[Federal Register Volume 60, Number 25 (Tuesday, February 7, 1995)]
[Notices]
[Pages 7245-7246]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2906]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35301; File No. SR-NYSE-95-01]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by New York Stock Exchange, Inc., Relating to Domestic Listing
Standards
January 31, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on January
18, 1995, the New York Stock Exchange, Inc. (``NYSE'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'' or
``SEC'') 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 NYSE is proposing amendments to its domestic listing standards.
These listing standards are contained in Paragraph 102.01 of the
Exchange's Listed Company Manual. The text of the proposed rule change
is available at the Office of the Secretary, NYSE, 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
The purpose of the proposed rule change is to create alternatives
for two existing Exchange listing standards and to amend two additional
standards. According to the Exchange, the NYSE already has, and intends
to maintain, the highest listing requirements among U.S. markets.
Current listing requirements measure, among other things, demonstrated
earning power and shareholder distribution, as well as tangible net
worth and market capitalization of publicly-held shares. The rule
change would provide alternatives to the existing demonstrated earning
power and shareholder distribution tests. In addition, the proposal
would increase the existing requirements for tangible net worth and
public market capitalization.
Demonstrated Earning Power
Under the Exchange's demonstrated earning power standard, the
existing requirement calls for:
Demonstrated earning power--income before federal income
taxes and under competitive conditions:
Latest fiscal year....................................... $2,500,000
Each of the preceding two fiscal years................... $2,000,000
[[Page 7246]]
or
Demonstrated earning power--income before federal income
taxes and under competitive conditions:
Aggregate for last three fiscal years together with...... $6,500,000
A minimum in most recent fiscal year (All three years
must be profitable)..................................... $4,500,000
The NYSE believes that there are substantial companies, in some
cases multi-billion dollar enterprises, that do not manage their
business on the basis of reported income. In order to provide an
opportunity for these companies to list, the Exchange is proposing an
alternate demonstrated earning power test for companies with a market
capitalization of not less than $500 million and revenues of not less
than $200 million in the most recent fiscal year. These companies would
be in a position to qualify for listing under an alternate listing
standard based on net income adjusted for the cash effects of investing
or financing cash flows.
The proposed standard would call for aggregate adjusted net income
of not less than $25 million for the last three years, with each year
showing a positive amount. Reported net income (before preferred
dividends) would be adjusted, under the new standard, to remove the
effects of all items whose cash effects are ``investing'' or
``financing'' cash flows as determined pursuant to Paragraph 28(b) of
the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 95, ``Statement of Cash Flows'' (depreciation,
amortization of good will and gains or losses on sales of property,
plant and equipment are examples of such items). The adjustment to net
income with respect to the cash effects of (1) discontinued operations,
(2) the cumulative effect of an accounting change, (3) an extraordinary
item or (4) the gain or loss on extinguishment of debt would be limited
to the amount charged or credited in determining net income for the
period.
Shareholder Distribution
The Exchange's current shareholder distribution requirement calls
for a minimum of:
Number of holders of 100 shares or more or of a unit of
trading if less than 100 shares........................... 2,000
or
Total stockholders together with........................... 2,200
Average monthly trading volume (For most recent six months) 100,000
The proposed rule change would add a distribution standard for
companies whose shares are very actively traded as an alternative to
the existing shareholder distribution tests. Under the new alternative
standard, a company with average monthly share trading volume of 1
million shares (for the most recent 12 months) could qualify for
listing with 500 total shareholders. The Exchange believes that a
company with this demonstrated level of trading activity would be
appropriate for trading in the Exchange's agency-auction market as long
as there are at least 500 shareholders.
Market Value and Net Tangible Assets
In addition to the two alternate standards proposed above, the
Exchange is proposing to increase the existing requirements for both
aggregate market value of publicly-held shares and net tangible assets
from the current $18 million to $40 million. These requirements
previously were adjusted in 1984. The NYSE views the increase in these
standards as appropriately reflecting the attributes of the kinds of
companies that the Exchange wants to attract, and expects that such
standards would help to maintain the quality of the NYSE list.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) that an exchange have rules that are
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system and, in general, to protect investors and the public
interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has not solicited, and does not intend to solicit,
comments on the proposed rule change. The Exchange has not received any
unsolicited written comments from members or other interested parties.
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 other period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 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. 552, will be available for inspection and copying at the
Commission's Public Reference Section, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of such filing will also be available for
inspection and copying at the principal office of the NYSE. All
submissions should refer to File No. SR-NYSE 95-01 and should be
submitted by February 28, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-2906 Filed 2-6-95; 8:45 am]
BILLING CODE 8010-01-M
