[Federal Register Volume 69, Number 6 (Friday, January 9, 2004)]
[Notices]
[Pages 1610-1611]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-404]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49013; File No. SR-PCX-2003-62]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 by the Pacific Exchange, Inc. To Amend Its 
Rules Relating to Initial Listing Requirements for Securities Listed 
Under the Tier I and Tier II Designations

December 31, 2003.
    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 November 4, 2003, the Pacific Exchange, Inc. (``PCX'' 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 
Exchange. On December 17, 2003, the Exchange filed Amendment No. 1 to 
the proposed rule change.\3\ The Commission is publishing this notice 
to solicit comments on the proposed rule change, as amended, from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On December 17, 2003, the Exchange filed a Form 19b-4, which 
replaced the original filing in its entirety (``Amendment No. 1'').
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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 its rules relating to initial 
listing requirements for securities listed under the Tier I and Tier II 
designations. The text of the proposed rule change appears below. New 
text is in italics. Deleted text is in brackets.

Rule 5

Listings

* * * * *

Designation of Tier I Securities Initial Listing Requirements

Common Stock--Select Market Companies
    Rule 5.2(c). In the case of common stock, the following Basic or 
Alternate Listing Requirements must be met:
Basic Listing Requirements
    (1)-(3)--No change.
    (4) Pre-tax income from continuing operations of at least $750,000 
[and net income of at least $400,000, excluding non-recurring and 
extraordinary items] in the last fiscal year or two of the last three 
fiscal years.
    (5)--No change.
Alternate Listing Requirements
    (1)-(5)--No change.
Commentary
    .01-.03--No change.
    (d)-(j)--No change.

Designation of Tier II Securities Initial Listing Requirements

Common Stock--Development Stage Companies
    Rule 5.2(k). In the case of common stock, the following Basic or 
Alternate Listing Requirements must be met:
Basic Listing Requirements
    (1)-(3)--No change.
    (4) Net income from continuing operations [Demonstrated net 
earnings] of at least $100,000 [after taxes, excluding nonrecurring 
income and extraordinary items] in the last fiscal year or in two of 
the last three fiscal years, or total net tangible assets of 
$2,500,000.
    (5)-(6)--No change.
Alternate Listing Requirements
    (1)-(4)--No change.
    Commentary:
    .01-.03--No change.
* * * * *

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 Exchange 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
    The Exchange's initial listing requirements for common stock under 
the Tier I and Tier II designations are set forth in PCXE Rules 5.2(c) 
and 5.2(k), respectively. In determining whether an issuer meets the 
applicable income requirements, each of the aforementioned rules 
provide for the exclusion of non-recurring and extraordinary items. The 
term ``non-recurring'' is not defined under

[[Page 1611]]

Generally Accepted Accounting Principles (``GAAP''). As such, the 
Exchange proposes to amend PCXE Rules 5.2(c) and 5.2(k) to remove the 
term ``non-recurring'' and replace it with the term ``income from 
continuing operations,'' a term the Exchange represents is recognized 
under GAAP. The Exchange believes that this change should remove any 
uncertainty in the initial listing process that existed for both 
issuers and investors.
    In modifying the initial listing requirement for Tier I issuers, 
the Exchange also proposes to eliminate the requirement that an issuer 
have net income of at least $400,000, excluding non-recurring and 
extraordinary items. The Exchange states that this change is proposed 
to be consistent with the initial listing requirements of another 
exchange.\4\ The Exchange represents that this change is not expected 
to make the Exchange's Tier I listing requirements any more or less 
restrictive.
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    \4\ See American Stock Exchange LLC Company Guide Section 
101(a)(2).
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    Under the proposed modifications to the initial listing 
requirements for Tier II issuers, the Exchange states that it does not 
propose to change the method upon which it calculates whether an issuer 
meets the income requirement. Under the existing rules, the Exchange 
states that it currently does not include both the income and 
corresponding expenses from nonrecurring and extraordinary items in 
calculating a potential issuers net earnings. The Exchange represents 
that the proposed change will have no effect on the Exchange's Tier II 
listing requirements.
2. Statutory Basis
    The Exchange believes that the proposal furthers the objectives of 
Section 6(b)(5) of the Act \5\ in that it is designed to promote just 
and equitable principles of trade and to protect investors and the 
public interest.
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    \5\ 15 U.S.C. 78(b)(5).
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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 burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor 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 Exchange 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 persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-PCX-2003-62. This file number should be included on the 
subject line if e-mail is used. To help the Commission process and 
review your comments more efficiently, comments should be sent in 
hardcopy or by e-mail but not by both methods. 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 Room. Copies of such filing will also be available for 
inspection and copying at the principal office of the PCX. All 
submissions should refer to File No. SR-PCX-2003-62 and should be 
submitted by January 30, 2004.

    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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-404 Filed 1-8-04; 8:45 am]
BILLING CODE 8010-01-P