[Federal Register Volume 59, Number 27 (Wednesday, February 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2894]


[[Page Unknown]]

[Federal Register: February 9, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33569; File No. SR-CSE-93-06]

 

Self-Regulatory Organizations; Filing and Order Granting 
Accelerated Approval of Proposed Rule Change by the Cincinnati Stock 
Exchange, Inc. Relating to the Exchange's Listing and Maintenance 
Standards for Preferred Stocks

February 1, 1994.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 20, 1993, the Cincinnati Stock Exchange, Inc. (``CSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\17 CFR 240.19b-4 (1993).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CSE hereby proposes to amend the Exchange's listing and 
maintenance standards for preferred stocks to conform them to the 
standards used by the New York Stock Exchange (``NYSE'')\3\ and the 
American Stock Exchange (``Amex'').\4\
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    \3\The Commission notes that the NYSE has not set any minimum 
numerical criteria for the listing of preferred stock. The NYSE 
states that the preferred stock must be of sufficient size and 
distribution to warrant trading in the Exchange market system. NYSE 
Listed Company Manual 703.05. The NYSE, however, has set certain 
numerical delisting criteria for preferred stock, stating that it 
will ``normally give consideration to suspending or removing a 
preferred stock if the aggregate market value of publicly-held 
shares is less than $2,000,000 and the number of publicly-held 
shares is less than 100,000.'' Id. These two measures are the 
minimum standards which the CSE is proposing to add to its listing 
requirements for preferred stock.
    \4\The CSE's proposed listing requirements for preferred stock 
are the same as the current Amex requirements. See Amex Company 
Guide Sec. 103. The numerical size and earning criteria for 
companies to list on the Exchanges remain different for the NYSE, 
Amex, and CSE. See NYSE Listed Company Manual 102.01; Amex Company 
guide Sec. 101; CSE By-Laws Article IV, Section 1.3.
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    The Exchange requests the Commission to find good cause, pursuant 
to section 19(b)(2) of the Act, for approving the proposed rule change 
prior to the thirtieth day after publication in the Federal Register. 
Accelerated approval would allow the CSE to have in place listing and 
maintenance standards which conform to those currently used by the NYSE 
and Amex.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of and basis for the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item III below. The self-regulatory 
organization has prepared summaries, set forth in Sections A, B, and C 
below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The proposed amendment is to Article IV, Section 1 of the CSE By-
Laws, Rule 1.3(2). It will apply to listed preferred stock and will 
conform the rules of the Exchange to those currently in place at the 
NYSE and Amex. The proposed standards for preferred stocks will apply 
to both initial and maintenance requirements for those securities.\5\
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    \5\The CSE Rules do not contain separate maintenance 
requirements for listed securities. The CSE Rule for the delisting 
of securities, however, states that a security may be delisted if it 
fails to meet the listing standards. CSE By-Laws, Article IV, 
Section 3, Rule 3.1(c).
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2. Statutory Basis
    The proposed rule change is consistent with section 6(b) of the Act 
in general and furthers the objectives of section 6(b)(5) in particular 
in that it will promote just and equitable principles of trade and 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The CSE does not believe that the proposed rule change will impose 
any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying at the 
Commission's Public Reference Section, 450 Fifth Street, NW., 
Washington, DC 20549. Copies of such filing will also be available for 
inspection and copying at the principal office of the CSE. All 
submissions should refer to File No. SR-CSE-93-06 and should be 
submitted by March 2, 1994.

IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Rule Change

    The Commission finds that the CSE's proposal to increase its 
listing standards for preferred stock is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange. Specifically, the 
Commission finds that the proposed rule change is consistent with 
section 6(b)(5) of the Act\6\ in that it will promote just and 
equitable principles of trade and remove impediments to and perfect the 
mechanism of a free and open market and a national market system.
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    \6\15 U.S.C. 78f(b)(5) (1988).
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    The Commission believes that the development and enforcement of 
adequate standards governing the listing of securities on an exchange 
is of critical importance to exchange markets and to the investing 
public. Listing standards serve as a means for the self-regulatory 
organizations (``SROs'') to screen issuers and to provide listed status 
only to bona fide companies with substantial float, investor base, and 
trading interest to ensure sufficient liquidity for fair and orderly 
markets.
    The proposed rule change increases in some respects the CSE's 
listing standards for preferred stock. The old standards required 500 
recordholders for which trading privileges had been granted or were 
requested, 200,000 shares for which trading privileges had been granted 
or were requested exclusive of the holdings of officers and directors, 
and a class of common stock that was listed on the Exchange or was 
otherwise eligible for listing. For issuers whose common stock is 
traded on the CSE, NYSE, or Amex, the rule change requires 100,000 
publicly held shares,\7\ an aggregate market value of $2 million, and a 
price of $10. For issuers of preferred stock not listed on the CSE, 
NYSE, or Amex, the rule change requires 400,000 publicly held preferred 
shares, 800 public round-lot holders, an aggregate market value of $4 
million, and a price of $10.
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    \7\Publicly held shares excludes the holdings of officers, 
directors, controlling shareholders and other concentrated or family 
holdings,and restricted securities.
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    The Commission believes that the initial listing and maintenance 
criteria for preferred sock, as described above, are consistent with 
section 6(b)(5) of the Act in that these criteria should help to ensure 
the maintenance of fair and orderly markets, as well as enhance 
benefits and protections for investors who trade in these securities. 
Requiring a minimum number of publicly held shares, and a minimum 
aggregate market value and price per share should help ensure a wide 
public distribution of the securities, which should decrease the 
opportunities for manipulation, as well as help create a more liquid 
market for trading.
    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice of filing thereof in the Federal Register. The Commission 
believes that accelerated approval of the proposal is appropriate in 
order to allow the CSE to conform its listing standards for preferred 
stocks with those of the NYSE and Amex. The rule change serves to 
create a uniformity of enhanced listing standards among the various 
exchanges, which benefits the marketplace as a whole, and thereby 
serves the public's interest.
    It is therefore ordered,  Pursuant to section 19(b)(2) of the 
Act\8\ that the proposed rule change is hereby approved.

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    \8\15 U.S.C. 78s(b)(2) (1988).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-2894 Filed 2-8-94; 8:45 am]
BILLING CODE 8010-01-M