Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by New York Stock Exchange, Inc., Relating to Permanent Approval of Revisions to the Exchange's Allocation Policy and Procedures

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34644; File No. SR-NYSE-94-30]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by New York Stock Exchange, Inc., Relating to Permanent Approval

of Revisions to the Exchange's Allocation Policy and Procedures

September 7, 1994.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on August

12, 1994, the New York Stock Exchange, Inc. (``NYSE'' or ``Exchange'')

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 self-regulatory organization. The

Commission is publishing this notice to solicit comments on the

proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance

of the Proposed Rule Change

The proposed rule change consists of the Exchange's request for

permanent approval of revisions to its Allocation Policy and Procedures

that were implemented on a one year pilot basis.

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 self-regulatory organization

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 statements may be examined at

the places specified in Item IV below. The self-regulatory organization

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

The intent of the Allocation Policy and Procedure (the ``Policy'')

is to ensure that each security listed on the Exchange is allocated in

the fairest manner possible to the best specialist unit for that

security. In its continuing efforts to enhance allocation decisions,

the Exchange conducts periodic reviews of the allocation process.\1\ As

the result of one such review, the Exchange filed proposed revisions

with the Commission on June 17, 1992 (see SR-NYSE-92-15). At the

request of the Commission, the Exchange requested that the proposed

rule changes take effect on a one year pilot basis. The Commission

approved the filing on October 29, 1993 (see Release No. 34-33121). The

Exchange fully integrated the changes to the Policy in February 1994.

The Exchange is now seeking permanent approval of the proposed rule

change. The changes to the Policy are summarized below.

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\1\Subsequent to implementation of the pilot program discussed

below, the Exchange conducted another comprehensive review of the

allocation process and filed further revisions to the Policy (see

SR-NYSE-94-18).

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The revisions to the Policy:

Limit, to no more than one-third, the weight that the

Specialist Performance Evaluation Questionnaire (``SPEQ'') may be

afforded in the allocation decision making process.

Require that SPEQ performance data be presented to the

Allocation Committee in four tiers, with units listed alphabetically in

each comparable group.

Require information about a specialist unit's contracts

during the prior six and 12 month periods with listed companies and

Exchange member organizations to be included in the Allocation

Application.

Require the allocation panel to consist of a core group of

experienced, senior professionals.

Eliminate specialist representation on the Allocation

Committee.

Require that the Allocation Committee list be kept

confidential and prohibit Exchange members and investment bankers from

initiating contact with Allocation committee members regarding pending

allocations.

State that the Exchange will honor the request of a

listing company that it not be allocated to its former specialist unit,

or the specialist in the parent or related company.

Permit current Allocation Committee members, including

outgoing members, to vote for an incoming Committee chairman.

Delete, as obsolete, the objective performance measure

pertaining to the Opening Automated Report Service contained in the

policy.

Discontinue the practice of distributing a summary of

reasons for each allocation decision to Exchange Floor members.

Delete the reference to specific aspects of trading

foreign issues on the Exchange Floor.

Standardize the agenda used to educate Allocation

Committee chairman and members.

The Exchange has reviewed the changes to the Policy as they have

impacted on the allocation process and it believes that there has been

a beneficial effect in terms of the way in which stocks are allocated.

The Exchange continues to subject this vital function to rigorous

scrutiny, looking to refine the process, as is evidenced by the filing

of further changes to the Policy cited earlier.

2. Statutory Basis

The Exchange believes that the basis under the Act for the proposed

rule change is the requirement under Section 6(b)(5) that an Exchange

have rules that are designed to promote just and equitable principles

of trade, to remove impediments to, and perfect the mechanism of a free

and open market and, in general, to protect investors and the public

interest. The proposed rule changes are consistent with these

objectives in that they enable the Exchange to further enhance the

process by which stocks are allocated to ensure fairness and equal

opportunity in the process.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will

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 neither solicited nor received written comments on

the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for

Commission Action

Within 35 days of the publication of this notice in the Federal

Register or within such longer period (i) as the Commission may

designated up to 90 days of such date if it finds such longer period to

be appropriate and publishes its reasons for so finding or (ii) as to

which the self-regulatory organization consents, the Commission will:

(A) By order approve the proposed rule change, or

(B) Institute proceedings to determine whether the proposed rule

change should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views and

arguments concerning the foregoing. 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.

Copies of the submission, 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 at 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 NYSE. All

submissions should refer to File No. SR-NYSE-94-30 and should be

submitted by October 5, 1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-22660 Filed 9-13-94; 8:45 am]

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