[Federal Register Volume 61, Number 143 (Wednesday, July 24, 1996)]
[Notices]
[Pages 38505-38506]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18798]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37453; File No. SR-PHLX-96-16]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Order Granting Approval to Proposed Rule Change Relating to Listing
Standards
July 18, 1996.
On May 20, 1996, the Philadelphia Stock Exchange, Inc. (``PHLX'' or
``Exchange'') submitted to the Securities and Exchange Commission
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to revise a drafting error that
occurred in PHLX Rule 804(2) pertaining to listing criteria.\3\
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\1\ 15 U.S.C. Sec. 78s(b)(1) (1996).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 34235 (June 17,
1994), 59 FR 32736 (June 24, 1994) (File No. SR-PHLX-93-31) (order
approving proposed rule change establishing new listing and
maintenance standards).
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The proposed rule change was published for comment in Securities
Exchange Act Release No. 37279 (June 5, 1996), 61 FR 29782 (June 12,
1996). No comments were received on the proposal.
Currently, PHLX Rules 803 through 805 describe a two-tier structure
for listing common stock, preferred stock, bonds and debentures,
various types of warrants, contingent value rights, and other
securities.\4\ For Tier I securities, two alternative minimum listing
standards are described. PHLX Rule 803 sets forth the first alternative
(``Alternative 1''), while PHLX Rule 804 sets forth the second
alternative (``Alternative 2''), which is geared toward mid-sized and
research and development companies. Both rules are based substantially
upon the Memorandum of Understanding (``MOU'') on the uniform model
marketplace exemption that had been approved by the National
Association of Securities Dealers, Inc. (``NASD'') and the North
American Securities Administrators Association, Inc. (``NASAA'').\5\
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\4\ Id.
\5\ See Securities Act Release No. 6810 (Dec. 6, 1988)
(publicizing the release of the MOU).
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The current PHLX Rule 804(2) sets forth a general requirement that
the public float for issuers is 1,000,000 shares, with an additional
shareholder requirement that the issuer have at least 800 public
shareholders if the issuer has between 500,000 and 1,000,000 shares
publicly held, or at least 400 public shareholders if the issuer has
either over (i) 1,000,000 shares publicly held, or (ii) over 500,000
shares publicly held and average daily trading volume in excess of
2,000 shares per day for a six-month period preceding the date of
application.
The Exchange proposes to amend this rule to provide that issuers
seeking to list pursuant to Rule 804 must show that there are at least
1,000,000 shares publicly held and at least 400 public shareholders in
the security. The Exchange states that the current Rule 804 incorrectly
incorporated some of the language from the public float/public
shareholder requirements in Alternative 1 for Tier I securities set
forth in Rule 803.
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange, and, in
particular, with the requirements of Section 6(b).\6\ In particular,
the Commission believes the proposal is consistent with the Section
6(b)(5) requirements that the rules of an exchange be designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, and, in general, to protect
investors and the public interest; and are not designed to permit
unfair discrimination between issuers.
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\6\ 15 U.S.C. Sec. 78f(b).
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The Commission believes that the proposal is consistent with the
purposes of the Act in that the amended Rule 804(2) will reflect the
original intent of the Exchange and the MOU. In addition, the amendment
to the rule is not a substantive change. Rule 804(2) sets forth a
requirement that the public float for Tier I issuers under Alternative
2 must be at least 1,000,000 shares.\7\ The holder requirement in
current Rule 804(2) states that an issuer listing under Alternative 2
must have either (1) a minimum of 800 public shareholders if the issuer
has between 500,000 and 1,000,000 shares, or (2) a minimum of 400
public shareholders if the issuer has either (i) over 1,000,000 shares
publicly held or (ii) over 500,000 shares publicly held and average
daily volume in excess of 2,000 shares per day for a six-month period
preceding the date of application. Because the minimum public float
requirement for companies listing under this alternative is 1,000,000
shares, an issuer can never be eligible to have less public float by
meeting the higher 800 public shareholder requirement or the trading
[[Page 38506]]
volume test noted above. Accordingly, the changes in PHLX Rule 804(2)
will eliminate any confusion about the minimum holder and public float
requirements and will, as originally intended, make clear that the
minimum listing requirement under this alternative is at least
1,000,000 shares publicly held with at least 400 public shareholders.
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\7\ As originally drafted, Rule 804(2) states that the public
float of an issuer must be ``1,000,000 shares.'' The Exchange
clarified the public float requirement by stating in amended Rule
804(2) that the public float must be ``at least 1,000,000 shares.''
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that the proposed rule change (SR-PHLX-96-16) is approved.
\8\ 15 U.S.C. Sec. 78s(b)(2) (1996).
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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).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-18798 Filed 7-23-96; 8:45 am]
BILLING CODE 8010-01-M
