Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change 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

[Federal Register Volume 65, Number 5 (Friday, January 7, 2000)]
[Notices]
[Pages 1212-1214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-388]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42304; File No. SR-NYSE-99-52]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change 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

December 30, 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 December 28, 1999, the New York Stock Exchange, Inc. (``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. The 
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.
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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 
January 3, 2000. The Exchange proposes to extend the Pilot Fee 
Structure through February 15, 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

[[Page 1213]]

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 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, create incentive fees to 
eliminate duplicative mailings, and establish a supplemental fee for 
intermediaries that coordinate multiple nominees.\3\ The Pilot Fee 
Structure has been modified and extended several times,\4\ most 
recently by Commission order dated November 1, 1999.\5\
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    \3\ See Securities Exchange Act Release No. 38406 (Mar. 14, 
1997), 62 FR 13922 (Mar. 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.
    \4\ 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 45652 (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); 41177 (Mar. 16, 1999), 64 FR 
14294 (Mar. 24, 1999) (order extending Pilot Fee Structure through 
August 31, 1999); and 41669 (July 29, 1999), 64 FR 43007 (Aug. 6. 
1999) (order extending Pilot Fee Structure through November 1, 
1999).
    \5\ See Securities Exchange Act Release No. 42086 (Nov. 1, 
1999), 64 FR 60870 (Nov. 8, 1999) (order extending Pilot Fee 
Structure through January 3, 2000).
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    In June of 1999, 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.\6\ 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 
Filing also proposes to define the term ``nominee'' as it relates to 
the calculation of the nominee coordination fee.
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    \6\ 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 February 15, 2000, will give the Commission additional time to 
fully consider the June Filing 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 January 3, 2000. 
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.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b)(4) of the Act \7\ 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) \8\ 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.\9\
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    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ 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 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) 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; the proposed rule change has become effective 
pursuant to section 19(b)(3)(A) of the Exchange Act \10\ and rule 19b-
4(f)(6) \11\ thereunder.
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    \10\ 15 U.S.C. 78S(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    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 become operative no later than January 3, 2000. 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.
    The Commission, consistent with the protection of investors and the 
public interest, has determined to make the proposed rule change 
operative immediately upon filing for the following reasons. The 
proposed rule change extends the expiration date of the Pilot Fee 
Structure from January 3, 2000, to February 15, 2000. The extension of 
the Pilot Fee Structure will provide the Commission with the additional 
time necessary to complete its review and evaluation of the June 
Filing.
    The Commission notes that unless the current expiration date of the 
Pilot Fee Structure is extended, the reimbursement rates for proxy 
materials distributed after January 3, 2000, will revert to those in 
effect prior to March 14, 1997. The Commission believes that 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

[[Page 1214]]

change become operative immediately upon the date of filing, December 
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 is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 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, NW., 
Washington, DC 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-99-52 and should be 
submitted by January 28, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-388 Filed 1-6-99; 8:45 am]
BILLING CODE 8010-01-M