Self-Regulatory Organizations; Notice of Filing by New York Stock Exchange LLC To Adopt an Additional Initial Listing Standard for Operating Companies, 60382-60385 [E8-24182]
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60382
Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Notices
guidelines set forth above. Where
appropriate, the Exchange may apply
the Aberrant Report Indicator to trades
that were reported prior to the adoption
of this policy.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Exchange Act,4 in
general, and furthers the objectives of
Section 6(b)(5) of the Exchange Act,5 in
particular in that it is designed to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest.
In particular, the Aberrant Report
Indicator is consistent with the
protection of investors and the public
interest in that the Exchange will seek
to ensure a proper understanding of the
Aberrant Report Indicator among
securities market participants by: (i)
Urging vendors to disclose the exclusion
from high, low or last sale price data of
any aberrant trades excluded from high,
low or last sale price information they
disseminate and to provide to data users
an explanation of the parameters used
in the Exchange’s aberrant trade policy;
(ii) informing the affected listed
company each time the Exchange or
another market appends the Aberrant
Report Indicator to a trade in an NYSElisted stock; and (iii) reminding the
users of the information that these are
still valid trades in that they were
executed and not unwound as in the
case of a clearly erroneous trade.
mstockstill on PROD1PC66 with NOTICES
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Exchange Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
From time to time, the Exchange has
received comments from representatives
of its listed companies that a trade
report for a transaction in the stock of
that listed company is inconsistent with
the prevailing market for that stock and
44
15 U.S.C. 78f(b).
U.S.C. 78f(b)(5).
5 15
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that the inconsistent trade price has
inappropriately distorted the high, low
and last sale price calculations for the
listed company. While those
commenters have not submitted formal,
written comments on the proposal, the
Exchange has incorporated some of their
ideas into the proposal and this
proposed rule change reflects their
input. The Exchange has not received
any unsolicited written comments from
members or other interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve the proposed
rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Exchange
Act. Comments may be submitted by
any of the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSE–2008–91 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSE–2008–91. 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
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Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of the filing also will be available
for inspection and copying at the
principal office of the Exchange. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–NYSE–2008–91 and should
be submitted on or before October 31,
2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–24181 Filed 10–9–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–58740; File No. SR–NYSE–
2008–98]
Self-Regulatory Organizations; Notice
of Filing by New York Stock Exchange
LLC To Adopt an Additional Initial
Listing Standard for Operating
Companies
October 6, 2008.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’),2 and Rule 19b–4 thereunder,3
notice is hereby given that on October
1, 2008, New York Stock Exchange LLC
(‘‘NYSE’’ or ‘‘the Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule changes as described in
Items I, II and III below, which items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule changes from interested
persons.
6 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Section 102.01C of the Exchange’s
Listed Company Manual (the ‘‘Manual’’)
to adopt an additional initial listing
standard under which companies may
qualify to list on the Exchange. The
Exchange also proposes to apply the
continued listing standard applicable
under Section 802.01B to companies
listed under the Earnings Test to
companies listed under the proposed
new initial listing standard.4
The text of the proposed rule change
is available on the Exchange’s Web site
(https://www.nyse.com), at the
Exchange’s Office of the Secretary, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
NYSE has prepared summaries, set forth
in Sections A, B, and C below, of the
most significant aspects of such
statements.
mstockstill on PROD1PC66 with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Section 102.01C of the Manual to adopt
an additional initial listing standard
under which companies may qualify to
list on the Exchange. The Exchange also
proposes to apply the continued listing
standard applicable under Section
802.01B to companies listed under the
Earnings Test to companies listed under
the proposed new initial listing
standard.
The proposed new standard (the
‘‘Assets and Equity Test’’) will not
replace any of the existing initial listing
standards set forth in Section 102.01C.
Rather it will be an additional
alternative standard under which
companies may qualify to list.
Companies qualifying to list under the
4 The Commission notes that NYSE is also
proposing to adopt a new initial listing standard
applicable only to companies transferring from
NYSE Arca. See Securities Exchange Act Release
No. 58741 (October 6, 2008) (SR–NYSE–2008–97).
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proposed new standard will have to
meet the same holders, publicly-held
shares and trading volume requirements
as set forth in Section 102.01A as
companies that list under the existing
initial listing standards and must meet
the same market value of publicly-held
shares requirements 5 and $4 stock price
requirement in Section 102.01B as
companies that list under the existing
initial listing standards in Section
102.01C. In addition, at the time of
listing, they will be required to have, at
a minimum, (i) $75 million in total
assets, (ii) $50 million in stockholders’
equity and (iii) $150 million of total
market capitalization.6 In considering
the listing under the Assets and Equity
Test of companies transferring from
other markets, the Exchange will
consider whether the company’s
business prospects and operating results
indicate that the company’s market
capitalization value is likely to be
sustained or increase over time.
While companies that list under the
Assets and Equity Test will not be
required to have any minimum
operating history prior to listing,
companies that would otherwise have
been considered for listing under
Section 102.06 of the Manual—the
Exchange’s Acquisition Company
standard (i.e., ‘‘SPACs’’)—will not
qualify for listing under the Assets and
Equity Test. SPACs will continue to be
listed only under Section 102.06.
5 $60 million in the case of IPOs and $100 million
for all other companies.
6 The total assets and stockholders equity that the
Exchange will use for qualification purposes will be
taken from the company’s most recent balance sheet
included in an SEC filing, in each case as adjusted
pursuant to Sections 102.01C(I)(3)(a) (adjusting for
the use of offering proceeds) and (b) (adjusting for
the effects of acquisitions and dispositions) as
applicable. The adjustments referenced in the prior
sentence enable the Exchange to analyze the
company’s balance sheet at the time of listing on
a pro forma basis to reflect the infusion of new
capital from a concurrent financing or the balance
sheet effects of any acquisition or disposition of
assets taking place in conjunction with the listing.
This is consistent with the Exchange’s approach in
listing companies under its existing initial listing
standards and the Exchange believes that making
these pro forma adjustments provides a more
accurate understanding of the entity that will
actually list. The Exchange also adjusts listing
applicants’ market capitalization and public float to
give effect to any new shares issued at the time of
listing. All of these adjustments are typical of the
financial presentation provided by companies in
their offering prospectuses that are reviewed by the
Division of Corporation Finance and included in
the related registration statements declared effective
by the Division of Corporation Finance. In the case
of companies listing in connection with an IPO, the
company’s underwriter (or, in the case of a spin-off,
the parent company’s investment banker or other
financial advisor) must provide a written
representation that demonstrates the company’s
ability to meet the $150 million global market
capitalization requirement based upon the
completion of the offering (or distribution).
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Companies qualifying under the Assets
and Equity Test will be subject to the
same continued listing standard in
Section 802.01B as companies that
qualify under the Earnings Test, i.e.,
they will be considered to be below
compliance standards if their average
global market capitalization over a
consecutive 30 trading-day period is
less than $75 million and, at the same
time, total stockholders’ equity is less
than $75 million. Of course, the holders,
trading volume and publicly-held shares
requirements of Section 802.01A, the
$25 million global market capitalization
requirement in Section 802.01B, the
$1.00 minimum stock price requirement
in Section 802.01C, Section 802.01D
(‘‘Other Criteria’’), and Section 802.01E
(‘‘SEC Annual Report Timely Filing
Criteria’’) will also apply.
Companies may apply to list under
the Assets and Equity Test that have not
previously had their common equity
securities registered under the Act but
which have sold common equity
securities in a private placement, and
wish to list their common equity
securities on the Exchange at the time
of effectiveness of a registration
statement filed solely for the purpose of
allowing existing shareholders to sell
their shares. These companies will be
required to demonstrate a global market
capitalization of $180 million. In such
cases, the Exchange may exercise its
discretion to determine that such a
company has met the global market
capitalization requirement based on a
combination of both (i) an independent
third party valuation of the company
and (ii) the most recent trading price for
the company’s common stock in a
trading system for unregistered
securities operated by a national
securities exchange or a registered
broker-dealer. The lesser of these values
will be used for determining the
company’s compliance with the
Exchange’s global market capitalization
requirement.
The Exchange recently adopted
provisions in relation to all of its
existing initial listings standards that
enable it to use third party valuations as
a basis for determining compliance with
the applicable market capitalization
requirements.7 The circumstances under
which third party valuations may be
used in connection with listings under
the Assets and Equity Test will be
identical to those that are applied under
the existing initial listing standards. In
particular, companies listing on this
basis will be required to demonstrate a
global market capitalization of $180
7 See 34–58550 (September 15, 2008) (SR–NYSE–
2008–68).
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Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Notices
mstockstill on PROD1PC66 with NOTICES
million, representing a 20% increase
over the general market capitalization
requirement of the listing standard, as is
the case with companies utilizing a
third party valuation under any of the
other original listing standards. The
Exchange believes that it is appropriate
to use third party valuations in
connection with the determination of
the market capitalization of companies
listing under the Assets and Equity test,
as the requirement that the market
capitalization demonstrated must be
20% higher than that normally required
under the standard and the additional
reliance on private market trading prices
as a verification of the adequacy of the
valuation in each case constitute, in the
Exchange’s view, significant safeguards
to ensure the validity of the market
capitalization derived from the third
party valuation.
The Exchange believes that, upon
adoption of the proposed Assets and
Equity Test, its listing standards will
continue to ensure that only companies
of a significant size and financial
standing will be able to list on the
Exchange. The Exchange notes that,
while many companies will qualify for
listing under the Assets and Equity Test
that do not qualify under any other
Exchange listing standard, many
companies will continue to qualify to
list on Nasdaq or the American Stock
Exchange that will not meet any of the
Exchange’s initial listing standards.
The Assets and Equity Test requires
all of the elements that must be met by
a company listing under the total value
of market capitalization option of Amex
Initial Listing Standard 4.8 However, the
Assets and Equity Test establishes
equivalent or higher thresholds for each
of the relevant criteria. Under Amex
Initial Listing Standard 4, a company
may list if it has a total market
capitalization of $75 million, while the
Assets and Equity Test requires a
minimum total market capitalization of
at least $150 million, as well as $75
million in total assets and $50 million
in stockholders’ equity. Amex Initial
Listing Standard 4 requires $20 million
of publicly-held shares, while
companies listing under the Assets and
Equity Test must have either $60
million (for IPOs) or $100 million (for
all other companies) of publicly-held
shares. The Amex will list a company
that has 400 public holders and 1
million publicly-held share, while the
minimum distribution required by the
NYSE is 400 round lot holders and 1.1
million publicly-held shares.9
The Exchange’s listing standards after
adoption of the proposed Assets and
Equity Test will exceed those
established by Exchange Act Rule 3a51–
1(a)(2) (the ‘‘Penny Stock Rule’’).10 The
proposed standard’s $50 million
stockholders’ equity requirement
exceeds the $5 million option and the
proposed standard’s $150 million total
market capitalization requirement
exceeds the $50 million market
capitalization option in the Penny Stock
Rule. In addition, the Exchange requires
all initial listings, regardless of which
standard they are listed under, to have
$60 million (in the case of IPOs) or $100
million (in all other cases) of market
capitalization of publicly-held shares, a
$4 stock price, 400 round lot holders
and 1.1 million publicly held shares,
thereby meeting or exceeding all of the
Penny Stock Rule’s remaining
requirements.
Companies listing under the Assets
and Equity Test will have to comply
with all other applicable Exchange
listing rules, including the Exchange’s
corporate governance requirements. As
with all other listing applicants, the
Exchange reserves the right to deny
listing to any company seeking to list
under the Assets and Equity Test if the
Exchange determines that the listing of
any such company is not in the interests
of the Exchange or the public interest.
8 See Amex Initial Listing Standard 4 (Amex
Company Guide Section 101(d)). Companies may
list under Amex Initial Listing Standard 4 without
demonstrating any minimum market capitalization
if the company has total assets and total revenue of
$75 million each in its last fiscal year, or in two
of its last three fiscal years.
9 The Exchange believes that its round lot holder
requirement is at least as stringent as the Amex’s
public holders requirement, as the Amex counts all
public holders regardless of how insignificant their
holdings may be.
10 17 CFR 240.a51–1(a)(ii).
11 15 U.S.C. 78f(b)(5).
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2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 11 that an
exchange have rules that are designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to remove
impediments to, and perfect the
mechanism of a free and open market
and, in general, to protect investors and
the public interest. The Exchange
believes that the proposed amendment
is consistent with the protection of
investors and the public interest in that
the requirements of the proposed new
listing standard will ensure that only
companies of a suitable size will qualify
for listing and many companies that are
eligible to list on other national
securities exchanges will continue to be
ineligible for listing on the Exchange.
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purpose 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. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve the proposed
rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Exchange
Act. Comments may be submitted by
any of the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSE–2008–98 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSE–2008–98. 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
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Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Notices
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of the filing also will be available
for inspection and copying at the
principal office of the Exchange. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–NYSE–2008–98 and should
be submitted on or before October 31,
2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–24182 Filed 10–9–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change Relating to Continued
Listing Criteria Applicable to Equity
Linked Notes and ‘‘Other Securities’’
mstockstill on PROD1PC66 with NOTICES
October 2, 2008.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
September 30, 2008, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
NYSE Arca, through its wholly owned
subsidiary NYSE Arca Equities, Inc.
(‘‘NYSE Arca Equities’’ or the
‘‘Corporation’’), proposes to adopt NYSE
Arca Equities Rules 5.5(i) and 5.5(j) to
specify continued listing criteria
applicable to securities listed on the
Exchange pursuant to NYSE Arca
Equities Rules 5.2(j)(1) (‘‘Other
Securities’’) and 5.2(j)(2) (‘‘Equity
Linked Notes’’), respectively. The text of
the proposed rule change is available on
the Exchange’s Web site at
www.nyse.com, at the Exchange’s
principal office 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 those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[Release No. 34–58720; File No. SR–
NYSEArca–2008–104]
12 17
solicit comments on the proposed rule
change from interested persons.
1. Purpose
The Exchange proposes to adopt
NYSE Arca Equities Rules 5.5(i) and
5.5(j) to specify continued listing
criteria applicable to securities listed on
the Exchange pursuant to NYSE Arca
Equities Rules 5.2(j)(1) (‘‘Other
Securities’’) and 5.2(j)(2) (‘‘Equity
Linked Notes’’ or ‘‘ELNs’’), respectively.
NYSE Arca Equities Rule 5.2(j)(1)
provides that the Exchange will
consider listing any security not
otherwise covered by the requirements
of NYSE Arca Equities Rule 5.2 subject
to specified initial listing requirements,
including minimum number of publicly
held trading units and minimum
principal amount/market value, the
required minimum number of public
beneficial holders, and required issuer’s
total assets and net worth. NYSE Arca
Equities Rule 5.2(j)(2) sets forth initial
listing requirements applicable to ELNs,
including numerical listing standards
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60385
applicable to the ELN’s issuer, the issue
itself, and the underlying security for
the ELN.
Securities listed under NYSE Arca
Equities Rules 5.2(j)(1) and 5.2(j)(2) are
subject to trading suspension or
delisting pursuant to standards set forth
in Rule 5.5(l) (‘‘Other Reasons for
Suspending or Delisting’’). Proposed
NYSE Arca Equities Rule 5.5(i) and
5.5(j) would provide that the
Corporation will commence delisting or
removal proceedings (unless the
Commission has approved the
continued trading of an issue of
securities listed pursuant to Rule
5.2(j)(1) or Rule 5.2(j)(2), respectively), if
the aggregate market value or the
principal amount of the securities
publicly held is less than $400,000, or
if such other event shall occur or
condition exists which in the opinion of
the Corporation makes further dealings
on the Corporation inadvisable.
The proposed minimum standard of
$400,000 is the same as the minimum
maintenance criterion for principal
amount of securities publicly held
previously approved by the Commission
for securities listed on the Exchange
under Rule 5.2(j)(6) (Equity IndexLinked Securities, Commodity-Linked
Securities, Currency-Linked Securities,
Fixed Income Index-Linked Securities,
Futures-Linked Securities and
Multifactor Index-Linked Securities).4
The Exchange believes that the
proposed criteria provide an adequate
minimum threshold for the dollar
principal amount of derivatively-priced
securities such as those listed under
Rules 5.2(j)(1) and 5.2(j)(2) to permit
sufficient market liquidity, and provides
flexibility to the Exchange to commence
delisting proceedings based on other
events or conditions that may occur.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) 5 of the
Securities Exchange Act of 1934
(‘‘Act’’), in general, and furthers the
objectives of Section 6(b)(5) 6 of the Act,
in particular in that 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. The
4 See, e.g., Securities Exchange Act Release No.
57701 (April 23, 2008), 73 FR 23281 (April 29,
2008) (SR–NYSEArca–2008–20).
5 15 U.S.C. 78f(b).
6 15 U.S.C. 78f(b)(5).
E:\FR\FM\10OCN1.SGM
10OCN1
Agencies
[Federal Register Volume 73, Number 198 (Friday, October 10, 2008)]
[Notices]
[Pages 60382-60385]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-24182]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58740; File No. SR-NYSE-2008-98]
Self-Regulatory Organizations; Notice of Filing by New York Stock
Exchange LLC To Adopt an Additional Initial Listing Standard for
Operating Companies
October 6, 2008.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on October 1, 2008, New York Stock Exchange LLC (``NYSE'' or
``the Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule changes as described in Items I,
II and III below, which items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule changes from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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[[Page 60383]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Section 102.01C of the Exchange's
Listed Company Manual (the ``Manual'') to adopt an additional initial
listing standard under which companies may qualify to list on the
Exchange. The Exchange also proposes to apply the continued listing
standard applicable under Section 802.01B to companies listed under the
Earnings Test to companies listed under the proposed new initial
listing standard.\4\
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\4\ The Commission notes that NYSE is also proposing to adopt a
new initial listing standard applicable only to companies
transferring from NYSE Arca. See Securities Exchange Act Release No.
58741 (October 6, 2008) (SR-NYSE-2008-97).
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The text of the proposed rule change is available on the Exchange's
Web site (https://www.nyse.com), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The NYSE has prepared summaries, set forth in Sections
A, B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Section 102.01C of the Manual to
adopt an additional initial listing standard under which companies may
qualify to list on the Exchange. The Exchange also proposes to apply
the continued listing standard applicable under Section 802.01B to
companies listed under the Earnings Test to companies listed under the
proposed new initial listing standard.
The proposed new standard (the ``Assets and Equity Test'') will not
replace any of the existing initial listing standards set forth in
Section 102.01C. Rather it will be an additional alternative standard
under which companies may qualify to list. Companies qualifying to list
under the proposed new standard will have to meet the same holders,
publicly-held shares and trading volume requirements as set forth in
Section 102.01A as companies that list under the existing initial
listing standards and must meet the same market value of publicly-held
shares requirements \5\ and $4 stock price requirement in Section
102.01B as companies that list under the existing initial listing
standards in Section 102.01C. In addition, at the time of listing, they
will be required to have, at a minimum, (i) $75 million in total
assets, (ii) $50 million in stockholders' equity and (iii) $150 million
of total market capitalization.\6\ In considering the listing under the
Assets and Equity Test of companies transferring from other markets,
the Exchange will consider whether the company's business prospects and
operating results indicate that the company's market capitalization
value is likely to be sustained or increase over time.
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\5\ $60 million in the case of IPOs and $100 million for all
other companies.
\6\ The total assets and stockholders equity that the Exchange
will use for qualification purposes will be taken from the company's
most recent balance sheet included in an SEC filing, in each case as
adjusted pursuant to Sections 102.01C(I)(3)(a) (adjusting for the
use of offering proceeds) and (b) (adjusting for the effects of
acquisitions and dispositions) as applicable. The adjustments
referenced in the prior sentence enable the Exchange to analyze the
company's balance sheet at the time of listing on a pro forma basis
to reflect the infusion of new capital from a concurrent financing
or the balance sheet effects of any acquisition or disposition of
assets taking place in conjunction with the listing. This is
consistent with the Exchange's approach in listing companies under
its existing initial listing standards and the Exchange believes
that making these pro forma adjustments provides a more accurate
understanding of the entity that will actually list. The Exchange
also adjusts listing applicants' market capitalization and public
float to give effect to any new shares issued at the time of
listing. All of these adjustments are typical of the financial
presentation provided by companies in their offering prospectuses
that are reviewed by the Division of Corporation Finance and
included in the related registration statements declared effective
by the Division of Corporation Finance. In the case of companies
listing in connection with an IPO, the company's underwriter (or, in
the case of a spin-off, the parent company's investment banker or
other financial advisor) must provide a written representation that
demonstrates the company's ability to meet the $150 million global
market capitalization requirement based upon the completion of the
offering (or distribution).
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While companies that list under the Assets and Equity Test will not
be required to have any minimum operating history prior to listing,
companies that would otherwise have been considered for listing under
Section 102.06 of the Manual--the Exchange's Acquisition Company
standard (i.e., ``SPACs'')--will not qualify for listing under the
Assets and Equity Test. SPACs will continue to be listed only under
Section 102.06. Companies qualifying under the Assets and Equity Test
will be subject to the same continued listing standard in Section
802.01B as companies that qualify under the Earnings Test, i.e., they
will be considered to be below compliance standards if their average
global market capitalization over a consecutive 30 trading-day period
is less than $75 million and, at the same time, total stockholders'
equity is less than $75 million. Of course, the holders, trading volume
and publicly-held shares requirements of Section 802.01A, the $25
million global market capitalization requirement in Section 802.01B,
the $1.00 minimum stock price requirement in Section 802.01C, Section
802.01D (``Other Criteria''), and Section 802.01E (``SEC Annual Report
Timely Filing Criteria'') will also apply.
Companies may apply to list under the Assets and Equity Test that
have not previously had their common equity securities registered under
the Act but which have sold common equity securities in a private
placement, and wish to list their common equity securities on the
Exchange at the time of effectiveness of a registration statement filed
solely for the purpose of allowing existing shareholders to sell their
shares. These companies will be required to demonstrate a global market
capitalization of $180 million. In such cases, the Exchange may
exercise its discretion to determine that such a company has met the
global market capitalization requirement based on a combination of both
(i) an independent third party valuation of the company and (ii) the
most recent trading price for the company's common stock in a trading
system for unregistered securities operated by a national securities
exchange or a registered broker-dealer. The lesser of these values will
be used for determining the company's compliance with the Exchange's
global market capitalization requirement.
The Exchange recently adopted provisions in relation to all of its
existing initial listings standards that enable it to use third party
valuations as a basis for determining compliance with the applicable
market capitalization requirements.\7\ The circumstances under which
third party valuations may be used in connection with listings under
the Assets and Equity Test will be identical to those that are applied
under the existing initial listing standards. In particular, companies
listing on this basis will be required to demonstrate a global market
capitalization of $180
[[Page 60384]]
million, representing a 20% increase over the general market
capitalization requirement of the listing standard, as is the case with
companies utilizing a third party valuation under any of the other
original listing standards. The Exchange believes that it is
appropriate to use third party valuations in connection with the
determination of the market capitalization of companies listing under
the Assets and Equity test, as the requirement that the market
capitalization demonstrated must be 20% higher than that normally
required under the standard and the additional reliance on private
market trading prices as a verification of the adequacy of the
valuation in each case constitute, in the Exchange's view, significant
safeguards to ensure the validity of the market capitalization derived
from the third party valuation.
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\7\ See 34-58550 (September 15, 2008) (SR-NYSE-2008-68).
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The Exchange believes that, upon adoption of the proposed Assets
and Equity Test, its listing standards will continue to ensure that
only companies of a significant size and financial standing will be
able to list on the Exchange. The Exchange notes that, while many
companies will qualify for listing under the Assets and Equity Test
that do not qualify under any other Exchange listing standard, many
companies will continue to qualify to list on Nasdaq or the American
Stock Exchange that will not meet any of the Exchange's initial listing
standards.
The Assets and Equity Test requires all of the elements that must
be met by a company listing under the total value of market
capitalization option of Amex Initial Listing Standard 4.\8\ However,
the Assets and Equity Test establishes equivalent or higher thresholds
for each of the relevant criteria. Under Amex Initial Listing Standard
4, a company may list if it has a total market capitalization of $75
million, while the Assets and Equity Test requires a minimum total
market capitalization of at least $150 million, as well as $75 million
in total assets and $50 million in stockholders' equity. Amex Initial
Listing Standard 4 requires $20 million of publicly-held shares, while
companies listing under the Assets and Equity Test must have either $60
million (for IPOs) or $100 million (for all other companies) of
publicly-held shares. The Amex will list a company that has 400 public
holders and 1 million publicly-held share, while the minimum
distribution required by the NYSE is 400 round lot holders and 1.1
million publicly-held shares.\9\
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\8\ See Amex Initial Listing Standard 4 (Amex Company Guide
Section 101(d)). Companies may list under Amex Initial Listing
Standard 4 without demonstrating any minimum market capitalization
if the company has total assets and total revenue of $75 million
each in its last fiscal year, or in two of its last three fiscal
years.
\9\ The Exchange believes that its round lot holder requirement
is at least as stringent as the Amex's public holders requirement,
as the Amex counts all public holders regardless of how
insignificant their holdings may be.
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The Exchange's listing standards after adoption of the proposed
Assets and Equity Test will exceed those established by Exchange Act
Rule 3a51-1(a)(2) (the ``Penny Stock Rule'').\10\ The proposed
standard's $50 million stockholders' equity requirement exceeds the $5
million option and the proposed standard's $150 million total market
capitalization requirement exceeds the $50 million market
capitalization option in the Penny Stock Rule. In addition, the
Exchange requires all initial listings, regardless of which standard
they are listed under, to have $60 million (in the case of IPOs) or
$100 million (in all other cases) of market capitalization of publicly-
held shares, a $4 stock price, 400 round lot holders and 1.1 million
publicly held shares, thereby meeting or exceeding all of the Penny
Stock Rule's remaining requirements.
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\10\ 17 CFR 240.a51-1(a)(ii).
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Companies listing under the Assets and Equity Test will have to
comply with all other applicable Exchange listing rules, including the
Exchange's corporate governance requirements. As with all other listing
applicants, the Exchange reserves the right to deny listing to any
company seeking to list under the Assets and Equity Test if the
Exchange determines that the listing of any such company is not in the
interests of the Exchange or the public interest.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \11\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest. The
Exchange believes that the proposed amendment is consistent with the
protection of investors and the public interest in that the
requirements of the proposed new listing standard will ensure that only
companies of a suitable size will qualify for listing and many
companies that are eligible to list on other national securities
exchanges will continue to be ineligible for listing on the Exchange.
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\11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose 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. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve the proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Exchange Act. Comments may be submitted
by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSE-2008-98 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2008-98. 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
[[Page 60385]]
amendments, all written statements with respect to the proposed rule
change that are filed with the Commission, and all written
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for inspection and copying in the Commission's Public
Reference Room, 100 F Street, NE., Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of the
filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NYSE-2008-98 and should be submitted on or before
October 31, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-24182 Filed 10-9-08; 8:45 am]
BILLING CODE 8011-01-P