NYSE to Make It Easier to Leave the Big Board

WASHINGTON — The New York Stock Exchange will move by year-end to drop a controversial rule that makes it almost impossible for a company listed on the Big Board to move to another market, Securities and Exchange Commission Chairman Arthur Levitt said Thursday.

“The New York Stock Exchange will change Rule 500--abandon it--before the end of the year,” Levitt said. “It’s a rule that should be changed.”

Levitt said NYSE executives have told him of their intent to eliminate the rule. The NYSE will submit its changes to the SEC for final approval, he said.

“I believe that every [company] in our markets should have the maximum options available, as long as they don’t conflict with the public interest,” Levitt said.

The SEC has pressured the NYSE, the nation’s largest stock market, to review its Rule 500. The agency challenged the NYSE’s defenses of the rule in a letter May 27.

NYSE said earlier this month it was considering possible changes in the rule because companies were complaining about the restraints on their flexibility. On Thursday, NYSE spokesman Ray Pellecchia said no decision has yet been made.

The NYSE is discussing the issue with constituent groups and will present a recommendation to its board of directors this fall, Pellecchia said.

NYSE Chairman Richard A. Grasso said earlier this month that the rule has became an “albatross” when he tries to recruit companies to list on the Big Board.

Under Rule 500, firms can leave the Big Board only if at least two-thirds of their shareholders OK a move, while no more than 10% object. This means that at least 90% of the holders have to vote in favor of a move or express neutrality. Nasdaq, the nation’s second-largest stock market, has complained that the rule hinders competition by unfairly locking in NYSE-listed companies.