[Federal Register Volume 60, Number 159 (Thursday, August 17, 1995)]
[Notices]
[Pages 42926-42927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20398]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-36079; File No. SR-Amex-95-23]


Self-Regulatory Organizations; American Stock Exchange, Inc.; 
Order Granting Approval to Proposed Rule Change Relating to the 
Discontinuation of the Emerging Company Marketplace

August 9, 1995.
    On June 9, 1995, the American Stock Exchange, Inc. (``Amex'' 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 discontinue the listing of new 
companies on the Emerging Company Marketplace (``ECM'').

    \1\ 15 U.S.C. 78s(b)(1) (1988).
    \2\ 17 CFR 240.19b-4 (1994).
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    The proposed rule change was published for comment in Securities 
Exchange Act Release No. 35863 (June 19, 1995), 60 FR 32719 (June 23, 
1995).
    In March 1992, the Commission approved a rule change to amend the 
Amex Company Guide to add a new section establishing listing criteria 
for an Emerging Company Marketplace (``ECM'').\3\ The ECM rules 
established quantitative listing standards that were below those 
required for listing on the Amex's main list. In May 1994, the United 
States General Accounting Office (``GAO'') issued a report (``GAO 
Report'') that examined the Amex's methodology for deciding whether to 
approve a company's securities for ECM listing and trading.\4\ The 
Commission concurred with the GAO's recommendations and noted that they 
were consistent with the Division of Market Regulation's conclusions 
following its prior inspection of the ECM.\5\ In December 1994, the 
Commission approved amendments to the ECM rules that substantially 
responded to the Commission and GAO recommendations.\6\

    \3\ See Securities Exchange Act Release No. 30445 (March 5, 
1994), 57 FR 8693 (March 11, 1992) (approving File No. SR-Amex-91-
25).
    \4\ GAO, American Stock Exchange--More Changes Needed in 
Screening Emerging Companies for the Marketplace (May 1994).
    \5\ See letter from Brandon Becker, Director, Division, to 
Richard L. Fogel, Assistant Comptroller General, GAO, dated February 
18, 1994, reprinted in GAO Report, supra noted 4.
    \6\ See Securities Exchange Act Release No. 35104 (December 15, 
1994), 59 FR 66381 (December 23, 1994).
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    The Amex now has determined to discontinue the listing of new 
companies on the ECM and proposes to eliminate the ECM guidelines that 
allow for such new listings. Under the proposal, companies currently 
trading pursuant to the ECM listing requirements will continue to trade 
on the Amex as ECM listed companies.\7\ The Amex does not have a 
deadline for removing these companies from the ECM list. Companies 
presently trading on the ECM will continue to do so until they graduate 
to the Amex's main list by meeting the appropriate listing standards, 
or delist, either voluntarily or because they fail to meet the ECM 
listing standards. During this transition time, ECM companies will 
continue to be subject to all the rules applicable to ECM issues, 
including the continued listing guidelines. Quotes and trades in such 
securities will continue to be reported to vendors with the ``.EC'' 
designator.

    \7\ The continued listing guidelines for ECM companies will 
remain in place for these companies.
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    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, with the requirements of Section 6(b).\8\ In particular, 
the Commission believes the proposal is consistent with the Section 
6(b)(5) requirements that the rules of an exchange be designed to 
promote just and equitable principles of trade, to prevent fraudulent 
and manipulative acts, and, in general, to protect investors and the 
public.

    \8\ 15 U.S.C. 78f(b) (1988).
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    A self-regulatory organization has the discretion to determine the 
type of companies it desires to list in its marketplace, so long as 
such listing decisions are consistent with the requirements of the Act 
and in accordance with the organizations listing rules. Similarly, the 
Commission believes that it is reasonable for the Amex to determine 
that it no longer wants to continue to list a certain class of 
securities, such as new companies on the ECM.
    Despite the Amex's determination to discontinue listing new ECM 
companies, the Amex's proposal ensures that existing listed ECM 
companies and their shareholders will not be disadvantaged because 
companies currently listed on the ECM will not be immediately delisted. 
In addition, because the existing ECM companies will remain subject to 
the Exchange's continued listing standards, as well as its regular 
surveillance program, the Commission believes that the Exchange's 
proposal will ensure the continued protection of investors in ECM 
listed companies.\9\ Once all of the ECM companies have delisted, 
either voluntarily or because they fail to meet the ECM maintenance 
standards, the Commission expects that the Amex will file a proposed 
rule change to remove 

[[Page 42927]]
the remaining ECM Rules from its Company Guide.

    \9\ As the Commission noted in the last amendment of the ECM 
Rules, see supra note 6, it believes that enforcement of maintenance 
standards is vital to the continued integrity of exchange markets. 
The Commission expects that the Amex will continue to strictly 
enforce the maintenance criteria contained in the ECM Rules and 
maintenance criteria contained in the ECM Rules and will delist 
companies that fail to meet these standards.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-Amex-95-23) is approved.

    \10\ 15 U.S.C. 78s(b)(2) (1988).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\

    \11\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-20398 Filed 8-16-95; 8:45 am]
BILLING CODE 8010-01-M