# 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 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A99-29159 ## Record - **Collection:** Federal Register - **Document type:** Notice - **Published:** November 8, 1999 - **Citation:** 64 FR 60870 ## Text 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. --------------------------------------------------------------------------- \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''). --------------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \7\ See Securities Exchange Act Release No. 41549 (June 23, 1999), 64 FR 35229 (June 30, 1999). --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78s(b)(3)(A). \13\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \14\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Margaret H. McFarland, Deputy Secretary. [FR Doc. 99-29159 Filed 11-5-99; 8:45 am] BILLING CODE 8010-01-M --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A99-29159. Public record. Not legal advice.