[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Notices]
[Pages 15545-15547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8543]



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[[Page 15546]]


SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37055; File No. SR-NYSE-96-05]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc., Relating to Listing 
Standards

April 1, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange of 1934 
(``Act''), 15 U.S.C. Sec. 78s(b)(1), notice is hereby given that on 
March 18, 1996, the New York Stock Exchange, Inc. (``NYSE'' 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 self-regulatory 
organization. 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 proposed rule change amends Paragraphs 102.01 and 103.00 of the 
Exchange's Listed Company Manual (``Manual''). Paragraph 102.01 
establishes the minimum numerical standards for listing on the Exchange 
pursuant to ``domestic'' criteria. The Manual expressly provides that 
the domestic criteria are available not only to U.S. companies, but 
also to non-U.S. companies that elect to qualify under those standards. 
The domestic criteria include a requirement that an issuer have a 
specified number of stockholders, depending on the trading volume in a 
stock. Specifically, the issuer must have either: (i) 2,000 round lot 
holders; (ii) 2,200 total holders with average monthly trading over the 
last six months of 100,000 shares; or (iii) 500 total holders with 
average monthly trading over the last 12 months of 1,000,000 shares.
    The proposed rule change amends these standards to specify that, 
for companies domiciled in Canada, Mexico and the United States 
(``North America''),\1\ the stockholder and trading volume requirements 
cover holders and trading volume in North America. This proposed rule 
change also makes conforming changes to Paragraph 103.00, which 
establishes alternative listing criteria for non-U.S. companies.

    \1\ For purposes of this rule, a company is ``domiciled'' in the 
country under the laws of which it is organized.
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    The text of the proposed rule change is available at the Exchange 
and 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

1. Purpose
    Companies applying to list on the Exchange must meet the listing 
criteria contained in the Manual, including the numerical standards. 
There are two sets of standards for equity listings: domestic criteria, 
which are available for all companies (``domestic standards''), and 
criteria available solely for non-U.S. companies (``worldwide 
standards''). The worldwide standards contain higher criteria for 
market value of shares, pre-tax income, net tangible assets (``NTAs'') 
and number of stockholders.
    Paragraph 103.00 of the Manual specifically permits a non-U.S. 
company to qualify for listing using either the domestic or worldwide 
listing standards. Thus, a non-U.S. issuer that does not meet the 
higher worldwide numerical criteria nevertheless can list under the 
domestic standards if the issuer can satisfy the stockholder 
requirements of those standards. As noted, these requirements range 
from 2,000 round lot holders to 500 total holders, depending on the 
trading volume in the security.
    The purpose of the rule filing is to provide that, for North 
American companies, the domestic stockholder and trading volume 
requirements in Paragraph 102.01 of the Manual cover holders and 
trading volume in North America. With the continuing integration of the 
North American market, the Exchange believes that this market should be 
viewed as a whole in reviewing a company's eligibility for listing. 
This will foster internationalization of the securities markets by 
enhancing the access of U.S. investors to the trading of Canadian and 
Mexican securities.
    Recognizing the integration of the U.S., Mexican and Canadian 
markets is especially appropriate at this time, given the recent 
ratification of the North American Free Trade Agreement (``NAFTA''). 
Furthermore, with respect to Canada, the Commission itself has 
recognized the integration of these securities markets with the 
adoption of its multijurisdictional disclosure systems (``MJDS''). The 
MJDS allows Canadian issuers to access the U.S. securities markets 
using documents prepared almost entirely according to Canadian 
securities laws.
    Pursuant to the rule change, in applying the listing criteria in 
Paragraph 102.01 to North American companies, the Exchange would look 
to the number of beneficial holders resident in North America. In 
computing trading volume, the Exchange would look to the reported 
volume (i) on U.S. stock exchanges, (ii) in the U.S. over-the-counter 
market and (iii) on Canadian or Mexican stock exchanges.\2\ This 
volume, in total, must meet the Exchange's listing standards. For 
securities that trade in the format of American Depositary Receipts 
(``ADRs''), volume in the ordinary shares would be adjusted to be on an 
ADR-equivalent basis.\3\

    \2\ According to the NYSE, the NYSE would consider an 
``exchange'' to be a trading market that is regulated as a stock 
exchange by home-country regulators. Therefore, currently in Mexico, 
such an ``exchange'' would be the Bolsa Mexicana de Valores. In 
Canada, there currently are five stock exchange: The Montreal 
Exchange and the Toronto, Vancouver, Winnipeg, and Alberta Stock 
Exchanges. See letter from Michael J. Simons, Milbank, Tweed, Hadley 
& McCloy, to Glen Barrentine, Senior Counsel, Division of Market 
Regulation, SEC, dated April 1, 1996.
    \3\ For example, assume that a Mexican company has ADRs trading 
in the United States and ordinary shares trading in Mexico, with 
each ADR representing 10 ordinary shares. If the company were to 
apply to list its U.S.-traded ARDs on the NYSE, the Exchange would 
divide the Mexican shares volume by 10 in determining whether the 
combined ARD/share volume meets the requirements of the listing 
criteria. For companies that have multiple series of shares or ADRs, 
the Exchange will include the volume only in the specific ordinary 
shares and overlying ADRs that would be listed on the Exchange.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b)(5) of the 
Act in that it is designed to prevent fraudulent and manipulative acts 
and practices and to perfect the mechanism of a free and open market.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate burden on competition.

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

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the publication of this notice in the Federal 
Register or within such other 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 the 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, 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. Sec. 552, will be available for inspection and copying at 
the Commission's Public Reference Section, 450 Fifth Street NW., 
Washington, D.C. 20549. Copies of such filing will also be available 
for inspection and copying at the principal office of the Exchange. All 
submissions should refer to File No. SR-NYSE-96-05 and should be 
submitted by April 29, 1996.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-8543 Filed 4-5-96; 8:45 am]
BILLING CODE 8010-01-M