[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