[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Notices]
[Pages 15548-15549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8545]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37057; File No. SR-NYSE-96-07]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by New York Stock Exchange, Inc., Relating to Continued Listing 
Criteria for Capital or Common Stock

April 1, 1996.

    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 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 NYSE proposes to amend Paragraph 802.00 of the Exchange's 
Listed Company Manual (``Manual''). Paragraph 802.00 contains the 
criteria for continued listing on the Exchange.
    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
    The proposed rule change amends the Exchange's continued listing 
criteria. In 1995 the Exchange amended its initial listing standards to 
include an alternate method by which a company could meet the 
``demonstrated earnings'' listing standard.\1\ Specifically, that 
standard was based on a company's ``adjusted net income,'' rather than 
on a company's ``income before federal income taxes and under 
competitive conditions.'' That filing also increased the listing 
standard regarding aggregate market value of publicly-held shares and 
added a new liquidity standard of 500 total stockholders and average 
monthly trading volume of 1,000,000 shares. In approving that filing, 
the Commission noted that the Exchange committed to propose 
corresponding continued listing criteria.\2\

    \1\ See Securities Exchange Act Release No. 35571 (Apr. 5, 
1995), 60 FR 18649 (Apr. 12, 1995) (order approving proposed rule 
change relating to domestic listing standards).
    \2\ See Securities Exchange Act Release No. 35571 n. 19 (Apr. 5, 
1995), 60 FR 18649 (Apr. 12, 1995).
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    This filing proposes two changes to the NYSE's continued listing 
criteria: the adoption of new continued listing criteria to parallel 
the adjusted net income listing standard; and the amendment of the 
current continued listing criteria to reflect the 1995 changes to the 
initial listing standards.
    Adjusted Net Income Continued Listing Criteria. The Exchange is 
proposing continued listing criteria that parallel the new adjusted net 
income listing standard: a company that listed pursuant to that 
standard would be subject to possible delisting if (1) Its average 
adjusted net income for the most recent three years is less than 
$6,500,000 and (2) the aggregate market value of the company's shares 
falls below $25,000,000. These new criteria would be available to 
companies that either listed pursuant to the adjusted net income 
standards or that are currently valued on a ``cash flow'' basis.
    Earnings and Liquidity Continued Listing Criteria. The second 
change to the Exchange's continued listing criteria conforms those 
criteria to the new earnings and liquidity listing standards. A company 
would be subject to possible delisting if the aggregate market value of 
its common stock is less than $8,000,000 (up from $5,000,000). A 
company also would be subject to delisting if: (1) The company has less 
than 400 total stockholders; or (2) if there are less than 1,200 total 
stockholders and the average monthly trading volume in the common stock 
is less than 100,000 for the most recent 12 months. This means that if 
a company meets the trading volume standard of 100,000 shares a month 
it would be subject to possible delisting if there are less than 400 
total stockholders; if a company does not have such trading volume it 
would be subject to possible

[[Page 15549]]
delisting if there are less than 1,200 total stockholders.
    With respect to a company's earnings and net tangible assets, a 
company would be subject to possible delisting if its average net 
income after taxes for three years is less than $600,000 and either the 
aggregate market value of the company's stock or its net tangible 
assets is less than $12,000,000 (up from $8,000,000).
    A small number of companies that initially listed on the Exchange 
before the original listing standards were increased to their current 
levels are above the current continued listing criteria but are below 
the proposed criteria. Upon Commission approval of this proposed rule 
change, the Exchange will notify these companies of the new continued 
listing criteria and will inform such companies that the Exchange 
expects them to be in compliance with the new criteria within 18 months 
of their effective date. If such a company does not meet these new 
standards by such date, the Exchange will consider it to be below the 
continued listing criteria at that time.
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.

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, DC 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, DC 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-96-07 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. 96-8545 Filed 4-5-96; 8:45 am]
BILLING CODE 8010-01-M