NYSE Board Changes Delisting Rule

The New York Stock Exchange board on Thursday voted to amend a rule that had made it virtually impossible for companies to leave the world’s largest stock market.

The rule change, which must be approved by the Securities and Exchange Commission, is expected to intensify competition between the New York Stock Exchange and its chief rival, the Nasdaq Stock Market.

While some NYSE-listed companies may now move to Nasdaq, others that were reluctant to switch to the Big Board may do so now, said Brian Borders, president of the Assn. of Publicly Traded Companies, which represents 900 small and mid-size companies.

“Nasdaq companies have told me that Rule 500 was their main impediment to moving to New York,” Borders said.

The vote was expected. NYSE Chairman and CEO Richard Grasso had called Rule 500 in its old form an “albatross” in recruiting companies.

“Obviously we’re pleased with the revision of rule 500,” said Frank Zarb, chairman and chief executive of the National Assn. of Securities Dealers, parent of Nasdaq.

Under the change, a domestic company can delist after receiving a majority of votes of the company’s board and audit committee. Companies would have to notify shareholders about delisting and wait at least 45 days.

The current NYSE Rule 500 lets companies move only after at least two-thirds of their shareholders approve and no more than 10% object. The SEC had pressured the Big Board to change the rule.