[Federal Register Volume 60, Number 15 (Tuesday, January 24, 1995)]
[Notices]
[Pages 4644-4651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1716]
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SECURITIES AND EXCHANGE COMMISSION
[Release Nos. 33-7127; 34-35234; International Series Release No. 772]
Exemptions From Rules 10b-6, 10b-7, and 10b-8 During
Distributions of Certain United Kingdom Securities and Certain
Securities Traded on SEAQ International
January 18, 1995.
Pursuant to delegated authority, on January 10, 1995, the Division
of Market Regulation issued the following letter granting class
exemptions from Rules 10b-6, 10b-7, and 10b-8 (``Trading Practice
Rules'') under the Securities Exchange Act of 1934 to facilitate
distributions in the United States of securities of certain highly
capitalized United Kingdom issuers and issuers whose securities are
traded on SEAQ International. The exemptions permit transactions that
otherwise would be prohibited by the Trading Practice Rules, subject to
certain disclosure, recordkeeping, record production, and notice
requirements.
The exemptions have been issued pursuant to the Commission's
Statement of Policy contained in Securities Exchange Act Release No.
33137 (November 3, 1993), and are published to provide notice of their
availability.
Margaret H. McFarland,
Deputy Secretary.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
January 10, 1995.
Mr. Dan Sheridan,
Director, Market Supervision, The London Stock Exchange, Old Broad
Street, London EC2N 1HP, United Kingdom
Re: Distributions of Certain United Kingdom Securities and of
Certain Securities Traded on SEAQ International, File No. TP 94-224
Dear Mr. Sheridan: In regard to your letter dated January 6,
1995 as supplemented by conversations with the staff, this response
thereto is attached to the enclosed photocopy of your
correspondence. By doing this we avoid having to recite or summarize
the facts set forth in your letter.
Response
I. Distributions of Certain Qualified U.K. Securities
On the bases of your representations and the facts presented,
the Commission hereby grants exemptions from Rules 10b-6, 10b-7, and
10b-8 under the Securities Exchange Act of 1934 (``Exchange Act'')
to distribution participants, as defined in Rule 10b-6(c)(6)(ii),
and their affiliated purchasers, as defined in Rule 10b-6(c)(6)(i)
(collectively, ``Relevant Parties''), in connection with
transactions in Relevant U.K. Securities outside the United States
during distributions of Qualified U.K. Securities subject to the
following terms, conditions, and limitations:
A. United Kingdom Securities
1. The security being distributed (``Qualified U.K. Security'')
must:
a. be issued by: (i) a ``foreign private issuer'' within the
meaning of Rule 3b-4 under the Exchange Act incorporated under the
laws of the United Kingdom, the Channel Islands, the Isle of Man or
the Republic of Ireland, which issuer (``U.K. Issuer'') has
outstanding a component security of the FT-SE 100;\1\ or (ii) a
subsidiary of a U.K. Issuer described in paragraph I.A.1.a.(i); and
\1\References herein to the FT-SE 100 refer to the composition
of such index on the date of this letter; provided, however, that
any security added to the FT-SE 100 after the date of this letter
also will be treated as a Qualified U.K. Security, if its issuer
satisfies the requirements in paragraph I.A.1.a. and such security
has an aggregate market value that equals or exceeds the equivalent
of 660 million (which exceeded US$1 billion as of
January 5, 1995) and a world-wide average daily trading volume that
equals or exceeds the equivalent of 3.5 million (which
exceeded US$5 million as of January 5, 1995), as published by
foreign financial regulatory authorities (``FFRA'') and any U.S.
securities exchanges or automated inter-dealer quotation systems,
during a period (``Reference Period for U.K. Issuers'') that is 20
consecutive business days in London within 60 consecutive calendar
days prior to the commencement of the Covered Period for U.K,
Issuers as defined in paragraph I.C.1. below.
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b. satisfy one of the following:
(i) be an equity security of a U.K. Issuer which security has an
aggregate market value that equals or exceeds the equivalent of
660 million (which exceeded US$1 billion as of January
5, 1995) and a world-wide average daily trading volume that equals
or exceeds the equivalent of 3.5 million (which exceeded
US$5 million as of January 5, 1995), as published by FFRAs\2\ and
any U.S. securities exchanges or automated inter-dealer quotation
systems during the Reference Period for U.K. Issuers; or
\2\An FFRA is defined in Section 3(a)(51) of the exchange Act,
15 U.S.C. 78c(a)(51), as any (A) foreign securities authority; (B)
other governmental body or foreign equivalent of a self-regulatory
organization empowered by a foreign government to administer or
enforce its laws relating to the regulation of fiduciaries, trusts,
commercial lending, insurance, trading in contracts of sale of a
commodity for future delivery, or other instruments traded on or
subject to the rules of a contract market, board of trade, or
foreign equivalent, or other financial activities; or (C) membership
organization a function of which is to regulate participation of its
members in activities listed above. The London Stock Exchange, The
Securities and Futures Authority (``SFA'') and The London
International Financial Futures and Options Exchange (``LIFFE'') are
considered to be FFRAs.
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(ii) be a security that is convertible into, exchangeable for,
or a right to acquire a security of a U.K. Issuer described in
paragraph I.A.1.b.(i).
2. ``Relevant U.K. Security'' means:
a. a Qualified U.K. Security; or
b. a security of the same class and series as, or a right to
purchase, a Qualified U.K. Security (collectively, ``Relevant U.K.
Securities''). [[Page 4645]]
B. Transactions Effected in the United States
All transactions in Relevant U.K. Securities effected in the
United States shall comply with Rules 10b-6, 10b-7, and 10b-8.
C. Transactions Effected in the United Kingdom
1. All transactions in Relevant U.K. Securities during the
Covered Period for the Qualified U.K. Security that are effected in
the United Kingdom shall be conducted in compliance with U.K. law.
For purposes of these exemptions, ``Covered Period for the Qualified
U.K. Security'' means: (i) in the case of a rights distribution, the
period commencing when the subscription price is determined and
continuing until the completion or abandonment of the distribution
in the United States, and (ii) in the case of any other
distribution, the period commencing three business days in London
before the price is determined and continuing until the completion
or abandonment of the distribution in the United States; provided,
however, that the Covered Period for the Qualified U.K. Security
shall not commence with respect to any Relevant Party until such
person becomes a distribution participant.
2. All transactions in Relevant U.K. Securities during the
Covered Period for the Qualified U.K. Security effected in the
United Kingdom shall be effected on or reported to the Exchange,
LIFFE or SFA.
3. Disclosure of Trading Activities.
a. The inside front cover page of the offering materials used in
the offer and sale in the United States of a Qualified U.K. Security
shall prominently display a statement in substantially the following
form, subject to appropriate modification where circumstances
require. Such statement shall be in capital letters, printed in
bold-face roman type at least as large as ten-point modern type and
at least two points leaded:
IN CONNECTION WITH THIS OFFERING, CERTAIN PERSONS MAY ENGAGE IN
TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS IN
(IDENTIFY RELEVANT U.K. SECURITIES) PURSUANT TO EXEMPTIONS FROM
RULES 10b-6, 10b-7, AND 10b-8 UNDER THE SECURITIES EXCHANGE ACT OF
1934. SEE ``[IDENTIFY SECTION OF OFFERING MATERIALS THAT DESCRIBES
THE TRANSACTIONS TO BE EFFECTED].''
b. In addition, there shall be included in the identified
section of the offering materials a comprehensive description of the
activities that may be undertaken by the Relevant Parties in the
Relevant U.K. Securities during the distribution.
4. Recordkeeping and Reporting.
a. Each Relevant Party shall provide to the Exchange the
information described in paragraph I.C.4.b. below with respect to
its transactions in Relevant U.K. Securities in the United Kingdom;
provided, however, that in the case of a distribution made pursuant
to rights, such information is only required to be reported to the
Exchange during the period or periods commencing at any time during
the Covered Period for the Qualified U.K. Security that the rights
exercise price does not represent a discount of at least 10 percent
from the then current market price of the security underlying the
rights and continuing until (a) the end of the Covered Period for
the Qualified U.K. Security or (b) until the rights exercise price
represents a discount of at least 12 percent from the then current
market price of the security underlying the rights.\3\
\3\For purposes of these exemptions, unless stated otherwise,
the ``current market price'' for a Qualified U.K. Security shall be
the closing mid-price at the end of the mandatory quote period for
the day on SEAQ.
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b. When required pursuant to paragraph I.C.4.a. above, the
Relevant Parties will provide the following information to the
Exchange in a Comma Delimited ASCII (American Standard Code for
Information Interchange) format including a common record layout
acceptable to the Exchange and the Division, with respect to
transactions in Relevant U.K. Securities during the Covered Period
for the Qualified U.K. Security:
(i) name of the security, date, time (of execution and
reporting, where available to the Relevant Party), price, and volume
of each transaction; provided, however, that no information
regarding a customer transaction need be provided unless such
transaction has a value of 200,000 or more (currently
$310,000);
(ii) the exchange or inter-dealer quotation system on which the
transaction was effected, if any;
(iii) an indication whether such transaction was for a
proprietary account or the account of a customer, provided that any
transaction effected by an underwriter for a customer account for
which it has exercised discretionary authority shall be reported as
a discretionary customer trade; and
(iv) the identity of the counterparty to the transaction.
c. The Exchange and the Relevant Parties shall keep all
documents produced or prepared pursuant to paragraph I.C.4.b. for a
period of not less than two years.
d. Upon the request of the Division, the Exchange shall transmit
the information provided by the Relevant Parties pursuant to
paragraph I.C.4.b. above to the Division within 30 days of the
request.
e. If the information required to be produced in paragraph
I.C.4.b. above is not available from the Exchange upon the request
of the Division the information shall be provided by each Relevant
Party, with respect to their own reportable transactions, and be
made available to the Division at its office in Washington, D.C.
within 30 days of the request. The Division will notify the Exchange
that it has received information pursuant to this paragraph, and
upon appropriate request, will provide the Exchange the information
submitted by the Exchange's member firms or their affiliates.
f. Representatives of a Relevant Party will be made available
(in person at the office of the Division or by telephone) to respond
to inquires of the Division relating to its records.
D. Transactions Effected in Significant Markets
All transactions in Relevant U.K. Securities in a Significant
Market shall be effected in accordance with the requirements of
Rules 10b-6, 10b-7, and 10b-8 or by other available exemptions. For
purposes of these exemptions, ``Significant Market'' means any
securities market(s) in a single country other than the United
States or the United Kingdom, the Channel Islands, the Isle of Man,
or the Republic of Ireland to which a U.K. Issuer has applied for
listing or obtaining a quotation for the Qualified U.K. Security and
been accepted, if during the Reference Period for the Qualified U.K.
Security the volume in such Qualified U.K. Security, as published by
the relevant FFRA in such securities market is 10 percent or more of
the aggregate world-wide trading volume in that securities as
published by all FFRAs in such Significant Markets, in the United
King, the Channel Islands, the Isle of Man, the Republic of Ireland,
and U.S. securities markets.
E. General Conditions
1. For purposes of these exemptions, a two business day cooling-
off period shall apply under Rule 10b-6(a)(4) (xi) and (xii) in the
United States and each Significant Market, provided that trading in
Relevant U.K. Securities in Significant Markets shall be subject to
the exemptive relief then available in such market, if any, or the
record maintenance and record production requirements contained in
Letter regarding Application of Cooling-Off Periods Under Rule 10b-6
to Distributions of Foreign Securities (April 4, 1994).
2. The lead underwriter or the global coordinator or equivalent
person shall promptly, but in any event before the commencement of
the Covered Period for the Qualified U.K. Securities, provide a
written notice (``Notice'') to the Division and the Exchange
containing the following information: (i) the name of the issuer and
the Qualified U.K. Security; (ii) whether the Qualified U.K.
Security is a FT-SE 100 component security or information with
respect to the market capitalization and the average daily trading
volume of the Qualified U.K. Security to be distributed; (iii) the
identity of the Significant Markets where the Qualified U.K.
Security trades; (iv) if the Notice is for more than one entity, the
identity of all underwriters and selling group members relying on
these exemptions; \4\ and (v) a statement that the Relevant Parties
are aware of the terms and conditions of these exemptions.
\4\Supplemental Notices shall be provided or underwriters and
selling group members identified after a Notice has been submitted.
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3. Any person who fails to comply with the conditions of the
exemptions, including a failure to provide requested information,
would not be permitted to rely on the exemptions in future
distributions.Upon a showing of good cause, however, the Commission
or the Division may determine that it is not necessary under the
circumstances that the exemption be denied.
II. Distributions of Certain SEAQ International Securities
On the basis of your representations and the FACTS presented,
the Commission hereby grants exemptions from Rules 10b-6, 10b-7, and
10b-8 under the Exchange Act to [[Page 4646]] Relevant Parties, in
connection with transactions in Relevant SEAQ International
Securities outside the United States during distributions of
Qualified SEAQ International Securities subject to the following
terms, conditions, and limitations:
A. Qualified SEAQ International Securities
1. The security being distributed (``Qualified SEAQ
International Security'') must be:
a. ``Qualified German Security,'' as defined in Securities
Exchange Act Release No. 33022 (October 6, 1993) (``Release No.
33022'')\5\; or
\5\58 FR 53220.
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b. a ``Qualified French Security,'' as defined in Securities
Exchange Act Release No. 34176 (June 7, 1994) (``Release No.
34176'');\6\ or
\6\59 FR 31274.
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c. any other security that qualifies for exemption pursuant to
Securities Exchange Act Release No. 33137 (November 3, 1993)
(``Release No. 33137'').\7\
\7\58 FR 60324.
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2. ``Relevant SEAQ International Security'' means:
a. a Qualified SEAQ International Security; or
b. a security of the same class and series as, or a right to
purchase, a Qualified SEAQ International Security.
B. Transactions Effected in the United States
All transactions in Relevant SEAQ International Securities
effected in the United States shall comply with Rules 10b-6, 10b-7,
and 10b-8.
C. Transactions Effected in United Kingdom
1. All transactions in Relevant SEAQ International Securities
during the Covered Period for the Qualified SEAQ International
Security that are effected in the United Kingdom shall be conducted
in compliance with U.K. law. For purposes of these exemptions,
``Covered Period for the Qualified SEAQ International Security''
means: (i) in the case of a rights distribution, the period
commencing when the subscription price is determined and continuing
until the completion or abandonment of the distribution in the
United States, and (ii) in the case of any other distribution, the
period commencing three business days in the principal market for
the Qualified SEAQ International Security before the price is
determined and continuing until the completion or abandonment of the
distribution in the United Startes; provided, however, that the
Covered Period for the Qualified SEAQ International Security shall
not commence with respect to any Relevant Party until such person
becomes a distribution participant.
2. All transactions in Relevant SEAQ International Securities
during the Covered Period for the Qualified SEAQ International
Security effected in the United Kingdom shall be effected on or
reported to the Exchange, LIFFE, or SFA.
3. Disclosure of Trading Activities.
a. The inside front cover page of the offering materials used in
the offer and sale in the United States of a Qualified SEAQ
International Security shall prominently display a statement in
substantially the following form, subject to appropriate
modification where circumstances require. Such statement shall be in
capital letters, printed in bold-face roman type at least as large
as ten-point modern type and at least two points leaded:
IN CONNECTION WITH THIS OFFERING, CERTAIN PERSONS MAY ENGAGE IN
TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS IN
(IDENTIFY RELEVANT SEAQ INTERNATIONAL SECURITIES) PURSUANT TO
EXEMPTIONS FROM RULES 10b-6, 10b-7, and 10b-8 UNDER THE SECURITIES
EXCHANGE ACT OF 1934. SEE ``[IDENTIFY SECTION OF OFFERING MATERIALS
THAT DESCRIBES THE TRANSACTIONS TO BE EFFECTED].''
b. In addition, there shall be included in the identified
section of the offering materials a comprehensive description of the
activities that may be undertaken by the Relevant Parties in the
Relevant SEAQ International Securities during the distribution.
4. Recordkeeping and Reporting.
a. Each Relevant Party shall provide to the Exchange the
information described in paragraph II.C.4.b. below with respect to
its transactions in Relevant SEAQ International Securities in the
United Kingdom; provided, however, that in the case of a
distribution made pursuant to rights, such information only is
required to be reported to the Exchange during the period or periods
commencing at any time during the Covered Period for Qualified SEAQ
International Issuers that the rights exercise price does not
represent a discount of at least 10 percent from the then current
market price of the security underlying the rights and continuing
until (a) the end of the Covered Period for Qualified SEAQ
International Securities or (b) until the rights exercise price
represents a discount of at least 12 percent from the then current
market price of the security underlying the rights.\8\
\8\For purposes of this exemption, unless stated otherwise, the
``current market price'' for a Qualified SEAQ International Security
shall be the closing mid-price at the end of the mandatory quote
period for the day on SEAQ International.
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b. When required pursuant to paragraph II.C.4.a. above, the
Relevant Parties will provide the following information to the
Exchange in a Comma Delimited ASCII (American Standard Code for
Information Interchange) format including a common record layout
acceptable to the Exchange and the Division, with respect to the
Qualified SEAQ International Securities in Relevant SEAQ
International Securities:
(i) name of the security, date, time (of execution and
reporting, where available to the Relevant Party), price, and volume
of each transaction; provided, however, that no information
regarding a customer transaction need be provided unless such
transaction has a value of 200,000, or more (currently
$310,000);
(ii) the exchange or inter-dealer quotation system on which the
transaction was effected if any;
(iii) an indication whether such transaction was for a
proprietary account or the account of a customer, provided that any
transaction effected by an underwriter for a customer account for
which it has exercised discretionary authority shall be reported as
a discretionary customer trade; and
(iv) the identity of the counterparty to the transaction.
c. The Exchange and the Relevant Parties shall keep all
documents produced or prepared pursuant to paragraph II.C.4.b. for a
period of not less than two years.
d. Upon the request of the Division, the Exchange shall transmit
the information provided by the Relevant Parties pursuant to
paragraph II.C.4.b. above to the Division within 30 days of the
request.
e. If the information required to be produced in paragraph
II.C.4.b. above is not available from the Exchange upon the request
of the Division such information shall be provided by the Relevant
Party and be made available to the Division of its office in
Washington, D.C. within 30 days of the request. The Division will
notify the Exchange that it has received information pursuant to
this paragraph, and upon appropriate request, will provide the
Exchange the information submitted by the Exchange's member firms or
their affiliates.
f. Representatives of a Relevant Party will be made available
(in person at the office of the Division or by telephone) to respond
to inquiries of the Division relating to its records.
D. General Conditions
1. The lead underwriter or the global coordinator or equivalent
person shall promptly, but in any event before the commencement of
the Covered Period for the Qualified SEAQ International Security,
provide a written notice to the Division and the Independent Entity
containing the following information: (i) the name of the issuer and
the Qualified SEAQ International Security; (ii) information with
respect to the market capitalization and the average daily trading
volume of the Qualified SEAQ International Security; (iii) if the
notice is for more than one entity, the identity of all underwriters
and selling group members relying on these exemptions;\9\ and (iv) a
statement that the Relevant Parties are aware of the terms and
conditions of the exemptions.
\9\Supplemental Notices shall be provided for underwriters and
selling group members identified after a Notice has been submitted.
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2. Where a Notice is required to be provided to the Division
pursuant to the exemptions granted in Release No. 33022, Release No.
34176, or Release No. 33137, the lead underwriter or the global
coordinator or equivalent person may provide a single Notice,
provided that the Notice contains the information in paragraph
II.D.1.
3. Any person who fails to comply with the conditions of the
exemptions, including a failure to provide requested information,
would not be permitted to rely on the exemptions in future
distributions. Upon a showing of good cause, however, the Commission
or the Division may determine that it is not necessary under the
circumstances that the exemptions be denied. [[Page 4647]]
The exemptions for ``passive market making'' granted by the
Commission in Letter regarding Distributions of Certain SEAQ and
SEAQ International Securities (July 12, 1993) shall continue to
apply to transactions in securities covered by those exemptions and
not qualifying for the exemptions granted herein.
The foregoing exemptions from Rules 10b-6, 10b-7, and 10b-8 are
based solely on your representations and the facts presented, and
are strictly limited to the application of those rules to the
proposed transactions. Any different facts or representations might
require a different response. Responsibility for compliance with any
other applicable provisions of the federal securities laws must rest
with the Relevant Parties. The Division expresses no view with
respect to any other questions that the proposed transactions may
raise, including, but not limited to, the adequacy of disclosure of
any other federal or state laws to, the proposed transactions.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Brandon Becker,
Director.
London Stock Exchange
6 January 1995
Mr. Larry Bergmann,
Associate Director, Division of Market Regulation, US Securities and
Exchange Commission, 450 Fifth Street NW., Washington DC 20549, USA
Dear Larry
Distributions of Certain SEAQ and SEAQ International Securities
Introduction
I am writing to request an exemption from rules 10b-6, 10b-7 and
10b-8 under the US Securities Exchange Act of 1934 (``1934 Act'')
for distribution of certain SEAQ and SEAQ International securities,
in line with the 1993 Policy Statement issued by the Commission
(``Commission'').
We seek exemptions for distributions of SEAQ securities that are
component securities of FT-SE 100 Index\1\ and have a market
capitalisation of more than $1 billion (660 million) and
a daily world-wide turnover of $5 million (3.5 million),
and for distributions of certain SEAQ International securities, as
discussed more fully below.
\1\The FT-SE 100 consists of the 100 largest UK companies which
have securities traded on the Domestic Equity Market.
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We also request that you confirm that distributions of SEAQ and
SEAQ International securities which do not meet the requirements of
the new exemptions may be made in conformity with the exemption from
rules 10b-6 and 10b-7 granted in July 1993 (``1993 exemption'')\2\,
if the terms of that exemption are met.
\2\The 1993 exemption allows London Stock Exchange member firms
who are Distribution Participants and Affiliated Purchasers (as
defined in that exemption) to engage in passive market making
activities during distributions of certain SEAQ and SEAQ
International securities. That exemption was granted under rules
10b-6 and 10b-7 for multi-national distributions of a security with
a US tranche quoted on:
1. SEAQ (a) with a normal market size of 5,000 shares or greater
or (b) that did not meet this condition but are agreed on by the
Division and the Exchange as eligible securities; or
2. SEAQ International (a) that qualifies as a firm quote
security and (b) with an average daily trading volume during any 20
consecutive business day period within 60 consecutive calendar days
prior to the commencement of the cooling-off period that equals or
exceeds the equivalent of $250,000 (166,000) as
calculated from transactions reported to the Exchange as a foreign
financial regulatory authority (``FFRA''), as that term is defined
in section 3(a)(51) of the 1934 Act that publishes trade volume
information.
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The London Stock Exchange
The International Stock Exchange of the United Kingdom and the
Republic of Ireland Limited, which trades as the London Stock
Exchange (``Exchange''), is an organised stock exchange and
regulatory organisation of long standing in the United Kingdom. The
offices, facilities and operations of the Exchange are located in
London, England with branches in various British centres and Dublin,
Ireland. The Exchange is subject to UK law and is not registered
under the 1934 Act in any capacity. The Exchange is recognised by
the UK Securities and Investments Board (``SIB'') as a Recognised
Investment Exchange (``RIE'') under the Financial Services Act of
1986 (``FSA'').
The Exchange Markets.
The Exchange operates and regulates four markets.
1. Domestic Equity Market. Ordinary shares in UK and Irish
companies are traded on the Domestic Equity Market. Over recent
years, an average of 33,000 transactions have taken place every day,
yielding a daily turnover of 1.6 billion.
The Stock Exchange Automated Quotation system (``SEAQ'') is the
screen based competitive market making system for Domestic Equity
Market securities that are designated by the Exchange for inclusion
in SEAQ. A Domestic Equity Market security includes: ordinary shares
which are issued by companies which are incorporated in the United
Kingdom, the Channel Islands, the Isle of Man or the Republic of
Ireland (``the British Isles'') and which are listed on the Exchange
or trade on the Unlisted Securities Market (``USM''); depositary
receipts for, stock convertible into or warrants to subscribe for
such ordinary shares (subject to such convertible stock or warrants
themselves being listed or designated by the Exchange); and such
other securities which the Exchange permits to be traded on the
Domestic Equity Market.
A SEAQ security is a Domestic Equity Market security for which a
minimum of two market makers, each of whom is obliged to display
two-way prices on SEAQ during the mandatory quote period and for
which it is possible to calculate a normal market size.
Approximately 2,000 securities are traded through SEAQ.
2. International Equity Market. This market is the largest
market in the world for trading securities of foreign companies.
Over recent years, an average of 8,636 transactions have taken place
each day, while annual turnover has reached 579 billion.
This market is divided into 20 country sectors and the developing
markets sector. Trading in the International Equity Market can take
place 24 hours a day; currently, quotations may only be input to
SEAQ International between 7.00 and 20.00 UK time.
The Stock Exchange Automated Quotation International system
(``SEAQ International'') is the screen based competitive market
making system used to support trading International Equity Market
securities. An International Equity Market security includes: any
equity security of a company which is incorporated in or has its
principal office in, a country outside the United Kingdom, the
Channel Islands, the Isle of Man and the Republic of Ireland and
which is listed by or quoted under the rules of an approved
organisation;\1\ a depositary receipt for such a security; or any
other security which the Exchange decides may be traded on the
International Equity Market. A SEAQ International security is an
International Equity Market Security for which a price is quoted on
SEAQ International or a price on enquiry security.
\1\An approved organization is an association or exchange which
meets criteria agreed between the SIB and the Exchange and is
included in a list published by the Exchange.
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3. Gilt-Edged and Sterling Bond Market. This is the market for
trading gilt-edged securities and fixed income securities (Sterling-
denominated corporate debt). In recent years, average daily turnover
in gilt-edged securities has reached 6.3 billion, and in
fixed interest securities has reached 4.3 billion.
4. Traditional Options Market. On this market, member firms
effect transactions in traditional options in securities which are
listed on the Exchange or are traded on the USM, in fixed interest
securities which are not gilt-edged securities or in International
Equity Market securities.
Exchange Market Making Obligations
The rules of the Exchange are designed, inter alia, to ensure
that there is at all times a competitive and liquid market for
securities listed on the Exchange and authorised for quotation on
SEAQ or SEAQ International.
A firm that wishes to make a market on SEAQ or SEAQ
International must be a member of the Exchange (rules 2.4, 3.3 and
4.3). Rule 4.5 obliges a market maker in a SEAQ security to display
on SEAQ during the mandatory quote period firm two-way prices in not
less than the minimum quote size and, subject to certain exceptions,
to actively offer to buy from and sell to an enquiring member firm
at the price and in the up to the size in a security displayed by it
on SEAQ. Rule 3.6 requires a market maker in a SEAQ International
security designated as a firm quote security, during the mandatory
quote period, to display on SEAQ International two-way prices in not
less than the minimum quote size and to actively offer to buy and
sell at its displayed size and price upon enquiry from another
Exchange member firm or a counterparty.
Certain adverse consequences may result when a member firm
ceases to act as a market maker in a security. A market maker that
withdraws its quotation from SEAQ or SEAQ
[[Page 4648]] International in a security without the prior consent
of the Exchange may have its registration as a market maker in such
security terminated. A market maker that has withdrawn its quote on
SEAQ International shall not, without the prior consent of the
Exchange, re-enter quotations for that security during the day it
was withdrawn unless the withdrawal arose by a failure of its market
maker computer system (rule 3.10). A market maker shall obtain
Exchange consent before withdrawing or re-entering its quotation in
a SEAQ security during the mandatory quote period, and where
withdrawal of a quotation was caused by the failure of a market
maker computer system, the market maker shall re-enter its quotation
as soon as it is able to do so (rule 4.17(b)).
A member firm may not resume market making on SEAQ or SEAQ
International in a security in which its registration has been
terminated without the prior consent of the Exchange. A market maker
may have its registration in a security withdrawn by the Exchange
where it has so requested (and where it has met any Exchange
requirements in connection with such withdrawal) or where the
Exchange has so ordered. A market maker cannot re-register in a
security within three months of a prior de-registration in respect
of the same security.
These rules are designed to inhibit ``fair weather market
making'' by effectively preventing a member firm from resuming
market making activities in a security for a period of three months
after the member firm ceases to make a market in that security.
Trading characteristics of SEAQ and SEAQ International Securities
Securities listed on the Exchange and quoted on SEAQ are
categorized according to a system based on normal market size
(``NMS''). The NMS classification for SEAQ securities is determined
by the following formula.
value of customer turnover in prior 12 months ()
NMS = --------------------------------------------------------------
closing mid-price on last day of quarter x 10,000
The Exchange uses fourteen NMS categories that range from 100
shares, the lowest NMS category, to 200,000 shares, the highest NMS
category. The NMS classifications of SEAQ securities are reviewed
quarterly.
Securities listed on the Exchange generally trade at lower
prices per share than comparable United States (``US) securities.
The share prices of many of the most highly capitalized companies in
the United Kingdom are less than the equivalent of $5.00 per share.
Securities quoted on SEAQ International are categorised as
either firm quote or indicative securities (and this includes price
on enquiry securities).
Firm quote securities are generally the leading internationally
traded equity securities listed on the major stock exchanges
throughout the world. All other securities are indicative
securities. The price per share of securities quoted on SEAQ
International ranges from approximately $1 to $1,000 due to
differences in market customs in the countries of these issuers.
Normally, at least three member firms are required to register as
market makers in a SEAQ International security before it can be
designated as a firm quote security. However, there is discretion to
permit a security to achieve firm quote status where only one or two
member firms are registered to make markets in the security and wish
to make firm quotes. A minimum quote size will be set for the
security and, in general, each market maker will be committed to
deal at the price and size it displays on the screen. The display of
these securities is normally arranged on the basis of their country
of origin giving rise to the geographic sectors on SEAQ
International.
Market users are kept informed of any significant issues
affecting the operation of the market by the transmission of market
status messages which are transmitted via the same mechanism used to
distribute market maker prices to quote vendors.
Member firms which register to make markets in indicative quote
securities input indicative quotations without a minimum quote size
to SEAQ International during the relevant mandatory quote period. If
the market maker receives an enquiry from a member firm or
counterparty, it is obliged to quote a firm two-way price in the
security which must be based on the quotation displayed on SEAQ
International. As a result, it is implicit that market makers in
indicative quote securities must actively maintain and update the
quote such that they are representative of the current market value.
At least one member firm is required to register as a market
maker before a security can be admitted to this category. Where a
minimum of two market makers are registered in a security, the
competing quotations for that security are gathered together on one
display page but the price and size in each quotation will be
indicative rather than firm.
As with firm quote securities, indicative securities are
normally displayed according to their country of origin.
Price on enquiry securities are securities in respect of which
no price and size quotation is displayed. A member firm registers as
a market maker and only the name of the firm, the security and
contact number are disseminated to the market. The market maker is
obliged, however, to quote a firm two-way price when receiving an
enquiry from another member firm or counterparty.
Exchange Trade Reporting and Surveillance
As in RIE, the Exchange is the principal agency for receiving
trade reports and transaction reports by its member firms for
investment business.
The Exchange requires its member firms to trade report specific
details of every transaction effected on the Domestic Equity Market
(rule 4.50). Rule 4.53 generally requires trade reporting to the
Exchange to take place within three minutes of the execution of a
transaction in a SEAQ security. This is followed by transaction
reporting to Checking which matches reports from firms.
A member firm is required to report to the Exchange every
transaction to which it is a party in an international Equity Market
security on the International Equity Market. Rule 3.22 imposes time
deadlines for transaction reporting.
Transaction surveillance is effected by interrogating date
received via the Checking and SEQUAL services under Exchange rules.
Routine surveillance takes place to ensure that the member firms
have complied with the dealing and reporting rules governing
activity on SEAQ and SEAQ International.
Member firms must comply with rule 2.9, which prohibits any act,
conduct or practice which, inter alia, creates a false or misleading
impression as to the price or value of any security and which may
induce another person to enter into or refrain from entering into
any transaction. A market maker in a security that is a component
with an index shall not changes its displayed quotation in that
security with the sole intention of moving the index value (rule
2.10). The Exchange may bring disciplinary proceedings against
member firms which have, inter alia, failed to comply with a
direction of the Exchange having binding effect, or have engaged in
conduct detrimental to the interests of the Exchange (rule 14.11).
Member firms also must comply with the FSA, including section
47(2) thereunder, which provides:
Any person who does any act or engages in any course of conduct
which creates a false or misleading impression as to the market in
or the price or value of any investments is guilty of an offense if
he does so for the purpose of creating that impression and of
thereby inducing another person to acquire, dispose of, subscribe
for or underwrite those investments or to refrain from doing so or
to exercise, or refrain from exercising, any rights conferred by
those investments.
Bringing Securities to the Market
There are three main methods of flotation which are presently
used in the UK for Domestic Equity Market securities. (Other
techniques may be used for offers of International Equity Market
securities.)
1. Offers for Sale. Shares are offered by a company's sponsor to
the public, inviting subscriptions both from institutional investors
and private individuals. The shares made available may be new shares
being issued for cash or existing shares held by
[[Page 4649]] current shareholders. Normally, the offer is
underwritten, e.g., the sponsor undertakes to ensure that all the
shares are taken up even if the offer is under-subscribed, so that
the company receives all the money that it is seeking to raise. In
order to pool the risks involved, the broker to the issue makes sub-
underwriting arrangements, mainly with institutional investors.
Offers for sale normally take place at a fixed price per share.
As with a placing, the price is set immediately before the offer
period following discussions between the company and its financial
advisers.
Less common are offers for sale by way of tender. In a tender
offer, shares are offered and underwritten at a minimum price.
Applicants may subscribe at any price at or above this level, and a
``striking price'' for all investors is determined on the basis of
applications submitted. In theory, tender offers provide a basis for
a more accurate market valuation of a company's shares, maximising
proceeds for the company. In practice this has not always been the
case, and the uncertainty and complexity can discourage private
investors. Tender offers have been used where there is no comparable
company already listed to use as a benchmark to determine the
company's value. If the issue is small and a large over-subscription
is expected, the tender offer may be used as the risk of failure may
be considered minimal.
2. Placings. In a placing, new shares or shares of existing
shareholders are offered to the public selectively. A company's
sponsor or broker sells the shares to its own client base, typically
investing institutions and private clients, finding purchasers with
whom the shares are then placed.
The Exchange will permit the entire issue to be placed in the
case of an initial public offer of 15 million or less.
Above this monetary limit, which applies both to the Official List
and the USM, different arrangements may apply depending on the
amount of money to be raised. The Exchange's rules for placings
afford issuers the maximum freedom in selecting how they raise
capital, while ensuring a fair distribution of shares and an
appropriate level of liquidity on the secondary market.
Placings which are particularly geared to smaller companies, are
the most frequently used method of making an initial public offer.
Compared to an offer for sale, a placing is typically a relatively
low-key operation, with less publicity and no widespread
advertising. Cost may be considerably lower than for an offer for
sale but the resulting shareholder spread is more limited.
3. Introductions. Where a company's shares are already widely
held and the proportion in public hands satisfies the Exchange's
requirements (25% for listing; 10% for the USM), their shares may be
``introduced'' to the market. In an introduction, no money is
raised. The Exchange does not normally permit an introduction if a
company has offered securities within the six months prior to it
coming to the market, or if there is an intention by shareholders to
dispose of shares at the time of flotation.
Further issues of Securities
A company may return to the market following flotation to raise
further funds.
Where a cash offer of equity securities is made, the UK
Companies Act 1985 gives shareholders the right to subscribe for new
shares in proportion to their existing shareholding (``rights
issue'').
Rights issues are the most common form of further equity issue.
In order to avoid dilution of shareholdings, shares are offered to
existing shareholders in proportion to their shareholdings. To
attract subscribers, rights issues usually take place at a discount
to the prevailing market price. Underwriting is normally prudent to
ensure that the issuer receives the funds required, unless the
shares are offered at such a substantial discount that shareholders
are almost certain to take up their rights. In order to give
shareholders adequate opportunity to consider the terms of the issue
and to take up their rights, the offer period must remain open for
at least three weeks. The pre-emption right may be waived (to an
extent) by a special resolution at the company's annual general
meeting or at an extraordinary general meeting.
In the light of the costs and timetable involved, a company can
opt to place new shares with institutions provided that the size of
issue is within the terms agreed at the company's general meeting
and is not issued at more than a 10% discount to the share price. A
further issue of shares by way of a placing is not subject to the
Exchange's limits on new issue placings.
Shares may be issued as consideration for the acquisition of a
business or assets in cases where the vendor is ready to accept them
instead of cash. This is more likely to be the case for quoted
rather than unquoted shares, since quoted shares are marketable, and
therefore normally more acceptable as a form of corporate currency.
An alternative is a vendor placing, which involves the issue of
shares to the vendor together with arrangements being made on their
behalf to sell some or all of the shares by placing them immediately
with institutions so that the vendor receives cash. Such an
arrangement does not fall within statutory pre-emption requirements,
though shareholders may expect their directors to arrange for a
``clawback'' from the place in the case of an issue that was large
in relation to the issued share capital.
The New Exemptions for Distributions of Certain SEAQ and SEAQ
International Securities
The Exchange seeks exemptions from rules 10b-6, 10b-7 and 10b-8
for distribution participants and their affiliated purchasers (as
defined in rule 10b-6(c)(b)(i) and (ii)) (``relevant parties''), in
connection with transactions effected during distributions of
certain SEAQ and SEAQ International securities:
A. United Kingdom securities.
1. Securities.
1.1 The security being distributed (``qualified UK security'')
must:--
(a) be issued by (i) a foreign private issuer as that term is
defined in rule 3b-4 under the 1934 Act, which issuer (``UK
issuer'') is incorporated in the British Isles and has outstanding a
component security of the FT--SE 100\1\ or (ii) a subsidiary of a UK
issuer described in paragraph A1.1(a)(i); and
\1\References to the FT-SE 100 refer to the composition of the
index on the date of this letter. Any security added to the FT-SE
100 after the date of this letter will be treated as a UK security
if its issuer satisfies the criteria in paragraph A1.1(a) and the
security satisfies the requirements in paragraph A1.1(b)(1). Any
security which ceases to be a component security of the index or
otherwise meet the eligibility requirements in paragraph A1.1(b)(1)
shall cease to be eligible for this exemption.
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(b) satisfy one of the following:
(1) be an equity security of a UK issuer which security has an
aggregate market capitalisation equal to or greater than $1 billion
(660 million) and a world-wide average daily trading
volume that equals or exceeds $5 million (3.5 million)
as published by FFRAs and any U.S. securities exchanges or automated
inter-dealer quotation systems, during a period that is 20
consecutive business days in London within 60 consecutive calendar
days prior to the commencement of the covered period for UK issuers
(``reference period for UK issuers''); or
(2) be a security that is convertible into, exchangeable for or
a right to acquire a security of a UK issuer as described in
paragraph A1.1(b)(1).
1.2 A ``relevant UK security'' is a qualified UK security, a
security of the same class and series as the qualified UK security
or a right to purchase the qualified UK security.
2. Transactions effected in the United States.
2.1 Transactions in relevant UK securities effected in the
United States shall comply with rules 10b-6, 10b-7 and 10b-8, unless
otherwise excepted or exempted from the operation of these rules.
3. Transactions effected in the UK.
3.1 Transactions in relevant UK securities during the covered
period for the qualified UK security that are effected in the UK
shall be conducted in compliance with UK law. For the purposes of
this exemption, the term ``covered period for the qualified UK
security'' means: (i) in the case of a rights issue, the period
commencing when the subscription price is determined and continuing
until the completion or abandonment of the distribution in the
United States; and (ii) in the case of any other distribution, the
period commencing three business days in London before the price is
determined and continuing until the completion or abandonment of the
distribution in the United States; provided, that the covered period
for the qualified UK security shall not start with respect to any
relevant party until such person becomes a distribution participant.
3.2 All transactions in relevant UK securities during the
covered period for the qualified UK security effected in the UK
shall be effected on or reported to the Exchange, the London
International Financial Futures and Options Exchange Limited
(``LIFFE'') or the Securities and Futures Authority Limited
(``SFA'').
3.3 Disclosure of trading activities.
(a) The inside front cover page of the offering materials used
in the offer and sale [[Page 4650]] in the United States of a
qualified UK security shall prominently display a statement in
substantially the following form, subject to appropriate
modification where circumstances require. Such statement shall be in
capital letters, printed in bold-face roman type at least as large
as ten-point modern type and at least two points leaded: IN
CONNECTION WITH THIS OFFERING, CERTAIN PERSONS MAY ENGAGE IN
TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNT OF OTHERS IN
[IDENTIFY RELEVANT UK SECURITIES] PURSUANT TO EXEMPTIONS FROM RULES
10b-6, 10b-7 and 10b-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
SEE ``[IDENTIFY SECTION OF OFFERING MATERIALS THAT DESCRIBES THE
TRANSACTIONS TO BE EFFECTED]''
(b) There shall be included in the identified section of the
offering materials a comprehensive description of the activities
that may be undertaken by the relevant parties in the relevant UK
securities during the distribution.
4. Record-keeping and reporting
4.1 Each relevant party shall provide to the Exchange the
information required in paragraph A4.2 with respect to its
transactions in relevant UK securities in the UK: provided, that in
the case of a rights issue, information is only required to be
reported to the Exchange during the period or periods commencing at
any time the covered period for the qualified UK security that the
rights exercise price does not represent a discount of at least 10
per cent from the then current market price of the security
underlying the rights and continuing until (i) the end of the
covered period for the qualified UK security or (ii) until the
rights exercise price represents a discount of at least 12 per cent
from the then current market price of the security underlying the
rights.\1\
\1\For the purposes of this exemption, unless stated otherwise,
the current market price for a qualified UK security shall be the
closing mid-price at the end of the mandatory quote period for the
day on SEAQ.
---------------------------------------------------------------------------
4.2 When required pursuant to paragraph A4.1, the relevant
parties will provide the following information to the Exchange in a
Comma Delimited ASCII (American Standard Code for Information
Interchange) format including a common record layout acceptable to
the Exchange and the Division, with respect to transactions during
the covered period in relevant UK securities during the covered
period for the qualified UK security:
(a) the name of the security, date, time (of execution and also
trade reported or transaction reported, as the case may be, where
available to the relevant party), price and volume of each
transaction: provided, that no information regarding a customer
transaction shall be provided unless the transaction has a value of
200,000 (currently $31,000) or more:
(b) the exchange or inter-dealer quotation system on which the
transaction was effected (if any);
(c) an indication whether the transaction was for a proprietary
account or the account of a customer: provided, that a transaction
effected by a relevant party for a customer account for which it has
exercised discretionary authority shall be reported as a
Discretionary Customer Trade; and
(d) the identity of the counterparty to the transaction.
4.3 The Exchange and the relevant parties shall keep all
documents produced or prepared pursuant to paragraph A4.2 for a
period of not less than two years.
4.4 Upon the request of the Division, the Exchange shall
transmit the information provided by the relevant parties pursuant
to paragraph A4.2 within 30 days to the Division.
4.5 If the information required to be produced pursuant to
paragraph A4.2 is not available from the Exchange, the relevant
parties shall upon request provide this information to the Division
(at its offices in Washington DC) within 30 days, with respect to
their own reportable transaction. The Division will notify the
Exchange that it has received information pursuant to this paragraph
and upon request will provide the Exchange the information submitted
by the Exchange's member firms or their affiliates.
4.6 Representatives of a relevant party shall be available to
respond to inquiries of the Exchange or the Division (in person at
the offices of the Division or by telephone) relating to its
records.
5. Transaction effected in significant markets
5.1 All transactions in relevant UK securities in a significant
market shall be effected in accordance with rules 10b-6, 10b-7 and
10b-8, or other available exemptions. For purposes of this
exemption, the term ``significant market'' means any securities
market in a country other than the United States or the British
Isles to which a UK issuer has applied for listing or obtaining a
quotation for the qualified UK security and been accepted, if during
the reference period for the qualified UK security the volume in
such qualified UK security, as published by the relevant FFRA in
such securities market, is 10 per cent or more of the aggregate
world-wide trading volume in that security as published by all FFRAs
in such significant markets, in the British Isles and the US
securities markets.
6. General conditions
6.1 For purposes of these exemptions, a two business day
cooling-off period shall apply under rule 10b-6(a)(4)(xi) and (xii)
in the United States. Each significant market shall be subject to
the exemptive relief then available in such market, if any, or the
record maintenance and record production requirement in Letter
regarding Application of Cooling-off Periods Under Rules 10b-6 to
Distributions of Foreign Securities (April 4, 1994).
6.2 The lead underwriter, global co-ordinator or equivalent
person shall promptly but in any event before the commencement of
the covered period for the qualified UK securities and within such
time limitations as are prescribed by the Exchange, provide written
notice (``Notice'') to the Exchange and the Division containing the
following information:
(a) the name of the issuer and the qualified UK security;
(b) whether the qualified UK security is FT-SE 100 component
security or information about the market capitalisation and the
world-wide average daily trading volume of the qualified UK security
to be distributed;
(c) the identity of the significant market where the qualified
UK security trades;
(d) if the Notice is for more than one entity, the identity of
all underwriters and selling group members relying on these
exemptions;\1\ and
\1\Supplemental Notices shall be made for underwriters and
selling group members identified after a Notice has been filed.
---------------------------------------------------------------------------
B. Certain SEAQ International securities.
1. Securities
1.1 The security being distributed (``qualified SEAQ
International security'') must be:
(a) a ``qualified German security'' as defined in Securities
Exchange Act Release No 33022 (6 October 1993);
(b) a ``qualified French security'' as defined in Securities
Exchange Act Release No 34176 (7 June 1994); or
(c) a security that qualifies for exemption pursuant to
Securities Exchange Act Release No 33137 (3 November 1993).
1.2 A ``relevant SEAQ international security'' is a qualified
SEAQ International security or a security of the same class and
series as or a right to purchase the qualified SEAQ International
security.
2. Transaction effected in the United States.
2.1.Transaction in relevant SEAQ International securities
effected in the United States shall comply with rules 10b-6, 10b-7
and 10b-8, [unless otherwise excepted or exempted from the operation
of these rules.]
3. Transactions effected in the UK.
3.1 Transactions in relevant SEAQ International securities
during the covered period for the qualified SEAQ International
security in the principal market effected in the UK shall be
conducted in compliance with UK law. For the purposes of this
exemption, the term ``covered period for the qualified SEAQ
International security'' means; (i) in the case of a rights issue,
the period commencing when the subscription price is determined and
continuing until the completion or abandonment of the distribution
in the United States; and (ii) in the case of any other
distribution, the period commencing three business days in the
principal market before the price is determined and continuing until
the completion or abandonment of the distribution in the United
States: provided, that the covered period for the qualified SEAQ
International security shall not start with respect to any relevant
party until such person becomes a distribution participant.
3.2 All transactions in relevant SEAQ International securities
during the covered period for the qualified SEAQ International
security effected in the UK shall be effected on or reported to the
Exchange, LIFFE or SFA.
3.3 Disclosure of trading activities.
(a) The inside cover page of the offering materials used in the
offer and sale in the United States of a qualified SEAQ
International security shall prominently [[Page 4651]] display a
statement in substantially the following form, subject to
appropriate modification where circumstances require. Such statement
shall be in capital letters, printed in bold-face roman type at
least as large as ten-point modern type and at least two points
leaded
IN CONNECTION WITH THIS OFFERING, CERTAIN PERSONS MAY ENGAGE IN
TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS IN
[IDENTIFY RELEVANT SEAQ INTERNATIONAL SECURITIES] PURSUANT TO
EXEMPTIONS FROM RULES 10b-6, 10b-7 and 10b-8 UNDER THE SECURITIES
EXCHANGE ACT OF 1934. SEE ``[IDENTIFY SECTION OF OFFERING MATERIALS
THAT DESCRIBES THE TRANSACTIONS TO BE EFFECTED].''
(b) There shall be included in the identified section of the
offering materials a comprehensive description of the activities
that may be undertaken by the relevant parties in the relevant SEAQ
International securities during the distribution.
4. Record-keeping and reporting.
4.1 Each relevant party shall provide to the Exchange the
information required in paragraph B4.2 with respect to its
transactions in relevant SEAQ International securities in the UK:
provided, that in the case of a rights issue, information is only
required to be reported to the Exchange during the period or periods
commencing at any time during the covered period for the qualified
SEAQ International security that the rights exercise price does not
represent a discount of a least 10 per cent from the then current
market price of the security underlying the rights and continuing
until (i) the end of the covered period for the qualified SEAQ
International security or (ii) until the rights exercise price
represents a discount of a least 12 percent from the then current
market price of the security underlying the rights.\1\
\1\For the purposes of this exemption, unless stated otherwise,
the current market price for a qualified SEAQ International security
shall be the closing mid-price at the end of the mandatory quote
period for the day on SEAQ International.
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4.2 When required pursuant to paragraph B4.1, the relevant
parties will provide the following information to the Exchange in a
Comma Delimited ASCII (American Standard Code for Information
Interchange) format including a common record layout acceptable to
the Exchange and the Division, with respect to transactions during
the covered period for qualified SEAQ International securities
during the reference period in qualified SEAQ International
securities:
(a) the name of the security, date, time (of execution and also
trade reported or transaction reported, as the case may be, where
available to the relevant party), price and volume of each
transaction: provided, that no information regarding a customer
transaction shall be provided unless the transaction has a value of
$200,000 (currently $310,000) or more;
(b) the exchange or inter-dealer quotation system on which the
transaction was effected;
(c) an indication whether the transaction was for a proprietary
account or the account of a customer: provided, that a transaction
effected by a relevant party for a customer account for which it has
exercised discretionary authority shall be reported as a
Discretionary Customer Trade; and
(d) the identity of a counterparty to the transaction.
4.3 The Exchange and the relevant parties shall keep all
documents produced or prepared pursuant to paragraph B4.2 for a
period of not less than two years.
4.4 Upon request, the Exchange will transmit the information
provided by relevant parties pursuant to paragraph B4.2 within 30
days to the Division.
4.5 If the information required to be produced pursuant to
paragraph B4.2 is not available from the Exchange, the relevant
parties will upon request provide this information to the Division
(at its offices in Washington DC) within 30 days, with respect to
their own reportable transaction. The Division will notify the
Exchange that it has received information pursuant to this paragraph
and upon request will provide the Exchange the information submitted
by the Exchange's member firms or their affiliates.
4.6 Representatives of a relevant party will be made available
to respond to inquiries of the Exchange or the Division (in person
at the offices of the Division or by telephone) relating to its
records.
5. General conditions.
5.1 The lead underwriter, the global co-ordinator or equivalent
person shall promptly, but in any event before the commencement of
the covered period for the qualified SEAQ International security,
provide a written notice to the Division and the Exchange containing
the following information: (i) the name of the issuer and the
qualified SEAQ International security; (ii) information with respect
to the market capitalization and the average daily trading volume of
the qualified SEAQ International security; (iii) if the notice is
for more than one entity, the identity of all underwriters and
selling group members relying on these exemptions; and (iv) a
statement that the relevant parties are aware of the terms and
conditions of the exemptions.
5.2 Where a Notice is required to be given pursuant to an
exemption named in paragraph B1.1, the lead underwriter, the global
manager or equivalent person may provide a single Notice: provided,
that the Notice contains the information required by paragraph B5.1.
Conclusion
This request for an exemption relates to distributions of those
SEAQ or SEAQ International securities which meet the specified
requirement statement above. A distribution of a SEAQ or SEAQ
International security which is subject to rules 10b-6, 10b-7 or
10b-8 and does not meet the terms of the new exemption, may be made
subject to the 1993 exemption. A distribution of any SEAQ or SEAQ
International security subject to rules 10b-6, 10b-7 and 10b-8 and
falling outside this exemption, the 1993 exemption or any other
exemption in force would require a specific grant of relief.
If you have any questions, please do not hesitate to call me or,
in my absence, Mark Berman of our Legal department (071 707 3512).
Yours sincerely.
Dan Sheridan,
Head of Market Supervision.
[FR Doc. 95-1716 Filed 1-23-95; 8:45 am]
BILLING CODE 8010-01-P
