[Federal Register Volume 60, Number 106 (Friday, June 2, 1995)]
[Notices]
[Pages 28815-28817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13533]



-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35772; File No. SR-PHLX-95-34]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change Regarding Depository 
Eligibility Requirements

May 26, 1995.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 19, 1995, the 
Philadelphia Stock Exchange, Inc. (``PHLX'') 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 
primarily by PHLX. On May 18, 1995, PHLX filed an amendment to the rule 
filing.\2\ The Commission is publishing this notice to solicit comments 
from interested persons.

    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\Letter from Sharon S. Metzger, PHLX, to Christine Sibille, 
Senior Counsel, Division of Market Regulation, Commission (May 18, 
1995). [[Page 28816]] 
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    PHLX proposes to adopt a new Rule 853 which will set forth 
depository eligibility requirements for issuers that apply to list 
their securities on PHLX.

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

    In its filing with the Commission, PHLX 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.\3\

    \3\The Commission has modified the language in these sections.
---------------------------------------------------------------------------

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

    Under the proposed rule change, PHLX will adopt a uniform 
depository eligibility rule for issuers that desire to list their 
securities on PHLX.\4\ The uniform rule has been developed by the Legal 
and Regulatory Subgroup of the U.S. Working Committee of the Group of 
Thirty in coordination with each of the national securities exchanges 
and the National Association of Securities Dealers (``NASD''). It is 
anticipated that each national securities exchange and the NASD will 
file rule changes proposing adoption of depository eligibility 
standards substantially similar to PHLX's proposed rule and will seek 
to make such changes effective contemporaneously with the effective 
date of the transition from a five day (``T+5'') to a three day 
(``T+3'') settlement cycle. The transition is set to occur June 7, 
1995.\5\

    \4\In addition, PHLX Rules 803 and 805 will be amended to 
properly cross-reference to new Rule 853.
    \5\Securities Exchange Act Release Nos. 33023 (October 6, 1993), 
58 FR 52891 (adoption of Rule 15c6-1) and 34952 (November 9, 1994), 
59 FR 59137 (change of effective date of Rule 15c6-1 from June 1, 
1995 to June 7, 1995).
---------------------------------------------------------------------------

    The proposed rule change will require issuers to ensure that 
securities to be listed on PHLX have been included in the file of 
eligible issues maintained by a securities depository registered as a 
clearing agency under section 17A of the Act.\6\ This requirement will 
not apply to a security if the terms of such security cannot be 
reasonably modified to meet the criteria for depository eligibility at 
all securities depositories.

    \6\15 U.S.C. 78q-1 (1988).
---------------------------------------------------------------------------

    The proposed rule change sets forth additional requirements that 
must be met before a security will be deemed to be ``depository 
eligible,'' within the meaning of PHLX Rule 279 (``uniform book-entry 
settlement rule'').\7\ The proposed rule specifies different 
requirements for depository eligibility depending upon whether a new 
issue is distributed by an underwriting syndicate before or after the 
date a securities depository system is available for monitoring 
repurchases of the distributed shares by syndicate members (``flipping 
tracking system'').

    \7\Pursuant to PHLX's uniform book-entry settlement rule, trades 
by a member in depository eligible securities generally must be 
settled by book-entry through a securities depository.
---------------------------------------------------------------------------

    Currently, a flipping tracking system is being developed that will 
include a securities depository service that (i) can be activated upon 
the request of the managing underwriter for a period of time that the 
managing underwriter specifies, (ii) in certain circumstances, will 
require the delivering participant to provide to the depository 
information sufficient to identify the seller of such shares as a 
precondition to the processing of book-entry delivery instructions for 
distributed shares, and (iii) will report to the managing underwriter 
the identity of any other syndicate member or selling group member 
whose customer(s) sold distributed shares (but will not report to the 
managing underwriter the identity of such customer[s]), and in certain 
circumstances, will report to such syndicate member or selling group 
member the identity of such customer(s). Prior to the availability of a 
flipping tracking system, the managing underwriter may delay the date a 
security is deemed ``depository eligible'' for up to three months after 
trading has commenced in the security. After the availability of a 
flipping tracking system, a new issue will be deemed to be depository 
eligible upon commencement of trading on PHLX.
    The proposed rule change is consistent with section 6(b)(5) of the 
Act\8\ in that it is designed to promote just and equitable principles 
of trade.

    \8\15 U.S.C. 78f(b)(5) (1988).
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    PHLX believes that no burden will be placed on competition as a 
result of the proposed rule change.

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

    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 thirty-five 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 ninety 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 PHLX 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.
    PHLX has requested accelerated approval of the proposed rule change 
in order that the rule can become effective on June 7, 1995.\9\

    \9\Supra note 5 and accompanying text.
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submission 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington DC 20549. Copies 
of the submissions, 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 20549. Copies of such filings will also be available for 
inspection and copying at the principal office of PHLX. All submissions 
should refer to file number SR-PHLX-95-34 and should be submitted by 
June 23, 1995.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\

    \10\17 CFR 200.30-3(a)(12) (1994). [[Page 28817]] 
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-13533 Filed 6-1-95; 8:45 am]
BILLING CODE 8010-01-M