
[Federal Register: January 29, 2010 (Volume 75, Number 19)]
[Notices]               
[Page 4897-4900]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29ja10-127]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61407; File No. SR-NYSE-2010-02]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC To 
Amend Certain of Its Initial Listing Requirements

January 21, 2010.
    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 January 7, 2010, New York Stock Exchange LLC (the 
``NYSE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule changes as 
described in Items I and II 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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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend certain of its initial listing 
requirements as they relate to companies listing in connection with a 
firm commitment underwritten public offering whose common stock is 
registered under the Securities Exchange Act of 1934 prior to listing 
but not listed on a national securities exchange.
    The text of the proposed rule change is available on the Exchange's 
Web site (http://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 self-regulatory organization 
included statements concerning the purpose of and basis for the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
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.

[[Page 4898]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Section 102.01B of the Exchange's Listed Company Manual (the 
``Manual'') requires that a company listing at the time of its initial 
public offering (``IPO'') or as a result of a spin-off or under the 
Affiliated Company standard of Section 102.01C(iii) must demonstrate an 
aggregate market value of publicly-held shares (``public float'') of 
$40 million at the time of listing. All other companies must have a 
public float of $100 million at the time of initial listing. For 
purposes of Section 102.01B, an IPO is defined as an offering by an 
issuer which, immediately prior to its original listing, does not have 
a class of common stock registered under the Act. The distribution 
requirements set forth in Section 103.01A for companies listing under 
the NYSE's listing standards for non-U.S. companies also utilize the 
same definition of an IPO. Section 102.01B and 103.01A both provide 
that--in connection with an IPO--the NYSE will rely on a written 
commitment from the company's underwriter to represent the anticipated 
value of the company's offering to demonstrate the company's compliance 
with the applicable public float requirement.\4\
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    \4\ Section 103.01A requires a worldwide public float of $100 
million for all listings.
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    The Exchange proposes to add a new definition for use in Sections 
102.01B and 103.01A. The proposed definition would classify a company 
as listing at the time of its ``Initial Firm Commitment Underwritten 
Public Offering'' if (i) Such company has a class of common stock 
registered under the Act, (ii) such common stock has not been listed on 
a national securities exchange during the period since the commencement 
of its current registration under the Act,\5\ and (iii) such company is 
listing in connection with a firm commitment underwritten public 
offering that is its first firm commitment underwritten public offering 
of its common stock since the registration of its common stock under 
the Act. The Exchange would apply the $40 million public float 
requirement of Section 102.01B to a company listing in connection with 
its Initial Firm Commitment Underwritten Public Offering. 
Notwithstanding the fact that a company is listing in connection with 
its Initial Firm Commitment Underwritten Public Offering, the Exchange 
will apply the $100 million market value of publicly-held shares 
standard of Section 102.01B if there is significant trading volume in 
the company's securities in the over-the-counter market prior to 
listing. In addition, the Exchange will generally apply the $100 
million test if the company has previously registered on one or more 
Securities Act registration statements the sale of significant numbers 
of shares of the class that the company proposes to list, unless there 
is evidence that subsequent trading has been very limited.
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    \5\ A company which had previously been listed but was taken 
private prior to its current registration under the Act would 
qualify.
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    Companies not listing in connection with an IPO are generally 
transferring their listing from another national securities exchange. 
These companies have a history of trading in a liquid market and, in 
general, there is no reason to believe that their public float will 
significantly increase in size simply as a result of transferring to 
the NYSE. On the other hand, companies listing in connection with an 
IPO have generally not previously had a trading market with significant 
liquidity and it has been the NYSE's experience that officers, 
directors and holders of more than 10% of the company's stock--whose 
shares are not counted as part of the public float--in many cases sell 
significant amounts of stock into the public markets after listing. 
This possibility of sales of shares by insiders after the IPO gives 
rise to a reasonable expectation that a company's public float will 
increase significantly over time after its IPO and the Exchange 
believes that the lower public float requirement for IPOs is an 
appropriate response to that fact.
    While most companies listing on the NYSE do so upon consummation of 
an IPO, a spin-off or a carve-out or upon transfer from another 
exchange, the NYSE occasionally receives applications for listing from 
companies whose common stock was registered under the Act prior to 
listing but which were neither listed on another exchange nor had a 
liquid trading market prior to listing. Typically, these are companies 
that have never undertaken a firm commitment underwritten public 
offering but have voluntarily registered their common stock under the 
Act or incurred an obligation to register under Section 12(g) of the 
Act because the number of holders of their common stock exceeded the 
minimum established under SEC rules. These companies may seek to list 
in connection with a public offering which the company and the market 
will view as essentially identical to an IPO--as it is the first 
broadly distributed public equity offering by the company--but which 
will not meet the NYSE's definition of an IPO, as the company's common 
stock was registered under the Act immediately prior to the listing. 
These companies will generally not have a large public float at the 
time of initial listing, as there will not have been any prior 
transaction that led to a significant distribution event and, in the 
absence of a listing, the company will not have had a liquid trading 
market. The Exchange believes that these companies are more similar to 
companies listing in connection with an IPO than to companies 
transferring from another exchange. As with companies listing in 
connection with an IPO, these companies are undertaking their first 
major public distribution of their stock and will have their first 
truly liquid trading market after listing. As such, the Exchange 
believes that there is a reasonable basis for concluding that the 
public float of these companies will increase over time in the same way 
as is the case for a company after its IPO. Consequently, the Exchange 
believes it is generally appropriate to subject companies listing in 
connection with an Initial Firm Commitment Underwritten Public Offering 
to the same public float requirements as companies listing in 
connection with an IPO. Notwithstanding the foregoing, the Exchange 
recognizes that there are companies that have significant trading 
volume on the over-the-counter market and which are more similar to 
companies trading on a national securities exchange than to the 
closely-held companies with illiquid stocks for which the Initial Firm 
Commitment Underwritten Public Offering provision is proposed. The 
Exchange will continue to apply the $100 million public float 
requirement to those types of companies. In addition, there are 
companies traded on the over-the-counter market that have sold 
significant numbers of equity securities pursuant to Securities Act 
registration statements, either in direct placements or best efforts 
underwritings. The Exchange will generally apply the $100 million 
public float requirement to those companies, unless there is only very 
limited trading activity in such securities in the over-the-counter 
market, as they are also more similar to companies trading on a 
national securities exchange than to the closely-held companies with 
illiquid stocks for which the Initial Firm Commitment Underwritten 
Public Offering provision is proposed.
    The Exchange also believes that it is appropriate to amend Sections 
102.01B and 103.01A to allow the Exchange to

[[Page 4899]]

(i) base its determination as to whether a company listing in 
connection with an Initial Firm Commitment Underwritten Public Offering 
has complied with the $4 stock price initial listing requirement on the 
public offering price in the Initial Firm Commitment Underwritten 
Public Offering and (ii) rely on a letter from the company's 
underwriter in the Initial Firm Commitment Underwritten Public Offering 
as evidence of compliance with the applicable public float requirement. 
These changes do not modify the quantitative public float requirement 
for companies whose common stock was registered prior to listing but 
which are not transferring from another exchange. Rather, (i) in the 
case of the $4 stock price requirement, it recognizes the fact that the 
offering price is a better gauge of the stock's likely trading price 
after listing than would be provided by any limited trading occurring 
in the over-the-counter market, and (ii) in the case of the public 
float requirement, it recognizes the fact that companies listing in 
connection with an Initial Firm Commitment Underwritten Public Offering 
typically will not have a significant public float prior to 
consummating their offering, but will be able to demonstrate the 
required public float at the time of listing. The Exchange also 
proposes to amend the domestic company financial listing standards of 
Section 102.01C and the non-U.S. company financial listing standards of 
Section 103.01B to permit the Exchange to rely on a letter from the 
company's underwriter as evidence of compliance with the market 
capitalization requirements of the various financial listing standards 
for companies listing in connection with an Initial Firm Commitment 
Underwritten Public Offering.
    The Exchange believes that the proposed rule change is consistent 
with the protection of investors and the public interest and does not 
raise any novel regulatory issues. The Exchange notes that the $40 
million public float requirement for domestic IPOs and $100 million 
worldwide public float requirement for non-U.S. companies are both 
higher than the public float requirements under the various Nasdaq 
Global Market initial listing standards, which range from $8 million to 
$20 million. The Exchange also notes that Nasdaq Global Market does not 
distinguish between IPOs and other new listing for purposes of 
establishing its quantitative public float requirements.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \6\ of the Act, in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\7\ 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. 
The Exchange believes that the proposed amendment is consistent with 
the investor protection objectives of the Act in that, while it will 
allow certain companies to list subject to a lower public float 
requirement, that lower requirement is still set at a high enough level 
that only companies that are suitable for listing on the Exchange will 
qualify to list. In addition, in expanding the circumstances in which 
the Exchange may rely on underwriters' letters to determine compliance 
with market capitalization requirements, the proposed rule change is 
not substantively changing the Exchange's quantitative initial listing 
requirements.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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 purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) does not become 
operative for 30 days after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest, provided that the self-regulatory 
organization has given the Commission written notice of its intent to 
file the proposed rule change at least five business days prior to the 
date of filing of the proposed rule change or such shorter time as 
designated by the Commission, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, the Commission notes 
that Rule 19b-4(f)(6)(iii) requires a self-regulatory organization 
to give the Commission written notice of its intent to file the 
proposed rule change at least five business days prior to the date 
of filing of the proposed rule change, or such shorter time as 
designated by the Commission. The Exchange has satisfied this 
requirement.
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    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 Exchange Act.

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 Number SR-NYSE-2010-02 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-2010-02. 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,\10\ 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

[[Page 4900]]

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, 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-2010-02 and should be 
submitted on or before February 19, 2010.
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    \10\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-1849 Filed 1-28-10; 8:45 am]
BILLING CODE 8011-01-P

