[Federal Register Volume 61, Number 91 (Thursday, May 9, 1996)]
[Notices]
[Pages 21215-21216]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11624]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37165; File No. SR-Amex-96-15]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange, 
Inc. Relating to the Listing of Hybrid Securities

May 3, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on April 26, 1996, 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 and II 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.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend Section 107A of the Amex Company 
Guide to conform the Exchange's listing criteria for hybrid securities 
to those of the New York Stock Exchange (``NYSE'').
    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.

[[Page 21216]]

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

1. Purpose
    In March 1990, the Commission approved the adoption of Section 107 
of the Amex Company Guide containing guidelines for listing securities 
that have features common to both equity and debt securities, yet do 
not fit within the traditional definitions of such securities.\2\ 
Sometimes referred to as ``hybrids,'' these securities can take a 
variety of forms. For example, the Exchange has listed under Section 
107 a zero coupon intermediate term note, which at maturity returns the 
face amount of the note plus a percentage of the appreciation, if any, 
in a well known index such as the S&P 500, or a debt security with a 
relatively high fixed return, but whose value at maturity is linked to 
the performance of an unrelated common stock.
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    \2\ See Securities Exchange Act Release No. 27753 (Mar. 1, 
1990), 55 FR 8626 (Mar. 8, 1990).
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    Section 107A currently specifies the minimum issuer qualifications, 
the minimum public distribution and aggregate market value of the 
security and other criteria to assist the Exchange in its case by case 
review and determination of the suitability of each security prior to 
its approval for listing.
    The Exchange now proposes to conform its listing criteria for 
hybrid securities to those of the NYSE by eliminating the current 
requirements of Section 107A that require a certain minimum redemption 
price and only allow cash settlement of covered instruments if settled 
in U.S. dollars.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
in general and furthers the objectives of Section 6(b) in particular in 
that it is designed to promote just and equitable principles of trade 
and to protect investors and the public interest in that it conforms 
the Exchange's listing standards for hybrid securities to those of the 
NYSE.

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

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.

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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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

    Because the foregoing proposed rule change: (1) does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
(3) does not become operative for 30 days from April 26, 1996, the date 
on which it was filed, and the Exchange provided the Commission with 
written notice of its intent to file the proposed rule change at least 
five business days prior to the filing date, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(e)(6) 
thereunder.\4\
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    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(e)(6).
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    The Commission notes that although it is reasonable for the 
Exchange to remove the affected provisions as mandatory listing 
standards,\5\ proposals that deviate from these standards might raise 
novel or significant regulatory issues that would require a proposed 
rule change to list the product.\6\
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    \5\ The affected provisions currently prevent the listing of (1) 
any cash settled product settled in any currency other than U.S. 
dollars or (2) any product that had a mandatory redemption price of 
less than three dollars.
    \6\ See Securities Exchange Act Release No. 27753 (Mar. 1, 
1990), 55 FR 8626 (Mar. 8, 1990) (order approving File-No. SR-Amex-
89-29). For example, a stock index-linked note that was payable in a 
foreign currency would raise important regulatory issues among which 
might include the need to address appropriate product term and risk 
disclosure, customer suitability, and settlement procedures. 
Accordingly, the Commission expects the Amex to consult with it on 
the need to file a Section 19(b) rule change to list a product with 
such terms under the Rule 107A listing standards.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

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. Sec. 552, will be available for inspection and copying at 
the Commission's Public Reference Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
submissions should refer to File No. SR-Amex-96-15 and should be 
submitted by May 30, 1996.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-11624 Filed 5-8-96; 8:45 am]
BILLING CODE 8010-01-M