

[Federal Register: March 21, 2006 (Volume 71, Number 54)]
[Notices]               
[Page 14265-14267]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21mr06-128]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53493; File No. SR-CHX-2005-27]

 
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change and Amendment Nos. 1, 2 and 3 
Relating to Amending Exchange Delisting Rules to Conform to Recent 
Amendments To Commission Rules Regarding Removal From Listing and 
Withdrawal From Registration

March 16, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on October 17, 2005, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission (``SEC 
or Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been substantially prepared by the 
Exchange. CHX filed Amendment No. 1 to the proposal on December 14, 
2005.\3\ On February 17, 2006, CHX filed Amendment No. 2 to the 
proposal.\4\ On March 15, CHX filed Amendment No. 3 to the proposal.\5\ 
The Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, CHX made several changes to the proposed 
rule text of CHX Article XXVIII, Rule 4 to clarify the organization 
of the Rule; incorporate the requirement that issuers provide notice 
to the Exchange upon filing a Form 25; and clarify the effective 
dates for the old and the new CHX Rule 4.
    \4\ In Amendment No. 2, CHX included new language to the 
proposed rule text of CHX Article XXVIII, Rule 4 relating to the 
timing of certain issuer obligations under SEC Rule 12d2-2 and made 
other grammatical corrections to the proposed rule text.
    \5\ In Amendment No. 3, CHX included new language to the 
proposed rule text of CHX Article XXVIII, Rule 4 stating that if an 
issuer seeks to voluntarily withdraw its securities from listing and 
has either received notice from the Exchange that it is below the 
Exchange's continued listing policies and standards, or is aware 
that it is below such continued listing policies and standards even 
if it has not received such notice from the Exchange, the issuer 
must disclose that it is no longer eligible for continued listing 
(including the specific continued listing policies and standards 
that the issue is below) in: (i) Its written notice to the Exchange 
of its determination to withdraw from listing required by Rule 12d2-
2(c)(2)(ii) under the Act; and (ii) its public press release and 
website notice required by Rule 12d2-2(c)(2)(iii) under the Act.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the text of its rule relating to the 
delisting

[[Page 14266]]

of securities (CHX Article XXVIII, Rule 4) to comply with the 
requirements of recently amended Rule 12d2-2 under the Act 
(``Commission Rule 12d2-2'') and to make a few non-substantive changes 
to clarify the organization of the Exchange's Rule.
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in [brackets].
* * * * *
ARTICLE XXVIII
* * * * *
Listed Securities
* * * * *
Removal of Securities

This version of the rule is effective through April 23, 2006

    RULE 4. No change to text.
Removal of Securities

This version of the rule is effective on and after April 24, 2006

    RULE 4. (a) Removal of Securities. The Board of Governors may 
remove securities from the list upon the recommendation of the Chief 
Executive Officer or upon application of the issuer. [In the absence of 
special circumstances a security considered by the Exchange to be 
eligible for continued listing will not be removed from the list upon 
application of the issuer, unless the issuer files with the Exchange a 
certified copy of a resolution adopted by the board of directors of the 
issuer authorizing withdrawal from listing and registration.]

[Interpretations and Policies:]

    (b) Notice provided by the issuer. In the absence of special 
circumstances, a security will not be removed from the list upon 
application of the issuer, unless the issuer files with the Exchange a 
certified copy of a resolution adopted by the board of directors of the 
issuer authorizing withdrawal from listing and registration.
    Once an issuer has satisfied the requirement set out above, the 
issuer may voluntarily withdraw its securities from listing and 
registration on the Exchange if it complies with Exchange Act Rule 
12d2-2(c), which requires that the issuer must (i) comply with all 
applicable state laws in effect in the state in which the issuer is 
incorporated; (ii) provide written notice to the Exchange (no fewer 
than 10 days before the issuer files an application on Form 25 with the 
Commission) of its determination to withdraw one or more of its 
securities from listing and registration on the Exchange; (iii) publish 
notice (contemporaneous with providing the written notice to the 
Exchange described in section (ii) above) of its intention to withdraw 
from listing and registration; and (iv) file Form 25 with the 
Commission, all as further described in Rule 12d2-2(c) itself. When the 
issuer notifies the Exchange of its intent to withdraw one or more of 
its securities from listing and registration on the Exchange, the 
Exchange shall provide public notice of that intent on the Exchange's 
website as required by Exchange Act Rule 12d2-2(c)(3). The issuer must 
file a copy of Form 25 with the Exchange immediately after submitting 
the form to the Commission. The issuer's securities shall be withdrawn 
from listing or registration on the Exchange on the effective date set 
out in Exchange Act Rule 12d2-2(d).
    If an issuer seeks to voluntarily withdraw its securities from 
listing on the Exchange pursuant to this provision and has either 
received notice from the Exchange that it is below the Exchange's 
continued listing policies and standards, or is aware that it is below 
such continued listing policies and standards even if it has not 
received such notice from the Exchange, the issuer must disclose that 
it is no longer eligible for continued listing (including the specific 
continued listing policies and standards that the issue is below) in: 
(i) Its written notice to the Exchange of its determination to withdraw 
from listing required by Rule 12d2-2(c)(2)(ii) under the Exchange Act 
and; (ii) its public press release and website notice required by Rule 
12d2-2(c)(2)(iii) under the Exchange Act.
    (c)[.01] Right to Hearing.
    An issuer whose securities the Exchange proposes to delist shall 
have the right to avail itself of a hearing.
* * * * *
    (d) Hearing. If the corporation's response to the notice includes a 
demand for hearing, the Chief Executive Officer shall appoint a Hearing 
examiner who will set a date for hearing. Failure of the issuer to 
appear at that hearing will be deemed consent to delisting.
* * * * *
    (e) Review. The corporation shall have fifteen days from the date 
of receipt of such ruling to file objection and demand a review thereof 
by the Executive Committee. Such review, unless the Executive Committee 
determines to permit the introduction of additional evidence, will 
consist solely of a review of the transcripts of the hearing.
* * * * *
    (f) Public Notice. When a final determination is made with respect 
to the delisting of one or more securities of an issuer, the Exchange's 
Secretary promptly shall provide public notice of that determination by 
issuing a press release and posting notice on the Exchange's website. 
This notice shall be disseminated no fewer than 10 days before the 
delisting becomes effective and must remain posted on the Exchange's 
website until the delisting is effective.
    (g) Submission of Forms. Immediately after providing the notice 
described in paragraph (f) above, the Exchange shall file Form 25 with 
the Commission and provide a copy of that form to the issuer.
* * * * *

 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 CHX included statements 
concerning the purpose of and basis for the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The CHX 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 Securities and Exchange Commission recently approved changes to 
Commission Rule 12d2-2, which were designed to streamline the process 
for delisting securities.\6\ As part of these changes, national 
securities exchanges are required to ensure that their delisting rules 
conform to the new requirements of Commission Rule 12d2-2.\7\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 52029 (July 14, 
2005), 70 FR 42456 (July 22, 2005).
    \7\ See Commission Rule 12d2-2(b)(1), 17 CFR 240.12d2-2(b)(1). 
Under these new requirements, exchanges must have rules that, at a 
minimum, provide for: (a) Notice to the issuer of the exchange's 
decision to delist its securities; (b) an opportunity for appeal to 
the exchange's board of directors, or to a committee designated by 
the board; and (c) specifically-defined public notice of the 
exchange's final delisting determination. CHX represents that its 
rules already comply with the requirements described in (a) and (b) 
and that its current proposal primarily is designed to incorporate 
the new public notice requirements associated with any final 
decision to delist an issuer's securities. See CHX Article XXVIII, 
Rule 4, Interpretation and Policy .01 (providing that notice of the 
Exchange's intent to delist a security (and of the decision 
following any hearing on the matter) must be served on the issuer; 
and that the issuer may appeal any delisting decision to the 
Exchange's Executive Committee, a committee appointed by the Board 
of Directors).

---------------------------------------------------------------------------

[[Page 14267]]

    The proposed rule changes included in this submission are designed 
to ensure that the Exchange's rules conform to Commission Rule 12d2-2's 
new requirements. As an initial matter, the changes confirm that the 
Exchange will provide public notice, on its website and through a press 
release, of any final Exchange determination to delist an issuer's 
securities.\8\ As noted in the proposed rule, this notice would be 
provided at least ten days before the delisting decision becomes 
effective and would remain on the Exchange's website until the decision 
is effective. The proposed rule change also confirms that the Exchange 
will file Form 25 with the Commission and provide a copy to the 
issuer.\9\ In other changes, the proposal describes, in general terms, 
the process that should be followed when an issuer seeks to voluntarily 
withdraw the listing or registration of a security on the Exchange, 
including the issuer's obligation to file Form 25 with the Commission 
(and to submit it to the Exchange) and the Exchange's obligation to 
provide public notice of an issuer's voluntary request to delist 
securities. The proposal also makes other non-substantive changes (such 
as inserting headings and making the text part of the rule itself, 
rather than an interpretation to the rule) that are designed to make 
the rule easier to read.\10\
---------------------------------------------------------------------------

    \8\ See CHX Article XXVIII, Rule 4(f).
    \9\ Although the recent amendments to Commission Rule 12d2-2 do 
not require the Exchange to include this information in its rules, 
the Exchange believes that it is appropriate to do so to more fully 
set out the process for delisting securities.
    \10\ These changes also are not required by the recent 
amendments to Commission Rule 12d2-2.
---------------------------------------------------------------------------

    Finally, the Exchange proposes that if an issuer seeks to 
voluntarily withdraw its securities from listing on the Exchange and 
has either received notice from the Exchange that it is below the 
Exchange's continued listing policies and standards, or is aware that 
it is below such continued listing policies and standards even if it 
has not received such notice from the Exchange, the issuer must 
disclose that it is no longer eligible for continued listing (including 
the specific continued listing policies and standards that the issue is 
below) in: (i) Its written notice to the Exchange of its determination 
to withdraw from listing required by Commission Rule 12d2-2(c)(2)(ii); 
and (ii) its public press release and website notice required by 
Commission Rule 12d2-2(c)(2)(iii).\11\
---------------------------------------------------------------------------

    \11\ See also note 5, supra, discussing Amendment No. 3, 
submitted on March 15, 2006.
---------------------------------------------------------------------------

    The Exchange believes that all of these changes are consistent with 
the requirements of Commission Rule 12d2-2 and provide guidance to 
issuers of the procedures that will be followed in the event of a 
voluntary or involuntary delisting of securities on the Exchange.
2. Statutory Basis
    The Exchange believes that the basis under the Act for this 
proposed rule change is found in Section 6(b)(5),\12\ in that the 
proposed rule change is designed to promote just and equitable 
principles of trade, to prevent fraudulent and manipulative acts, to 
remove impediments to and perfect the mechanisms of a free and open 
market and a national market system and, in general, to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not 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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. 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 Exchange consents, the Commission shall:
    (a) By order approve such 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 Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File No. SR-CHX-2005-27 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-CHX-2005-27. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, 

all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the CHX. 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-CHX-2005-27 and should be submitted on or before April 
11, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
Nancy M. Morris,
Secretary.
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

[FR Doc. 06-2752 Filed 3-16-06; 4:09 pm]

BILLING CODE 8010-01-P
