[Federal Register Volume 76, Number 81 (Wednesday, April 27, 2011)]
[Notices]
[Page 23637]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-10091]
[[Page 23637]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64322; File No. SR-NYSE-2011-09]
Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Approving a Proposed Rule Change Amending Exchange Rule 103B To Modify
the Application of the Exchange's Designated Market Maker Allocation
Policy in the Event of a Merger Involving One or More Listed Companies
April 21, 2011.
I. Introduction
On February 24, 2011, New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``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 Rule 103B to modify the
application of the Exchange's Designated Market Maker (``DMM'')
allocation policy in the event of a merger involving one or more listed
companies. The proposed rule change was published for comment in the
Federal Register on March 10, 2011.\3\ The Commission received no
comment letters on the proposal. This order approves the proposed rule
change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 64039 (March 4,
2011), 76 FR 13251.
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II. Description of the Proposed Rule Change
Currently, Policy Note VI(D)(1) to Exchange Rule 103B provides that
when two NYSE listed companies merge, the post-merger listed company is
assigned to the DMM in the company that is determined to be the
survivor-in-fact (dominant company). Where no survivor-in-fact can be
identified, the post-merger listed company may select one of the DMM
units trading the merging companies without the security being referred
for reallocation, or it may request that the matter be referred for
allocation through the allocation process pursuant to Exchange Rule
103B, Section III.
In addition, Policy Note VI(D)(3) to Exchange Rule 103B provides
that in situations involving the merger of a listed company and an
unlisted company, where the unlisted company is determined to be the
survivor-in-fact, the post-merger listed company may choose to remain
registered with the DMM unit that had traded the listed company entity
in the merger, or it may request that the matter be referred for
allocation through the allocation process pursuant to Exchange Rule
103B.
The Exchange proposes to amend Policy Notes VI(D)(1) and (3) to
Exchange Rule 103B to provide that in all listed company mergers,
either between two listed companies or a listed company and an unlisted
company, the management of the post-merger listed company will be able
to choose to retain either of the incumbent DMMs (in the case of a
merger between two listed companies) or the incumbent DMM (in the case
of a merger between a listed company and an unlisted company) or
request to have the security referred for reallocation. In no case will
the policy dictate that a post-merger listed company must retain an
incumbent DMM unless it chooses to do so.
The Exchange also proposes to amend Policy Notes VI(D)(1) and (3)
to provide that a DMM unit that is ineligible to receive a new
allocation due to its failure to meet the requirements of Exchange Rule
103B, Section II(D) and (E) will be eligible to be selected in its
capacity as the DMM for one of the two pre-merger listed companies (in
the case of a merger between two listed companies) or in its capacity
as DMM of the pre-merger listed company (in the case of a merger
between a listed company and an unlisted company), but will not be
eligible to participate in the allocation process if the post-merger
company requests that the matter be referred for allocation through the
allocation process pursuant to Exchange Rule 103B, Section III. In the
event that such a situation were to arise, the Exchange would inform
the listed company of such DMM unit's ineligibility under Exchange Rule
103B, Section II(D) or (E).
III. Discussion and Findings
After careful review, 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.\4\
In particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\5\ which requires, among
other things, that the rules of a national securities exchange be
designed to promote just and equitable principles of trade, 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.
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\4\ 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).
\5\ 15 U.S.C. 78f(b)(5).
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The Commission believes that the proposed rule change is consistent
with the Act because it would provide listed companies involved in a
merger with greater flexibility with respect to the DMM allocation
process. Moreover, the Commission notes that Section 806.01 of the NYSE
Listed Company Manual provides that a listed company can request a
change of DMM at any time. Thus, giving post-merger listed companies
greater control over the allocation decision in connection with a
merger is consistent with the Exchange's current DMM allocation policy.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\6\ that the proposed rule change (SR-NYSE-2011-09) be, and hereby
is, approved.
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\6\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-10091 Filed 4-26-11; 8:45 am]
BILLING CODE 8011-01-P