[Federal Register Volume 62, Number 130 (Tuesday, July 8, 1997)]
[Notices]
[Pages 36594-36595]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17668]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38795; File No. SR-CHX-97-17]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Stock Exchange, Incorporated Relating to Tier 1 
Listing Standards

June 30, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 25, 1997, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Article XXVIII, rule 14 of the 
Exchange's Rules relating to Tier 1 listing standards. The text of the 
proposed rule change is available at the Office of the Secretary, CHX, 
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 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 aspect of such statements.

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

1. Purpose
    The National Securities Markets Improvement Act of 1996 \3\ amended 
Section 18 of the Securities Act of 1933 \4\ to provide for exclusive 
federal registration of securities listed, or authorized for listing, 
on the New York Stock Exchange (``NYSE''), the American Stock Exchange 
(``Amex'') or listed on the National Market System of the Nasdaq Stock 
Market (``Nasdaq/NMS''), or any other national securities exchange 
designated by the Commission by rule to have substantially similar 
listing standards to those markets. The CHX petitioned the SEC in 
February of this year to adopt a rule finding the CHX's Tier 1 listing 
standards to be substantially similar to those of the NYSE, Amex or 
Nasdaq/NMS. If the SEC adopts such a rule, any security listed on the 
CHX under its Tier 1

[[Page 36595]]

standards would be exempt from registration in all fifty states.
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    \3\ Pub. L. No. 104-290, 110 Stat. 3416 (1996)
    \4\ 15 U.S.C. 77s.
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    The SEC has recently published for comment proposed Rule 146(b) 
which would designate various exchanges' listing standards as being 
substantially similar to those of the NYSE, Amex or Nasdaq/NMS. The SEC 
has indicated that it preliminarily believes that the only deficiency 
in the CHX Tier 1 standards, which precludes it from designating the 
CHX Tier 1 securities as qualifying, is that there is no minimum share 
price requirement for continued listing on Tier 1. If such deficiency 
was corrected, the SEC indicated that it would consider including CHX's 
Tier 1 securities in the final Rule 146(b).
    As a result of the above, the CHX is proposing to amend Article 
XXVIII, rule 14 of the Exchange rules to add a minimum share price 
requirement for continued listing of common stock on Tier 1. The 
proposed amendment is virtually identical to Amex's requirement. In 
essence, the proposed amendment states that an issuer that has a common 
stock listed under Tier 1 that is selling for a substantial period of 
time at a low price per share must effect a reverse split within a 
reasonable period of time after being notified that the Exchange deems 
such action to be appropriate. The proposed amendment then sets forth 
examples of pertinent factors which the Exchange will review in 
determining whether a reverse split is appropriate. If the issuer fails 
to effect a reverse split, then the Exchange would initiate a 
proceeding to delist the issuer's common stock from Tier 1.
 2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b)(5) of the Act \5\ in that it is designed to promote 
just and equitable principles of trade, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and in general, to protect investors and the public interest.
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    \5\ 15 U.S.C. 78f(b).
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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, and 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 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 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, 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 my be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying at the 
Commission's Public Reference Room. 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-97-17 and 
should be submitted by July 29, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-17668 Filed 7-7-97; 8:45 am]
BILLING CODE 8010-01-M