[Federal Register Volume 64, Number 215 (Monday, November 8, 1999)]
[Notices]
[Pages 60870-60872]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29159]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-42086; File No. SR-NYSE-99-43]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by
the New York Stock Exchange, Inc., Extending the Pilot Fee Structure
Governing the Reimbursement of Member Organizations for Costs Incurred
in the Transmission of Proxy and Other Shareholder Communication
Materials
November 1, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 28, 1999, the New York Stock Exchange, Inc. (the
``Exchange'' or ``NYSE'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items, I, II, and III below, which Items have been prepared by the
Exchange. On November 1, 1999, the Exchange filed with the Commission
Amendment No. 1 to the proposed rule change.\3\ The
[[Page 60871]]
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 to the proposed rule change requests that
the Commission exercise its discretionary authority under rule 19b-
4(f)(6)(iii) of the Act by designating such shorter time period,
which waives the requirement that written notice of a ``non-
controversial'' proposed rule change be provided to the Commission
at least five business days before filing. See Letter from James E.
Buck, Senior Vice President and Secretary, Exchange, to Sharon
Lawson, Senior Special Counsel, Division of Market Regulations,
Commission, dated November 1, 1999 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange proposes to extend the effectiveness of the pilot fees
(``Pilot Fee Structure'') currently set forth in Exchange Rule 451.
``Transmission of Proxy Material,'' and Exchange Rule 465,
``Transmission of Interim Reports and Other Material.'' (collectively
the ``Rules''). The Rules provide guidelines for the reimbursement of
expenses by NYSE issuers to NYSE member organizations for the
processing and delivery of proxy materials and other issuer
communications to security holders whose securities are held in street
name. The Pilot Fee Structure is presently scheduled to expire on
November 1, 1999. The Exchange proposes to extend the Pilot Fee
Structure through January 3, 2000.
The text of the proposed rule change is available at the Office of
the Secretary, the Exchange, and at the Commission.
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 the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statement 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 significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
As first adopted, the Pilot Fee Structure revised the Rules to
lower certain reimbursement guidelines, incentive fees to eliminate
duplicative mailings, and establish a supplemental fee for
intermediaries that coordinate multiple nominees.\4\ The Pilot Fee
Structure has been modified and extended several times,\5\ most
recently by Commission order dated July 29, 1999.\6\
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\4\ See Securities Exchange Act Release No. 38406 (Mar. 14,
1997), 62 FR 13922 (Mar. 24, 1970. The Commission initially approved
the Pilot Fee Structure as a one-year pilot, and designated May 13,
1998, as the date of expiration.
\5\ See Securities Exchange Act Release Nos. 39672 (Feb. 17,
1998), 63 FR 9034 (Feb. 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 (Aug.
10, 1998) (order extending Pilot Fee Structure through October 31,
1998); 40621 (Oct. 30, 1998), 63 FR 60036 (Nov. 6, 1998) (order
extending Pilot Fee Structure through February 12, 1999); 41044
(Feb. 11, 1999), 64 FR 8422 (Feb. 19, 1999) (order extending Pilot
Fee Structure through March 15, 1999); and 41177 (Mar. 16, 1999), 64
FR 14294 (Mar. 24, 1999) (order extending Pilot Fee Structure
through August 31, 1999).
\6\ See Securities Exchange Act Release No. 41669 (July 29,
1999), 64 FR 43007 (Aug. 6, 1999) (order extending Pilot Fee
Structure through November 1, 1999).
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In June of this year, the Exchange submitted a proposed rule change
to the Commission (``June Filing'') to further revise the Pilot Fee
Structure and extend its effectiveness through August 31, 2001.\7\ The
June Filing proposes to reduce the basic processing fee and nominee
coordination fee that NYSE member organizations and proxy distribution
intermediaries may recover in connection with the distribution of proxy
and shareholder communication materials to shareholders. The June
Pilots also proposes to define the term ``nominee'' as it relates to
the calculation of the nominee coordination fee.
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\7\ See Securities Exchange Act Release No. 41549 (June 23,
1999), 64 FR 35229 (June 30, 1999).
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The Exchange believes that an extension of the Pilot Fee Structure
through January 3, 2000, will give the Commission additional time to
fully consider the June Filing and the public comment letters regarding
the June Filing,\8\ without a lapse in the current Rules. Absent an
extension of the Pilot Fee Structure, the fees in effect prior to the
Pilot Fee Structure (i.e., the fees in effect prior to March 14, 1997)
would return to effectiveness after November 1, 1999. The Exchange
believes that such a result could be counterproductive and cause
confusion among NYSE member organizations and issuers, especially given
that the June Filing, proposing to extend the revised Pilot Fee
Structure through August 31, 2001, is still pending with the
Commission.
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\8\ The Commission received comment letters from the Council of
Institutional Investors, Association of Publicly Traded Companies,
and Automatic Data Processing (``ADP''). The ADP comment letter
included an economic analysis of the June Filing, which analysis was
prepared by a consulting firm retained and paid by ADP. See Public
File SR-NYSE-99-21.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b)(4) of the Act \9\ in that it provides for the equitable
allocation of reasonable dues, fees, and other charges among its
members and other persons using its facilities. The Exchange further
believes that the proposed rule change satisfies the requirement under
Section 6(b)(5) \10\ that an exchange have rules that are designed to
prevent fraudulent and manipulative acts and practices; promote just
and equitable principles of trade; foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities; remove impediments to and perfect the mechanism of a free
and open market and a national market system; and, in general, protect
investors and the public interest.\11\
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\9\ 15 U.S.C. 78f(b)(4).
\10\ 15 U.S.C. 78f(b)(5).
\11\ In reviewing this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes 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
The Exchange has not solicited, and does not intend to solicit,
comments on the proposed rule change. The Exchange has not received any
unsolicited written comments from members or other interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Because the foregoing 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) 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 (or such shorter time period as designated by the Commission); the
proposed rule change has become effective pursuant to Section
19(b)(3)(A)
[[Page 60872]]
of the Exchange Act \12\ and Rule 19b-4(f)(6) \13\ thereunder.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
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Under Rule 19b-4(f)(6)(iii),\14\ an exchange is ordinarily required
to provide the Commission with written notice of its intent to file a
``non-controversial'' proposed rule change at least five business days
prior to the filing date. In Amendment No. 1, however, the Exchange
requested that the Commission exercise its discretionary authority
under Rule 19b-4(f)(6)(iii) by designating such shorter time period so
that the five day pre-filing requirement would be waived. Given the
nature of the filing and absence of material issues, the Commission
believes that it is appropriate to waive the five day pre-filing
requirement for the proposed rule change.
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\14\ 17 CFR 240.19b-4(f)(6)(iii).
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In addition, 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 such shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission designate such shorter time period so
that the proposed rule change may take effect no later than November 1,
1999. The immediate effectiveness would allow the current Pilot Fee
Structure to continue uninterrupted, and would provide the Commission
with additional time to complete its review of the June Filing and
related comment letters.
The Commission, consistent with the protection of investors and the
public interest, has determined to make the proposed rule change
effective immediately upon filing for the following reasons. The
proposed rule change extends the expiration date of the Pilot Fee
Structure from November 1, 1999, through January 3, 2000. The extension
of the Pilot Fee Structure will provide the Commission with further
time to complete its review and evaluation of the June Filing. In
particular, the Commission is still reviewing the economic analysis of
the June Filing that was submitted by ADP. Thus, the extension will
afford the Commission the additional time necessary to thoroughly
consider the substance of ADP's economic analysis and the issues raised
in the comment letters.
The Commission notes that unless the current expiration date of the
Pilot Fee Structure is extended, the reimbursement rates for proxy
materials distributed after November 1, 1999, will revert to those in
effect prior to March 14, 1997. The Commission believes such a result
could be confusing and counterproductive, especially given that the
June Filing proposing to extend the Pilot Fee Structure through August
31, 2001, is still pending with the Commission.
Based on the above reasons, the Commission believes it is
consistent with the protection of investors and the public interest
that the proposed rule change, and Amendment No. 1, become immediately
effective upon the date of filing, October 28, 1999. 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, as amended, 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 submissions, 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 persons,
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 Section, 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of such filing will also
be available for inspection and copying at the principal office of the
Exchange. All submissions should refer to File No. SR-NYSE-9943 and
should be submitted by November 29, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-29159 Filed 11-5-99; 8:45 am]
BILLING CODE 8010-01-M