[Federal Register Volume 61, Number 149 (Thursday, August 1, 1996)]
[Notices]
[Pages 40270-40274]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19564]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37481; File No. SR-CHX-95-26]


Self-Regulatory Organizations; Chicago Stock Exchange, 
Incorporated; Order Granting Approval to Proposed Rule Change and 
Notice of Filing and Order Granting Accelerated Approval to Amendments 
Nos. 1, 2, and 3 to Proposed Rule Change Relating to Listing Standards

July 25, 1996.

I. Introduction

    On November 8, 1995, the Chicago Stock Exchange, Incorporated 
(``CHX'' or ``Exchange'') submitted to the Securities and Exchange 
Commission (``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to establish new quantitative and 
qualitative listing standards with respect to common stock, preferred 
stock, bonds and debentures, warrants, contingent value rights, and 
other securities.
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    \1\ 15 U.S.C. Sec. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change was published for comment in Securities 
Exchange Act Release No. 36531 (Nov. 30, 1995), 60 FR 62918 (Dec. 7, 
1995). No comments were received regarding the proposal.
    On December 5, 1995, June 18, 1996, and June 23, 1996, 
respectively, the Exchange submitted to the Commission Amendment Nos. 
1, 2, and 3 to the proposed rule change to make grammatical changes to 
the text of the rule and to clarify certain listing and maintenance 
requirements and corporate governance standards.\3\ This order approves 
the proposed rule change, including Amendment Nos. 1, 2, 3 on an 
accelerated basis.
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    \3\ See Letter from Craig Long, Foley & Lardner, to Glen 
Barrentine, Team Leader, Division of Market Regulation, SEC, dated 
December 4, 1995 (``Amendment No. 1''); Letter from Craig Long, 
Foley & Lardner, to Sharon Lawson, Senior Special Counsel, Division 
of Market Regulation, SEC, dated June 17, 1996 (``Amendment No. 
2''); Letter from Craig Long, Foley & Lardner, to Jennifer S. Choi, 
Division of Market Regulation, SEC, dated July 23, 1996 (``Amendment 
No. 3''). Amendment Nos. 1, 2, and 3 are described in more detail 
infra in the description of the proposal.
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II. Description of Proposal

    This rule change includes original listing and maintenance criteria 
and

[[Page 40271]]

establishes qualitative standards and corporate governance policies 
applicable to listed companies. Specifically, the rule change 
establishes a new two-tier listing structure whereby the Tier I listing 
standards, in general, will be quantitatively and qualitatively higher 
(i.e., more restrictive and demanding) than Tier II listing standards. 
The current CHX listing standards, to a large extent, will constitute 
the listing requirements for new CHX Tier II listing, and CHX proposes 
new higher standards for the CHX Tier I listing.
    Tier I includes standards for listing common stock, preferred stock 
and similar issues, bonds and debentures, stock warrants, contingent 
value rights, and other securities suited for auction market trading. 
Tier II includes listing standards for common stock, preferred stock, 
bonds and debentures, and warrants.
    All securities, regardless of the requirements used for their 
admission to listing, will be subject to identical auction market 
trading rules. The Exchange, however, will identify and distinguish at 
all times which securities are listed pursuant to Tier I and Tier II 
standards. The Exchange will identify Tier I issues with a designation 
symbol annexed to its ticker symbol.
    CHX listing standards for Tier I, either as regards to initial or 
maintenance listing, are not waivable. Moreover, all issuers listed 
under Tier I must satisfy the Tier I maintenance standards on a 
continuing basis. For Tier II, the Exchange may revise the Tier II 
requirements upward under certain circumstances, but an exception to 
Tier II requirements may be made only by vote of the Executive 
Committee of the Board of Governors.

1. Tier I Listing Standards

    The Exchange's new listing standards for Tier I common stock are 
based on standards established in a Memorandum of Understanding 
(``MOU'') between the North American Securities Administrators 
Association, Inc. (``NASAA'') \4\ and the Philadelphia Stock Exchange 
(``Phlx'') \5\ and between NASAA and the Pacific Stock Exchange.\6\ The 
standards in these MOUs were developed in an effort to provide issuers 
with securities listed on these exchanges a basis for obtaining an 
exemption from state securities registration requirements (i.e., blue 
sky exemption). The MOUs created minimum quantitative initial inclusion 
and maintenance standards, corporate governance requirements, and 
minimum voting rights for listing on the respective exchange. The 
Exchange has adopted the MOUs' two alternative minimum quantitative 
initial inclusion standards for common stock, as follows:
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    \4\ NASAA is an association of securities administrators from 
each of the 50 states, the District of Columbia, Puerto Rico and ten 
Canadian provinces.
    \5\ The Memorandum of Understanding was approved by NASAA and 
Phlx on October 12, 1994.
    \6\ The Memorandum of Understanding was approved by NASAA and 
PSE on October 12, 1994.

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         Description                 Alt. No. 1            Alt. No. 2   
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Net Worth...................  $4,000,000..............  $12,000,000.    
Pre-Tax Income..............  750,000.................  ................
Net Income..................  400,000.................  ................
Public Float (Shares).......  500,000.................  1,000,000.      
Market Value of Float.......  3,000,000...............  15,000,000.     
Minimum Bid.................  $5/share *..............  $3/share *      
Public Beneficial Holders...  800/400 **..............  400.            
Operating History...........  ........................  3 years.        
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*The $5/$3 price must be the closing bid price for a majority of        
  business days for the six-month period prior to the date of the       
  application.\7\ f**800 shareholders are required for companies with at
  least 500,000 but less than 1 million shares publicly held, or 400    
  shareholders for companies with at least 1 million shares publicly    
  held, or 500,000 shares publicly held and daily trading volume in     
  excess of 2,000 shares per day for six months.                        

Initial public offerings must be underwritten on a ``firm commitment'' 
basis and must meet the CHX's listing standards within a 30-day grace 
period after completion of the offering, except that the initial public 
offering price will only be required to meet the price required at the 
time of application and not the six-month historical requirement.\8\
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    \7\ See Amendment No. 2, supra note 3.
    \8\ Id.
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    For preferred stock, the original listing criteria vary depending 
on where the issuer has its common stock listed. If the related common 
stock is listed on the Exchange, New York Stock Exchange (``NYSE''), or 
American Stock Exchange (``Amex''), there must be at least 100,000 
preferred shares publicly held and an aggregate market value of at 
least $2,000,000. If the related common stock is not so listed, there 
must be at least 400,000 preferred shares publicly held, an aggregate 
market value of at least $4,000,000, and at least 800 public beneficial 
holders of 100 shares or more. In either cases, the issuer must meet 
the net tangible assets and earnings requirements for common stock and 
must meet and appear able to service the dividend requirement for the 
preferred stock, and each share of preferred stock must have a minimum 
closing bid price of $10 to be eligible for listing.
    Moreover, the Exchange will not list convertible preferred issues 
containing a provision that permits the company, at its discretion, to 
change the conversion price other than in accordance with the terms of 
the company's Articles of Incorporation or any amendments thereof.\9\ 
If preferred stock is convertible into a class of common stock, such 
class must meet the Tier I listing requirements for common stock. 
Current last sale information must also be available with respect to 
the underlying security into which the security is convertible.\10\
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    \9\ Id.
    \10\ Redeemable preferred stock issues must provide for 
redemption pro rata or by lot. See Amendment No. 2, supra note 3.
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    For listing of bonds and debentures under Tier I, issuers will be 
evaluated based on the same net tangible assets and earnings criteria 
applicable to common stock. If an issuer's common stock is listed on 
the Exchange, NYSE or Amex, the bonds or debentures must have a minimum 
aggregate market value and principal amount of $5,000,000 each and at 
least 100 public beneficial holders. If the related common stock is not 
traded on any of the above referenced exchanges, the bonds or 
debentures must have an aggregate market value and principal amount of 
at least $20,000,000 each and at least 100 public beneficial holders. 
In either case,

[[Page 40272]]

issuers must meet and appear able to satisfy interest and principal 
when due on the bond or debenture to be listed.
    Moreover, the Exchange will not list convertible debt issues 
containing a provision that permits the company, at its discretion, to 
change the conversion price other than in accordance with the terms of 
the company's Indenture Agreement.\11\ If a debt security is 
convertible into a class of equity security, such equity security must 
meet the Tier I listing requirements. Current last sale information 
must also be available with respect to the underlying security into 
which the bond or debenture is convertible.\12\
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    \11\ Id.
    \12\ Redeemable issues must provide for redemption pro rata or 
by lot. See Amendment No. 2, supra note 3.
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    To list municipal securities under Tier I, the aggregate market 
value and principal amount must be at least $20,000,000 each, and there 
must be at least 100 public beneficial owners. The municipal security 
must also be rated as investment grade by at least one nationally 
recognized rating service. The Exchange intends to require specialist 
units applying for appointment and registration in municipal securities 
to be in compliance with Municipal Securities Rulemaking Board 
(``MSRB'') Rule G-3 regulations regarding municipal securities 
principals and representatives. \13\ All Exchange contracts in 
municipal securities will be compared, settled and cleared in 
accordance with the applicable regulations of the MSRB. \14\
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    \13\ The National Association of Securities Dealers (``NASD'') 
has authority to enforce MSRB rules for listed municipal securities. 
The CHX enforcement in this regard will not preempt or limit in any 
manner the NASD's authority to act in this area.
    \14\ The Exchange has also represented that municipal securities 
traded on the Exchange will not be subject to off-Board trading 
restrictions. See Amendment No. 2, supra note 3.
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    For a Tier I listing of stock warrants, there must be at least 
500,000 stock warrants publicly held by not less than 250 public 
beneficial holders. The Exchange will not list stock warrants under the 
Tier I designation unless the common stock of the company or other 
security underlying the stock warrants is already listed (and meets the 
relevant maintenance requirements for continued listing) or will be 
listed concurrently with the stock warrants on the Exchange under the 
Tier I designation.
    For the listing of Tier I contingent value rights (``CVRs''), \15\ 
issuers must meet the net tangible assets and earnings requirements 
applicable to common stock. In addition, there must be at least 600,000 
publicly held CVRs with a market value of at least $18,000,000 and at 
least 400 public beneficial holders, the issuer must have total assets 
of at least $100,000,000, and the CVRs must have a maturity of at least 
one year. In the alternative, the CVRs must have been approved for 
listing on another national securities exchange. \16\ Prior to the 
commencement of trading of CVRs, the Exchange will distribute a 
circular to its membership explaining the specific risks associated 
with CVRs and providing guidance regarding member firm compliance 
responsibilities when handling transactions in such securities. \17\
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    \15\ CVRs are unsecured obligations providing for a possible 
cash payment at maturity based on the value of an equity security 
issued by an affiliate of the issuer of the CVRs (``related 
security''). At maturity, the holder of a CVR would be entitled to a 
cash payment at maturity if the market price of the related security 
is lower than a predetermined target price. If the market price of 
the related security equals or exceeds the target price, the holder 
of the CVR would not be entitled to receive such a cash payment. See 
Securities Exchange Act Release No. 33843 (Mar. 31, 1994), 59 FR 
16666 (Apr. 7, 1994).
    \16\ See Amendment No. 1, supra note 3. The Commission notes 
that if another exchange amends its listing standards for CVRs and 
lists securities pursuant to the amended standards, the Commission 
expects the CHX to make conforming changes.
    \17\ See Amendment No. 2, supra note 3.
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    The Exchange will consider listing other securities not otherwise 
covered by the Tier I listing requirements provided the issue is suited 
for auction market trading. Prior to commencement of trading of such 
securities, the Exchange will evaluate the nature and complexity of the 
issue and, if appropriate, distribute a circular to the membership 
providing guidance regarding member firm compliance responsibilities 
when handling transactions in such securities. \18\ Such securities 
must have at least 1,000,000 publicly held trading units and a 
principal amount/market value of at least $20,000,000. The issue must 
also have at least 400 public beneficial holders or if the issue is 
traded in thousand dollar denominations, there must be a minimum of 100 
public beneficial holders. In addition, the issuer must have total 
assets of at least $100,000,000 and net worth of at least $10,000,000. 
If the issuer is unable to satisfy the earnings requirements applicable 
to Tier I common stock, the Exchange will require the issuer to have 
total assets of at least $200,000,000 and net worth of at least 
$10,000,000, or total assets of at least $100,000,000 and net worth of 
at least $20,000,000. \19\
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    \18\ The Exchange has also represented to the Commission that 
before listing or trading a new product, the Exchange will review 
whether any Section 19(b) rule filings would be required pursuant to 
Rule 12f-5. See Amendment No. 2, supra note 3.
    \19\ If the issue contains cash settlement provisions, 
settlement must be made in U.S. dollars, and if the issue contains 
redemption provisions, the redemption price must be at least $3.00 
per unit.
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    Moreover, the Tier I listing standards for these securities are not 
intended to accommodate the listing of securities that raise novel or 
significant regulatory issues and, therefore, the listing of such 
securities would require a separate rule filing submitted pursuant to 
Section 19(b) of the Act and Rule 19b-4 thereunder. In this regard, the 
Exchange represents that it will consult with the Commission on a case-
by-case basis concerning the appropriateness of filing a proposed rule 
change concerning such new product. \20\
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    \20\ See Amendment No. 3, supra note 3.
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2. Tier II Listing Standards

    For issuers unable to satisfy the Tier I standards, the Exchange 
proposes Tier II standards to allow companies that may not be large 
enough to list under Tier I the opportunity to have their securities 
traded in an auction market, thereby increasing liquidity and issuer 
access to the investment community.
    The numerical Tier II initial listing standards for common stock, 
preferred stock, bonds and debentures, and warrants are substantially 
similar to the current CHX standards applicable to all listed issues, 
except that index warrants and contingent value rights can no longer be 
listed under these standards. With respect to Tier II listing 
standards, the Exchange proposes to use the term ``publicly held 
shares,'' in new Rule 18, consistent with new Rule 1(b)(v). \21\ The 
Exchange also is now requiring that listed companies have at least 500 
public beneficial holders and that they demonstrate the ability to 
produce adequate annual earnings, without specifying a minimum annual 
amount. \22\
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    \21\ See Amendment No. 2, supra note 3.
    \22\ Id.
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    In cases where a company's security does not qualify for inclusion 
under Tier I, yet the security is listed or has been approved for 
listing on the NYSE, Amex (except for ``ECM'' securities), or Nasdaq 
National Market System (``Nasdaq/NMS''), the Exchange may list such 
security under Tier II in reliance upon the listing requirements of the 
applicable exchange or association. \23\
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    \23\ Id.

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[[Page 40273]]

3. Corporate Governance and Disclosure Policies

Tier I
    The Exchange proposes new corporate governance standards for Tier I 
securities. These provisions include rules concerning conflicts of 
interest, independent directors, audit committees, quorum, shareholder 
approval, annual meetings, and solicitation of proxies and consents. 
Moreover, these standards include specific requirements for disclosure 
of reports filed with federal regulatory bodies, specific requirements 
for shareholder approval for certain corporate actions, and specific 
voting rights provisions. These requirements are described in detail in 
the new rules.
    With respect to voting rights, the new rule prohibits the listing 
or continued listing of any common stock or other equity security of a 
domestic issuer if the company issues any class of security or takes 
other corporate action with the effect of nullifying, restricting or 
disparately reducing the per share voting rights of holders of an 
outstanding class of common stock.\24\ Moreover, to be eligible for 
listing, preferred stock must give the holders the right to elect at 
least two members of the issuer's Board of Directors no later than two 
years after a default in the payment of fixed dividends.\25\
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    \24\ This voting rights standard is modelled after former 
Commission Rule 19c-4, which is no longer in effect. The model MOU 
continues to utilize the Rule 19c-4 voting rights standard.
    \25\ In addition, any change in the rights, privileges or 
preferences of preferred stock holders requires at least a two-
thirds vote of the preferred class, voting as a class. The creation 
of any additional class of preferred stock senior to or equal in 
preference to the issue to be listed requires at least a favorable 
majority vote of the preferred class, voting as a class.
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Tier II
    The Exchange is proposing to apply its current corporate governance 
standards to Tier II securities. These include, among others, 
requirements for an audit committee, independent directors, and 
solicitation of proxies. The Exchange also proposes to impose new 
voting rights provisions on Tier II securities.\26\ The new rule 
prohibits the voting rights of existing shareholders of publicly traded 
common stock from being disparately reduced or restricted through any 
corporate action or issuance.\27\ Although this voting rights standard 
is similar to the standard applicable to Tier I securities, it provides 
the Exchange with useful flexibility in evaluating transactions on a 
case-by-case basis.
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    \26\ See Amendment No. 2, supra note 3.
    \27\ Id. This standard is almost identical to the voting rights 
standard of the NYSE and Amex.
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Tier I and Tier II
    The Exchange will apply the current public disclosure requirements 
to both Tier I and Tier II issues.\28\
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    \28\ Id.
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4. Maintenance Requirements

Tier I
    The quantitative maintenance standards for Tier I common stock are 
as follows: (1) at least 200,000 publicly held shares and a market 
value of at least $1,000,000; (2) at least 400 public beneficial 
holders, or at least 300 beneficial holders of 100 shares or more; and 
(3) net worth of at least $2,000,000 if the issuer has sustained losses 
from continuing operations and/or net losses in two of the last three 
fiscal years, or $4,000,000 if losses in three of the last four years.
    The preferred stock maintenance standards require for Tier I 
securities the same net worth standards as common stock, at least 
100,000 publicly held shares with a market value of at least 
$1,000,000, and at least 150 public beneficial holders. In addition, 
the issuer must not have sustained losses from continuing operations 
and/or net losses in the five most recent fiscal years. If preferred 
stock is convertible into a class of common stock, such class must meet 
the applicable Tier I maintenance requirements.\29\
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    \29\ Current last sale information must be available with 
respect to the underlying security into which the security is 
convertible. See Amendment No. 2, supra note 3.
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    Tier I bonds and debentures must maintain the same net worth 
maintenance standards as common stock, an aggregate market value and 
principal amount of at least $1,000,000 each, and at least 100 public 
beneficial holders. In addition, for Tier I debt, the issuer must not 
have sustained losses from continuing operations and/or net losses in 
the five most recent fiscal years. For debt securities of non-listed 
issuers, the security must be rated as investment grade by at least one 
nationally recognized rating service. If a debt security is convertible 
into a class of equity security, such class must meet the applicable 
Tier I maintenance requirements.\30\
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    \30\ Current last sale information must be available with 
respect to the underlying security into which the security is 
convertible. See Amendment No. 2, supra note 3.
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    In the case of Tier I stock warrants, the common stock of the 
company or other security underlying the stock warrant must meet the 
applicable Tier I maintenance requirements. Finally, Tier I CVRs must 
maintain an aggregate market value of at least $1,000,000. If the 
security to which the CVR is tied is delisted, trading in the CVR will 
be suspended and proceedings initiated to delist the CVRs.\31\
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    \31\ Id.
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    Securities listed under the Tier I designation will not be granted 
waivers from the Exchange's maintenance requirements. For any security 
that no longer meets the Tier I maintenance requirements, but meets the 
Tier II maintenance requirements, the Exchange will initiate a 
proceeding to redesignate it as a Tier II security.
Tier II
    The Exchange proposes to apply the current maintenance standards 
for all securities listed on the Exchange to Tier II securities. If a 
Tier II listed security matures to the point that it could meet the 
Tier I standards, the issuer must apply and receive approval to list 
the security pursuant to the Tier I standards before the CHX will 
recognize that security as a Tier I issue.
    The Exchange does not propose to materially change its delisting 
procedures.

III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange and, in 
particular, the requirements of Section 6.\32\ The Commission believes 
that the proposal is consistent with the Section 6(b)(5) requirements 
that the rules of an exchange be designed to perfect the mechanism of a 
free and open market and a national market system and to protect 
investors and the public interest; and are not designed to permit 
unfair discrimination between issuers.
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    \32\ 15 U.S.C. Sec. 78F.
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    The development and enforcement of adequate standards governing the 
initial and continued listing of securities on an exchange is an 
activity of critical importance to financial markets and the investing 
public. Listing standards serve as a means for a self-regulatory 
organization to screen issuers and to provide listed status only to 
bona fide companies with sufficient float, investor base and trading 
interest to maintain fair and orderly markets. Once a security has been 
approved for initial listing, maintenance criteria allow an exchange to 
monitor the status and trading characteristics of that issue to ensure 
that it continues to meet the exchange's standards for market depth and

[[Page 40274]]

liquidity. For the reasons set forth below, the Commission believes 
that the proposed rule change will provide the Exchange with greater 
flexibility in determining which securities warrant inclusion on the 
Exchange, without compromising the benefits that the Exchange's listing 
standards offer to investors.
    The Commission notes that most of the Exchange's new listing 
standards are substantially similar to the rules of existing national 
securities exchanges and the Nasdaq National Market and, therefore, 
finds that these standards are equally acceptable for the Exchange. To 
the extent that the Exchange's proposed rules do differ from those of 
existing national securities exchanges and the Nasdaq National Market, 
the Commission finds them also to be consistent with the Act.
    In addition to the quantitative standards, the other qualitative 
requirements, such as the establishment of audit committees, voting 
rights, shareholder approval, and disclosure policies, ensure that 
companies trading on the Exchange will adequately protect the interests 
of public shareholders. The Commission also notes that because 
extensive listing and maintenance standards are being adopted, only 
companies suitable for exchange listing are eligible for trading on the 
Exchange. Further, as noted above, for Tier I securities the listing 
and maintenance criteria are not waivable. This will ensure that the 
minimum requirements necessary to ensure adequate depth and liquidity 
to support exchange trading will be met.\33\
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    \33\ The Commission notes that for Tier II securities, the 
Exchange may revise the requirements upward under certain 
circumstances, but only the Executive Committee of the Board of 
Governors may make an exception to the requirements. The Commission 
expects the Exchange to treat these standards generally as minimum 
requirements. To the extent the CHX Executive Committee has 
authority to permit lower standards, the Commission believes this 
should only be permitted in the rarest of circumstances and only 
when the CHX is assured an adequate market in the security can 
continue to be made and continued listing is supported in the public 
interest.
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    Moreover, with respect to the CHX's proposal to list other 
securities, the Commission believes that the proposed rule change is 
consistent with the Act because it relates only to those securities 
that are similar to products currently listed for trading by the 
Exchange. If a new product raises novel or significant regulatory 
issues, the Exchange must file a proposed rule change so that the 
Commission would have an opportunity to review the regulatory structure 
for the product.\34\
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    \34\ See Amendment No. 3, supra note 3.
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    With respect to CVRs, the CHX's proposed standards are identical to 
those of the other securities exchanges. Moreover, the Exchange has 
represented that it will distribute a circular to its membership 
explaining the specific risks associated with CVRs and providing 
guidance regarding member firm compliance responsibilities when 
handling transactions in such securities. The Commission believes that 
this should help ensure that only customers with an understanding of 
the risks attendant to the trading of CVRs trade these securities on 
their brokers' recommendations.
    Finally, the Commission believes that inclusion of a security for 
listing on an exchange should not depend solely on meeting quantitative 
criteria, but should also entail an element of judgment given the 
expectations of investors and the imprimatur of listing on a particular 
market.\35\ The Commission believes that this rule provides the 
necessary flexibility to determine whether to list an issuer, while 
ensuring that certain minimum standards must be met. Thus, the 
Commission believes that the new listing and maintenance standards 
strike the appropriate balance between protecting investors and 
providing a marketplace for issuers satisfying the disclosure 
requirements under the federal securities laws. The new standards will 
provide important guidance to the Exchange review process, and will 
alert issuers seeking listing on the Exchange, as well as current 
Exchange issuers, of the Exchange's specific standards.
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    \35\ See, e.g., In the Matter of Silver Shield Mining and 
Milling Company, Securities Exchange Act Release No. 6214 (Mar. 18, 
1960) (``use of the facilities of a national securities exchange is 
a privilege involving important responsibilities under the Exchange 
Act''); In the Matter of Consolidated Virginia Mining Co., 
Securities Exchange Act Release No. 6192 (Feb. 26, 1960) (same).
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    Moreover, the Commission finds good cause for approving Amendment 
Nos. 1, 2, and 3 to the proposed rule change prior to the thirtieth day 
after the date of publication of notice of filing thereof. These 
amendments made clarifying changes to the rule proposal and 
strengthened the listing requirements under the proposal. Moreover, the 
Commission did not receive any comments on the original proposal,\36\ 
which was noticed for the full statutory period, nor did it receive 
comments on a similar PSE proposal that was also noticed for the full 
statutory period.\37\ Based on the above, the Commission finds that 
there is good cause, consistent with Section 6(b)(5) of the Act, to 
accelerate approval of Amendment Nos. 1, 2, and 3.
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    \36\ See Securities Exchange Act Release No. 36531 (Nov. 30, 
1995), 60 FR 62918 (Dec. 7, 1995).
    \37\ See Securities Exchange Act Release No. 34429 (July 22, 
1994), 59 FR 38998 (Aug. 1, 1994) (approval of PSE's two-tier 
listing structure).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment Nos. 1, 2, and 3. 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-CHX-95-26 and should be 
submitted by August 22, 1996.

V. Conclusion

    For the reasons stated above, the Commission believes the rule 
change is consistent with the Act and, therefore, has determined to 
approve it. The rule change provides enhanced listing standards for 
Exchange listed securities which provide greater protection for 
investors and the public interest.
    The Commission does not believe that the rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\38\ that the proposed rule change (SR-CHX-95-26), as amended, is 
approved.

    \38\ 15 U.S.C. Sec. 78s(b)(2).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\39\
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    \39\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-19564 Filed 7-31-96; 8:45 am]
BILLING CODE 8010-01-M