[Federal Register Volume 61, Number 223 (Monday, November 18, 1996)]
[Notices]
[Page 58728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29441]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37937; File No. SR-NYSE-96-29]
Self-Regulatory Organizations; New York Stock Exchange, Inc.;
Order Granting Accelerated Approval of Proposed Rule Change Relating to
Stock Distributions
November 8, 1996.
On October 11, 1996, the New York Stock Exchange, Inc. (``NYSE'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change (File No. SR-NYSE-96-29) pursuant to Section
19(b)(1) of the Securities Exchange Act of 1934 (``Act``).\1\ Notice of
the proposal was published in the Federal Register on October 18,
1996.\2\ No comment letters were received. For the reasons discussed
below, the Commission is granting approval of the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1) (1988).
\2\ Securities Exchange Act Release No. 37809 (October 10,
1996), 61 FR 54476.
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I. Description
The proposed rule change will allow listed companies engaged in
distributions to offer shareholders whose ownership of stock is
directly registered with them or their transfer agents the choice of
receiving either certificates or account statements. The NYSE is
rescinding its policy which required listed companies to supply stock
certificates to recordholders for all distributions, such as stock
splits, mergers, and spin-offs, other than those relating to dividend
reinvestment plans (``DRIPs'') and dividend reinvestment stock purchase
plans (``DRSPPs''). The NYSE is rescinding the current policy due to
the decreasing importance of physical certificates, the technological
enhancements in the automation of stock ownership records, and a recent
rule filing by The Depository Trust Company (``DTC'') to implement an
electronic ``direct registration system'' (``DRS'').\3\
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\3\ For a complete description of DRS, refer to Securities
Exchange Act Release No. 35038 (December 1, 1994), 59 FR 63652
(concept release on a transfer agent operated book-entry
registration system) and DTC Important Notice B# 1811-96 (October 7,
1996) and Important Notice B# 1841-96 (October 7, 1996), which are
attached as Exhibits A and B to Securities Exchange Act Release No.
37800 (October 9, 1996), 61 FR 54473.
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DRS will provide a linkage between transfer agents, broker-dealers,
and the depositories and will allow investors to move stock position
from transfer agent to broker-dealers in connection with their sales of
stock. As a condition of allowing issuers to provide investors with the
option of obtaining either certificates or account statements for
distributions in addition to those associated with DRIPs and DRSPPs,
NYSE is requiring issuers to include their stock in a DRS. Such a DRS
must be operated by a registered clearing agency and must be available
for exchange-traded stock.
II. Discussion
Section 6(b)(5) \4\ of the Act requires that an exchange have rules
that are designed to foster cooperation and coordination with persons
engaged in regulating, clearing, settling, processing information with
respect to, and facilitating transactions in securities. The Commission
believes that NYSE's proposed rule change rescinding its policy will
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities. By rescinding its policy, NYSE
listed companies will have the opportunity to participate in DRS, which
a joint industry committee comprised of representatives from the
transfer agent, broker-dealer, and depository communities. DRS will
provide significant efficiencies in the processing of securities and
should contribute to the cooperation and coordination between the
various groups involved in the clearance and settlement process.
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\4\ 15 U.S.C. 78f (1988).
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NYSE has requested that the Commission find good cause for
approving the proposed rule change prior to the thirtieth day after the
date of publication of notice of the filing. The Commission finds good
cause for approving the proposed rule change prior to the thirtieth day
after the date of publication because accelerated approval will allow
NYSE listed issuers to participate in the DRS pilot program which
begins on November 11, 1996.
III. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular Section 6 of the Act and the rules and regulations
thereunder.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-NYSE-96-29) be and hereby is
approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12) (1996).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-29441 Filed 11-15-96; 8:45 am]
BILLING CODE 8010-01-M