Information Memos

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Number 12-6 31 Jan 2012


The New York Stock Exchange LLC (“NYSE”) and NYSE Amex, LLC (“NYSE Amex”, together with NYSE, the “Exchange”) have filed with the Securities and Exchange Commission rule proposals to amend Exchange Rule 103B in the following manner:

Extend the Allocation Sunset Policy from six months to 12 months;

Permit an issuer to submit a written letter to an Exchange Selection Panel (“ESP”) expressing a preference for a Designated Market Maker (“DMM”) if the issuer has delegated authority to the Exchange to select the DMM unit; and

Align the quiet period for issuer contact with DMM units or the ESP.

The effective date of these rule changes is January 16, 2012. A copy of the rule text, as amended, is attached.

II. Description of Rule Changes

Allocation Sunset Policy Extended to 12 Months

Exchange Rule 103B(VI)(H), the Allocation Sunset Policy, sets forth how long allocation decisions remain effective with respect to any initial public offering listing company that lists on the Exchange. Because allocation decisions are generally made prior to the date of an initial public offering, the Allocation Sunset Policy provides for a period for DMM allocation decisions to remain effective pending the initial public offering. Currently, allocation decisions remain effective for six months. With the rule change, allocation decisions will remain effective for 12 months.

Issuer Written Preference Submission

Exchange Rule 103B(III) provides issuers with the choice either to select its DMM unit directly or to delegate the authority to the Exchange to select its DMM unit. When authority has been delegated to the Exchange, the Exchange convenes an ESP to select the DMM unit based on a review of all information available to the issuer. The Exchange has amended Rule 103B(III)(1) to provide that when an issuer delegates authority to the Exchange to select its DMM unit, the ESP may consider written submissions from the issuer that express the issuer’s preference. Such issuer written submissions are not required and would be non-binding on the ESP.

If an issuer chooses to submit a written preference submission, such submission should provide supporting justification for why an issuer prefers a particular DMM unit. Among other things, the issuer should include information about the due diligence that was conducted as part of the issuer’s preference for a particular DMM unit. Factors that the ESP will take into consideration when reviewing a preference submission include the number of DMM units that the issuer considered (generally, a minimum of three DMM units should be reviewed), and the extent of the due diligence conducted of each DMM unit (i.e., which representatives from the DMM units, if any, that the issuer has met with and whether the issuer has reviewed written materials from the DMM unit, and if so, what type of materials).

The Exchange also amended Rule 103B(III)(B)(1) to provide that the ESP may choose to interview one or more individuals associated with the DMM unit. The Exchange also removed the reference to non-DMM Executive Floor Governors as such reference is redundant of the requirement that the ESP include three non-DMM Executive Floor Governors or Floor Governors.

Quiet Periods Aligned

Exchange Rule 103B(III) currently provides for a “quiet period” during which the DMM unit may not have contact with the issuer or ESP. The rule previously separated the description of the quiet periods in Rule 103B(III)(A)(2) for when the issuer selects the DMM unit and 103B(III)(B)(1) for when authority has been delegated to the Exchange to select the DMM unit. To make the quiet periods more consistent regardless of the issuer’s election, the Exchange amended Rule 103B(III) to provide that after the Exchange provides written notice to the DMM units that the issuer is listing on the Exchange, no individual associated with a DMM unit may contact the issuer, or the ESP if applicable, until the allocation is made, except as otherwise provided for in the rule (e.g., as permitted during the interview).

III. Staff Contacts

Questions regarding the allocation process may be addressed to the following:

David Ethridge, Senior Vice President, Global Listings, 212.656.2419;

Frank DeGarcia, Vice President, Operations, 212.656.6852; or

Lydia Offord, Global Listings, 212.656.4603; or

Questions regarding the NYSE and NYSE Amex Equities Rules cited in this notice may be addressed to:

Clare Saperstein, Vice President, NYSE Regulation, Inc., 212.656.2355; or

David De Gregorio, Chief Counsel, NYSE Regulation, Inc., 212.656.4166.


NYSE Regulation, Inc

1. See Securities Exchange Act Release Nos. 66047 (Dec. 23, 2012), 76 FR 82339 (Dec. 30, 2011) (SR-NYSE-2011-64) and 66044 (Dec. 23, 2011), 76 FR 82344 (Dec. 30, 2011) (SR-NYSEAmex-2011-100).