[Federal Register Volume 61, Number 143 (Wednesday, July 24, 1996)]
[Notices]
[Pages 38488-38490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18721]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37444; File No. SR-Amex-96-28]
Self-Regulatory Organizations; Notice of Filing of a Proposed
Rule Change by American Stock Exchange, Inc. Relating to the Listing
and Trading of Indexed Term Notes
July 16, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934, 15 U.S.C. 78s(b)(1), notice is hereby given that on July 15,
1996, the American Stock Exchange, Inc. (``Amex'' or ``Exchange'')
filed with the Securities and Exchange Commission the proposed rule
change as described in Items I and II below, which Items have been
prepared by the Amex. 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 Amex proposes to approve for listing and trading under Section
107A of the Amex Company Guide, Indexed Term Notes based in whole or in
part on changes in the value of a portfolio of common stocks
representing the ten highest yielding stocks in the Dow Jones
Industrial Average (the ``Select Ten'').
The text of the proposed rule change is available at the Office of
the Secretary, Amex 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 Amex 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 Amex 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 the
Statutory Basis for, the Proposed Rule Change
(1) Purpose
Under Section 107A of the Amex Company Guide, the Exchange may
approve for listing and trading securities which cannot be readily
categorized under the listing criteria for common and preferred stocks,
bonds, debentures, or warrants.\1\ The Amex now proposes
[[Page 38489]]
to list for trading under Section 107A of the Company Guide, Indexed
Term Notes whose value in whole or in part will be tied to the Select
Ten Index. The Select Ten will be determined on two business days prior
to the pricing date of the Indexed Term Note.\2\
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\1\ See Securities Exchange Act Release No. 27753 (March 1,
1990).
\2\ The following is a sample list of the component securities
in the Select Ten Index as of July 11, 1996: Philip Morris; J.P.
Morgan; Texaco; Exxon Corp; Chevron Corp; General Motors; Du Pont;
International Paper; Caterpillar Inc; and Eastman Kodak.
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The Indexed Term Notes will be non-convertible debt securities and
will conform to the listing guidelines under Section 107A of the
Company Guide. Although a specific maturity date will not be
established until the time of the offering, the Indexed Term Notes will
provide for maturity within approximately ten years from the date of
issue. Indexed Term Notes may provide for periodic payments and/or
payments at maturity based in whole or in part on changes in the value
of the Select Ten Index. At maturity holders of the Indexed Term Notes
will receive not less than 90% of the initial issue price. Consistent
with other structured products, the Exchange will distribute a circular
to its membership, prior to the commencement of trading, providing
guidance with regard to member firm compliance responsibilities,
including appropriate suitability criteria and/or guidelines.
Eligibility Standards for the Index Components
Components of the Select Ten Index approved pursuant to this filing
shall meet the following criteria: (1) A minimum market value of at
least $75 million, except that up to 10% of the component securities in
the Select Ten Index may have a market value of $50 million; (2)
average monthly trading volume in the last six months of not less than
1,000,000 shares, except that up to 10% of the component securities in
the Select Ten Index may have an average monthly trading volume of
500,000 shares or more in the last six months; (3) 90% of the Select
Ten Index's numerical value and at least 80% of the total number of
component securities will meet the then current criteria for
standardized option trading set forth in Exchange Rule 915; and (4) all
component stocks will either be listed on the Amex, the New York Stock
Exchange, or traded through the facilities of the National Association
of Securities Dealers Automated Quotation System and reported National
Market System securities.
Select Ten Index Calculation
The Select Ten Index will be calculated using an ``equal-dollar
weighting'' methodology designed to ensure that each of the component
securities is represented in an approximately ``equal'' dollar amount
at the time the Index is established. The Index will initially be set
to provide a benchmark value of 100.00 at the close of trading on the
day preceding the establishment of the Index. The Index will reflect
price appreciation and cumulative dividends paid on the Select Ten. The
Index will be reconstituted annually to reflect an equal-dollar
weighted portfolio of the ten highest yielding stocks in the Dow Jones
Industrial Average as of two business days prior to the anniversary of
the pricing date.
The multiplier of each component stock in the Index will remain
fixed except in the event of certain types of corporate actions such as
the payment of a dividend other than an ordinary cash dividend, a stock
distribution, stock split, reverse stock split, rights offering,
distribution, reorganization, recapitalization, or similar event with
respect to the component stocks. The multiplier of each component stock
may also be adjusted, if necessary in the event of a merger,
consolidation, dissolution or liquidation of an issuer or in certain
other events such as the distribution of property by an issuer to
shareholders, the expropriation or nationalization of a foreign issuer
or the imposition of certain foreign taxes on shareholders of a foreign
issuer. If the issuer of a stock included in the Index were to no
longer exist, whether by reason of a merger, acquisition or similar
type of corporate transaction, a value equal to the stock's final value
will be assigned to the stock for the purpose of calculating the Index
value. For example, if a company included in the Index were acquired by
another company, a value will be assigned to the company's stock equal
to the value per share at the time the acquisition occurred. If the
issuer of stock included in the Index is the process of liquidation or
subject to a bankruptcy proceeding, insolvency, or other similar
adjudication, such security will continue to be included in the Index
so long as a market price for such security is available. If a market
price is no longer available for an Index stock due to circumstances
including but not limited to, liquidation, bankruptcy, insolvency, or
any other similar proceeding, then the security will be assigned a
value of zero when calculating the Index for so long as no market price
exists for that security. If the stock remains in the Index, the
multiplier of that security in the Index may be adjusted to maintain
the component's relative weight in the Index at the level immediately
prior to the corporate action. In all cases, the multiplier will be
adjusted, if necessary, to ensure Index continuity.
The Exchange will calculate the Select Ten Index and, similar to
other stock index values published by the Exchange, the value of the
Index will be calculated continuously and disseminated every 15 seconds
over the Consolidated Tape Association's Network B.
(2) 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 is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and to 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 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
No written comments were solicited or 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
[[Page 38490]]
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such filing will also be available
for inspection and copying at the principal office of the Exchange. All
submissions should refer to File No. SR-Amex-96-28 and should be
submitted by August 14, 1996.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\3\
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\3\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-18721 Filed 7-23-96; 8:45 am]
BILLING CODE 8010-01-M
