Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to a Six-Month Pilot Program To Adopt New Initial and Continued Listing Standards, 69166-69172 [E6-20211]

Download as PDF 69166 Federal Register / Vol. 71, No. 229 / Wednesday, November 29, 2006 / Notices or delivery at the end of the quarter. In such case, the customer would receive a quarterly statement even though it had consented not to receive one. BNP contended that the customer would be confused by such statement and the statement would not benefit the customer.12 The SIA letter supported the proposed amendment to NYSE Rule 409 but commented that the proposal would unnecessarily and impractically require individual firms to retain a record that reflects each institution’s consent to the suspension of statements. SIA proposed that the NYSE interpret proposed amended Rule 409 to make an institution’s notification to Omgeo 13 and Omgeo’s population of their database sufficient for recordkeeping purposes. III. NYSE’s Response to Comments In filing Amendment No. 2, NYSE addressed comments on the proposal by revising proposed amended Rule 409(a)(3) to confirm that transactional positions, such as those arising from a fail to receive or deliver money or securities, will not be deemed money or security positions for purposes of this rule. This proposed change is intended to avoid the possibility raised by BNP that firms could be in violation of the rule due to a failed receipt or delivery at the end of a quarter. jlentini on PROD1PC65 with NOTICES IV. Discussion The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange.14 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Exchange Act.15 Section 6(b)(5) of the Act requires, among other things, that the rules of an exchange be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and national market system, and in general, to protect investors and the public interest. The 12 In its comment, discussed below, SIA does not believe that condition (3) should apply to those accounts that show a money or position balance at the end of the quarter because of unsettled items or a ‘‘DK.’’ 13 According to SIA, Omgeo, LLC is the leading industry provider of institutional processing services. SIA believes that other vendors would also provide such indicators. 14 In approving this proposed rule change, the Commission has considered whether the proposed rule change will promote efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 15 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 15:37 Nov 28, 2006 Jkt 211001 Commission believes that the proposed rule change, as amended, should remove impediments to and perfect the mechanisms of a free and open market and national market system by removing an unnecessary and potentially costly obligation on firms to deliver quarterly account statements to DVP/RVP customers. At the same time, the proposal maintains certain investor protections (i.e., requiring NYSE member organizations to obtain affirmative consent to the suspension of quarterly account statements, preserving the ability of customers to obtain particular statements upon request and to resume receipt of statements promptly upon request, and precluding member organizations from unilaterally terminating delivery of such statements). Therefore, the Commission believes the proposal is consistent with the Exchange Act. Accelerated Approval of Amendment No. 2 The Commission finds good cause to approve Amendment No. 2 to the proposed rule change, as amended, prior to the thirtieth day after Amendment No. 2 is published for comment in the Federal Register pursuant to Section 19(b)(2) of the Act.16 Amendment No. 2 clarifies that transactional positions, such as those arising from a fail to receive or deliver money or securities, will not be deemed money or security positions for purposes of the proposed amended rule. The Commission finds that Amendment No. 2 appropriately addresses a concern raised by a commenter.17 For these reasons, the Commission believes that good cause exists to accelerate approval of Amendment No. 2. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Exchange Act,18 that the proposed rule change (SR– NYSE–2005–90), as amended by Amendment No. 1 thereto, be, and hereby is, approved, and that Amendment No. 2 thereto, be, and hereby is, approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.19 Nancy M. Morris, Secretary. [FR Doc. E6–20227 Filed 11–28–06; 8:45 am] BILLING CODE 8011–01–P 16 15 U.S.C. 78s(b)(2). BNP letter, footnote 6, supra. 18 15 U.S.C. 78s(b)(2). 19 17 CFR 200.30–3(a)(12). 17 See PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54796; File No. SR– NYSEArca–2006–85] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to a Six-Month Pilot Program To Adopt New Initial and Continued Listing Standards November 20, 2006. 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 17, 2006, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Commission is publishing this notice to solicit comment on the proposed rule change from interested persons. For the reasons discussed below, the Commission is granting accelerated approval of the proposed rule change, as a six-month pilot, until May 29, 2007. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes, on a sixmonth pilot program basis (the ‘‘Pilot Program’’), to make significant revisions to its initial and continued financial listing standards for operating companies.3 The text of the proposed rule change is available on the Exchange’s Web site at www.nysearca.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 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 The Commission notes that the proposed changes are primarily to the initial and continued listing standards of common stock and common stock equivalent securities, preferred stock and similar issues and secondary classes of common stock. Some changes are also being made to the listing standards for bonds and debentures, warrants, contingent value rights, other securities, and index-linked exchangeable notes. 2 17 E:\FR\FM\29NON1.SGM 29NON1 Federal Register / Vol. 71, No. 229 / Wednesday, November 29, 2006 / Notices the places specified in Item III below. The self-regulatory organization 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 On March 7, 2006, Archipelago Holdings, Inc. and the New York Stock Exchange, Inc. completed their merger (the ‘‘Merger’’), creating NYSE Group, Inc. (‘‘NYSE Group’’). NYSE Group is a holding company that operates, among other subsidiaries, two securities exchanges: New York Stock Exchange LLC (‘‘NYSE’’) and NYSE Arca Equities, Inc. (‘‘NYSE Arca Equities’’ or the ‘‘Corporation’’).4 NYSE Arca Equities conducts its equities trading operations through its equities trading facility, NYSE Arca, L.L.C. (also referred to as the ‘‘NYSE Arca Marketplace’’). In connection with the Merger, NYSE Arca Marketplace examined all aspects of its listings program, and as a result, determined to make substantial modifications and enhancements to its listing standards. Accordingly, with this filing, NYSE Arca is proposing significant revisions to the initial and continued listing criteria applicable to operating companies set forth in NYSE Arca Equities Rule 5, completely replacing the current tiered structure with a single set of numerical and jlentini on PROD1PC65 with NOTICES 4 The Commission notes that NYSE Arca is actually the registered national securities exchange and NYSE Arca Equities is a wholly-owned subsidiary of NYSE Arca. VerDate Aug<31>2005 15:37 Nov 28, 2006 Jkt 211001 financial requirements.5 The principal objectives of these proposed revisions are to upgrade the financial condition, shareholder interest, and stature of issuers listing on NYSE Arca Marketplace; more closely align NYSE Arca Marketplace’s listing standards and structure with the NYSE; and enhance NYSE Arca Marketplace’s competitive position.6 NYSE Arca Equities Rule 5.1(a) provides that the Board of the Directors of the Exchange will make determinations as to whether to list securities or admit securities to unlisted trading privileges on the Exchange. Similarly, current NYSE Arca Equities Rule 5.2(a) provides that the prescribed forms of applications to list securities on the Exchange will be determined by the Board of Directors. This filing proposes to amend both of the aforementioned requirements to state that the Exchange will make such determinations. Such decisions will be made by the chief executive officer of the Exchange or by staff of the Exchange pursuant to authority delegated by the chief executive officer. In addition, NYSE Arca Equities Rule 5.2(a) would be amended to state that the Exchange may deny listing or apply additional or more stringent criteria based on any 5 This filing relates only to quantitative (financial) original and continued listing standards applicable to operating companies. It does not relate to listing standards for corporate governance, exchange traded funds, open and closed-end funds, commodity-based trusts, trust issued receipts, portfolio depositary receipts, investment company units or other types of structured products. See supra note 3. 6 The Commission recently approved substantial revisions to NYSE Arca’s listing fees. See Securities Exchange Act Release No. 54007 (June 16, 2006), 71 FR 36155 (June 23, 2006) (SR–PCX–2006–16). PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 69167 event, condition, or circumstance that makes the listing of the company inadvisable or unwarranted in the opinion of the Exchange. Such determination could be made even if the company meets the standards set forth below. Summary of Current and Proposed Initial Listing Standards Summary of Current Initial Listing Standards for Operating Companies Currently, the NYSE Arca Marketplace has a two-tier listing structure, classifying listed securities as either Tier I or Tier II. For their common stock to qualify for initial listing as a Tier I security, issuers must satisfy, among other things, the numerical criteria set forth in NYSE Arca Equities Rule 5.2(c).7 To qualify for initial listing as a Tier II security, issuers must satisfy, among other things, the numerical criteria set forth in NYSE Arca Equities Rule 5.2(k). Both Rule 5.2(c) and Rule 5.2(k) also provide that an issuer may qualify under either a Basic or an Alternate set of listing criteria. To be eligible to list, an issuer need only satisfy all of the criteria under one of these four separate sets of standards.8 7 In addition to the numerical criteria set forth in Rules 5.2(c) and 5.2(k), issuers must also satisfy certain qualitative requirements, including corporate governance-related standards set forth in NYSE Arca Equities Rule 5.3. These corporate governance rules are not the subject of this proposal. 8 NYSE Arca Equities Rule 5.2(a) provides that approval of listing applications is a matter solely within the discretion of NYSE Arca Equities, and the fact that an issuer may meet the applicable listing requirements does not necessarily mean that its application will be approved. E:\FR\FM\29NON1.SGM 29NON1 69168 Federal Register / Vol. 71, No. 229 / Wednesday, November 29, 2006 / Notices These requirements are: Tier I (Rule 5.2(c)) Tier II (Rule 5.2(k)) Basic Net tangible assets 9 ........................................................................................ Net worth 10 ...................................................................................................... Pre-tax income 11 ............................................................................................. Net income 12 ................................................................................................... Public float (shares) ......................................................................................... Public beneficial holders 13 .............................................................................. Market value .................................................................................................... Operating history ............................................................................................. Price 14 ............................................................................................................. jlentini on PROD1PC65 with NOTICES Proposed Initial Listing Standards for Common Stock and Common Stock Equivalent Securities With this filing, NYSE Arca is proposing to eliminate the Tier I and II classifications and replace, in their entirety, the current Tier I and Tier II numerical standards for initial listing for common stock set forth in NYSE Arca Rules 5.2(c) and (k), respectively. Companies whose common stock is listed with a Tier II designation will be able to remain listed under the existing Tier II rules as long as they are in compliance with the maintenance requirements of Arca Equities Rule 5.5(h). However, the Exchange will no longer list any new issuers or additional classes of securities with a Tier II designation. In place of the existing Tier I and Tier II standards, this filing proposes to 9 NYSE Arca Equities Rule 5.1(b)(10) defines ‘‘net tangible assets’’ as the amount of funds remaining after deducting intangible assets from stockholders’ equity. This rule further provides that intangible assets include, but are not limited to, goodwill, patents, copyrights, trademarks, leaseholds, franchises, licenses, permits, research and development costs, organization costs, and similar types of property rights. 10 NYSE Arca Equities Rule 5.1(b)(9) defines ‘‘net worth’’ as total assets (excluding the value of goodwill) less total liabilities. 11 NYSE Arca Equities Rule 5.2(c)(4) provides that an issuer must have pre-tax income from continuing operations of at least $750,000 in the last fiscal year or two of the last three fiscal years. 12 NYSE Arca Equities Rule 5.2(k)(4) provides that an issuer must have net income from continuing operations of at least $100,000 in the last fiscal year or in two of the last three fiscal years, or total net tangible assets of $2,500,000. 13 NYSE Arca Equities Rule 5.2(c)(2) provides that issuers must have at least 800 public beneficial holders if the issuer has at least 500,000 and less than 1,000,000 shares publicly held, or a minimum of 400 public beneficial holders if the issuer has either: (i) At least 1,000,000 shares publicly held; or (ii) at least 500,000 shares publicly held and average daily trading volume in excess of 2,000 shares for the six months preceding the date of application. 14 NYSE Arca Equities Rules 5.2(c)(5) and 5.2(k)(5) provide that the issuer must maintain the minimum price for the majority of business days for the most recent six-month period prior to the date of application, and the price must be at or above the minimum per share at the time of application. VerDate Aug<31>2005 15:37 Nov 28, 2006 Jkt 211001 Alternate Basic Alternate ........................ $4,000,000 $750,000 ........................ 500,000 800 or 400 $3,000,000 ........................ $5 ........................ $12,000,000 ........................ ........................ 1,000,000 400 $15,000,000 3 years $3 $2,000,000 ........................ ........................ $100,000 500,000 500 $1,500,000 3 years $3 ........................ $8,000,000 ........................ ........................ 1,000,000 500 $2,000,000 ........................ $1 require for initial listing that, at the time of initial listing, the listed class of common stock or common stock equivalent securities 15 shall have: • At least 1.1 million publicly held shares. • A closing price per share of $5 or more. • A minimum of 400 round lot shareholders. In addition, the requirements of one of Standards One, Two or Three below must be met: Standard One • The issuer of the security had annual income from continuing operations before income taxes of at least $1 million in the most recently completed fiscal year or in two of the last three most recently completed fiscal years. • The market value of publicly held shares is at least $8 million. • The issuer of the security has stockholders’ equity of at least $15 million. Standard Two • The issuer of the security has stockholders’ equity of at least $30 million. • The market value of publicly held shares is at least $18 million. • The issuer has a two-year operating history. Standard Three • The market value of publicly held shares is at least $20 million. • The issuer has: Æ A market value of listed securities of $75 million (currently traded issuers must meet this requirement and the $5 closing price requirement for 90 consecutive trading days prior to applying for listing); or 15 Proposed NYSE Arca Equities Rule 5.1(b)(26) defines common stock equivalent as ‘‘ordinary shares, ADRs, American Depository Shares, global depository shares, depository shares, shares or certificates of beneficial interest of trusts, and other similar issues that have the same characteristics of common stock.’’ PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 Æ Total assets and total revenue of $75 million each for the most recently completed fiscal year or two of the last three most recently completed fiscal years. In evaluating compliance with these standards, the Exchange will consider amounts contained in a company’s pro forma financial statements provided in a filing with the Commission pursuant to Commission rules and regulations governing Article 11 ‘‘Pro forma information of Regulation S–X Part 210—Form and Content of and Requirements for Financial Statements.’’ This shall include, without limitation, adjustments relating to the proceeds of an offering. In the case of foreign private issuers (as such term is defined in Rule 3b–4 under the Act), the Exchange will take into account global market capitalization in evaluating compliance with the market capitalization requirements of this rule. This revised rule shall apply to common stock and common stock equivalents, including, but not limited to: Ordinary shares, American Depository Receipts (‘‘ADRs’’), American Depository Shares, global depository shares, depository shares, shares or certificates of beneficial interest of trusts, and other similar issues that have the same characteristics of common stock. Summary of Current Initial Listing Standards for Preferred Stock and Similar Issues Currently, as set forth in NYSE Arca Equities Rule 5.2(d), in the case of preferred stock and similar issues, the following listing requirements among others must be met: • The issuer must meet the net worth and earnings requirements as set forth in the Tier I Basic Listing Requirements under Rule 5.2(c), and must meet and appear to be able to service the dividend requirements for the preferred stock. • If the company’s common stock is traded on NYSE Arca or on either the American Stock Exchange LLC E:\FR\FM\29NON1.SGM 29NON1 Federal Register / Vol. 71, No. 229 / Wednesday, November 29, 2006 / Notices (‘‘Amex’’) or NYSE, the following public distribution requirements must be met: At least 100,000 preferred shares publicly held and an aggregate market value of at least $2,000,000, and a minimum closing bid price of $10. • If the related common stock is not traded on any of the above referenced exchanges then the requirements are: At least 400,000 preferred shares publicly held and an aggregate market value of at least $4,000,000, and a minimum closing bid price of $10. At least 800 public beneficial holders of 100 shares or more shall also be required. Proposed Initial Listing Standards for Preferred Stock and Similar Issues and Secondary Classes of Common Stock For initial listing, if the common stock or common stock equity equivalent security of the issuer is listed on the Exchange or on the NYSE, The Nasdaq Global Market or the Amex, the issue shall have: • At least 200,000 publicly held shares; • A market value of publicly held shares of at least $4,000,000; • A minimum closing price per share of $5; • A minimum of 100 round lot shareholders. Alternatively, in the event the issuer’s common stock or common stock equivalent security is not listed on either the Exchange or on the NYSE, The Nasdaq Global Market or the Amex, the preferred stock and/or secondary class of common stock may be traded on the Exchange so long as the security satisfies the initial listing criteria for common stock. Summary of Current and Proposed Continued Listing Standards Current Continued Listing Standards for Common Stock To qualify for continued listing as a Tier I security, issuers must satisfy, among other things, the numerical criteria set forth in NYSE Arca Equities Rule 5.5(b). To qualify for continued listing as a Tier II security, issuers must satisfy, among other things, the numerical criteria set forth in NYSE Arca Equities Rule 5.5(h). These requirements are: Tier I (Rule 5.5(b)) Net tangible assets or Net worth ........................................ Public float (shares) ............................................................ Public beneficial holders ..................................................... Market value ....................................................................... Bid price 18 .......................................................................... Proposed Continued Listing Standards for Common Stock and Common Stock Equivalent Securities jlentini on PROD1PC65 with NOTICES With this filing, NYSE Arca is proposing to eliminate the two tiered structure and replace, in their entirety, the current Tier I and Tier II numerical standards for continued listing for common stock set forth in NYSE Arca Rules 5.5(b) and (h), respectively, except that Rule 5.5(h) will continue to be applied to common stocks listed with a Tier II designation prior to the effectiveness of this filing. In their place, this filing proposes in new Rule 5.5(b) to require for continued listing that a listed common stock must meet the criteria set forth in either Continued Listing Standard One or Continued Listing Standard Two below to continue to remain listed on the Exchange. All of the existing Tier I issuers and securities currently meet the requirements of the proposed continued listing standards. As such, the Exchange does not need to provide a phase in period for compliance with the new rules and will be able to apply them as soon as the Commission approves the Pilot Program. 16 If the issuer has sustained losses from continuing operations and/or net losses in two of the last three fiscal years, then it must have a minimum of $2 million in net worth. If the issuer has sustained losses from continuing operations and/or net losses in three of the last four fiscal VerDate Aug<31>2005 15:37 Nov 28, 2006 Jkt 211001 Continued Listing Standard One • 750,000 publicly held shares; • Market value of publicly held shares of $5 million; • The issuer has stockholders’ equity of at least $10 million; and • 400 shareholders of round lots. Continued Listing Standard Two • The issuer has: Æ A market value of listed securities of $50 million or, in the case of non-U.S. companies, a global market capitalization of $50 million; or Æ total assets and total revenue of $50 million each for the most recently completed fiscal year or two of the last three most recently completed fiscal years. • 1,100,000 shares publicly held; • Market value of publicly held shares of $15 million; and • 400 shareholders of round lots. In the case of a non-U.S. company with ADRs listed on the Exchange, the term ‘‘global market capitalization’’ years, then it must have a minimum of $4 million in net worth. 17 Alternatively, an issuer must have at least 300 beneficial holders of 100 shares or more. 18 NYSE Arca Equities Rules 5.5(b) and (h) provide that NYSE Arca Equities may waive the minimum bid price requirements upon PO 00000 Tier II (Rule 5.5(h)) $2,000,000 or 4,000,000 16 ................................................ 200,000 .............................................................................. 400 17 ................................................................................. $1,000,000 ......................................................................... $3 ....................................................................................... Under the proposed new standards, a listed common stock must meet each of the criteria set forth in Continued Listing Standards One or Two below to continue to remain listed on the Exchange. Frm 00073 Fmt 4703 Sfmt 4703 69169 $500,000 or 2,000,000. 300,000. 250. $500,000. $1. means (x) the closing sale price per share of the common stock or common stock equivalent security underlying the ADRs multiplied by (y) the number of shares of such common stock or common stock equivalent security outstanding worldwide (including any shares underlying outstanding ADRs). In addition, an issuer will also be considered to be below compliance standards if the average closing price of a security is less than $1.00 over a consecutive 30 trading-day period. Once notified, the issuer must bring its share price and average share price back above $1.00 by six months following receipt of the notification. The issuer 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. Once a U.S. issuer is notified that it is below compliance, it is required to issue a press release disclosing the fact that it has fallen below the continued listing standards of the Exchange concurrent with filing notice of such noncompliance with the SEC as required by Form 8–K. Once a foreign private issuer is notified that it is below compliance, the issuer has 30 days to issue a press consideration of market conditions, the issuer’s capitalization, the number of outstanding and publicly held shares, and any other factors NYSE Arca Equities deems appropriate. This proposal eliminates this provision and replaces it with the ‘‘cure period’’ set forth in revised Rule 5.5(b). E:\FR\FM\29NON1.SGM 29NON1 69170 Federal Register / Vol. 71, No. 229 / Wednesday, November 29, 2006 / Notices release disclosing the fact that it has fallen below the continued listing standards of the Exchange. If the foreign private issuer fails to issue this press release during the allotted 30 days, the Exchange will issue the requisite press release. 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 an issuer 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. Notwithstanding the foregoing, if the subject security is not the primary trading common equity security of the issuer (e.g., a tracking stock or a preferred class), as discussed in more detail below, the Exchange may determine whether to apply this test to such security after evaluating the financial status of the issuer. jlentini on PROD1PC65 with NOTICES Continued Listing Standards for Preferred Stock and Similar Issues and Secondary Classes of Common Stock NYSE Arca proposes to replace its existing continued listing standards for preferred stock and similar issues with the requirements described below and to also apply those requirements to secondary classes of common stock. For continued listing, if the common stock or common stock equity equivalent security of the issuer is listed on the Exchange or on the NYSE, The Nasdaq Global Market or the Amex, the issue shall have: • At least 100,000 publicly held shares; • A market value of publicly held shares of at least $1,000,000; • A minimum closing price per share of $1; • A minimum of 100 round lot shareholders. If the preferred stock or similar issue is the issuer’s only security listed on the Exchange, after evaluating the financial status of the issuer, the Exchange may choose to apply the six-month cure period provided under the proposed common stock continued listing VerDate Aug<31>2005 15:37 Nov 28, 2006 Jkt 211001 standards to any failure to maintain a $1 closing price. Alternatively, in the event the issuer’s common stock or common stock equivalent security is not listed on either the Exchange or on the NYSE, The Nasdaq Global Market or the Amex, the preferred stock and/or secondary class of common stock may be listed on the Exchange so long as the security satisfies the continued listing criteria for common stock. Other Securities Pre-Tax Income Requirement To conform to the parallel provision in Standard One of the proposed common stock initial listing standards, the Exchange proposes to increase the pre-tax income from continuing operations standard of NYSE Arca Equities Rule 5.2(e) (‘‘Bonds and Debentures’’), NYSE Arca Equities Rule 5.2(g) (‘‘Contingent Value Rights’’), NYSE Arca Equities Rule 5.2(j)(1) (‘‘Other Securities’’) and NYSE Arca Equities Rule 5.2(j)(4) (‘‘Index-Linked Exchangeable Notes’’) from $750,000 to $1 million.19 III. 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 rulecomments@sec.gov. Please include File Number SR–NYSEArca–2006–85 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–NYSEArca–2006–85. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your 2. Statutory Basis comments more efficiently, please use The Exchange believes the proposed only one method. The Commission will rule change is consistent with Section post all comments on the Commission’s 6(b) of the Act,20 in general, and furthers Internet Web site (http://www.sec.gov/ the objectives of Section 6(b)(5) of the rules/sro.shtml). Copies of the Act 21 in particular, because it is submission, all subsequent designed to prevent fraudulent and amendments, all written statements manipulative acts and practices, to with respect to the proposed rule promote just and equitable principles of change that are filed with the trade, to foster cooperation and Commission, and all written coordination with persons engaged in communications relating to the facilitating transactions in securities, proposed rule change between the and to remove impediments to and Commission and any person, other than perfect the mechanism of a free and those that may be withheld from the open market and a national market public in accordance with the system. provisions of 5 U.S.C. 552, will be available for inspection and copying in B. Self-Regulatory Organization’s the Commission’s Public Reference Statement on Burden on Competition Room. Copies of such filing also will be The Exchange does not believe that available for inspection and copying at the proposed rule change will impose the principal office of the Exchange. All any burden on competition that is not comments received will be posted necessary or appropriate in furtherance without change; the Commission does of the purposes of the Act. not edit personal identifying information from submissions. You C. Self-Regulatory Organization’s should submit only information that Statement on Comments on the you wish to make available publicly. All Proposed Rule Change Received From submissions should refer to File Members, Participants, or Others Number SR–NYSEArca–2006–85 and Written comments on the proposed should be submitted on or before rule change were neither solicited nor December 20, 2006. received. IV. Commission’s Findings and Order 19 The Commission notes that, among other Granting Accelerated Approval of things, the Exchange proposes other clarifying Proposed Rule Change changes, additional definitions, and different net worth standards for bonds and debentures, contingent value rights, other securities, and indexlinked exchangeable notes. 20 15 U.S.C. 78f(b). 21 15 U.S.C. 78f(b)(5). PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder E:\FR\FM\29NON1.SGM 29NON1 Federal Register / Vol. 71, No. 229 / Wednesday, November 29, 2006 / Notices applicable to a national securities exchange.22 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,23 which requires that an exchange have rules designed, among other things, 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 are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange proposes to make significant changes to its initial and continued listing standards. Among other things, the Exchange would no longer have a two-tiered listing structure. The Exchange represents that all existing Tier I issuers would meet one of the proposed continued listing standards set forth in proposed NYSE Arca Equities Rule 5.5(h). Further, the proposal would include a grandfather clause to ensure that the existing Tier II issuers would have the option to remain listed on the Exchange for as long as they meet the continued listing standards. The Commission believes that the proposal is designed not to permit unfair discrimination among issuers, since the proposal would treat all prospective issuers and existing Exchange-listed issuers equally. Although the proposal significantly restructures and changes NYSE Arca listing standards, as discussed below, the changes are substantially similar to The Nasdaq Global Market initial and continued listing standards. Based on this, the Commission believes it is reasonable for the Exchange to determine that companies that meet these new listing standards are appropriate for inclusion and continued listing on NYSE Arca. For these reasons, as discussed in more details below, the Commission finds that the proposal is consistent with the requirements of the Act. jlentini on PROD1PC65 with NOTICES A. Initial Listing Standards As proposed, the Exchange’s common stock or common stock equivalent securities 24 initial listing standards would be significantly modified and the Exchange would no longer have Tier I or Tier II securities. Common stock or common stock equivalent securities would need: (1) At least 1.1 million publicly held shares; (2) a closing price 22 In approving this proposed rule change, the Commission notes that it has considered the proposed rules’ impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 23 15 U.S.C. 78f(b)(5). 24 See proposed NYSE Arca Equities Rule 5.1(b)(26). VerDate Aug<31>2005 15:37 Nov 28, 2006 Jkt 211001 per share of $5 or more; and (3) a minimum of 400 round lot shareholders, in addition to meeting the additional standards set forth in one of three alternatives.25 Among other things, Standard 1 and Standard 2 would replace the current net worth requirement with an increased stockholders’ equity requirement of $15,000,000 and $30,000,000, respectively. In addition, under Standard 3, the current net worth requirement would be eliminated and the issuer would be required to have a market value of listed securities of $75,000,000 or total assets and total revenue of $75,000,000 each for the most recently completed fiscal year or two of the last three most recently completed fiscal years. The Commission notes that the proposed initial listing standards for common stock or common stock equivalent securities are substantially similar to The Nasdaq Global Market initial listing standards.26 The Exchange’s proposed preferred stock (and similar issues) and secondary classes of common stock initial listing standards would also be significantly modified. The Exchange would eliminate the current net worth and earnings requirements, and increase the current publicly held shares requirement and market value requirement. The Exchange would also lower the current bid price requirement. As proposed, if the common stock or common stock equivalent security of the issuer is listed on the Exchange, NYSE, The Nasdaq Global Market, or Amex, these securities must have: (1) At least 200,000 publicly held shares; (2) a market value of publicly held shares of at least $4 million; (3) a closing price per share of $5 or more; and (4) a minimum of 100 round lot shareholders.27 If the common stock or common stock equivalent security of the issuer is not listed on the Exchange, NYSE, The Nasdaq Global Market, or Amex, these securities must satisfy the initial listing standards for common stock.28 The Commission notes that these requirements are substantially similar to The Nasdaq Global Market initial listing standards.29 The Exchange also proposes to amend the initial listing standards for bonds and debentures and contingent value rights by increasing the net worth requirement and pre-tax income requirement consistent with the proposed common stock initial listing proposed NYSE Arca Equities Rule 5.2(c). Nasdaq Rule 4420(a)–(c). 27 See proposed NYSE Arca Equities Rule 5.2(d). 28 See proposed NYSE Arca Equities Rule 5.2(d). 29 See Nasdaq Rule 4420(k). 69171 standards. In addition, the Exchange proposes to amend the initial listing standards for other securities and indexlinked exchangeable notes to add a pretax income requirement, consistent with the pre-tax income requirements of the common stock initial listing standards. The pre-tax income requirement for these securities is being raised from $750,000 to $1,000,000. Based on the foregoing, the Commission believes that the proposed amendments to the NYSE Arca Equities initial listing standards are consistent with the requirements of the Act. B. Continued Listing Standards The Commission believes that the proposed amendments to the NYSE Arca Equities continued listing standards are consistent with the requirements of the Act. The Exchange proposes to amend the common stock or common stock equivalent securities continued listing standard, by requiring that common stock must meet the standards set forth in one of two alternatives.30 Both common stock continued listing standards would increase the current publicly held shares requirement. In addition, the current $1,000,000 market value requirement would be increased to a $5,000,000 market value of publicly held shares requirement under Continued Listing Standard 1 and $15,000,000 under Continued Listing Standard 2. Continued Listing Standard 1 would replace the current net worth requirement of $2,000,000 or $4,000,000 with a higher stockholders’ equity requirement of $10,000,000. Continued Listing Standard 2 would eliminate the current net worth requirement, but require companies to maintain a market value of listed securities of $50,000,000 (in the case of non-U.S. companies, a global market capitalization of $50,000,000), or total assets and total revenue of $50,000,000 each for the most recently completed fiscal year or two of the last three most recently completed fiscal years. In addition, the Exchange would require under both common stock continued listing standards that all common stock have an average closing price of at least $1.00 over a consecutive 30-day trading period, instead of the current $3 bid price requirement.31 The Commission notes that the proposed continued listing standards for common stock, common stock equivalent securities and similar issues are substantially similar 25 See 26 See PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 30 See proposed NYSE Arca Equities Rule 5.5(b). noted above, issuers would have six months to cure this deficiency. See proposed NYSE Arca Equities Rule 5.5(b). 31 As E:\FR\FM\29NON1.SGM 29NON1 69172 Federal Register / Vol. 71, No. 229 / Wednesday, November 29, 2006 / Notices to The Nasdaq Global Market continued listing standards.32 The Exchange also proposes to amend the preferred stock (and similar issues) and secondary classes of common stock continued listing standards.33 The Exchange would eliminate the current net worth requirement and continuing operations requirements. In addition, the proposed new preferred continued listing standards would contain a new $1 bid price requirement. The Commission notes that the proposed continued listing standards for preferred stock and similar issues and secondary classes of common stock are substantially similar to The Nasdaq Global Market continued listing standards.34 C. Other Changes The proposed rule change would permit the Exchange, rather than its board of directors, to approve securities for listing and to prescribe the form of listing applications.35 In particular, the Exchange may deny listing or apply additional or more stringent criteria based on any event, condition, or circumstance that makes the listing of the company inadvisable or unwarranted in the opinion of the Exchange. Such determination could be made even if the company meets the standards set forth below. The Commission believes that it is reasonable for the Exchange, based upon its experience, to determine whether the security of a company would be appropriate for inclusion on NYSE Arca. The Commission notes that this amendment is similar to NYSE’s listing standards.36 Further, with respect to the continued listing standards of all securities, the Exchange proposes to require all issuers to comply with the Exchange’s corporate governance qualitative standards, rather than only the independent directors/board committees requirement in current NYSE Arca Equities Rule 5.3(k).37 The Commission believes that these amendments are consistent with the requirements of the Act. D. Accelerated Approval Pursuant to Section 19(b)(2) of the Act,38 the Commission may not approve 32 See Nasdaq Rule 4450(a)–(b). proposed NYSE Arca Equities Rule 5.5(c). 34 See Nasdaq Rule 4450(h). 35 See proposed NYSE Arca Equities Rule 5.1(a) and 5.2(a). 36 See NYSE Listed Company Manual Section 101.00. 37 See also NYSE Arca Equities Rule 5.5(k), which sets forth other reasons for suspending or delisting securities on the Exchange. 38 15 U.S.C. 78s(b)(2). jlentini on PROD1PC65 with NOTICES 33 See VerDate Aug<31>2005 15:37 Nov 28, 2006 Jkt 211001 any proposed rule change prior to the 30th day after the date of publication of notice of the filing thereof, unless the Commission finds good cause for so doing and publishes its reasons for so finding. The Exchange has requested the Commission find good cause for approving the proposed rule change prior to the 30th day after the date of publication of notice in the Federal Register. The Commission believes that it is reasonable to grant accelerated approval to allow for the efficient administration of the Exchange’s initial and continued listing programs as promptly as possible. The Commission notes that the proposed listing standards, while significantly different than the Exchange’s current listing standards, are substantially similar to The Nasdaq Global Market, which the Commission previously approved. In addition, the Commission notes that the proposed listing standards would be in effect only as a pilot program for a six-month period.39 Accordingly, the Commission believes that there is good cause, pursuant to Sections 6(b)(5) of the Act 40 and 19(b)(2) of the Act,41 to grant accelerated approval to the proposed rule change prior to the 30th day after the date of publication of notice in the Federal Register. V. Conclusion For the foregoing reasons, the Commission finds that the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange, and, in particular, with Section 6(b)(5) of the Act.42 It is therefore ordered, pursuant to Section 19(b)(2) of the Act,43 that the proposed rule change (SR–NYSEArca– 2006–85), is hereby approved on an accelerated basis, as a six-month pilot, until May 29, 2007. 39 In any request under Section 19(b) of the Act for permanent approval or an extension of the pilot period, the Exchange may wish to report on the operations of the new standards during the pilot period. 40 15 U.S.C. 78f(b)(5). 41 15 U.S.C. 78s(b)(2). 42 15 U.S.C. 78f(b)(5). The staff of the Division of Market Regulation (‘‘Staff’’) would not recommend enforcement action to the Commission under Rules 15g–2 through 15g–9 under the Act if broker-dealers treat equity securities listed pursuant to the initial and continued listing requirements set forth in amended NYSE Arca Equities Rule 5 as meeting the exclusion from the definition of penny stock contained in Rule 3a51–1 udner the Act pursuant to paragraph (a)(2) thereof. In taking this position, the Staff notes in particular that these amended listing requirements are equivalent, in all material respects, to the listing requirments of the The Nasdaq Global Market. 43 15 U.S.C. 78s(b)(2). PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.44 Nancy M. Morris, Secretary. [FR Doc. E6–20211 Filed 11–28–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54793; File No. SR–OCC– 2006–20] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Proposed Rule Change To Accelerate the Expiration Date of American-Style Equity Options That Have Been Adjusted To Call for CashOnly Delivery November 20, 2006. 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 October 26, 2006, The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by OCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The purpose of the proposed rule change is to accelerate the expiration date of American-style equity options that have been adjusted to call for cashonly delivery to the earliest practicable regular expiration date. OCC currently has such authority with respect to European-style options that have been so adjusted. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OCC 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. OCC has prepared summaries, set forth in sections (A), (B), 44 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\29NON1.SGM 29NON1

Agencies

[Federal Register Volume 71, Number 229 (Wednesday, November 29, 2006)]
[Notices]
[Pages 69166-69172]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-20211]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54796; File No. SR-NYSEArca-2006-85]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Order Granting Accelerated Approval of Proposed Rule Change 
Relating to a Six-Month Pilot Program To Adopt New Initial and 
Continued Listing Standards

 November 20, 2006.
    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 17, 2006, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'' or 
``SEC'') the proposed rule change as described in Items I and II below, 
which Items have been substantially prepared by the Exchange. The 
Commission is publishing this notice to solicit comment on the proposed 
rule change from interested persons. For the reasons discussed below, 
the Commission is granting accelerated approval of the proposed rule 
change, as a six-month pilot, until May 29, 2007.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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, on a six-month pilot program basis (the 
``Pilot Program''), to make significant revisions to its initial and 
continued financial listing standards for operating companies.\3\ The 
text of the proposed rule change is available on the Exchange's Web 
site at www.nysearca.com, at the Exchange's Office of the Secretary and 
at the Commission's Public Reference Room.
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    \3\ The Commission notes that the proposed changes are primarily 
to the initial and continued listing standards of common stock and 
common stock equivalent securities, preferred stock and similar 
issues and secondary classes of common stock. Some changes are also 
being made to the listing standards for bonds and debentures, 
warrants, contingent value rights, other securities, and index-
linked exchangeable notes.
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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

[[Page 69167]]

the places specified in Item III below. The self-regulatory 
organization 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
    On March 7, 2006, Archipelago Holdings, Inc. and the New York Stock 
Exchange, Inc. completed their merger (the ``Merger''), creating NYSE 
Group, Inc. (``NYSE Group''). NYSE Group is a holding company that 
operates, among other subsidiaries, two securities exchanges: New York 
Stock Exchange LLC (``NYSE'') and NYSE Arca Equities, Inc. (``NYSE Arca 
Equities'' or the ``Corporation'').\4\ NYSE Arca Equities conducts its 
equities trading operations through its equities trading facility, NYSE 
Arca, L.L.C. (also referred to as the ``NYSE Arca Marketplace'').
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    \4\ The Commission notes that NYSE Arca is actually the 
registered national securities exchange and NYSE Arca Equities is a 
wholly-owned subsidiary of NYSE Arca.
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    In connection with the Merger, NYSE Arca Marketplace examined all 
aspects of its listings program, and as a result, determined to make 
substantial modifications and enhancements to its listing standards. 
Accordingly, with this filing, NYSE Arca is proposing significant 
revisions to the initial and continued listing criteria applicable to 
operating companies set forth in NYSE Arca Equities Rule 5, completely 
replacing the current tiered structure with a single set of numerical 
and financial requirements.\5\ The principal objectives of these 
proposed revisions are to upgrade the financial condition, shareholder 
interest, and stature of issuers listing on NYSE Arca Marketplace; more 
closely align NYSE Arca Marketplace's listing standards and structure 
with the NYSE; and enhance NYSE Arca Marketplace's competitive 
position.\6\
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    \5\ This filing relates only to quantitative (financial) 
original and continued listing standards applicable to operating 
companies. It does not relate to listing standards for corporate 
governance, exchange traded funds, open and closed-end funds, 
commodity-based trusts, trust issued receipts, portfolio depositary 
receipts, investment company units or other types of structured 
products. See supra note 3.
    \6\ The Commission recently approved substantial revisions to 
NYSE Arca's listing fees. See Securities Exchange Act Release No. 
54007 (June 16, 2006), 71 FR 36155 (June 23, 2006) (SR-PCX-2006-16).
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    NYSE Arca Equities Rule 5.1(a) provides that the Board of the 
Directors of the Exchange will make determinations as to whether to 
list securities or admit securities to unlisted trading privileges on 
the Exchange. Similarly, current NYSE Arca Equities Rule 5.2(a) 
provides that the prescribed forms of applications to list securities 
on the Exchange will be determined by the Board of Directors. This 
filing proposes to amend both of the aforementioned requirements to 
state that the Exchange will make such determinations. Such decisions 
will be made by the chief executive officer of the Exchange or by staff 
of the Exchange pursuant to authority delegated by the chief executive 
officer. In addition, NYSE Arca Equities Rule 5.2(a) would be amended 
to state that the Exchange may deny listing or apply additional or more 
stringent criteria based on any event, condition, or circumstance that 
makes the listing of the company inadvisable or unwarranted in the 
opinion of the Exchange. Such determination could be made even if the 
company meets the standards set forth below.

Summary of Current and Proposed Initial Listing Standards

Summary of Current Initial Listing Standards for Operating Companies

    Currently, the NYSE Arca Marketplace has a two-tier listing 
structure, classifying listed securities as either Tier I or Tier II. 
For their common stock to qualify for initial listing as a Tier I 
security, issuers must satisfy, among other things, the numerical 
criteria set forth in NYSE Arca Equities Rule 5.2(c).\7\ To qualify for 
initial listing as a Tier II security, issuers must satisfy, among 
other things, the numerical criteria set forth in NYSE Arca Equities 
Rule 5.2(k). Both Rule 5.2(c) and Rule 5.2(k) also provide that an 
issuer may qualify under either a Basic or an Alternate set of listing 
criteria. To be eligible to list, an issuer need only satisfy all of 
the criteria under one of these four separate sets of standards.\8\
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    \7\ In addition to the numerical criteria set forth in Rules 
5.2(c) and 5.2(k), issuers must also satisfy certain qualitative 
requirements, including corporate governance-related standards set 
forth in NYSE Arca Equities Rule 5.3. These corporate governance 
rules are not the subject of this proposal.
    \8\ NYSE Arca Equities Rule 5.2(a) provides that approval of 
listing applications is a matter solely within the discretion of 
NYSE Arca Equities, and the fact that an issuer may meet the 
applicable listing requirements does not necessarily mean that its 
application will be approved.

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[[Page 69168]]

    These requirements are:

----------------------------------------------------------------------------------------------------------------
                                                    Tier I (Rule 5.2(c))              Tier II (Rule 5.2(k))
                                             -------------------------------------------------------------------
                                                   Basic          Alternate          Basic          Alternate
----------------------------------------------------------------------------------------------------------------
Net tangible assets \9\.....................  ...............  ...............      $2,000,000   ...............
Net worth \10\..............................      $4,000,000      $12,000,000   ...............      $8,000,000
Pre-tax income \11\.........................        $750,000   ...............  ...............  ...............
Net income \12\.............................  ...............  ...............        $100,000   ...............
Public float (shares).......................         500,000        1,000,000          500,000        1,000,000
Public beneficial holders \13\..............      800 or 400              400              500              500
Market value................................      $3,000,000      $15,000,000       $1,500,000       $2,000,000
Operating history...........................  ...............         3 years          3 years   ...............
Price \14\..................................              $5               $3               $3               $1
----------------------------------------------------------------------------------------------------------------

Proposed Initial Listing Standards for Common Stock and Common Stock 
Equivalent Securities

    With this filing, NYSE Arca is proposing to eliminate the Tier I 
and II classifications and replace, in their entirety, the current Tier 
I and Tier II numerical standards for initial listing for common stock 
set forth in NYSE Arca Rules 5.2(c) and (k), respectively. Companies 
whose common stock is listed with a Tier II designation will be able to 
remain listed under the existing Tier II rules as long as they are in 
compliance with the maintenance requirements of Arca Equities Rule 
5.5(h). However, the Exchange will no longer list any new issuers or 
additional classes of securities with a Tier II designation.
---------------------------------------------------------------------------

    \9\ NYSE Arca Equities Rule 5.1(b)(10) defines ``net tangible 
assets'' as the amount of funds remaining after deducting intangible 
assets from stockholders' equity. This rule further provides that 
intangible assets include, but are not limited to, goodwill, 
patents, copyrights, trademarks, leaseholds, franchises, licenses, 
permits, research and development costs, organization costs, and 
similar types of property rights.
    \10\ NYSE Arca Equities Rule 5.1(b)(9) defines ``net worth'' as 
total assets (excluding the value of goodwill) less total 
liabilities.
    \11\ NYSE Arca Equities Rule 5.2(c)(4) provides that an issuer 
must have pre-tax income from continuing operations of at least 
$750,000 in the last fiscal year or two of the last three fiscal 
years.
    \12\ NYSE Arca Equities Rule 5.2(k)(4) provides that an issuer 
must have net income from continuing operations of at least $100,000 
in the last fiscal year or in two of the last three fiscal years, or 
total net tangible assets of $2,500,000.
    \13\ NYSE Arca Equities Rule 5.2(c)(2) provides that issuers 
must have at least 800 public beneficial holders if the issuer has 
at least 500,000 and less than 1,000,000 shares publicly held, or a 
minimum of 400 public beneficial holders if the issuer has either: 
(i) At least 1,000,000 shares publicly held; or (ii) at least 
500,000 shares publicly held and average daily trading volume in 
excess of 2,000 shares for the six months preceding the date of 
application.
    \14\ NYSE Arca Equities Rules 5.2(c)(5) and 5.2(k)(5) provide 
that the issuer must maintain the minimum price for the majority of 
business days for the most recent six-month period prior to the date 
of application, and the price must be at or above the minimum per 
share at the time of application.
---------------------------------------------------------------------------

    In place of the existing Tier I and Tier II standards, this filing 
proposes to require for initial listing that, at the time of initial 
listing, the listed class of common stock or common stock equivalent 
securities \15\ shall have:
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    \15\ Proposed NYSE Arca Equities Rule 5.1(b)(26) defines common 
stock equivalent as ``ordinary shares, ADRs, American Depository 
Shares, global depository shares, depository shares, shares or 
certificates of beneficial interest of trusts, and other similar 
issues that have the same characteristics of common stock.''
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     At least 1.1 million publicly held shares.
     A closing price per share of $5 or more.
     A minimum of 400 round lot shareholders.
    In addition, the requirements of one of Standards One, Two or Three 
below must be met:

Standard One

     The issuer of the security had annual income from 
continuing operations before income taxes of at least $1 million in the 
most recently completed fiscal year or in two of the last three most 
recently completed fiscal years.
     The market value of publicly held shares is at least $8 
million.
     The issuer of the security has stockholders' equity of at 
least $15 million.

Standard Two

     The issuer of the security has stockholders' equity of at 
least $30 million.
     The market value of publicly held shares is at least $18 
million.
     The issuer has a two-year operating history.

Standard Three

     The market value of publicly held shares is at least $20 
million.
     The issuer has:
    [cir] A market value of listed securities of $75 million (currently 
traded issuers must meet this requirement and the $5 closing price 
requirement for 90 consecutive trading days prior to applying for 
listing); or
    [cir] Total assets and total revenue of $75 million each for the 
most recently completed fiscal year or two of the last three most 
recently completed fiscal years.
    In evaluating compliance with these standards, the Exchange will 
consider amounts contained in a company's pro forma financial 
statements provided in a filing with the Commission pursuant to 
Commission rules and regulations governing Article 11 ``Pro forma 
information of Regulation S-X Part 210--Form and Content of and 
Requirements for Financial Statements.'' This shall include, without 
limitation, adjustments relating to the proceeds of an offering. In the 
case of foreign private issuers (as such term is defined in Rule 3b-4 
under the Act), the Exchange will take into account global market 
capitalization in evaluating compliance with the market capitalization 
requirements of this rule.
    This revised rule shall apply to common stock and common stock 
equivalents, including, but not limited to: Ordinary shares, American 
Depository Receipts (``ADRs''), American Depository Shares, global 
depository shares, depository shares, shares or certificates of 
beneficial interest of trusts, and other similar issues that have the 
same characteristics of common stock.

Summary of Current Initial Listing Standards for Preferred Stock and 
Similar Issues

    Currently, as set forth in NYSE Arca Equities Rule 5.2(d), in the 
case of preferred stock and similar issues, the following listing 
requirements among others must be met:
     The issuer must meet the net worth and earnings 
requirements as set forth in the Tier I Basic Listing Requirements 
under Rule 5.2(c), and must meet and appear to be able to service the 
dividend requirements for the preferred stock.
     If the company's common stock is traded on NYSE Arca or on 
either the American Stock Exchange LLC

[[Page 69169]]

(``Amex'') or NYSE, the following public distribution requirements must 
be met: At least 100,000 preferred shares publicly held and an 
aggregate market value of at least $2,000,000, and a minimum closing 
bid price of $10.
     If the related common stock is not traded on any of the 
above referenced exchanges then the requirements are: At least 400,000 
preferred shares publicly held and an aggregate market value of at 
least $4,000,000, and a minimum closing bid price of $10. At least 800 
public beneficial holders of 100 shares or more shall also be required.

Proposed Initial Listing Standards for Preferred Stock and Similar 
Issues and Secondary Classes of Common Stock

    For initial listing, if the common stock or common stock equity 
equivalent security of the issuer is listed on the Exchange or on the 
NYSE, The Nasdaq Global Market or the Amex, the issue shall have:
     At least 200,000 publicly held shares;
     A market value of publicly held shares of at least 
$4,000,000;
     A minimum closing price per share of $5;
     A minimum of 100 round lot shareholders.
    Alternatively, in the event the issuer's common stock or common 
stock equivalent security is not listed on either the Exchange or on 
the NYSE, The Nasdaq Global Market or the Amex, the preferred stock 
and/or secondary class of common stock may be traded on the Exchange so 
long as the security satisfies the initial listing criteria for common 
stock.

Summary of Current and Proposed Continued Listing Standards

Current Continued Listing Standards for Common Stock

    To qualify for continued listing as a Tier I security, issuers must 
satisfy, among other things, the numerical criteria set forth in NYSE 
Arca Equities Rule 5.5(b). To qualify for continued listing as a Tier 
II security, issuers must satisfy, among other things, the numerical 
criteria set forth in NYSE Arca Equities Rule 5.5(h).
    These requirements are:
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    \16\ If the issuer has sustained losses from continuing 
operations and/or net losses in two of the last three fiscal years, 
then it must have a minimum of $2 million in net worth. If the 
issuer has sustained losses from continuing operations and/or net 
losses in three of the last four fiscal years, then it must have a 
minimum of $4 million in net worth.
    \17\ Alternatively, an issuer must have at least 300 beneficial 
holders of 100 shares or more.
    \18\ NYSE Arca Equities Rules 5.5(b) and (h) provide that NYSE 
Arca Equities may waive the minimum bid price requirements upon 
consideration of market conditions, the issuer's capitalization, the 
number of outstanding and publicly held shares, and any other 
factors NYSE Arca Equities deems appropriate. This proposal 
eliminates this provision and replaces it with the ``cure period'' 
set forth in revised Rule 5.5(b).

----------------------------------------------------------------------------------------------------------------
                                              Tier I (Rule 5.5(b))               Tier II (Rule 5.5(h))
----------------------------------------------------------------------------------------------------------------
Net tangible assets or Net worth........  $2,000,000 or 4,000,000      $500,000 or 2,000,000.
                                           \16\.
Public float (shares)...................  200,000....................  300,000.
Public beneficial holders...............  400 \17\...................  250.
Market value............................  $1,000,000.................  $500,000.
Bid price \18\..........................  $3.........................  $1.
----------------------------------------------------------------------------------------------------------------

Proposed Continued Listing Standards for Common Stock and Common Stock 
Equivalent Securities

    With this filing, NYSE Arca is proposing to eliminate the two 
tiered structure and replace, in their entirety, the current Tier I and 
Tier II numerical standards for continued listing for common stock set 
forth in NYSE Arca Rules 5.5(b) and (h), respectively, except that Rule 
5.5(h) will continue to be applied to common stocks listed with a Tier 
II designation prior to the effectiveness of this filing. In their 
place, this filing proposes in new Rule 5.5(b) to require for continued 
listing that a listed common stock must meet the criteria set forth in 
either Continued Listing Standard One or Continued Listing Standard Two 
below to continue to remain listed on the Exchange. All of the existing 
Tier I issuers and securities currently meet the requirements of the 
proposed continued listing standards. As such, the Exchange does not 
need to provide a phase in period for compliance with the new rules and 
will be able to apply them as soon as the Commission approves the Pilot 
Program.
    Under the proposed new standards, a listed common stock must meet 
each of the criteria set forth in Continued Listing Standards One or 
Two below to continue to remain listed on the Exchange.

Continued Listing Standard One

     750,000 publicly held shares;
     Market value of publicly held shares of $5 million;
     The issuer has stockholders' equity of at least $10 
million; and
     400 shareholders of round lots.

Continued Listing Standard Two

     The issuer has:
    [cir] A market value of listed securities of $50 million or, in the 
case of non-U.S. companies, a global market capitalization of $50 
million; or
    [cir] total assets and total revenue of $50 million each for the 
most recently completed fiscal year or two of the last three most 
recently completed fiscal years.
     1,100,000 shares publicly held;
     Market value of publicly held shares of $15 million; and
     400 shareholders of round lots.
    In the case of a non-U.S. company with ADRs listed on the Exchange, 
the term ``global market capitalization'' means (x) the closing sale 
price per share of the common stock or common stock equivalent security 
underlying the ADRs multiplied by (y) the number of shares of such 
common stock or common stock equivalent security outstanding worldwide 
(including any shares underlying outstanding ADRs).
    In addition, an issuer will also be considered to be below 
compliance standards if the average closing price of a security is less 
than $1.00 over a consecutive 30 trading-day period. Once notified, the 
issuer must bring its share price and average share price back above 
$1.00 by six months following receipt of the notification. The issuer 
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. Once a U.S. issuer is 
notified that it is below compliance, it is required to issue a press 
release disclosing the fact that it has fallen below the continued 
listing standards of the Exchange concurrent with filing notice of such 
non-compliance with the SEC as required by Form 8-K. Once a foreign 
private issuer is notified that it is below compliance, the issuer has 
30 days to issue a press

[[Page 69170]]

release disclosing the fact that it has fallen below the continued 
listing standards of the Exchange. If the foreign private issuer fails 
to issue this press release during the allotted 30 days, the Exchange 
will issue the requisite press release. 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 an issuer 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.
    Notwithstanding the foregoing, if the subject security is not the 
primary trading common equity security of the issuer (e.g., a tracking 
stock or a preferred class), as discussed in more detail below, the 
Exchange may determine whether to apply this test to such security 
after evaluating the financial status of the issuer.

Continued Listing Standards for Preferred Stock and Similar Issues and 
Secondary Classes of Common Stock

    NYSE Arca proposes to replace its existing continued listing 
standards for preferred stock and similar issues with the requirements 
described below and to also apply those requirements to secondary 
classes of common stock.
    For continued listing, if the common stock or common stock equity 
equivalent security of the issuer is listed on the Exchange or on the 
NYSE, The Nasdaq Global Market or the Amex, the issue shall have:
     At least 100,000 publicly held shares;
     A market value of publicly held shares of at least 
$1,000,000;
     A minimum closing price per share of $1;
     A minimum of 100 round lot shareholders.
    If the preferred stock or similar issue is the issuer's only 
security listed on the Exchange, after evaluating the financial status 
of the issuer, the Exchange may choose to apply the six-month cure 
period provided under the proposed common stock continued listing 
standards to any failure to maintain a $1 closing price.
    Alternatively, in the event the issuer's common stock or common 
stock equivalent security is not listed on either the Exchange or on 
the NYSE, The Nasdaq Global Market or the Amex, the preferred stock 
and/or secondary class of common stock may be listed on the Exchange so 
long as the security satisfies the continued listing criteria for 
common stock.

Other Securities Pre-Tax Income Requirement

    To conform to the parallel provision in Standard One of the 
proposed common stock initial listing standards, the Exchange proposes 
to increase the pre-tax income from continuing operations standard of 
NYSE Arca Equities Rule 5.2(e) (``Bonds and Debentures''), NYSE Arca 
Equities Rule 5.2(g) (``Contingent Value Rights''), NYSE Arca Equities 
Rule 5.2(j)(1) (``Other Securities'') and NYSE Arca Equities Rule 
5.2(j)(4) (``Index-Linked Exchangeable Notes'') from $750,000 to $1 
million.\19\
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    \19\ The Commission notes that, among other things, the Exchange 
proposes other clarifying changes, additional definitions, and 
different net worth standards for bonds and debentures, contingent 
value rights, other securities, and index-linked exchangeable notes.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act,\20\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act \21\ in particular, because it is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system.
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    \20\ 15 U.S.C. 78f(b).
    \21\ 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 on the proposed rule change were neither solicited 
nor received.

III. 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-NYSEArca-2006-85 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-NYSEArca-2006-85. 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. 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-NYSEArca-2006-85 and should be submitted on or before 
December 20, 2006.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder

[[Page 69171]]

applicable to a national securities exchange.\22\ In particular, the 
Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act,\23\ which requires that an exchange have 
rules designed, among other things, 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 are not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \22\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rules' impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \23\ 15 U.S.C. 78f(b)(5).
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    The Exchange proposes to make significant changes to its initial 
and continued listing standards. Among other things, the Exchange would 
no longer have a two-tiered listing structure. The Exchange represents 
that all existing Tier I issuers would meet one of the proposed 
continued listing standards set forth in proposed NYSE Arca Equities 
Rule 5.5(h). Further, the proposal would include a grandfather clause 
to ensure that the existing Tier II issuers would have the option to 
remain listed on the Exchange for as long as they meet the continued 
listing standards. The Commission believes that the proposal is 
designed not to permit unfair discrimination among issuers, since the 
proposal would treat all prospective issuers and existing Exchange-
listed issuers equally.
    Although the proposal significantly restructures and changes NYSE 
Arca listing standards, as discussed below, the changes are 
substantially similar to The Nasdaq Global Market initial and continued 
listing standards. Based on this, the Commission believes it is 
reasonable for the Exchange to determine that companies that meet these 
new listing standards are appropriate for inclusion and continued 
listing on NYSE Arca. For these reasons, as discussed in more details 
below, the Commission finds that the proposal is consistent with the 
requirements of the Act.

A. Initial Listing Standards

    As proposed, the Exchange's common stock or common stock equivalent 
securities \24\ initial listing standards would be significantly 
modified and the Exchange would no longer have Tier I or Tier II 
securities. Common stock or common stock equivalent securities would 
need: (1) At least 1.1 million publicly held shares; (2) a closing 
price per share of $5 or more; and (3) a minimum of 400 round lot 
shareholders, in addition to meeting the additional standards set forth 
in one of three alternatives.\25\ Among other things, Standard 1 and 
Standard 2 would replace the current net worth requirement with an 
increased stockholders' equity requirement of $15,000,000 and 
$30,000,000, respectively. In addition, under Standard 3, the current 
net worth requirement would be eliminated and the issuer would be 
required to have a market value of listed securities of $75,000,000 or 
total assets and total revenue of $75,000,000 each for the most 
recently completed fiscal year or two of the last three most recently 
completed fiscal years. The Commission notes that the proposed initial 
listing standards for common stock or common stock equivalent 
securities are substantially similar to The Nasdaq Global Market 
initial listing standards.\26\
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    \24\ See proposed NYSE Arca Equities Rule 5.1(b)(26).
    \25\ See proposed NYSE Arca Equities Rule 5.2(c).
    \26\ See Nasdaq Rule 4420(a)-(c).
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    The Exchange's proposed preferred stock (and similar issues) and 
secondary classes of common stock initial listing standards would also 
be significantly modified. The Exchange would eliminate the current net 
worth and earnings requirements, and increase the current publicly held 
shares requirement and market value requirement. The Exchange would 
also lower the current bid price requirement. As proposed, if the 
common stock or common stock equivalent security of the issuer is 
listed on the Exchange, NYSE, The Nasdaq Global Market, or Amex, these 
securities must have: (1) At least 200,000 publicly held shares; (2) a 
market value of publicly held shares of at least $4 million; (3) a 
closing price per share of $5 or more; and (4) a minimum of 100 round 
lot shareholders.\27\ If the common stock or common stock equivalent 
security of the issuer is not listed on the Exchange, NYSE, The Nasdaq 
Global Market, or Amex, these securities must satisfy the initial 
listing standards for common stock.\28\ The Commission notes that these 
requirements are substantially similar to The Nasdaq Global Market 
initial listing standards.\29\
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    \27\ See proposed NYSE Arca Equities Rule 5.2(d).
    \28\ See proposed NYSE Arca Equities Rule 5.2(d).
    \29\ See Nasdaq Rule 4420(k).
---------------------------------------------------------------------------

    The Exchange also proposes to amend the initial listing standards 
for bonds and debentures and contingent value rights by increasing the 
net worth requirement and pre-tax income requirement consistent with 
the proposed common stock initial listing standards. In addition, the 
Exchange proposes to amend the initial listing standards for other 
securities and index-linked exchangeable notes to add a pre-tax income 
requirement, consistent with the pre-tax income requirements of the 
common stock initial listing standards. The pre-tax income requirement 
for these securities is being raised from $750,000 to $1,000,000.
    Based on the foregoing, the Commission believes that the proposed 
amendments to the NYSE Arca Equities initial listing standards are 
consistent with the requirements of the Act.

B. Continued Listing Standards

    The Commission believes that the proposed amendments to the NYSE 
Arca Equities continued listing standards are consistent with the 
requirements of the Act. The Exchange proposes to amend the common 
stock or common stock equivalent securities continued listing standard, 
by requiring that common stock must meet the standards set forth in one 
of two alternatives.\30\ Both common stock continued listing standards 
would increase the current publicly held shares requirement. In 
addition, the current $1,000,000 market value requirement would be 
increased to a $5,000,000 market value of publicly held shares 
requirement under Continued Listing Standard 1 and $15,000,000 under 
Continued Listing Standard 2. Continued Listing Standard 1 would 
replace the current net worth requirement of $2,000,000 or $4,000,000 
with a higher stockholders' equity requirement of $10,000,000. 
Continued Listing Standard 2 would eliminate the current net worth 
requirement, but require companies to maintain a market value of listed 
securities of $50,000,000 (in the case of non-U.S. companies, a global 
market capitalization of $50,000,000), or total assets and total 
revenue of $50,000,000 each for the most recently completed fiscal year 
or two of the last three most recently completed fiscal years. In 
addition, the Exchange would require under both common stock continued 
listing standards that all common stock have an average closing price 
of at least $1.00 over a consecutive 30-day trading period, instead of 
the current $3 bid price requirement.\31\ The Commission notes that the 
proposed continued listing standards for common stock, common stock 
equivalent securities and similar issues are substantially similar

[[Page 69172]]

to The Nasdaq Global Market continued listing standards.\32\
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    \30\ See proposed NYSE Arca Equities Rule 5.5(b).
    \31\ As noted above, issuers would have six months to cure this 
deficiency. See proposed NYSE Arca Equities Rule 5.5(b).
    \32\ See Nasdaq Rule 4450(a)-(b).
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    The Exchange also proposes to amend the preferred stock (and 
similar issues) and secondary classes of common stock continued listing 
standards.\33\ The Exchange would eliminate the current net worth 
requirement and continuing operations requirements. In addition, the 
proposed new preferred continued listing standards would contain a new 
$1 bid price requirement. The Commission notes that the proposed 
continued listing standards for preferred stock and similar issues and 
secondary classes of common stock are substantially similar to The 
Nasdaq Global Market continued listing standards.\34\
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    \33\ See proposed NYSE Arca Equities Rule 5.5(c).
    \34\ See Nasdaq Rule 4450(h).
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C. Other Changes

    The proposed rule change would permit the Exchange, rather than its 
board of directors, to approve securities for listing and to prescribe 
the form of listing applications.\35\ In particular, the Exchange may 
deny listing or apply additional or more stringent criteria based on 
any event, condition, or circumstance that makes the listing of the 
company inadvisable or unwarranted in the opinion of the Exchange. Such 
determination could be made even if the company meets the standards set 
forth below. The Commission believes that it is reasonable for the 
Exchange, based upon its experience, to determine whether the security 
of a company would be appropriate for inclusion on NYSE Arca. The 
Commission notes that this amendment is similar to NYSE's listing 
standards.\36\ Further, with respect to the continued listing standards 
of all securities, the Exchange proposes to require all issuers to 
comply with the Exchange's corporate governance qualitative standards, 
rather than only the independent directors/board committees requirement 
in current NYSE Arca Equities Rule 5.3(k).\37\ The Commission believes 
that these amendments are consistent with the requirements of the Act.
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    \35\ See proposed NYSE Arca Equities Rule 5.1(a) and 5.2(a).
    \36\ See NYSE Listed Company Manual Section 101.00.
    \37\ See also NYSE Arca Equities Rule 5.5(k), which sets forth 
other reasons for suspending or delisting securities on the 
Exchange.
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D. Accelerated Approval

    Pursuant to Section 19(b)(2) of the Act,\38\ the Commission may not 
approve any proposed rule change prior to the 30th day after the date 
of publication of notice of the filing thereof, unless the Commission 
finds good cause for so doing and publishes its reasons for so finding. 
The Exchange has requested the Commission find good cause for approving 
the proposed rule change prior to the 30th day after the date of 
publication of notice in the Federal Register.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    The Commission believes that it is reasonable to grant accelerated 
approval to allow for the efficient administration of the Exchange's 
initial and continued listing programs as promptly as possible. The 
Commission notes that the proposed listing standards, while 
significantly different than the Exchange's current listing standards, 
are substantially similar to The Nasdaq Global Market, which the 
Commission previously approved. In addition, the Commission notes that 
the proposed listing standards would be in effect only as a pilot 
program for a six-month period.\39\ Accordingly, the Commission 
believes that there is good cause, pursuant to Sections 6(b)(5) of the 
Act \40\ and 19(b)(2) of the Act,\41\ to grant accelerated approval to 
the proposed rule change prior to the 30th day after the date of 
publication of notice in the Federal Register.
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    \39\ In any request under Section 19(b) of the Act for permanent 
approval or an extension of the pilot period, the Exchange may wish 
to report on the operations of the new standards during the pilot 
period.
    \40\ 15 U.S.C. 78f(b)(5).
    \41\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with the Act and the rules and regulations 
thereunder applicable to a national securities exchange, and, in 
particular, with Section 6(b)(5) of the Act.\42\
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    \42\ 15 U.S.C. 78f(b)(5). The staff of the Division of Market 
Regulation (``Staff'') would not recommend enforcement action to the 
Commission under Rules 15g-2 through 15g-9 under the Act if broker-
dealers treat equity securities listed pursuant to the initial and 
continued listing requirements set forth in amended NYSE Arca 
Equities Rule 5 as meeting the exclusion from the definition of 
penny stock contained in Rule 3a51-1 udner the Act pursuant to 
paragraph (a)(2) thereof. In taking this position, the Staff notes 
in particular that these amended listing requirements are 
equivalent, in all material respects, to the listing requirments of 
the The Nasdaq Global Market.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\43\ that the proposed rule change (SR-NYSEArca-2006-85), is hereby 
approved on an accelerated basis, as a six-month pilot, until May 29, 
2007.
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    \43\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\44\
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    \44\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-20211 Filed 11-28-06; 8:45 am]
BILLING CODE 8011-01-P