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June 2, 2003
TO: EQUITY MARKETS ADVISORY COMMITTEE No. 11-03
SEC RULES COMMITTEE No. 49-03
RE: NASDAQ RULEMAKING PETITION TO REPEAL NYSE RULE 500
The Nasdaq Stock Market has filed a petition for rulemaking with the Securities and
Exchange Commission to repeal New York Stock Exchange Rule 500.1 NYSE Rule 500 requires
that in order to delist its securities from the NYSE, a domestic issuer must (1) provide actual
written notice to at least its 35 largest shareholders of record and publish a press release
announcing the delisting proposal; (2) delay delisting for 20 to 60 business days from the later of
the written notice or the press release; and (3) obtain the approval of the issuer’s audit
committee, in addition to the approval of the issuer’s board.
Nasdaq states that it is requesting that the SEC repeal NYSE Rule 500 for three reasons.
First, Nasdaq believes that the rule serves no legitimate investor protection purpose under the
current market structure. Second, Nasdaq states that the rule’s mandatory shareholder notice
provisions and waiting periods, as well as the requirement of audit committee approval, are
detrimental to the interests of shareholders. Finally, Nasdaq believes the rule does not promote
the development of the most efficient securities markets by impeding fair competition between
markets.
Ari Burstein
Associate Counsel
1 Nasdaq’s petition can be found on the SEC’s website at http://www.sec.gov/rules/petitions/petn4-482.htm.