SEC Receives Conflicting Stock Symbol Proposals From US Exchange Groups

by Glen Shapiro, LawAndTax-News.com, New York

11 April 2007

It was announced last Thursday that the US Securities and Exchange Commission has received two proposed national market system plans from separate groups of stock exchanges relating generally to securities symbols.

In addition, Nasdaq has filed with the Commission a separate proposal to permit a company in certain circumstances to retain its symbol when transferring its listing to Nasdaq from another stock exchange.

Securities symbols are a key element in the operation of a national market system, and are essential to the dissemination of trade information in a common format. Historically, security symbols have been assigned under an informal understanding among the listing markets. It has been the practice of the New York Stock Exchange to list companies using 1-, 2- and 3-character symbols.

Other exchanges, including the American Stock Exchange and regional exchanges, have also listed companies using 3-character symbols. Nasdaq has always listed companies using 4- and 5-character symbols.

In response to dissatisfaction expressed by several markets regarding the informal allocation system, Commission staff asked in February 2005 that the exchanges work together to develop a national market system plan for the process of reserving, selecting, and allocating securities symbols.

Following discussions over the past two years, the exchanges recently submitted two competing proposals relating generally to symbols.

One proposed plan is supported by Amex, NYSE and NYSE Arca, and limits the use of 1-, 2- and 3-character symbols to those listing markets that traditionally used those symbols. It does not address the use of 4- and 5-character symbols.

The second proposed plan is supported by Nasdaq, NASD, the National Stock Exchange and the Philadelphia Stock Exchange. This plan would permit any listing market to use 1-, 2-, 3-, 4- or 5-character symbols.

After publishing these plans for comment, the Commission has stated that it aims to resolve the conflicts over the allocation of stock symbols as fairly and expeditiously as possible.

Erik Sirri, Director of the SEC Division of Market Regulation, observed that:

"Securities symbols are an important part of a listed company's identity and developing a formal process to reserve, select and allocate symbols among listing markets and their companies will help promote a fair and orderly national market system and prevent investor confusion."

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