[Federal Register Volume 59, Number 90 (Wednesday, May 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-11340]
[[Page Unknown]]
[Federal Register: May 11, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34016; International Series Release No. 663; File No.
SR-Amex-94-05]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the American Stock Exchange, Inc. Relating to Warrants Based
on Foreign Government Bonds
May 5, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on March 2,
1994, the American Stock Exchange, Inc. (``Amex'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Amex. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Amex proposes to approve for listing and trading under Section
106 of the Amex Company Guide warrants tied to changes in the prices of
foreign government bonds.
The text of the proposed rule change is available at the Office of
the Secretary, the Amex, and at the Commission.
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 IV 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
The Exchange proposes to list and trade under Section 106 of the
Amex Company Guide warrants that can be expected to fluctuate in value
based on changes in prices of foreign government bonds.\1\ Such issues
may relate to a single bond issue or several bond issues of one or more
foreign countries.\2\
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\1\The size required for an individual government bond issue
relating to a warrant based thereon shall not be less than the
equivalent of U.S. $100,000,000. In addition, such warrant issues
shall be based on only those government bonds for which prices are
readily available from independent vendors of financial information.
\2\For purposes of this rule change, the Exchange intends to
limit such issues to warrants based on government bonds of the
following countries: Australia, Austria, Canada, Denmark, Finland,
France, Germany, Italy, Japan, the Netherlands, Spain, Sweden,
Switzerland, and the United Kingdom. The Exchange will consult with
Commission staff prior to listing warrants based on bonds issued by
governments other than those specified above.
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Warrants based on prices of foreign government bonds will conform
to the listing guidelines under Section 106 of the Amex Company Guide
which currently provide that:
(1) The issuer shall have assets in excess of U.S. $100,000,000 and
otherwise substantially exceed the size and earnings requirements of
Section 101(A) of the Amex Company Guide;
(2) The term of the warrants shall be for a period ranging from one
to five years from date of issuance; and
(3) The minimum public distribution of such issues shall be
1,000,000 warrants together with a minimum of 400 public holders, and
an aggregate market value of U.S. $4,000,000.
Such warrants shall be direct obligations of their issuer subject
to cash settlement in U.S. dollars, and exercisable throughout their
life (i.e. American style) or exercisable only at expiration (i.e.,
European style). Upon exercise, or at the warrant expiration date (if
not exercisable prior to such date), the holder of a warrant will be
entitled to a cash settlement value computed in accordance with a
formula specified in the issuer's prospectus. If ``out of the money''
at the time of expiration, the warrants will expire worthless.
Warrants may be structured either to increase or decrease in value
based on the increase or decrease in the price or yield of the
government bond or bonds. Because all payments will be required to be
in U.S. dollars, there would be no currency risk except to the extent
that fluctuations in the value of the relevant currency affect the
price or yield of the government bond(s).
The Amex will require that member firms only sell such warrants to
investors whose accounts have been approved for options trading
pursuant to Amex Rule 921. The Exchange also will distribute a circular
to its membership prior to the commencement of trading calling
attention to the risks associated with the purchase and trading of such
warrants.
At this time, the Exchange anticipates the listing of a warrant
issue based on the prices of between three and five foreign government
issues. Holders of such warrants would be entitled to receive from the
issuer in U.S. dollars a cash settlement value, if any, based on
changes in the arithmetic average yield to maturity of the bonds as
calculated by the designated Calculation Agent based on prices obtained
from three dealers in the bonds.\3\
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\3\The Exchange represents that it will consult with Commission
staff prior to listing warrant issues tied to government bond(s)
with respect to (1) the specific calculation methodology to be used
by individual warrant issuers, and (2) the adequacy of available
bond pricing information.
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The Exchange believes that 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 is designed to prevent
fraudulent and manipulative acts and practices and to promote just and
equitable principals of trade, and is not designed to permit unfair
discrimination between customers, issuers, brokers and dealers.
(B) Self-Regulatory Organization's Statement on Burden on Competition
The Amex believes that the proposed rule change will not impose an
inappropriate burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received from Members, Participants, or Others
Written comments on the proposed rule change were neither solicited
nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(a) By order approve such proposed rule change, or
(b) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. 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 in the
Commission's Public Reference Section, 450 Fifth Street, NW.,
Washington, DC. Copies of such filing will also be available for
inspection and copying at the principal office of the above-mentioned
self-regulatory organization. All submissions should refer to File No.
SR-Amex-94-05 and should be submitted by June 1, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\4\
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\4\17 CFR 200.30-3(a)(12)(1993).
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[FR Doc. 94-11340 Filed 5-10-94; 8:45 am]
BILLING CODE 8010-01-M