Document ID: SEC-2009-1731-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2009-12-08T05:00Z

[Federal Register: December 8, 2009 (Volume 74, Number 234)]
[Notices]               
[Page 64781-64783]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08de09-113]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61099; File No. SR-NYSE-2009-115]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Warrant Initial Listing Standard To Exempt From the Minimum 
Holders Requirement Any Series of Warrants That Is Listed in Connection 
With the Initial Firm Commitment Underwritten Public Offering of Such 
Warrants

December 2, 2009.
    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 November 16, 2009, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule changes 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 Act. 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\ 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 amend its warrant listing standard set 
forth in Section 703.12 of the Listed Company Manual (the ``Manual'') 
to exempt from the minimum holders requirement of Section 703.12 any 
series of warrants that is listed in connection with the initial firm 
commitment underwritten public offering of such warrants.
    The text of the proposed rule change is available on NYSE's Web 
site at www.nyse.com, on the Commission's Web site at http://
www.sec.gov, at NYSE'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
    The NYSE's initial listing standard for warrants set forth in 
Section 703.12 of the Manual requires that, at the time of initial 
listing, there are at least 1,000,000 warrants outstanding with at 
lease 400 holders and a market value of at least $4 million.
    The Exchange proposes to amend Section 703.12 to exempt from the 
400 holders requirement any series of warrants listed in connection 
with the initial firm commitment underwritten public offering of such 
warrants. Warrants that benefit from this exemption will still be 
required to meeting the 1,000,000 warrants outstanding and $4 million 
market value requirements of Section 703.12.
    The Exchange believes that a primary purpose of distribution 
requirements in listing standards is to ensure a liquid trading market, 
promoting price discovery and the establishment of an appropriate 
market price for the listed securities. In the case of warrants, the 
Exchange believes that this liquidity concern is partially addressed by 
the fact that the market price for a warrant is in large part 
determined by the trading price of the underlying common stock. Warrant 
values are primarily determined using valuation models which factor in 
the trading price of the underlying stock, the warrant exercise price 
and the expiration date of the warrant.
    Generally, warrants that are listed on the Exchange have either (i) 
been distributed to the pre-restructuring shareholders or creditors of 
a company in connection with its emergence from bankruptcy or (ii) were 
sold in an underwritten public offering as part of a unit which 
included warrants and common stock. In either case, the bankruptcy-
related distribution or the underwritten public offering of units 
typically results in a significant number of holders of the warrants. 
The Exchange has not had any recent experience with the listing of 
warrants sold on a stand-alone basis in an underwritten public 
offering. However, the Exchange believes that the sale of warrants in 
an underwritten public

[[Page 64782]]

offering provides an additional basis for believing that a liquid 
trading market will likely develop for such warrants after listing, 
since the offering process is designed to promote appropriate price 
discovery. Moreover, the underwriters in a firm commitment underwritten 
public offering will also generally make a market in the securities for 
a period of time after the offering, assisting in the creation of a 
liquid trading market. For the foregoing reasons, the Exchange believes 
that it is consistent with the protection of investors and the public 
interest to exempt from the holders requirement of Section 703.12 any 
series of warrants that is listed in connection with the initial firm 
commitment underwritten public offering. The Exchange notes that Nasdaq 
Global Market's warrant listing standard does not contain any minimum 
holders requirement.\4\
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    \4\ See Nasdaq Marketplace Rule 5410.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \5\ of the Act, in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\6\ 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 Exchange believes that the proposed amendment is consistent with 
the investor protection objectives of the Act in that (i) the concern 
that a liquid trading market will develop for listed securities that 
underlies listing standard distribution requirements is partially 
addressed by the fact that the market price for a warrant is in large 
part determined by the trading price of the underlying common stock, 
(ii) the sale of warrants in an underwritten public offering provides 
an additional basis for believing that a liquid trading market will 
likely develop for such warrants after listing, since the offering 
process is designed to promote appropriate price discovery, and (iii) 
the underwriters in a firm commitment underwritten public offering will 
also generally make a market in the securities for a period of time 
after the offering, assisting in the creation of a liquid trading 
market.
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    \5\ 15 U.S.C. 78f(b)
    \6\ 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 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6) \8\ thereunder because 
the proposal does not: (i) Significantly affect the protection of 
investors or the public interest; (ii) impose any significant burden on 
competition; and (iii) by its terms, become operative for 30 days from 
the date on which it was filed, or such shorter time as the Commission 
may designate if consistent with the protection of investors and the 
public interest.\9\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ The Exchange has given the Commission 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \10\ 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 period.
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    \10\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiver of the 30-day operative delay 
period is consistent with the protection of investors and the public 
interest. Specifically, the Commission believes that the NYSE's 
narrowly crafted proposal, that exempts from the 400 holders 
requirement only those warrants that are issued through an initial firm 
commitment underwritten public offering, helps to address the liquidity 
and price discovery concerns that underlie the minimum holder 
requirement. The Commission notes that the underwriters in an initial 
firm commitment public offering in such warrants would generally make a 
market for a period of time after the offering, thereby alleviating 
short term liquidity concerns. Moreover, as noted by the NYSE, the 
price of such warrants would be established by the firm commitment 
underwritten offering process, in addition to the price of the 
underlying security, the exercise price of the warrants, and the 
expiration of the warrants. Finally, the Commission notes that these 
warrants would have to meet all the other requirements under NYSE's 
Listed Company Manual Section 703.12, which includes minimum aggregate 
market value and size requirements. For these reasons, the Commission 
believes it is consistent with the protection of investors and the 
public interest to waive the 30-day operative delay and the proposal is 
effective upon filing.\11\
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    \11\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 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 such proposed 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.\12\
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    \12\ 15 U.S.C. 78s(b)(3)(C).
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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-2009-115 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-2009-115. 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

[[Page 64783]]

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-2009-115 and should be submitted on or before 
December 29, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-29138 Filed 12-7-09; 8:45 am]

BILLING CODE 8011-01-P