Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Order Approving Proposed Rule Change Relating to Delisting Standards, 4790-4792 [E9-1673]
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4790
Federal Register / Vol. 74, No. 16 / Tuesday, January 27, 2009 / Notices
protection of investors and the public
interest because such waiver will allow
BATS Users to immediately benefit from
the protections provided by BATS
market orders. The Commission hereby
grants the Exchange’s request and
designates the proposal operative upon
filing.14
At any time within 60 days of the
filing of such proposed rule change the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors
or otherwise in furtherance of the
purposes of the Act.
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of such filing also will be
available for inspection and copying at
the principal office of BATS. 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 No.
SR–BATS–2009–001 and should be
submitted on or before February 17,
2009.
ii. Solicitation of Comments
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–1670 Filed 1–26–09; 8:45 am]
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposal 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
No. SR–BATS–2009–001 on the subject
line.
mstockstill on PROD1PC66 with NOTICES6
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File No.
SR–BATS–2009–001. 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 changes 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
14 For the purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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17:20 Jan 26, 2009
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59265; File No. SR–BSE–
2008–36]
Self-Regulatory Organizations; Boston
Stock Exchange, Inc.; Order Approving
Proposed Rule Change Relating to
Delisting Standards
January 16, 2009.
I. Introduction
On November 3, 2008, the Boston
Stock Exchange, Inc. (‘‘BSE’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’),1 and Rule 19b–4
thereunder,2 a proposed rule change to
adopt new criteria permitting the
delisting of a security when the
Exchange has terminated its program for
listing and trading cash equities
(‘‘Listing Program’’) in connection with
the discontinuation of trading in all
securities listed on its market. The
proposed rule change was published for
comment in the Federal Register on
November 28, 2008.3 The Commission
received no comments on the proposal.
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 58990
(November 20, 2008), 73 FR 72534 (‘‘Notice’’). In
order for a company to voluntarily delist from the
Exchange, it would have to follow the procedures
set forth in Rule 12d2–2 under the Act, which
includes the filing of a Form 25 with the
Commission. See Rule 12d2–2 under the Act, 17
CFR 240.12d2–2.
1 15
PO 00000
Frm 00060
Fmt 4703
Sfmt 4703
This order approves the proposed rule
change.
II. Description of the Proposed Rule
Change
On September 5, 2007, the Exchange
announced the discontinuation of the
operations of the Boston Equities
Exchange. In addition to that
announcement, in October 2007, all
issuers were given additional notice that
the BSE had terminated its Listing
Program. While trading in all securities
on the BSE ceased on September 5,
2007, not all companies have delisted
their securities from the Exchange by
filing a Form 25 with the Commission.4
As a result, the Exchange proposes to
adopt new rules that would give it the
authority to delist, under certain
conditions, the remaining BSE-listed
companies, because there is no basis to
involuntarily delist these companies
under BSE’s existing rules.
Under the proposal, the Exchange
may determine to delist a security when
the Exchange has terminated its Listing
Program in connection with the
discontinuation of trading in all
securities listed on its market. The
proposed new rule will provide that at
least 15 days before issuing such
delisting determination, the Board of
Directors or its designee must give
notice of the delisting to the company.
As soon as practicable after the issuance
of the delisting determination, notice
will be provided to the company and
the Commission of such delisting
determination. Notice to the company of
the delisting determination shall inform
the company of the opportunity to
appeal, applying the same appeal rights
that exist under BSE rules for any
company involuntarily delisted by the
Exchange when the BSE was
operational.5
The Exchange represents that it would
use this authority to delist on the
grounds that BSE is not currently
operating a listing program and,
therefore, it is in the public interest that
the Exchange not maintain any
appearance of having any listings on the
Exchange as long as programs for listing
and trading cash equities and related
activity have ceased. In addition, prior
to implementing any involuntary
delistings, the Exchange represented
that it will contact each company and
suggest that it file a Form 25 to effect a
voluntary delisting before the Exchange
issues any delisting determination.
Thereafter, the Exchange will move to
delist those companies that do not act
4 As of the date of the Notice, twenty-nine issuers
currently have listings with the Exchange.
5 See infra note 6.
E:\FR\FM\27JAN1.SGM
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Federal Register / Vol. 74, No. 16 / Tuesday, January 27, 2009 / Notices
in accordance with that suggestion.
Companies that are involuntarily
delisted under the rule being adopted in
this filing will have the appeal right
provided for by new Section 2(c)(3) of
Chapter XXVII of the Rules of the
Exchange.6
In its filing, BSE noted that the
NASDAQ OMX Group, Inc. (‘‘NASDAQ
OMX’’) has acquired the Exchange.
According to BSE, NASDAQ OMX
expects that the Exchange will resume
a program for listing and trading cash
equities. Accordingly, the Exchange
believes it is appropriate to leave all of
its listing rules, as amended, in place
pending rule changes to its listing
rules.7 Upon the resumption of a listing
business by the Exchange, delisted
companies may be eligible for relisting
if their securities meet the applicable
standards of the Exchange.8
mstockstill on PROD1PC66 with NOTICES6
III. Discussion and Commission
Findings
After careful consideration, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities exchange 9 and, in
particular, the requirements of Section 6
of the Act.10 Specifically, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act,11 which requires,
among other things, that the rules of a
national securities exchange be
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
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
6 The Commission notes that the appeals
procedures proposed in new Section 2(c)(3) of
Chapter XXVII are identical to the appeals
procedures set forth in the current BSE Rules. See
Chapter XXVII, Section 2(b)(2) of the BSE Rules.
7 Any future proposal to resume trading on a BSE
market and amend listing standards would be
required to be submitted as a proposed rule change
to the Commission under Section 19(b) of the Act
and Rule 19b–4 thereunder. See 15 U.S.C. 78s(b),
17 CFR 240.19b–4.
8 Any company that seeks listing on the Exchange
would be required to apply and meet the
Exchange’s initial listing standards. Delisted
companies may also apply to list on another
national securities exchange if they meet that
exchange’s initial listing standards.
9 In approving this proposed rule change the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
10 15 U.S.C. 78f.
11 15 U.S.C. 78f(b)(5).
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17:20 Jan 26, 2009
Jkt 217001
general, to protect investors and the
public interest and are not designed to
permit unfair discrimination between
customers, issuers, brokers or dealers.
The Commission also finds that the
proposed rule change is consistent with
Section 6(b)(7) of the Act,12 which
requires, among other things, that the
rules of the exchange provide a fair
procedure for the prohibition or
limitation by the exchange of any
person with respect to access to services
offered by the exchange.
The BSE proposes to adopt new
criteria permitting the delisting of
securities that are no longer being
traded in connection with the
discontinuation of trading in all
securities listed on its market. The
Commission notes that the new
delisting standard can only be utilized
in rare and unusual circumstances and
emphasizes that it can only be used to
involuntarily delist companies when the
Exchange has discontinued trading in
all listed securities in its marketplace, as
BSE has done. Specifically, the
Exchange announced in September 2007
that it was terminating its Listings
Program, and in October 2007, all
issuers were given additional notice that
the Listings Program had ceased.
However, not all issuers have
voluntarily delisted their securities in
accordance with the requirements in
Rule 12d2–2 under the Act 13 and BSE
rules. The proposed rule change should
also make the delisting process more
efficient for both the Exchange and
listed companies in light of the
cessation of trading on the BSE market.
The new delisting standard should
provide the Exchange with an
additional means of ensuring the quality
of and public confidence in BSE as a
national securities exchange during its
reorganization.
The proposed rule change further
serves to protect the public from being
mislead into believing that these
securities retain the imprimatur of an
exchange listing on an active trading
market. In this regard, the Commission
notes that companies listed on a
national securities exchange retain
certain benefits and privileges. If an
exchange has ceased all trading in all
securities due to discontinuation of its
marketplace, companies generally
should not be able to retain their
exchange listing and corresponding
privileges, as they are no longer
providing liquidity via the market.
Moreover, these companies would no
longer be monitored for compliance
with maintenance listing criteria, and
12 15
13 17
PO 00000
U.S.C. 78f(b)(7).
CFR 240.12d2–2.
Frm 00061
Fmt 4703
4791
thus investors and the public would not
have necessary information regarding
these companies’ viability. The
Commission thus believes that the
proposed new delisting standard is
consistent with the protection of
investors under Section 6(b)(5) of the
Act.14
The Commission also believes the
proposal provides sufficient notice to
companies facing delisting pursuant to
the new criteria consistent with the Act.
First, notice will be given to the
company at least 15 days before the
Exchange issues its delisting
determination. The Commission
believes that the proposed rule affords
sufficient time for interested parties to
submit to the Exchange and/or
Commission any comments they have
on the anticipated delisting, or to take
any other action as permitted under
state and federal law including
commencing a voluntary delisting in
accordance with Rule 12d2–2 under the
Act.15
Second, notice will be given to the
company (and the Commission) after the
issuance of the delisting determination,
and the notice shall inform the company
of the opportunity to appeal. The
appeals procedures proposed in new
Section 2(c)(3) of Chapter XXVII, which
are identical to the appeals procedures
currently set forth in Section 2(b)(2) of
Chapter XXVII, provide for notice to the
issuer of the Exchange’s decision to
delist its securities; an opportunity for
appeal to the Exchange’s board of
directors, or to a designee of the board,
with a $3000 fee; and public notice, no
fewer than 10 days before the delisting
becomes effective, of the Exchange’s
final determination to delist the
security. The Commission believes that
the proposed rule requiring notice to the
issuer of the Exchange’s delisting
decision and establishing appeal
procedures provides issuers with
adequate notice and opportunity to
appeal the delisting as required by Rule
12d2–2 under the Act.16 The
Commission notes that the appeal
procedures being adopted by the
Exchange set forth an adequate structure
to meet the requirements of Section
6(b)(7) of the Act 17 and for BSE to
review on appeal any involuntary
delistings commenced under the new
rule being adopted herein.18
14 15
U.S.C. 78f(b)(5).
CFR 240.12d2–2.
16 17 CFR 240.12d2–2.
17 15 U.S.C. 78f(b)(7).
18 The Commission has made similar findings in
approving the original delisting appeal procedures
of the BSE. See Securities Exchange Act Release No.
15 17
Continued
Sfmt 4703
E:\FR\FM\27JAN1.SGM
27JAN1
4792
Federal Register / Vol. 74, No. 16 / Tuesday, January 27, 2009 / Notices
Finally, the proposed rule change
requires that public notice of the final
delisting determination by the Exchange
be provided no fewer than 10 days
before the delisting becomes effective,
in accordance with Rule 12d2–2 under
the Act.19 The Commission believes that
public notice of the Exchange’s final
determination should ensure that
investors have adequate notice of an
exchange delisting and is consistent
with the protection of investors under
Section 6(b)(5) of the Act.20
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act and in
particular Section 6 of the Act and the
rules and regulations thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act, that the
proposed rule change (File No. SR–
BSE–2008–36) is approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–1673 Filed 1–26–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59253; File No. SR–FINRA–
2008–052]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change Relating to the
Adoption of FINRA Rule 2140
(Interfering With the Transfer of
Customer Accounts in the Context of
Employment Disputes) in the
Consolidated FINRA Rulebook
mstockstill on PROD1PC66 with NOTICES6
January 15, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
October 29, 2008, Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
(f/k/a National Association of Securities
Dealers, Inc. [‘‘NASD’’]) 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
by FINRA. The Commission is
53700 (April 21, 2006), 71 FR 25257 (April 28,
2006) (SR–BSE–2005–46).
19 17 CFR 240.12d2–2.
20 15 U.S.C. 78f(b)(5).
21 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
VerDate Nov<24>2008
18:55 Jan 26, 2009
Jkt 217001
publishing this notice to solicit
comments from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to adopt without
material change NASD Interpretive
Material 2110–7 (IM–2110–7)
(‘‘Interfering With the Transfer of
Customer Accounts in the Context of
Employment Disputes’’) as a FINRA rule
in the consolidated FINRA rulebook.
The proposed rule change would
renumber NASD IM–2110–7 as FINRA
Rule 2140 in the consolidated FINRA
rulebook.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA 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. FINRA has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of these statements.
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
As part of the process of developing
the new consolidated rulebook
(‘‘Consolidated FINRA Rulebook’’),2
FINRA is proposing to adopt without
material change NASD Interpretive
Material 2110–7 (IM–2110–7)
(‘‘Interfering With the Transfer of
Customer Accounts in the Context of
Employment Disputes’’) as a FINRA rule
in the Consolidated FINRA Rulebook.
The proposed rule change would
renumber NASD IM–2110–7 as FINRA
Rule 2140 in the Consolidated FINRA
Rulebook.
(A) Background
NASD IM–2110–7 provides that it
shall be inconsistent with just and
2 The current FINRA rulebook includes, in
addition to FINRA Rules, (1) NASD Rules and (2)
rules incorporated from NYSE (‘‘Incorporated NYSE
Rules’’) (together, the NASD Rules and Incorporated
NYSE Rules are referred to as the ‘‘Transitional
Rulebook’’). While the NASD Rules generally apply
to all FINRA members, the Incorporated NYSE
Rules apply only to those members of FINRA that
are also members of the NYSE (‘‘Dual Members’’).
For more information about the rulebook
consolidation process, see FINRA Information
Notice, March 12, 2008 (Rulebook Consolidation
Process).
PO 00000
Frm 00062
Fmt 4703
Sfmt 4703
equitable principles of trade for a
member or person associated with a
member 3 to interfere with a customer’s
request to transfer his or her account in
connection with the change in
employment of the customer’s registered
representative provided that the account
is not subject to any lien for monies
owed by the customer or other bona fide
claim. Prohibited interference includes,
but is not limited to, seeking a judicial
order or decree that would bar or restrict
the submission, delivery, or acceptance
of a written request from a customer to
transfer his or her account.4
FINRA adopted IM–2110–7 to address
the practice of delaying customer
account transfers.5 In adopting IM–
2110–7, FINRA noted that, when a
registered representative leaves his or
her firm for a position at a different
firm, clients serviced by the registered
representative may decide to continue
their relationship with the registered
representative by transferring their
accounts to the registered
representative’s new firm. FINRA
expressed concern that the registered
representative’s former firm, concerned
that its former employee may have
breached his or her employment
contract by sharing client information
with the new firm or by soliciting
clients to transfer their accounts to the
new firm, sometimes would seek a court
order to prevent the transfer of accounts.
FINRA noted that in a prior Notice to
Members it had already alerted members
that unnecessary delays in transferring
customer accounts, including delays
accompanied by attempts to persuade
customers not to transfer their accounts,
are inconsistent with just and equitable
principles of trade.6 FINRA stated that
3 The term ‘‘person associated with a member’’
includes, among others, registered representatives.
See FINRA By-Laws, Article I, Paragraph (rr).
4 IM–2110–7 further states that nothing in the
Interpretation shall affect the operation of NASD
Rule 11870 (Customer Account Transfer Contracts).
Generally, Rule 11870 addresses the transfer of
securities account assets from one member to
another member in connection with a customer
request. (FINRA intends to review NASD Rule
11870 and related interpretive materials as part of
a later phase in the rulebook consolidation process.
Note that the Commission has approved FINRA’s
proposed rule change to rescind, as duplicative of
Rule 11870, Incorporated NYSE Rule 412 and its
Interpretation. See Securities Exchange Act Release
No. 58533 (September 12, 2008), 73 FR 54652
(September 22, 2008) [File No. SR–FINRA–2008–
036].
5 See NASD Notice to Members 02–07 (January
2002) (Interfering With Customer Account
Transfers); see also Securities Exchange Act Release
No. 45239 (January 4, 2002), 67 FR 1790 (January
14, 2002) [File No. SR–NASD–2001–95].
6 NASD Notice to Members 79–7 (February 1979)
(Fair Treatment of Customer Accounts); see also
Securities Exchange Act Release No. 15194
(September 28, 1978) (Notice to Broker-Dealers
Concerning Fair Treatment of Customer Accounts).
E:\FR\FM\27JAN1.SGM
27JAN1
]]>Agencies
[Federal Register Volume 74, Number 16 (Tuesday, January 27, 2009)]
[Notices]
[Pages 4790-4792]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-1673]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59265; File No. SR-BSE-2008-36]
Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Order
Approving Proposed Rule Change Relating to Delisting Standards
January 16, 2009.
I. Introduction
On November 3, 2008, the Boston Stock Exchange, Inc. (``BSE'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to adopt new criteria permitting the delisting of
a security when the Exchange has terminated its program for listing and
trading cash equities (``Listing Program'') in connection with the
discontinuation of trading in all securities listed on its market. The
proposed rule change was published for comment in the Federal Register
on November 28, 2008.\3\ The Commission received no comments on the
proposal. This order approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 58990 (November 20,
2008), 73 FR 72534 (``Notice''). In order for a company to
voluntarily delist from the Exchange, it would have to follow the
procedures set forth in Rule 12d2-2 under the Act, which includes
the filing of a Form 25 with the Commission. See Rule 12d2-2 under
the Act, 17 CFR 240.12d2-2.
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
On September 5, 2007, the Exchange announced the discontinuation of
the operations of the Boston Equities Exchange. In addition to that
announcement, in October 2007, all issuers were given additional notice
that the BSE had terminated its Listing Program. While trading in all
securities on the BSE ceased on September 5, 2007, not all companies
have delisted their securities from the Exchange by filing a Form 25
with the Commission.\4\ As a result, the Exchange proposes to adopt new
rules that would give it the authority to delist, under certain
conditions, the remaining BSE-listed companies, because there is no
basis to involuntarily delist these companies under BSE's existing
rules.
---------------------------------------------------------------------------
\4\ As of the date of the Notice, twenty-nine issuers currently
have listings with the Exchange.
---------------------------------------------------------------------------
Under the proposal, the Exchange may determine to delist a security
when the Exchange has terminated its Listing Program in connection with
the discontinuation of trading in all securities listed on its market.
The proposed new rule will provide that at least 15 days before issuing
such delisting determination, the Board of Directors or its designee
must give notice of the delisting to the company. As soon as
practicable after the issuance of the delisting determination, notice
will be provided to the company and the Commission of such delisting
determination. Notice to the company of the delisting determination
shall inform the company of the opportunity to appeal, applying the
same appeal rights that exist under BSE rules for any company
involuntarily delisted by the Exchange when the BSE was operational.\5\
---------------------------------------------------------------------------
\5\ See infra note 6.
---------------------------------------------------------------------------
The Exchange represents that it would use this authority to delist
on the grounds that BSE is not currently operating a listing program
and, therefore, it is in the public interest that the Exchange not
maintain any appearance of having any listings on the Exchange as long
as programs for listing and trading cash equities and related activity
have ceased. In addition, prior to implementing any involuntary
delistings, the Exchange represented that it will contact each company
and suggest that it file a Form 25 to effect a voluntary delisting
before the Exchange issues any delisting determination. Thereafter, the
Exchange will move to delist those companies that do not act
[[Page 4791]]
in accordance with that suggestion. Companies that are involuntarily
delisted under the rule being adopted in this filing will have the
appeal right provided for by new Section 2(c)(3) of Chapter XXVII of
the Rules of the Exchange.\6\
---------------------------------------------------------------------------
\6\ The Commission notes that the appeals procedures proposed in
new Section 2(c)(3) of Chapter XXVII are identical to the appeals
procedures set forth in the current BSE Rules. See Chapter XXVII,
Section 2(b)(2) of the BSE Rules.
---------------------------------------------------------------------------
In its filing, BSE noted that the NASDAQ OMX Group, Inc. (``NASDAQ
OMX'') has acquired the Exchange. According to BSE, NASDAQ OMX expects
that the Exchange will resume a program for listing and trading cash
equities. Accordingly, the Exchange believes it is appropriate to leave
all of its listing rules, as amended, in place pending rule changes to
its listing rules.\7\ Upon the resumption of a listing business by the
Exchange, delisted companies may be eligible for relisting if their
securities meet the applicable standards of the Exchange.\8\
---------------------------------------------------------------------------
\7\ Any future proposal to resume trading on a BSE market and
amend listing standards would be required to be submitted as a
proposed rule change to the Commission under Section 19(b) of the
Act and Rule 19b-4 thereunder. See 15 U.S.C. 78s(b), 17 CFR 240.19b-
4.
\8\ Any company that seeks listing on the Exchange would be
required to apply and meet the Exchange's initial listing standards.
Delisted companies may also apply to list on another national
securities exchange if they meet that exchange's initial listing
standards.
---------------------------------------------------------------------------
III. Discussion and Commission Findings
After careful consideration, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange \9\ and, in particular, the requirements of Section 6 of the
Act.\10\ Specifically, the Commission finds that the proposed rule
change is consistent with Section 6(b)(5) of the Act,\11\ which
requires, among other things, that the rules of a national securities
exchange be 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 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
and are not designed to permit unfair discrimination between customers,
issuers, brokers or dealers. The Commission also finds that the
proposed rule change is consistent with Section 6(b)(7) of the Act,\12\
which requires, among other things, that the rules of the exchange
provide a fair procedure for the prohibition or limitation by the
exchange of any person with respect to access to services offered by
the exchange.
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\9\ In approving this proposed rule change the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
\10\ 15 U.S.C. 78f.
\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78f(b)(7).
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The BSE proposes to adopt new criteria permitting the delisting of
securities that are no longer being traded in connection with the
discontinuation of trading in all securities listed on its market. The
Commission notes that the new delisting standard can only be utilized
in rare and unusual circumstances and emphasizes that it can only be
used to involuntarily delist companies when the Exchange has
discontinued trading in all listed securities in its marketplace, as
BSE has done. Specifically, the Exchange announced in September 2007
that it was terminating its Listings Program, and in October 2007, all
issuers were given additional notice that the Listings Program had
ceased. However, not all issuers have voluntarily delisted their
securities in accordance with the requirements in Rule 12d2-2 under the
Act \13\ and BSE rules. The proposed rule change should also make the
delisting process more efficient for both the Exchange and listed
companies in light of the cessation of trading on the BSE market. The
new delisting standard should provide the Exchange with an additional
means of ensuring the quality of and public confidence in BSE as a
national securities exchange during its reorganization.
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\13\ 17 CFR 240.12d2-2.
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The proposed rule change further serves to protect the public from
being mislead into believing that these securities retain the
imprimatur of an exchange listing on an active trading market. In this
regard, the Commission notes that companies listed on a national
securities exchange retain certain benefits and privileges. If an
exchange has ceased all trading in all securities due to
discontinuation of its marketplace, companies generally should not be
able to retain their exchange listing and corresponding privileges, as
they are no longer providing liquidity via the market. Moreover, these
companies would no longer be monitored for compliance with maintenance
listing criteria, and thus investors and the public would not have
necessary information regarding these companies' viability. The
Commission thus believes that the proposed new delisting standard is
consistent with the protection of investors under Section 6(b)(5) of
the Act.\14\
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\14\ 15 U.S.C. 78f(b)(5).
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The Commission also believes the proposal provides sufficient
notice to companies facing delisting pursuant to the new criteria
consistent with the Act. First, notice will be given to the company at
least 15 days before the Exchange issues its delisting determination.
The Commission believes that the proposed rule affords sufficient time
for interested parties to submit to the Exchange and/or Commission any
comments they have on the anticipated delisting, or to take any other
action as permitted under state and federal law including commencing a
voluntary delisting in accordance with Rule 12d2-2 under the Act.\15\
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\15\ 17 CFR 240.12d2-2.
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Second, notice will be given to the company (and the Commission)
after the issuance of the delisting determination, and the notice shall
inform the company of the opportunity to appeal. The appeals procedures
proposed in new Section 2(c)(3) of Chapter XXVII, which are identical
to the appeals procedures currently set forth in Section 2(b)(2) of
Chapter XXVII, provide for notice to the issuer of the Exchange's
decision to delist its securities; an opportunity for appeal to the
Exchange's board of directors, or to a designee of the board, with a
$3000 fee; and public notice, no fewer than 10 days before the
delisting becomes effective, of the Exchange's final determination to
delist the security. The Commission believes that the proposed rule
requiring notice to the issuer of the Exchange's delisting decision and
establishing appeal procedures provides issuers with adequate notice
and opportunity to appeal the delisting as required by Rule 12d2-2
under the Act.\16\ The Commission notes that the appeal procedures
being adopted by the Exchange set forth an adequate structure to meet
the requirements of Section 6(b)(7) of the Act \17\ and for BSE to
review on appeal any involuntary delistings commenced under the new
rule being adopted herein.\18\
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\16\ 17 CFR 240.12d2-2.
\17\ 15 U.S.C. 78f(b)(7).
\18\ The Commission has made similar findings in approving the
original delisting appeal procedures of the BSE. See Securities
Exchange Act Release No. 53700 (April 21, 2006), 71 FR 25257 (April
28, 2006) (SR-BSE-2005-46).
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[[Page 4792]]
Finally, the proposed rule change requires that public notice of
the final delisting determination by the Exchange be provided no fewer
than 10 days before the delisting becomes effective, in accordance with
Rule 12d2-2 under the Act.\19\ The Commission believes that public
notice of the Exchange's final determination should ensure that
investors have adequate notice of an exchange delisting and is
consistent with the protection of investors under Section 6(b)(5) of
the Act.\20\
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\19\ 17 CFR 240.12d2-2.
\20\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular Section 6 of the Act and the rules and regulations
thereunder.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-BSE-2008-36) is approved.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-1673 Filed 1-26-09; 8:45 am]
BILLING CODE 8011-01-P
