Pursuant to section 19(b)(1) of the Securities Act of 1934 (“Act”), and Rule 19b-4 thereunder, notice is hereby given that on August 11, 2000, the New York Stock Exchange, Inc. (“Exchange” or “NYSE”) 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 prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
17 CFR 240.19b-4.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The NYSE is proposing to extend the effectiveness of the pilot fee structure (“Pilot Fee Structure”) currently set forth in the Exchange Rule 451, “Transmission of Proxy Material,” and Exchange Rule 465, “Transmission of Interim Reports and Other Material” (“Rules”). Among other things, the Rules establish guidelines for the reimbursement of expenses by NYSE issuers to NYSE member organizations for the processing of proxy materials and other issuer communications (collectively, “Materials”) with respect to security holders whose securities are held in street name. The current pilot period regarding the Rules is scheduled to expire on September 1, 2000. NYSE proposes extending the Pilot Fee Structure through October 10, 2000.
The text of NYSE Rule 451 also is included at Para 402.10(A) of the Exchange's Listed Company Manual and the Exchange will make conforming changes to that paragraph.
II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for 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 Exchange has prepared summaries, set forth in sections, A, B and C below, of the most signficiant aspect of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
Among other things, the Pilot Fee Structure lowers certain guidelines concerning the reimbursement of fees for the distribution of Materials, creates incentive fee to eliminate duplicative mailings, and establishes a supplemental fee for intermediaries that coordinate multiple nominees. The Pilot Fee Structure has been modified and extended several times, most recently by Commission order dated February 16, 2000. . The present proposed rule change would extend the Pilot Fee Structure to October 10, 2000.
See Securities Exchange Act Release No. 38406 (March 14, 1997), 62 FR 13922 (March 24, 1997). The Commission initially approved the Pilot Fee Structure as a one-year pilot, and designated May 13, 1998, as the date of expiration.
See Securities Exchange Act Release Nos. 39672 (February 17, 1998) 63 FR 9034 (February 23, 1998) (order extending Pilot Fee Structure through July 31, 1998, and lowering the rate of reimbursement for mailing each set of initial proxies and annual reports from $.55 to $.50); 40289 (July 31, 1998), 63 FR 42652 (August 10, 1998) (order extending Pilot Fee Structure through October 31, 1998); 40621 (October 30, 1998), 63 FR 60036 (November 6, 1998) (order extending Pilot Fee Structure through February 12, 1999); 41044 (February 11, 1999), 64 FR 8422 (February 19, 1999) (order extending Pilot Fee Structure through March 15, 1999); 41177 (March 16, 1999), 64 FR 14294 (March 24, 1999) (order extending Pilot Fee Structure through August 31, 1999); 41669 (July 29, 1999), 64 FR 43007 (August 6, 1999) (order extending Pilot Fee Structure through November 1, 1999); 42086 (November 1, 1999), 64 FR 60870 (November 8, 1999) (order extending Pilot Fee Structure through January 3, 2000); and 42304 (December 30, 1999), 65 FR 1212 (January 7, 2000) (order extending Pilot Fee Structure through February 15, 2000).
See Securities Exchange Act Release No. 42433, 65 FR 10133, 65 FR 10137 (February 25, 2000).
The Exchange believes that an extension of the Pilot Fee Structure will give the Commission additional time to consider the pilot program without a lapse in the current rules. Absent an extension of the Pilot Fee Structure, the fees in effect prior to the pilot program would return to effectiveness after September 1, 2000, creating confusion in the market.
2. Basis
The Exchange believes that the proposed rule change is consistent with section 6(b)(4) of the Act, which requires an exchange's rules to provide for the equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. In addition, the Exchange believes that the proposed rule change is consistent with section 6(b)(5) of the Act, which requires an exchange's rules to 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.
15 U.S.C. 78f(b)(5).
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that 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
NYSE has not solicited, and does not intend to solicit, comments on the proposed rule change. NYSE has not received any unsolicited comments from members of other interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
Because the foregoing proposed rule change: (1) Does not significantly affect the protection of investors or the public interest; (2) does not impose any significant burden on competition; and (3) does not become operative for 30 days from the date of filing, or such shorter time that the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act and Rule 19b- thereunder.
17 CFR 240.19b-4(f)(6).
As required under Rule 19b-4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change at least five business days prior to the filing date.
A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative prior to 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. NYSE seeks to have the proposed rule change become operative on or before September 1, 2000 to allow the Pilot Fee Structure to continue in effect on an uninterrupted basis.
The Commission, consistent with the protection of investors and the public interest, has determined to make the proposed rule change operative immediately through October 10, 2000. This extension of the Pilot Fee Structure will provide the Commission with additional time to review and evaluate the Pilot Fee Structure.
The Commission notes that unless the current expiration date of the Pilot Fee Structure is extended, the reimbursement rate for proxy material distributed after September 1, 2000, will revert to those in effect prior to March 14, 1997. The Commission believes that such a result could be confusing and counterproductive.
In addition, the Commission notes that the NYSE has filed a proposal to amend the current Pilot Fee Structure. By extending the current Pilot Fee Structure, the Commission will be able to fully consider, and solicit comment from interested persons regarding, the proposed amended Pilot Fee Structure.
See File No. SR-NYSE-00-36.
Based on these reason, the Commission believes that it is consistent with the protection of investors and the public interest that the proposed rule change become operative on immediately through October 10, 2000. At any time within 60 days of the filing of the 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.
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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. 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 pay 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 will also be available for inspection and copying at the principal office of the NYSE. All submissions should refer to file No. SR-NSYE-00-35 and should be submitted by September 13, 2000.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
17 CFT 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-21438 Filed 8-22-00; 8:45 am]
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