[Federal Register Volume 59, Number 146 (Monday, August 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18575]


[[Page Unknown]]

[Federal Register: August 1, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34429; File No. SR-PSE-93-12]

 

Self-Regulatory Organizations; Pacific Stock Exchange, Inc.; 
Order Granting Approval to Proposed Rule Change Relating to New Listing 
and Maintenance Standards

July 22, 1994.

I. Introduction

    On August 11, 1993, the Pacific Stock Exchange, Inc. (``PSE'' or 
``Exchange'') submitted to the Securities and Exchange Commission 
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'')\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to establish new quantitative and 
qualitative listing standards with respect to common stock, preferred 
stock, bonds and debentures, warrants, contingent value rights, and 
other securities. Subsequently, the PSE filed Amendments Nos. 1, 2 and 
3, dated December 8, 1993, February 3, 1994, and July 16, 1994 
respectively.\3\
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    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\17 CFR 240.19b-4 (1993).
    \3\Amendment No. 3, which is available in the Commission's 
Public Reference Room, was largely technical in nature and generally 
had no substantive impact on the original filing. Therefore, it was 
determined that Amendment No. 3 did not need to be published for 
public comment.
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    The proposed rule change and Amendments Nos. 1 and 2 were published 
for comment in Securities Exchange Act Release No. 33759 (March 14, 
1994), 59 FR 13019 (March 18, 1994). No comments were received 
regarding the proposal.

II. Description of the Rule Change

    This rule change includes original listing and maintenance criteria 
and establishes qualitative standards and corporate governance policies 
applicable to all listed companies. Specifically, the rule change 
eliminates all of the current listing standards and establishes a new 
two-tier listing structure.\4\ Tier I and Tier II securities are 
distinguished with respect to quantitative initial listing and 
maintenance standards. Tier I includes standards for listing common 
stock, preferred stock and similar issues, bonds and debentures, 
warrants, contingent value rights, unit investment trusts, and other 
securities suited for auction market trading. Tier I contains more 
stringent quantitative standards than the PSE's current standards. Tier 
II includes listing standards for listing common stock, preferred stock 
and similar issues, bonds and debentures, and warrants. The Tier II 
standards are comparable to the PSE's current listing standards.
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    \4\The Commission is currently considering the PSE's proposed 
rule change to list and trade common stock under a Small Corporate 
Offering Registration/Regulation A (``SCOR'') designation. See 
Securities Exchange Act Release No. 32514 (June 25, 1993), 58 FR 
35496 (July 1, 1993) (File No. SR-PSE-92-42); and Securities 
Exchange Act Release No. 34328 (July 7, 1994) (Amendment No. 1 to 
File No. SR-PSE-92-42). The SCOR listing requirements would, in 
effect, constitute a third tier of less stringent listing 
requirements; however, for purposes of the exchange exemption under 
state blue sky laws, SCOR securities would not be deemed ``listed'' 
on the Exchange.
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    In addition to the quantitative standards, the Exchange will 
consider other factors in determining a company's listing eligibility 
including, for example, the voting rights of shareholders, the nature 
and scope of the applicant's operations, the applicant's financial 
condition, and the composition of the applicant's assets. The Exchange 
may also evaluate such factors as the experience and reputation of the 
applicant and its management, and the nature and effect of governmental 
policies on the company's products or properties. In the case of 
initial public offerings, the exchange will consider the estimated 
proceeds to be received by the issuer from the offering and the 
specific purposes for which the proceeds are to be used by the issuer. 
In the case of bonds and debentures, the Exchange will consider the 
credit rating by agencies designated as nationally recognized 
statistical rating organizations, such as Standard & Poor's and Moody's 
Investors Services, as an indication of the quality of the issuer.
    All securities, regardless of the requirements used for their 
admission to listing, will be subject to auction market trading rules 
and real-time reporting. Transactions in Tier II will be identified by 
a special suffix to the ticker symbol so that these securities can be 
distinguished from other securities traded on the Exchange. The suffix 
will not be applied, however, to a security listed on either the NYSE, 
Amex, or NASDAQ/NMS even though it is designated by the Exchange as a 
Tier II security. Finally, all of the Exchange's rules and surveillance 
procedures will be applicable to transactions in securities listed 
under the Tier I and Tier II designations.
    Special transition rules will apply for securities listed or 
approved for listing prior to the effective date of the new standards. 
For inclusion under Tier I, the securities must meet the applicable 
initial listing standards, except that securities also listed on the 
NYSE, Amex, or NASDAQ/NMS may be designated as Tier I securities if 
they meet the applicable Tier I maintenance requirements. All 
securities currently listed that do not meet the Tier I listing 
standards will be designated Tier II securities. These Tier Ii 
securities must meet the Tier II maintenance standards within six 
months of the effectiveness of the rule change.\5\
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    \5\During this six month transition period, the PSE's current 
listing and maintenance standards will be applied to Tier II 
securities not meeting the new maintenance standards.
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1. Tier I

    The PSE's new listing standards for Tier I common stock are based 
on standards established in a Memorandum of Understanding (``MOU'') 
between the North American Securities Administrators Association, Inc. 
(``NASAA'')\6\ and the Chicago Board Options Exchange Inc. 
(``CBOE'').\7\ The CBOE and NASAA developed the MOU in an effort to 
provide issuers with securities listed on the CBOE a basis for 
obtaining an exemption from state securities registration requirements 
(i.e., blue sky exemption). The MOU created minimum quantitative 
initial inclusion and maintenance standards, corporate governance 
requirements and minimum voting rights for listing on the CBOE. The PSE 
has adopted the MOU's two alternative minimum quantitative initial 
inclusion standards for common stock, as follows:
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    \6\NASAA is an association of securities administrators from 
each of the 50 states, the District of Columbia, Puerto Rico, Mexico 
and 12 Canadian provinces and territories.
    \7\The MOU criteria were approved by the NASAA membership on May 
30, 1991. The Commission approved a CBOE rule change adopting the 
standards set forth in the MOU in Securities Exchange Act Release 
No. 29748 (September 27, 1991), 56 FR 50404 (October 4, 1991).

------------------------------------------------------------------------
             Description                 Alt. No. 1       Alt. No. 2    
------------------------------------------------------------------------
Net Worth............................  $4,000,000...  $12,000,000.      
Pre-Tax Income.......................  750,000......                    
Net Income...........................  400,000......                    
Public Float (Shares)................  500,000......  1,000,000.        
Market Value of Float................  3,000,000....  15,000,000.       
Minimum Bid..........................  $5/share.....  $3/share.         
Public Beneficial Holders............  800/400*.....  400.              
Operating History....................  .............  3 years.          
------------------------------------------------------------------------
*800 shareholders are required for companies with at least 500,000 but  
  less than 1 million shares publicly held, or 400 shareholders for     
  companies with at least 1 million shares publicly held, or 500,000    
  shares publicly held and daily trading volume in excess of 2,000      
  shares per day for six months.                                        

    The original listing criteria for preferred stock vary depending on 
where the issuer has common stock listed. If the related common stock 
is listed on the PSE, NYSE or Amex, there must be at least 100,000 
preferred shares publicly held and an aggregate market value of at 
least $2,000,000. If the related common stock is not so listed, there 
must be at least 400,000 preferred shares publicly held, an aggregate 
market value of at least $4,000,000, and at least 800 public beneficial 
holders of 100 shares or more. In all cases, the issuer must meet the 
net worth and earnings requirements for common stock, and each share of 
preferred stock must have a minimum share price of $10 to be eligible 
for listing.
    With respect to bonds and debentures, issuers will be evaluated 
according to the same net tangible assets and earnings criteria 
applicable to common stock. If an issuer's common stock is traded on 
the PSE, NYSE or Amex, the bonds or debentures must have a minimum 
aggregate market value and principal amount of $5,000,000 each and at 
least 100 public beneficial holders. If related common stock is not 
traded on any of the above referenced exchanges, the bonds or 
debentures must have an aggregate market value and principal amount of 
at least $20,000,000 each and at least 100 public beneficial 
holders.\8\ If a debt security is convertible into a class of equity 
security, such equity security must meet the applicable Tier I listing 
requirements. Current last sale information must be publicly available 
with respect to the underlying security into which the bond or 
debenture is convertible.
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    \8\Additionally, issuers must meet and appear to be able to 
satisfy interest and principal when due on the bond or debenture to 
be listed.
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    The Exchange will not list warrants under the Tier I designation 
unless the common stock of the company or other security underlying the 
warrants is already listed, or will be listed concurrently with the 
warrants, on the PSE under the Tier I designation. For a Tier I listing 
of warrants there must be at least 500,000 warrants publicly held by 
not less than 250 public beneficial holders.\9\
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    \9\The Tier I and Tier II listing standards for warrants do not 
apply to warrants based on currency or market indices. The Exchange 
is creating a separate rule for such warrants that requires at least 
1,000,000 publicly held warrants with a market value of at least 
$4,000,000, at least 400 public beneficial holders, and a term of 5 
years. The issuer of warrants based on currency or market indices 
must have total assets of at least $100,000,000. All cash 
settlements are made in U.S. dollars.
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    For the listing of Tier I contingent value rights (``CVRs''), 
issuers must meet the net worth and earnings requirements applicable to 
common stock.\10\ In addition, there must be at least 600,000 publicly 
held CVRs with a market value of at least $18,000,000, at least 1,200 
public beneficial holders, and total assets of at least $100,000,000. 
The CVRs must have a maturity of at least one year. Prior to the 
commencement of trading of CVRs, the Exchange will distribute a 
circular to its membership explaining the specific risks associated 
with CVRs and providing guidance regarding member firm compliance 
responsibilities when handling transactions in such securities.
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    \10\CVRs are unsecured obligations providing for a possible cash 
payment at maturity based on the value of an equity security issued 
by an affiliate of the issuer of the CVRs (``related security''). At 
maturity, the holder of a CVR would be entitled to a cash payment at 
maturity if the market price of the related security is lower than a 
predetermined target price. If the market price of the related 
security equals or exceeds the target price, the holder of the CVR 
would not be entitled to receive such a cash payment. See Securities 
Exchange Act Release No. 33843 (March 31, 1994), 59 FR 16666 (April 
7, 1994).
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    The PSE also is adopting listing standards for Unit Investment 
trusts (``UITs'').\11\ To list UITs, the new rule requires at least 
1,000,000 publicly held shares or units, at least 400 public beneficial 
holders, and total trust assets of at least $60,000,000 at the time of 
formation.\12\ Additionally, the stated term must be at least two 
years, but may be subject to earlier termination under specific 
circumstances set forth in the UIT's governing documents and disclosed 
in the UIT prospectus. Where a UIT has been divided into separate 
components, any voting rights accorded the UIT interest may be divided 
between the component securities as specified in the UIT prospectus.
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    \11\The trustee of a UIT interest must be a trust company or 
banking institution having substantial capital and surplus. Such 
trustee may not have an executive officer who is also an officer of 
the issuing sponsor nor shall the trustee and issuer be made under 
common control. No change in the trustee can be made without prior 
notice to, and approval of, the Exchange. In cases where an 
individual has been appointed as Trustee, a qualified trust company 
or banking institution must be appointed co-trustee.
    \12\Before a UIT may be recommended, customers must be provided 
with a prospectus and an explanation of any special characteristics 
and risks attendant to trading UIT interests, and their suitability 
for such an investment must be determined. A prospectus must be 
provided to investors in connection with each transaction in a UIT 
interest unless the member organization has procedures to verify 
previous receipt of a current prospectus.
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    The Exchange will consider listing other securities not otherwise 
covered by the Tier I listing requirements provided the issue is suited 
for auction making trading. Prior to commencement of trading of such 
securities, the Exchange will evaluate the nature and complexity of the 
issue.\13\ Such securities must have at least 1,000,000 publicly held 
trading units and a principal amount/market value of at least 
$20,000,000, and at least 400 public beneficial holders.\14\ In 
addition, the issuer must have total assets of at least $100,000,000. 
If the issuer is unable to satisfy the earnings requirements applicable 
to Tier I common stock, the Exchange will require the issuer to have 
total assets of at least $200,000,000 and net worth of at least 
$10,000,000, or total assets of at least $100,000,000 and net worth of 
at least $20,000,000.\15\
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    \13\If appropriate, the Exchange will distribute a circular to 
the membership providing guidance regarding member firm compliance 
responsibilities when handling transactions in the issue.
    \14\If the issue is traded in thousand dollar denominations, 
there must be a minimum of 100 public beneficial holders.
    \15\If the issue contains cash settlement provisions, settlement 
must be made in U.S. dollars, and if the issue contains redemption 
provisions, the redemption price must be at least $3.00 per unit.
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2. Tier II Listing Standards

    For issuers not satisfying the Tier I standards, the PSE is 
establishing listing criteria under Tier II. A Tier II listing 
generally signifies that a company has limited commercial operations, 
lower capitalization, and lacks a demonstrated earnings history. Tier 
II is intended to provide small companies with access to the capital 
markets and to supply liquidity to public investors within a regulated 
marketplace. A security that is listed on the NYSE, Amex, or NASDAQ/NMS 
may be listed under Tier II in reliance upon the listing requirements 
of the applicable exchange or association.
    The numerical Tier II initial listing standards for common stock 
are lower than those for Tier I, but generally comparable to the 
current PSE listing criteria. The following are the new Tier II initial 
listing standards for common stock: 

------------------------------------------------------------------------
              Description                 Alt. No. 1       Alt. No. 2   
------------------------------------------------------------------------
Net Tangible Assets....................  $2,000,000...  ................
Net Worth..............................  .............  $8,000,000.     
Net Income.............................  100,000*.....  ................
Public Float (Shares)..................  500,000......  1,000,000.      
Market Value of Float..................  1,500,000....  2,000,000.      
Minimum Bid............................  $3/share.....  $1/share.       
Public Beneficial Holders..............  500..........  500.            
Operating History......................  3 years......  ................
------------------------------------------------------------------------
*Demonstrated net earnings of at least $100,000 after taxes, excluding  
  non-recurring income and extraordinary items, in the last fiscal year 
  or in two of the last three fiscal years, or total tangible assets of 
  $2,500,000.                                                           

    The following are the current PSE listing standards for common 
stock: 

------------------------------------------------------------------------
              Description                 Alt. No. 1       Alt. No. 2   
------------------------------------------------------------------------
Net Tangible Assets....................  $1,500,000...  $2,000,000.     
Net Income.............................  100,000......  ................
Public Float (Shares)..................  750,000......  750,000.        
Market Value of Float..................  2,250,000....  2,250,000.      
Minimum Bid............................  $1/share.....  $1/share.       
Public Beneficial Holders..............  750..........  750.            
------------------------------------------------------------------------

    To list preferred stock and debt under Tier II, the issuer must 
meet the same net tangible asset and earnings requirements for Tier II 
common stock. For preferred stock, there must be at least 500,000 
preferred shares publicly hold with an aggregate market value of at 
least $1,000,000 at least 250 public beneficial holders, and an 
operating history of at least three continuous years. A Tier II listing 
of bonds and debentures requires that, in addition to the net tangible 
asset and earnings requirements applicable to issuers of common stock, 
there is an aggregate market value and principal amount of $5,000,000 
each, and at least 200 public beneficial holders., If the preferred 
stock or debt is convertible into a class of common stock, such class 
must meet the Tier II listing requirements.\16\ Redeemable issues must 
provide for redemption pro rata or by lot.
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    \16\Current last sale information must be available with respect 
to the underlying security into which the security is convertible.
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    The Exchange will not list warrants under the Tier II designation 
unless the common stock of the company or other security underlying the 
warrants is already listed, or will be listed concurrently with the 
warrants, on the PSE under the Tier II designation. For listing under 
Tier II, there must be at least 500,000 warrants publicly held by not 
less than 250 public beneficial holders.\17\
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    \17\These standards do not apply to warrants based on currency 
or market indices. See supra note 9.
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3. Corporate Governance and Disclosure Policies

    The PSE is adopting corporate governance and disclosure policies 
for the first time. The provisions being adopted herein apply to both 
Tier I and Tier II securities, except that Tier II securities need not 
comply with the provision for an audit committee. Under corporate 
governance, the provisions include rules concerning conflicts of 
interest, independent directors, quorum, shareholder approval, annual 
meetings, and solicitation of proxies and consents. With respect to 
voting rights, the new rule prohibits the listing or continued listing 
of any common stock or other equity security of a domestic issuer that 
has the effect of nullifying, restricting or disparately reducing the 
per share voting rights of holders of an outstanding class of common 
stock. To be eligible for listing, preferred stock must give the 
holders the right to elect at least two members of the issuer's Board 
of Directors if the issuers should default in the payment of fixed 
dividends for two years.\18\
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    \18\In addition, any change in the rights, privileges or 
preferences of preferred stock holders requires at least a two-
thirds vote of the preferred class, voting as a class. The creation 
of any additional class of preferred stock senior to or equal in 
preference to the issue to be listed requires at least a favorable 
majority vote of the preferred class, voting as a class.
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    The new corporate disclosure policies incorporate an issuer's duty 
to disclose any news or information that might reasonably be expected 
to materially affect the market for its securities. The new rules 
provide guidance to listed companies in making appropriate public 
disclosure, and include information regarding consultation with the PSE 
Listings Department, internal handling of confidential corporate 
matters, and relationships between company officials and others. The 
new rules also provide guidelines regarding the content and preparation 
of public announcements. In addition, as a term of the listing 
agreement, listed companies are required to submit to the Exchange 
certain reports, notifications, and materials required to be filed by 
the Act. These requirements are described in detail in the new rules.

4. Maintenance Requirements and Delisting Procedures

    The rule change also establishes numerical maintenance criteria, 
and delisting and suspension policies and procedures intended to ensure 
uniform treatment of issuers. Securities listed under the Tier I 
designation will not be granted waivers from the Exchange's numerical 
maintenance requirements. Any security that no longer meets the Tier I 
maintenance requirements, but meets the Tier II maintenance 
requirements, will be reclassified as a Tier II security. Tier II 
securities failing to meet the Tier II maintenance standards will not 
be granted waivers for continued listing except in cases where the 
security continues to be listed on either the NYSE, Amex, or NASDAQ/
NMS, provided, however, that the Exchange determines that there is a 
reasonable basis for a waiver.
    The quantitative maintenance standards for Tier I common stock are 
as follows: (1) At least 200,000 publicly held shares and a market 
value of at least $1,000,000; (2) at least 400 public beneficial 
holders, or at least 300 beneficial holders of 100 shares or more; (3) 
net worth of at least $2,000,000 if the issuer has sustained losses for 
continuing operations and/or net losses in two of the last three fiscal 
years, or $4,000,000 if losses in three of the last four years; and (4) 
a share bid price of at least $3. For Tier II, the common stock 
maintenance standards require at least 300,000 publicly held shares 
with a market value of at least $500,000, at least 250 public 
beneficial holders, total net tangible assets of at least $500,000 (or 
net worth of at least $2,000,000), and a share bid price of at least 
$1.\19\
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    \19\The Exchange may waive the Tier I and II share bid price 
requirements upon consideration of market conditions, the issuer's 
capitalization, the number of outstanding and publicly held shares, 
and any other factors the Exchange deems appropriate.
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    The preferred stock maintenance standards require for Tier I 
securities the same net worth standards as common stock, at least 
100,000 publicly held shares with a market value of at least 
$1,000,000, and at least 150 public beneficial holders. In addition, 
the issuer must not have sustained losses from continuing operations 
and/or net losses in the five most recent fiscal years. Tier II 
maintenance standards require that issuers of preferred stock meet the 
net tangible asset or net worth requirements for Tier II common stock, 
and have at least 250,000 shares publicly held by not less than 100 
public beneficial holders. If the Tier I or Tier II preferred stock is 
convertible into a class of common stock, such class must meet the 
applicable Tier's maintenance requirements.
    Tier I and Tier II bonds and debentures must maintain the same net 
worth standards as Tier I and Tier II common stock respectively, an 
aggregate market value and principal amount of at least $1,000,000 
each, and at least 100 public beneficial holders. In addition, for Tier 
I debt, the issuer must not have sustained losses from continuing 
operation and/or net losses in the five most recent fiscal years. In 
the case of Tier I and Tier II warrants, the common stock of the 
company or other security underlying the warrant must meet the 
applicable Tier I or Tier II maintenance requirements.
    Finally, Tier I CVRs and UITs must maintain an aggregate market 
value of at least $1,000,000. If the equity security to which the cash 
payment of a CVR or UIT at maturity is tied is delisted, the CVR or UIT 
shall also be suspended or delisted.\20\
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    \20\The Exchange will consider the suspension of trading in, or 
removal from listing of any UIT interest when, in its opinion, 
further dealing in such interests appear unwarranted under any of 
the following circumstances: (1) the UIT interest has more than 60 
days remaining until termination and there are less than 50 record 
and/or beneficial holders of shares, units, or trading components 
thereof for 20 or more consecutive trading days; or (2) there has 
been failure on the part of the UIT and/or sponsor to comply with 
the Exchange's listing policies or agreements; or (3) such other 
event occurs or condition exists that, in the opinion of the 
Exchange, makes further dealings on the Exchange inadvisable.
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    The securities of a company will be subject to suspension and/or 
withdrawal from listing and registration as a listed issue if the 
Exchange finds that the listed company fails to meet the quantitative 
maintenance requirements discussed above, or fails to comply with the 
Exchange's listing policies or agreements.\21\ Whenever the Exchange 
staff determines that a security is to be removed from the list, the 
issuer will be given an opportunity to present to the Equity Listing 
Committee any reasons why the security should not be delisted. A 
decision by the Equity Listing Committee to delist a security may be 
appealed to a Board Committee or a committee appointed by the Board of 
Governors for such purpose.\22\
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    \21\Other factors the Exchange will consider include, among 
others, the issuance of an independent public accountant's 
disclaimer opinion on financial statements required to be certified, 
and losses which are so substantial that, in the opinion of the 
Exchange, it appears questionable as to whether a company will be 
able to continue operations. In addition, the Exchange would examine 
a company that has depleted, sold or otherwise disposed of its 
principal operating assets, or substantially discontinued the 
business that it conducted at the time it was listed, or the 
liquidation of the company has been authorized.
    \22\If a security is delisted, the Exchange must submit an 
application to the Commission to strike the security from listing 
and registration. A copy of such application will be provided to the 
issuer in accordance with Section 12 of the Act.
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III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange and, in 
particular, the requirements of Section 6.\23\ The Commission believes 
that the proposal is consistent with the Section 6(b)(5) requirements 
that the rules of an exchange be designed to perfect the mechanism of a 
free and open market and a national market system and to protect 
investors and the public interest.
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    \23\15 U.S.C. 78f (1988).
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    The development and enforcement of adequate standards governing the 
initial and continued listing of securities on an exchange is an 
activity of critical importance to financial markets and the investing 
public. Listing standards serve as a means for a self-regulatory 
organization to screen issuers and to provide listed status only to 
bona fide companies with sufficient float, investor base and trading 
interest to maintain fair and orderly markets. Once a security has been 
approved for initial listing, maintenance criteria allow an exchange to 
monitor the status and trading characteristics of that issue to ensure 
that it continues to meet the exchange's standards for market depth and 
liquidity. For the reasons set forth below, the Commission believes 
that the proposed rule change will provide the PSE with greater 
flexibility in determining which securities warrant inclusion on the 
Exchange, without compromising the benefits that the Exchange's listing 
standards offer to investors.
    The Commission notes that most of the PSE's new listing standards 
are substantially similar to the rules of existing national securities 
exchanges and the Nasdaq National Market and, therefore, finds that 
these standards are equally acceptable for the PSE. To the extent that 
PSE's proposed rules do differ from those of existing national 
securities exchanges and the Nasdaq National Market, the Commission 
finds them also to be consistent with the Act.
    In addition to the quantitative standards, the other qualitative 
requirements, such as the establishment of audit committees, voting 
rights, shareholder approval, and disclosure policies, ensure that 
companies trading on the PSE will adequately protect the interests of 
public shareholders. The commission also notes that because extensive 
listing and maintenance standards are being adopted, only companies 
suitable for exchange listing are eligible for trading on the PSE.
    Finally, the Commission believes that inclusion of a security for 
listing on an exchange should not depend solely on meeting quantitative 
criteria, but should also entail an element of judgement given the 
expectations of investors and the imprimatur of listing on a particular 
market.\24\ The Commission believes that this rule provides the 
necessary flexibility to determine whether to list an issuer, while 
ensuring that certain minimum standards must be met. Thus, the 
Commission believes that the new listing and maintenance standards 
strike the appropriate balance between protecting investors and 
providing a marketplace for issuers satisfying the disclosure 
requirements under the federal securities laws. The new standards will 
provide important guidance to the PSE review process, and will alert 
issuers seeking listing on the PSE, as well as current PSE issurers, of 
the Exchange's specific standards.
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    \24\See, e.g., In the Matter of Siver Shield Mining and Milling 
Company, Securities Exchange Act Release No. 6214 (March 18, 1960) 
(``use of the facilities of a national securities exchange is a 
privilege involving important responsibilities under the Exchange 
Act''); In the Matter of Consolidated Virginia Mining Co., 
Securities Exchange Act Release No. 6192 (February 26, 1960) (same).
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IV. Conclusion

    For the reasons stated above, the Commission believes the rule 
change is consistent with the Act and, therefore, has determined to 
approve it. The rule change provides enhanced listing standards for PSE 
listed securities which provide greater protection of investors and the 
public interest.
    The Commission does not believe that the rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\25\ that the proposed rule change (SR-PSE-93-12) is approved.
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    \25\15 U.S.C. 78s(b)(2) (1988)

    For the Commission, by the Division of Market Regulations, 
pursuant to delegated authority.\26\
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    \26\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-18575 Filed 7-29-94; 8:45am]
BILLING CODE 8010-01-M