Rising delistings tide may push NYSE on rules

By Jonathan Spicer - Analysis

NEW YORK (Reuters) - The New York Stock Exchange is facing a crush of delistings that may force it to suspend its listing requirements for the first time, a move that would mirror one by rival Nasdaq Stock Market two months ago.

So far this year the world's biggest equity market, operated by NYSE Euronext (NYX.N), has delisted 51 companies that failed to meet minimum listing requirements, approaching levels last seen during the technology-inspired selloff early this decade.

Twenty-three of those suspensions came in November and December, including chicken company Pilgrim's Pride (PGPDQ.PK), suggesting victims of this year's market selloff are starting to pile up.

Because next year could be worse, the top NYSE regulator is keeping open the option to suspend the requirement that all shares stay above $1 -- a temporary measure Nasdaq OMX (NDAQ.O) adopted in October.

"Certainly, we haven't taken it off the table that there should be a moratorium" on listing rules, said Richard Ketchum, chief executive of oversight body NYSE Regulation.

Ketchum, who is also chairman of the regulatory committee for the World Federation of Exchanges, said market participants likely appreciate that the NYSE has so far held companies' "feet to the fire," despite the mortgage market-inspired credit crisis that has shaken stocks.

"It would take a lot for us to change, but none of us can predict the market three or four months in the future," he said in a recent interview at his office near the Big Board in lower Manhattan.

The all-electronic Nasdaq, which has delisted 83 companies this year, received approval in October to drop the requirement that all stocks stay above $1.

Nasdaq said it made the move because "unprecedented turmoil" weighed on the shares of companies that otherwise remained suitable for listing. CEO Robert Greifeld told Reuters he was prepared to extend the suspension beyond its scheduled expiration on January 16.

DOT-COM REVISITED

NYSE's 51 delistings so far in 2008 are more than twice the number suspended in any of the last six years.

During the height and burst of the so called dot-com bubble of 2000, 2001 and 2002, the exchange delisted 61, 65 and 62 companies, respectively.

About half of this year's delistings were companies suspended because their market capitalization fell below the minimum $25 million, according to NYSE data. Most of the others resulted from bankruptcies, low share prices and declining operating assets.

"Any and all rules can be stretched in this kind of market environment," said Roger Freeman, exchanges analyst at Barclays Capital.

"You're seeing household names that may have structural issues now, but I don't think you move to delist or do anything rash when you have this kind of a market move."