[Federal Register Volume 62, Number 136 (Wednesday, July 16, 1997)]
[Notices]
[Pages 38180-38182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18611]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38825; File No. SR-Phlx-97-29]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Philadelphia Stock Exchange, Inc. Relating to Amendments
to Phlx's Tier I Listing and Maintenance Standards
July 9, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\
[[Page 38181]]
notice is hereby given that on June 25, 1997, the Philadelphia Stock
Exchange, Inc. (``Phlx'' 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 self-regulatory organization. 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 amend Exchange Rules 803 and 810 regarding
Tier I security listing and maintenance standards in order to: (a) add
a term limit and minimum distribution/aggregate market value listing
requirement for index and currency warrants in Rule 803(e); (b)
increase the pre-tax income listing requirement for ``other
securities'' from $100,000 in three of the four prior fiscal years'' to
``$750,000 in its last fiscal year or in two of its last three fiscal
years'' in Rule 803(f); and (c) add maintenance standards for bonds,
notes and debentures in Rule 810(a). The text of the proposed rule
change is available at the Office of the Secretary, Phlx, 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 aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
In October, 1996, the National Securities Markets Improvement Act
of 1996 \3\ was signed into law. Among other provisions, the law
amended Section 18 of the Securities Act of 1933 (``Securities Act'')
\4\ to provide for exclusive federal registration (and preemption of
state blue sky laws) for ``covered securities'' which are those
securities listed on the New York Stock Exchange (``NYSE''), American
Stock Exchange (``Amex'') or the National Market System of the Nasdaq
Stock Market (``Nasdaq/NMS'') or on any other national securities
exchange designated by the Commission to have substantially similar
listing standards to those markets. On March 31, 1997, the Phlx
petitioned the Commission to adopt a rule that would find Phlx Tier I
listing standards to be substantially similar to those of the NYSE,
Amex or Nasdaq/NMS and therefore entitle its listed Tier I securities
to be considered covered securities.
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\3\ Pub. L. No. 104-290, Stat. 3416 (1996).
\4\ 15 U..C. 77s.
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The Commission recently proposed Rule 146(b) under Section 19 of
the Securities Act which would designate certain securities as
``covered securities'' for purposes of this federal registration
scheme.\5\ In order for the Commission to designate the Phlx's Tier I
securities as covered securities, it must first determine that its Tier
I listing and maintenance standards are substantially similar to those
of either the NYSE, Amex or Nasdaq/NMS. The Commission has noted that
it preliminarily believes that the Phlx's Tier I standards differ in
three areas from those of the NYSE, Amex, or Nasdaq/NMS. Pursuant to
this filing, the Phlx is amending its rules to make them substantially
similar to those of the Amex in those three specified areas as set
forth below.
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\5\ Securities Exchange Act Release No. 38728, Securities Act
Release No. 7422 (June 10, 1997).
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First, Phlx Rule 803(e) would be amended to adopt additional
listing standards for index warrants, currency warrants and currency
index warrants. New subsection (2) would require that the warrants have
a term of between one and five years from the date of issuance. New
subsection (3) would impose a minimum public distribution and market
value requirement of 1,000,000 warrants with at least 400 public
warrant holders and a minimum aggregate market value of $4,000,000.\6\
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\6\ These provisions are similar to Sections 106(b) and (c) of
the Amex Company Guide.
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Second, the pre-tax income requirement for ``other securities'' in
Rule 803(f)(2) would be increased from ``$100,000 in three of the four
prior fiscal years'' to ``$750,000 in its last fiscal year or in two of
its last three fiscal years.'' \7\ Other securities are hybrid
securities which have features common to both equity and debt
securities, yet do not fit within the traditional definitions of
either.
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\7\ This provision is similar to Section 107 and, by reference,
Section 101(b) of the Amex Company Guide.
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Finally, Exchange Rule 810(a) which contains the maintenance
standards for Tier I securities will be amended to add subsection (5)
to add maintenance standards for bonds, notes and debentures. The rule
will require that debt securities maintain an aggregate market value or
principal amount of the bonds that are publicly held of $400,000 and
the issuer to be able to meet its obligations in the listed debt
securities. Also, for any debt security convertible into a listed
equity security, the debt security will be reviewed when the underlying
equity security is delisted and will be delisted when the underlying
equity security is no longer subject to real-time trade reporting in
the United States. In addition, if common stock is delisted for
violation of any of the corporate governance criteria in Exchange Rules
812 through 899, the Exchange will also delist any listed debt
securities convertible into that common stock.\8\
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\8\ These provisions are similar to Section 1003(b)(iii) and (e)
of the Amex Company Guide.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act \9\ in general, and in particular, with
Section 6(b)(5),\10\ in that it is designed to promote just and
equitable principles of trade, prevent fraudulent and manipulative acts
and practices, to foster cooperation and coordination with persons
engaged in regulating, clearing, settling, processing information with
respect to, and facilitating transactions in securities, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, as well as to protect investors and the
public interest by assuring that securities listed on the Phlx pursuant
to its Tier I listing standards, which will no longer be subject to
state blue sky laws, will not be any less onerous than similar
securities listed on the NYSE, Amex or Nasdaq/NMS.
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\9\ 15 U.S.C. Sec. 78f.
\10\ 15 U.S.C. Sec. 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.
[[Page 38182]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or 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 of (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 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 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-Phlx-97-29 and
should be submitted by August 6, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-18611 Filed 7-15-97; 8:45 am]
BILLING CODE 8010-01-M