[Federal Register Volume 61, Number 143 (Wednesday, July 24, 1996)]
[Notices]
[Pages 38485-38486]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18715]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37447; File No. SR--96-27]
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
July 17, 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 July 15,
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, 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, Indexed Term Notes based in
whole or in part on changes in the value of 29 healthcare/biotechnology
industry securities.
The text of the proposed rule change is available at the Office of
the Secretary, the Amex, and at 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 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
Pursuant to Section 107A of the Amex Company 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.\1\ The Amex now proposes to list for
trading under Section 107A of the Company Guide, Indexed Term Notes
whose value, in whole or in part, will be tied to an index consisting
of 29 actively traded healthcare/biotechnology industry securities (the
``Index'').\2\
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\1\ See Securities Exchange Act Release No. 27753 (March 1,
1990), 55 FR 8626 (March 8, 1990).
\2\ As of July 8, 1996, the Index was comprised of the stocks of
the following 29 issuers: Abbott Laboratories, Amgen, Inc., Apria
Healthcare Group, Inc., Baxter International, Inc., Beverly
Enterprises, Biogen, Inc., Caremark International, Inc., Chiron
Corporation, Columbia/HCA Healthcare Corporation, Emcare Holdings,
Inc., Genzyme Corporation, Genesis Health Ventures, Inc., Health
Management Associates, Inc., Healthsource, Inc., Healthsouth
Corporation, Horizon/CMS Healthcare Corporation, Humana, Inc.,
Johnson & Johnson, Medpartner/Mullikin, Inc., Neuromedical Systems,
Inc., Olsten Corporation, Ornda Healthcorp., Oxford Health Plans,
Inc., Phycor, Inc., Quorum Health Group, Inc., Renal Treatment
Centers, Inc., Tenet Healthcare Corporation, Total Renal Care
Holdings, Inc., and United Healthcare Corporation. According the
Exchange, as of July 8, 1996, the market capitalizations of these
companies ranged from $222 million to $63.9 billion, and average
monthly trading volumes over the six month period from January 1,
1996 to June 30, 1996 ranged from 1.44 million to 58.48 million
shares.
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The Indexed Term Notes will be non-convertible debt securities and
will conform to the listing guidelines under Section 107A of the
Company Guide. Although a specific maturity date will not be
established until the time of the offering, the Indexed Term Notes will
provide for maturity within a period of not less than one nor more than
seven years from the date of issue. Indexed Term Notes may provide for
periodic payments and/or payments at maturity based in whole or in part
on changes in the value of the Index. At maturity holders of the
Indexed Term Notes will receive not less than 90% of the initial issue
price. Consistent with other structured products, the Exchange will
distribute a circular to its membership, prior to the commencement of
trading, providing guidance with regard to member firm compliance
responsibilities, including appropriate suitability criteria and/or
guidelines.
[[Page 38486]]
Eligibility Standards for Index Components
Components of the Index approved pursuant to this filing shall meet
the following criteria: (1) A minimum market value of at least $75
million, except that up to 10% of the component securities in the Index
may have a market value of $50 million; (2) average monthly trading
volume in the last six months of not less than 1,000,000 shares, except
that up to 10% of the component securities in the Index may have an
average monthly trading volume of 500,000 shares or more in the last
six months; (3) 90% of the Index's numerical Index value and at least
80% of the total number of component securities will meet the then
current criteria for standardized option trading set forth in Exchange
Rule 915; (4) all component stocks will either be listed on the Amex,
the New York Stock Exchange, or traded through the facilities of the
National Association of Securities Dealers Automated Quotation System
and reported National Market System securities; and (5) if any foreign
securities or American Depository Receipts (``ADRs'') represented in
the Index cause a particular foreign country's weight in the Index to
initially exceed 20% of the Index's numerical Index value, the Exchange
will have in place a surveillance sharing agreement with the
appropriate regulatory organization in that country.
Index Calculation
The Index will be calculated using an ``equal-dollar weighting''
methodology designed to ensure that each of the component securities is
represented in an approximately ``equal'' dollar amount in the Index at
the time such Index is established. The Index will initially be set to
provide a benchmark value of 100.00 at the close of trading on the day
preceding the establishment of the Index.
The multiplier 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 stocks. The multiplier of each component stock
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, the expropriation or nationalization of a foreign issuer
or the imposition of certain foreign taxes on shareholders of a foreign
issuer. If the issuer of a stock included in the Index were to no
longer exist, whether by reason of a merger, acquisition or similar
type of corporate transaction, a value equal to the stock's final value
will be assigned to the stock for the purpose of calculating the Index
value. For example, if a company included in the Index were acquired by
another company, a value will be assigned to the company's stock equal
to the value per share at the time the acquisition occurred. If the
issuer of stock included in the Index is in the process of liquidation
or subject to a bankruptcy proceeding, insolvency, or other similar
adjudication, such security will continue to be included in the Index
so long as a market price for such security is available. If a market
price is no longer available for an Index stock due to circumstances
including but not limited to, liquidation, bankruptcy, insolvency, or
any other similar proceeding, then the security will be assigned a
value of zero when calculating the Index for so long as no market price
exists for that security. If the stock remains in the Index, the
multiplier of that security in the portfolio may be adjusted to
maintain the component's relative weight in the Index at the level
immediately prior to the corporate action. In all cases, the multiplier
will be adjusted, if necessary, to ensure Index continuity.
Similar to other stock index values published by the Exchange, the
value of the Index will be calculated continuously and disseminated
every 15 seconds over the Consolidated Tape Association's Network B.
2. Basis
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 person 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, 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. 552, will be available for inspection and copying in the
Commission's Public Reference Section, 450 Fifth Street, NW.,
Washington, DC. 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-96-27 and should
be submitted by August 14, 1996.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\3\
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\3\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-18715 Filed 7-23-96; 8:45 am]
BILLING CODE 8010-01-M