 63222 (October 23, 2008) (SR-NASDAQ-2008-082) for the 
suspension of NASDAQ's bid price and market value of publicly held 
shares through January 16, 2009. See also Securities Exchange Act 
Release 59219 (January 8, 2009), 74 FR 2640 (January 15, 2009), 
extending the suspension of these requirements to April 19, 2009. 
NASDAQ's continued listing requirements relating to bid price are 
set forth in NASAQ Marketplace Rules 4310(c)(4), 4320(e)(2)(E)(ii), 
4450(a)(5), 4450(b)(4), and 4450(h)(3) and the related compliance 
periods are set forth in NASDAQ Marketplace Rules 4310(c)(8)(D), 
4320(e)(2)(E)(ii), and 4450(e)(2). NASDAQ's continued listing 
requirements relating to market value of publicly held shares are 
set forth in NASDAQ Marketplace Rules 4310(c)(7), 4320(e)(5), 
450(a)(2), 4450(b)(3) and 4450(h)(2) and the related compliance 
periods are set forth in Rules 4310(c)(8)(B) and 4450(e)(1).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \12\ of the Exchange Act, in general, and furthers 
the objectives of Section 6(b)(5) of the Exchange Act \13\ 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. The proposed rule change is 
designed to remove uncertainty regarding the ability of certain 
companies to remain listed on the NYSE during the current highly 
unusual market conditions, thereby protecting investors, facilitating 
transactions in securities, and removing an impediment to a free and 
open market.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 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

    Written comments were neither solicited nor received.

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, the proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \14\ and 
Rule 19b-4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii) 
under the Act, the Exchange is required to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of 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 Commission has determined to waive this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \16\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \17\ 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 requested that the Commission waive the 30-day operative delay.
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).

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[[Page 10638]]

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it will allow NYSE to immediately implement a temporary 
measure, until June 30, 2009, to suspend its $1.00 price continued 
listing requirement for capital and common stock to respond to recent 
market volatility and conditions. The Commission notes that this will 
provide certain companies with immediate relief from receiving a non-
compliance or delisting notification, or from being delisted, as a 
result of the current market conditions. The Commission notes that this 
action is temporary in nature, and that following the suspension, 
companies currently in the compliance period will resume at the same 
stage and receive the remaining balance of its compliance period if 
they remain non-compliant with these standards. This will ensure that 
the temporary suspension addresses the concerns to companies and 
investors caused by the current market conditions, and that may result 
in a company's securities becoming non-compliant with the $1.00 price 
requirement, or unable to cure such a deficiency, due to these market 
conditions. The Commission also notes that the proposed rule change is 
substantially similar to a recent Nasdaq filing to suspend its bid 
price test, and thus, raises no new regulatory issues.\18\ In addition, 
the Commission believes that waiving the operative delay is consistent 
with the protection of investors and the public interest because it 
will allow NYSE to immediately conform the end dates of the suspension 
of the $1.00 price requirement and the temporary lowering of the 
average market capitalization requirement of Section 802.01B of the 
Manual,\19\ preventing any confusion over the end dates of these 
temporary modifications to the continued listing standards due to 
market conditions. For these reasons, the Commission designates that 
the proposed rule change become operative immediately upon filing.\20\
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    \18\ See supra note 11.
    \19\ See supra note 9.
    \20\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate the 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 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 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-2009-21 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.

All submissions should refer to File Number SR-NYSE-2009-21. 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 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-2009-21 and should be submitted on or before April 1, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-5209 Filed 3-10-09; 8:45 am]

BILLING CODE 8011-01-P