[Federal Register Volume 60, Number 111 (Friday, June 9, 1995)]
[Notices]
[Pages 30614-30615]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14192]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35802; File No. SR-Amex-95-20]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the American Stock Exchange, Inc. Relating to the Listing and
Trading of Indexed Term Notes
June 2, 1995.
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 May 30,
1995, 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 Exchange proposes to approve for listing and trading under
Section 107A of the Amex Company Guide (``Guide''), Indexed Term Notes
(``Notes''), the return on which is based in whole or in part on
changes in the value of twenty-four (24) equity securities of companies
that have been identified by the underwriter as ``consolidation
candidates'' (``Index'').\1\ The text of the proposed rule change is
available at the Office of the Secretary, the Amex, and at the
Commission.
\1\ The components of the Index are: Agouron Pharmaceuticals,
Inc; Biogen, Inc.; Campbell Soup Co.; Crestar Financial Corp.;
Electronic Arts, Inc.; H.J. Heinz Co.; Healthcare Compare Corp.;
Integra Financial Corp.; McCormick & Co.; Mercantile Bancorporation;
Mesa, Inc.; Midlantic Corp.; Inc.; Money Store, Inc.; Multicare
Companies, Inc.; Oryx Energy Co.; Physician Corp. of America;
Protein Design Labs, Inc.; Quaker Oats Co.; Santa Fe Energy
Resources; Sierra Health Services; Triton Energy Corp.; United
Financial Corp.; Upjohn Co.; and Vertex Pharmaceuticals, Inc.
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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 Exchange 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 Amex 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 the
Statutory Basis for, the Proposed Rule Change
Under Section 107A of the Guide, the Exchange may approve for
listing and trading securities which cannot be readily categorized
under the listing criteria for common and preferred stocks, bonds,
debentures, or warrants.\2\ The Amex now proposes to list for trading,
under Section 107A of the Guide, Notes whose value is based in whole or
in part on the value of the Index.
\2\ See Securities Exchange Act Release No. 27753 (March 1,
1990), 55 FR 8626 (March 8, 1990).
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The Notes will be non-convertible debt securities and will conform
to the listing guidelines under section 107A of the Guide.\3\ The Notes
will have a term of three years from the date of issue.\4\
Additionally, the Notes will provide that at maturity, holders will
receive not less than 90% of the initial issue price of the Notes.
Prior to the commencement of listing and trading of the Notes, the
Exchange will distribute a circular to its membership providing
guidance with regard to member firm compliance responsibilities,
including appropriate suitability criteria and/or guidelines.
\3\ Specifically, issuances of securities pursuant to Sec. 107A
of the Guide must have: (1) A minimum public distribution of one
million trading units; (2) a minimum of 400 holders; (3) an
aggregate market value of at least $4 million; and (4) a term of at
least one year. Additionally, the issuers must have assets of at
least $100 million, stockholders' equity of at least $10 million,
and pre-tax income of at least $750,000 in the last fiscal year or
in two of the three prior fiscal years. As an alternative to these
financial criteria, the issuer may have either: (1) Assets in excess
of $200 million and stockholders' equity in excess of $10 million;
or (2) assets in excess of $100 million and stockholders' equity in
excess of $20 million.
\4\ The Commission notes that the value of the Index at maturity
will not be adjusted to account for ordinary cash dividends paid on
the component securities during the term of the Notes.
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Eligibility Standards for Index Components
The AMEX represents that at the time of issuance of the Notes, each
security in the Index will satisfy the following criteria: (1) A
minimum market capitalization of $75 million, except that up to 10% of
the component securities may have a market capitalization of not less
than $50 million; (2) average monthly trading volume for the six months
prior to the offering of the Notes of not less than one million shares,
except that up to 10% of the component securities may have an average
monthly trading volume of 500,000 shares or more for the six months
prior to the offering; (3) 90% of the Index's [[Page 30615]] numerical
Index value and at least 80% of the total number of component
securities will meet the then current criteria for standardized options
trading set forth in Exchange Rule 915; and (4) all component stocks
will (i) either be listed on the Amex, the New York Stock Exchange, or
will be National Market securities traded through the facilities of
Nasdaq and (ii) be subject to last sale reporting pursuant to Rule
11Aa-3 of the Act.
Index Calculation
The Index will be calculated using an ``equal dollarweighting''
methodology designed to ensure that each of the component securities is
represented in an approximately equal dollar amount in the Index at the
time the Notes are issued. To create the Index, a portfolio of the
securities comprising the Index will be established by the issuer
representing an investment of a specified dollar amount in each
component security (rounded to the nearest whole share). The value of
the Index will equal the current market value of the sum of the
assigned number of shares of each of the component securities divided
by the current Index divisor. The Index divisor will initially be set
to provide a benchmark value of 100.00 at the close of trading on the
day preceding the issuance of the Notes.
The number of shares of each component stock in the Index will
remain fixed except in the event of certain types of corporate actions
such as the payment of a dividend (other than an ordinary cash
dividend), a stock distribution, stock split, reverse stock split,
rights offering, distribution, reorganization, recapitalization, or
similar event with respect to the component securities. The number of
shares of each component security may also be adjusted, if necessary,
in the event of a merger, consolidation, dissolution, or liquidation of
an issuer or in certain other events such as the distribution of
property by an issuer to shareholders. Shares of a component security
may be replaced (or supplemented) with other securities under certain
circumstances, such as the conversion of a component stock into another
class of security, or the spin-off of a subsidiary. If the security
remains in the Index, the number of shares of that security may be
adjusted, to the nearest whole share, to maintain the component's
relative weight in the Index at the level immediately prior to the
event(s) discussed above.\5\ In all cases, the divisor will be
adjusted, if necessary, to ensure continuity of the value of the Index.
In the event that a security in the Index is canceled due to a
corporate consolidation and the holders of such security receive cash,
the cash value of that security will be included in the Index and will
accrue interest at LIBOR to term, compounded daily.
\5\ The issuer will not attempt to find a replacement stock or
compensate for the extinction of a security due to bankruptcy or a
similar event.
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The value of the Index will be calculated continuously by the Amex
and disseminated every 15 seconds over the Consolidated Tape
Association's Network B.
Payment at Maturity
The Notes will provide for a single payment at maturity, i.e.,
there will be no periodic interest payments. The Notes will entitle the
holder, upon maturity, to receive an amount based upon the percentage
change between the ``original portfolio value'' and the ``average
portfolio value,'' provided, however that the amount payable at
maturity will not be less than 90% of the principal amount of the
Notes. The ``original portfolio value'' is the closing level of the
Index on the day immediately preceding the issuance of the Notes. The
``average portfolio value'' is the average of the closing values of the
Index on the last trading day of each of the last 30 months of the term
of the Notes.
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, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and to
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 Amex does not believe that the proposed rule change will impose
any inappropriate 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. 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, N.W., Washington, D.C. 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, N.W.,
Washington, D.C. Copies of such filing will also be available for
inspection and copying at the principal office of the Amex. All
submissions should refer to File No. SR-Amex-95-20 and should be
submitted by June 30, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
\6\ 17 CFR 200.30-3(a) (12) (1994).
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Jonathan G. Katz,
Secretary.
[FR Doc. 95-14192 Filed 6-8-95; 8:45 am]
BILLING CODE 8010-01-M