[Federal Register Volume 59, Number 27 (Wednesday, February 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2894]
[[Page Unknown]]
[Federal Register: February 9, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33569; File No. SR-CSE-93-06]
Self-Regulatory Organizations; Filing and Order Granting
Accelerated Approval of Proposed Rule Change by the Cincinnati Stock
Exchange, Inc. Relating to the Exchange's Listing and Maintenance
Standards for Preferred Stocks
February 1, 1994.
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 December 20, 1993, the Cincinnati Stock Exchange, Inc. (``CSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II 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.
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\1\15 U.S.C. 78s(b)(1) (1988).
\2\17 CFR 240.19b-4 (1993).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CSE hereby proposes to amend the Exchange's listing and
maintenance standards for preferred stocks to conform them to the
standards used by the New York Stock Exchange (``NYSE'')\3\ and the
American Stock Exchange (``Amex'').\4\
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\3\The Commission notes that the NYSE has not set any minimum
numerical criteria for the listing of preferred stock. The NYSE
states that the preferred stock must be of sufficient size and
distribution to warrant trading in the Exchange market system. NYSE
Listed Company Manual 703.05. The NYSE, however, has set certain
numerical delisting criteria for preferred stock, stating that it
will ``normally give consideration to suspending or removing a
preferred stock if the aggregate market value of publicly-held
shares is less than $2,000,000 and the number of publicly-held
shares is less than 100,000.'' Id. These two measures are the
minimum standards which the CSE is proposing to add to its listing
requirements for preferred stock.
\4\The CSE's proposed listing requirements for preferred stock
are the same as the current Amex requirements. See Amex Company
Guide Sec. 103. The numerical size and earning criteria for
companies to list on the Exchanges remain different for the NYSE,
Amex, and CSE. See NYSE Listed Company Manual 102.01; Amex Company
guide Sec. 101; CSE By-Laws Article IV, Section 1.3.
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The Exchange requests the Commission to find good cause, pursuant
to section 19(b)(2) of the Act, for approving the proposed rule change
prior to the thirtieth day after publication in the Federal Register.
Accelerated approval would allow the CSE to have in place listing and
maintenance standards which conform to those currently used by the NYSE
and Amex.
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 III 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 proposed amendment is to Article IV, Section 1 of the CSE By-
Laws, Rule 1.3(2). It will apply to listed preferred stock and will
conform the rules of the Exchange to those currently in place at the
NYSE and Amex. The proposed standards for preferred stocks will apply
to both initial and maintenance requirements for those securities.\5\
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\5\The CSE Rules do not contain separate maintenance
requirements for listed securities. The CSE Rule for the delisting
of securities, however, states that a security may be delisted if it
fails to meet the listing standards. CSE By-Laws, Article IV,
Section 3, Rule 3.1(c).
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2. Statutory Basis
The proposed rule change is consistent with section 6(b) of the Act
in general and furthers the objectives of section 6(b)(5) in particular
in that it will promote just and equitable principles of trade and
remove impediments to and perfect the mechanism of a free and open
market and a national market system.
B. Self-Regulatory Organization's Statement on Burden on Competition
The CSE 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
No written comments were solicited or received with respect to the
proposed rule change.
III. 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 CSE. All
submissions should refer to File No. SR-CSE-93-06 and should be
submitted by March 2, 1994.
IV. Commission's Findings and Order Granting Accelerated Approval
of Proposed Rule Change
The Commission finds that the CSE's proposal to increase its
listing standards for preferred stock is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange. Specifically, the
Commission finds that the proposed rule change is consistent with
section 6(b)(5) of the Act\6\ in that it will promote just and
equitable principles of trade and remove impediments to and perfect the
mechanism of a free and open market and a national market system.
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\6\15 U.S.C. 78f(b)(5) (1988).
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The Commission believes that the development and enforcement of
adequate standards governing the listing of securities on an exchange
is of critical importance to exchange markets and to the investing
public. Listing standards serve as a means for the self-regulatory
organizations (``SROs'') to screen issuers and to provide listed status
only to bona fide companies with substantial float, investor base, and
trading interest to ensure sufficient liquidity for fair and orderly
markets.
The proposed rule change increases in some respects the CSE's
listing standards for preferred stock. The old standards required 500
recordholders for which trading privileges had been granted or were
requested, 200,000 shares for which trading privileges had been granted
or were requested exclusive of the holdings of officers and directors,
and a class of common stock that was listed on the Exchange or was
otherwise eligible for listing. For issuers whose common stock is
traded on the CSE, NYSE, or Amex, the rule change requires 100,000
publicly held shares,\7\ an aggregate market value of $2 million, and a
price of $10. For issuers of preferred stock not listed on the CSE,
NYSE, or Amex, the rule change requires 400,000 publicly held preferred
shares, 800 public round-lot holders, an aggregate market value of $4
million, and a price of $10.
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\7\Publicly held shares excludes the holdings of officers,
directors, controlling shareholders and other concentrated or family
holdings,and restricted securities.
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The Commission believes that the initial listing and maintenance
criteria for preferred sock, as described above, are consistent with
section 6(b)(5) of the Act in that these criteria should help to ensure
the maintenance of fair and orderly markets, as well as enhance
benefits and protections for investors who trade in these securities.
Requiring a minimum number of publicly held shares, and a minimum
aggregate market value and price per share should help ensure a wide
public distribution of the securities, which should decrease the
opportunities for manipulation, as well as help create a more liquid
market for trading.
The Commission finds good cause for approving the proposed rule
change prior to the thirtieth day after the date of publication of
notice of filing thereof in the Federal Register. The Commission
believes that accelerated approval of the proposal is appropriate in
order to allow the CSE to conform its listing standards for preferred
stocks with those of the NYSE and Amex. The rule change serves to
create a uniformity of enhanced listing standards among the various
exchanges, which benefits the marketplace as a whole, and thereby
serves the public's interest.
It is therefore ordered, Pursuant to section 19(b)(2) of the
Act\8\ that the proposed rule change is hereby approved.
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\8\15 U.S.C. 78s(b)(2) (1988).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-2894 Filed 2-8-94; 8:45 am]
BILLING CODE 8010-01-M
