[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