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 (https://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 (https://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

SECURITIES AND EXCHANGE COMMISSION

[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.
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\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:
---------------------------------------------------------------------------

\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.''
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

\20\ 15 U.S.C. 78f(b).
\21\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 (https://
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 (https://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).
---------------------------------------------------------------------------

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).
---------------------------------------------------------------------------

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).
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\33\ See proposed NYSE Arca Equities Rule 5.5(c).
\34\ See Nasdaq Rule 4450(h).
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

\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).
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

\43\ 15 U.S.C. 78s(b)(2).

For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\44\
---------------------------------------------------------------------------

\44\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
[FR Doc. E6-20211 Filed 11-28-06; 8:45 am]
BILLING CODE 8011-01-P

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