

[Federal Register: April 28, 2006 (Volume 71, Number 82)]
[Notices]               
[Page 25276-25279]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28ap06-124]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53690; File No. SR-PCX-2005-122]

 
Self-Regulatory Organizations; Pacific Exchange, Inc. (n/k/a NYSE 
Arca, Inc.); Order Granting Accelerated Approval of Proposed Rule 
Change and Amendment No. 1 Thereto and Notice of Filing and Order 
Granting Accelerated Approval to Amendment No. 2 to the Proposed Rule 
Change Relating to Amending Exchange Delisting Rules to Conform to 
Recent Amendments to Commission Rules Regarding Removal From Listing 
and Withdrawal From Registration

April 20, 2006.

I. Introduction

    On October 24, 2005, the Pacific Exchange, Inc. (n/k/a NYSE Arca, 
Inc.) (``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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 amend Exchange delisting rules 
to conform to recent amendments to Commission rules regarding removal 
from listing and withdrawal from registration.\3\ On January 6, 2006, 
the Exchange filed Amendment No. 1 to the proposed rule change.\4\ The 
proposed rule change, as amended by Amendment No. 1, was published for 
comment in the Federal Register on March 23, 2006.\5\ On March 21, 
2006, the Exchange filed Amendment No. 2 to the proposed rule 
change.\6\ No comments were received regarding the proposal. This order 
approves the proposed rule change, as amended, on an accelerated basis, 
publishes notice of Amendment No. 2 to the proposed rule change, and 
grants accelerated approval to Amendment No. 2.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On March 6, 2006, the Exchange filed with the Commission a 
proposed rule change, which was effective upon filing, to change the 
name of the Exchange, as well as several other related entities, to 
reflect the recent acquisition of the Pacific Exchange, Inc. by 
Archipelago Holdings, Inc. (``Archipelago'') and the merger of NYSE 
with Archipelago. See Securities Exchange Act Release No. 53615 
(April 7, 2006), 71 FR 19226 (April 13, 2006) (File No. SR-PCX-2006-
24). All references herein have been changed to reflect the 
aforementioned rule change.
    \4\ In Amendment No. 1, the Exchange made changes to its rule 
text to clarify that the delisting procedures set forth therein 
apply to instances where the Exchange is considering delisting for 
reasons other than those set forth in amended Rule 12d2-2(a) under 
the Act.
    \5\ See Securities Exchange Act Release No. 53497 (March 16, 
2006), 71 FR 14763.
    \6\ In Amendment No. 2, the Exchange amended its rule text to 
clarify that an issuer that is below the continued listing policies 
and standards of the Exchange and seeks to voluntarily apply to 
withdraw a class of securities from listing must disclose that it is 
no longer eligible for continued listing in its statement of 
material facts relating to the reason for withdrawal from listing, 
its public press release, and its Web site notice. In addition, the 
Exchange revised its rule text to clarify that applications to 
voluntarily withdraw a class of securities from listing must be 
filed on Form 25 and that the previous rule text would be operative 
until April 23, 2006.
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II. Description of the Proposed Rule Change

    Section 12 of the Act \7\ and Rule 12d2-2 thereunder \8\ (``SEC 
Rule 12d2-2'') govern the process for the delisting and deregistration 
of securities listed on national securities exchanges. Recent 
amendments to SEC Rule 12d2-2 (``amended SEC Rule 12d2-2'') and other 
Commission rules require the electronic filing of revised Form 25 \9\ 
on the Commission's Electronic Data Gathering, Analysis, and Retrieval 
(``EDGAR'') system by exchanges and issuers for all delistings, other 
than delistings of standardized options and securities futures, which 
are exempted.\10\
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    \7\ 15 U.S.C. 78l.
    \8\ 17 CFR 240.12d2-2.
    \9\ 17 CFR 249.25.
    \10\ See Securities Exchange Act Release No. 52029 (July 14, 
2005), 70 FR 42456 (July 22, 2005) (``SEC Rule 12d2-2 Approval 
Order'').
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    In the case of exchange-initiated delistings, amended SEC Rule 
12d2-2(b) states that a national securities exchange may file an 
application on Form 25 to strike a class of securities from listing 
and/or withdraw the registration of such securities, in accordance with 
its rules, if the rules of such exchange, at a minimum, provide for:
    (i) Notice to the issuer of the exchange's decision to delist its 
securities;
    (ii) An opportunity for appeal to the exchange's board of 
directors, or to a committee designated by the board; and
    (iii) Public notice of the national securities exchange's final 
determination to remove the security from listing and/or registration, 
by issuing a press release and posting notice on its Web site. Public 
notice must be disseminated no fewer than 10 days before the delisting 
becomes effective pursuant to amended SEC Rule 12d2-2(d)(1), and must 
remain posted on its Web site until the delisting is effective.
    NYSE Arca Equities Rule 5.5(m) provides the applicable procedures 
when the Exchange considers removing securities from listing. The 
Exchange proposes to amend NYSE Arca Equities

[[Page 25277]]

Rule 5.5(m) to comply with new requirements set forth in amended SEC 
Rule 12d2-2(b). The provisions set forth in current NYSE Arca Equities 
Rule 5.5(m), which provide for notification to the issuer in the event 
that the Exchange determines to delist the issuer's securities and the 
right to appeal the Exchange's determination, satisfy the minimum 
provisions set forth in amended SEC Rule 12d2-2(b)(1)(i)-(ii). The 
Exchange's rules do not currently provide for the mandated public 
notice, and accordingly, proposed NYSE Arca Equities Rule 5.5(m)(3) 
would require the Exchange to provide public notice, pursuant to 
amended SEC Rule 12d2-2(b)(iii). Specifically, the Exchange proposes to 
state that, in the event the Exchange makes a final decision to remove 
the security of an issuer from listing, the Exchange will take the 
following actions, no fewer than ten (10) days before the delisting 
becomes effective: (i) An application on Form 25 will be submitted by 
the Exchange to the Commission to strike the security from listing and 
registration in accordance with Rule 12d2-2; (ii) a copy of such 
application will be provided to the issuer in accordance with Rule 
12d2-2; and (iii) public notice of the Exchange's final determination 
to delist the security will be made via a press release and posting on 
the Exchange's website until the delisting is effective. In connection 
with this proposed change, the Exchange also proposes to make reference 
to the above public notice procedures in the appeal procedures 
discussion in new NYSE Arca Equities Rule 5.5(m)(2)(f). In addition, 
the Exchange proposes to state in NYSE Arca Equities Rule 5.5(m)(1)(b) 
that the Exchange, after making its initial determination to delist a 
security, will notify the issuer in writing, if possible, rather than 
by telephone.
    NYSE Arca Equities Rule 5.4(b) sets forth the Exchange procedures 
that apply when an issuer proposes to withdraw a security from listing 
on the Exchange. The Exchange proposes to amend NYSE Arca Equities Rule 
5.4(b) to provide that the Exchange, upon receiving notification by an 
issuer of its intent to withdraw its securities from listing and 
registration, will post notice of such intent on the Exchange's Web 
site by the next business day and will continue to post the notice 
until the delisting becomes effective. These proposed changes reflect 
the requirements set forth in amended SEC Rule 12d2-2(c). The Exchange 
also proposes a new requirement that an issuer submit to the Exchange a 
copy of the Form 25 that it has filed with the Commission no later than 
the date of such filing.
    In addition, the Exchange proposes to amend NYSE Arca Equities Rule 
5.4(b) to clarify that the issuer, when proposing to withdraw its 
securities from listing and registration, must submit to the Exchange a 
``letter from an authorized officer of the issuer providing the 
specific reasons cited by the board of directors of the issuer for the 
proposed withdrawal,'' rather than a ``statement setting forth in 
detail the reasons for the proposed withdrawal and the facts in support 
thereof.''
    The Exchange also proposes to amend NYSE Arca Equities Rule 5.4(b) 
to state that an issuer seeking to voluntarily apply to withdraw a 
class of securities from listing on NYSE Arca that has received notice 
from NYSE Arca, pursuant to Rule 5.3, Rule 5.5 or otherwise, that it is 
below NYSE Arca's continued listing policies and standards, or that is 
aware that it is below such continued listing policies and standards 
notwithstanding that it has not received such notice from NYSE Arca, 
must disclose that it is no longer eligible for continued listing 
(identifying the specific continued listing policies and standards with 
which it does not comply) in: (i) Its statement of all material facts 
relating to the reasons for withdrawal from listing provided to NYSE 
Arca along with written notice of its determination to withdraw from 
listing required by amended SEC Rule 12d2-2(c)(2)(ii); and (ii) its 
public press release and Web site notice required by amended SEC Rule 
12d2-2(c)(2)(iii).\11\
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    \11\ See Amendment No. 2, supra note 6.
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    Finally, the Exchange has made changes in its rules to clarify that 
the Form 25 serves as the application to remove a security from listing 
and/or registration and to specify that the proposed changes will be 
effective as of April 24, 2006 as required by amended SEC Rule 12d2-2.

III. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change and Amendment Nos. 1 and 2

    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange 
\12\ and, in particular, the requirements of section 6 of the Act.\13\ 
Specifically, as discussed below, the Commission finds that the 
proposal, as amended, is consistent with section 6(b)(5) of the 
Act,\14\ which requires, in part, that the rules of an 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, and 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. Further, as 
noted in more detail below, the changes being adopted by the Exchange 
meet the requirements of amended SEC Rule 12d2-2.
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    \12\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(5).
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A. Exchange Delisting

    Amended SEC Rule 12d2-2(b) states that a national securities 
exchange may file an application on Form 25 to strike a class of 
securities from listing and/or withdraw the registration of such 
securities, in accordance with its rules, if the rules of such 
exchange, at a minimum, provide for notice to the issuer of the 
exchange's decision to delist, opportunity for appeal, and public 
notice of the exchange's final determination to delist. The Commission 
believes that the Exchange's current rules and proposal comply with the 
dictates of amended SEC Rule 12d2-2(b).
    The Exchange's rules currently provide the requisite issuer notice 
as well as an opportunity for appeal to the Board Appeals Committee, a 
committee appointed by the Board of Directors.\15\ In addition, the 
proposed rule change will provide for public notice of the Exchange's 
final determination to remove the security from listing and/or 
registration. The Exchange also proposes to state in NYSE Arca Equities 
Rule 5.5(m)(1)(b) that the Exchange, after making its initial 
determination that a security should be delisted, will notify the 
issuer in writing, if possible, of the decision rather than by 
telephone. The Commission notes that this provision is a clarification 
of the Exchange's current practices. Overall, the proposed Exchange 
amendments 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.\16\
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    \15\ See NYSE Arca Equities Rule 5.5(m)(2)(c).
    \16\ 15 U.S.C. 78f(b).

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[[Page 25278]]

B. Issuer Voluntary Delisting

    The Exchange proposes to set forth in its Exchange rules the 
general requirements of amended SEC Rule 12d2-2(c) regarding issuer 
voluntary delisting. Accordingly, the Exchange proposes to amend NYSE 
Arca Equities Rule 5.4(b) to provide that the Exchange, upon receiving 
notification by an issuer of its intent to withdraw its securities from 
listing and registration, will post notice of such intent on the 
Exchange's Web site by the next business day and will continue to post 
the notice until the delisting becomes effective. The Commission 
believes that the proposal will better inform issuers of the 
requirements for voluntary delisting of their securities under the 
Exchange's rules and Federal securities laws.
    The proposal also sets forth a new requirement not in amended SEC 
Rule 12d2-2 that would require the issuer to submit to the Exchange a 
copy of the Form 25 that the issuer has filed with the Commission no 
later than the date of such filing. The Commission believes that this 
requirement will allow the Exchange to be fully informed of the filing 
of a Form 25 and be prepared to take timely action to delist the 
security in accordance with the filing of the Form.
    In addition, the Exchange proposes to revise NYSE Arca Equities 
Rule 5.4(b) to require an issuer proposing to withdraw a security from 
listing to submit to the Exchange a letter from an authorized officer 
of the issuer providing the specific reasons cited by the board of 
directors of the issuer for the proposed withdrawal. The Commission 
believes that this requirement may help ensure that the decision to 
delist a security voluntarily has been well-considered by the issuer's 
board.
    The Exchange also proposes to amend NYSE Arca Equities Rule 5.4(b) 
to state that an issuer seeking to voluntarily apply to withdraw a 
class of securities from listing on the Exchange that has received 
notice from the Exchange, pursuant to Rule 5.3, Rule 5.5 or otherwise, 
that it is below the Exchange's continued listing policies and 
standards, or that is aware that it is below such continued listing 
policies and standards notwithstanding that it has not received such 
notice from the Exchange, must disclose that it is no longer eligible 
for continued listing (identifying the specific continued listing 
policies and standards with which it does not comply) in: (i) Its 
statement of all material facts relating to the reasons for withdrawal 
from listing provided to the Exchange along with written notice of its 
determination to withdraw from listing required by amended SEC Rule 
12d2-2(c)(2)(ii); and (ii) its public press release and Web site notice 
required by amended SEC Rule 12d2-2(c)(2)(iii).\17\ The Commission 
believes that this requirement will allow shareholders to be informed 
and aware that the issuer has failed to meet Exchange listing standards 
and is voluntarily delisting with the consent of the Exchange. Issuers 
will therefore not be permitted to delist voluntarily without public 
disclosure of their noncompliance with Exchange listing standards.
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    \17\ See Amendment No. 2, supra note 6.
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C. Accelerated Approval of Proposed Rule Change and Amendment Nos. 1 
and 2

    Pursuant to section 19(b)(2) of the Act,\18\ the Commission may not 
approve any proposed rule change, or amendment thereto, prior to the 
30th day after the date of publication of notice of the filing thereof, 
unless the Commission finds good cause for so doing and publishes its 
reasons for so finding. The Commission hereby finds good cause for 
approving the proposed rule change, as amended, prior to the 30th day 
after publishing notice of the proposed rule change and Amendment Nos. 
1 and 2 in the Federal Register. In the SEC Rule 12d2-2 Approval Order, 
the Commission stated that the compliance date of the amendments is 
April 24, 2006.\19\ In addition, no comments were received on the 
proposal, as originally published.\20\ Accelerated approval of the 
proposal, as amended, would enable the Exchange's amended rules to 
become operative by the compliance date set forth by the Commission.
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    \18\ 15 U.S.C. 78s(b)(2).
    \19\ See SEC Rule 12d2-2 Approval Order, supra note 10.
    \20\ See note 5, supra.
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    The Commission further finds good cause for approving Amendment No. 
2 to the proposal, prior to the 30th day after publishing notice in the 
Federal Register. In Amendment No. 2, the Exchange amended its rule 
text to clarify that an issuer seeking to voluntarily delist that has 
received notice from the Exchange that it is below continued listing 
policies and standards, or that is aware that it is below such 
continued listing policies and standards notwithstanding that it has 
not received such notice from the Exchange, must disclose its status. 
As previously discussed, the revisions made to the proposal in 
Amendment No. 2 will allow shareholders to be informed and aware that 
the issuer has failed to meet Exchange listing standards and is 
voluntarily delisting with the consent of the Exchange. The Commission 
believes that granting accelerated approval of Amendment No. 2 will 
permit the Exchange to implement this new provision as expeditiously as 
possible, to the benefit of investors. In addition, the Commission 
believes that these revisions do not raise new regulatory issues.
    Accordingly, pursuant to section 19(b)(2) of the Act,\21\ the 
Commission finds good cause to approve the proposed rule change, as 
amended, prior to the thirtieth day after notice of the proposed rule 
change and Amendment Nos. 1 and 2 are published in the Federal 
Register.
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    \21\ Id.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 2, including whether Amendment No. 2 
is consistent with the Act. Comments may be submitted by any of the 
following methods:

Electronic Comments

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

File Number SR-PCX-2005-122 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-PCX-2005-122. 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

[[Page 25279]]

available for inspection and copying in the Commission's Public 
Reference Room. 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-PCX-2005-122 and should be 
submitted on or before May 19, 2006.

V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\22\ that the proposed rule change (File No. SR-PCX-2005-122), as 
amended by Amendment Nos. 1 and 2, is approved on an accelerated basis. 

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    \22\ 15 U.S.C. 78s(b)(2).
    \23\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\23\
Nancy M. Morris,
Secretary.
 [FR Doc. E6-6413 Filed 4-27-06; 8:45 am]

BILLING CODE 8010-01-P
