[Federal Register Volume 61, Number 148 (Wednesday, July 31, 1996)]
[Notices]
[Pages 40058-40059]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19470]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37472; File No. SR-Phlx-96-28]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Philadelphia Stock
Exchange, Inc., Relating to the Listing of Hybrid Securities
July 23, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on July 19, 1996, the
Philadelphia Stock Exchange, Inc. (``Phlx'' 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to amend Phlx Rule 803(f) in order to
conform the Exchange's listing criteria for hybrid securities to those
of the New York Stock Exchange (``NYSE'') and the American Stock
Exchange (``Amex'').
The text of the proposed rule change is available at the Exchange
and 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
In March 1992, the Commission approved the adoption of subsection
(f) under Phlx Rule 803 containing guidelines for listing securities
that have features common to both equity and debt securities, yet do
not fit within the traditional definitions of such securities.\2\
Sometimes referred to as ``hybrids,'' these securities can take a
variety of forms. Although the Exchange has not listed any hybrid
securities to date, it does trade certain ones pursuant to unlisted
trading privileges (``UTP''); \3\ for example, PERCS and trust
convertible preferred securities.
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\2\ See Securities Exchange Act Release No. 30466 (March 11,
1992), 57 FR 9301 (March 17, 1992). At the time the rule was
approved, it was denoted as Supplementary Material .02 to Rule 803
and was subsequently reapproved in the same form as renumbered
subsection (f) when the Exchange's two tiered listing standards were
approved. See Securities Exchange Act Release No. 34235 (June 17,
1994), 59 FR 32736 (June 24, 1994).
\3\ Rule 12f-5 under the Act provides that an exchange must have
in effect rules providing for transactions in the class of type of
security to which it extends unlisted trading privileges.
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In reviewing its hybrid security listing rules, the Exchange
noticed that certain provisions which initially were also included in
the NYSE and Amex rules have since been removed. Because the Exchange
may in the future trade other hybrid securities listed on either the
NYSE or the Amex pursuant to UTP, the Exchange believes it is
unnecessary for its rules to be more onerous than those of the NYSE or
the Amex. Accordingly, the Phlx seeks to conform its rules therewith.
Phlx Rule 803(f) currently specifies the minimum issuer
qualifications, the minimum public distribution and aggregate market
value of the security and other criteria to assist the Exchange in its
case by case review and determination of the suitability of each
security prior to its approval for listing. The Exchange now proposes
to remove current provisions that prohibit the listing of (1) any cash
settled product that is settled in any currency other than U.S.
dollars, or (2) any product that has a mandatory redemption price of
less than three dollars.\4\ Additionally, the Exchange proposes to
delete the provision requiring only 100 public holders if the security
is traded in thousand dollar denominations, thereby requiring 400
holders regardless of the denomination.
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\4\ The Commission recently approved similar amendments to
Amex's rules. See Securities Exchange Act Release No. 37165 (May 3,
1996), 61 FR 21215 (May 9, 1996).
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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) in particular in
that it is designed to promote just and equitable principles of trade
and to protect investors and the public interest in that it conforms
the Exchange's listing standards for hybrid securities to those of the
NYSE and the Amex.
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 neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2)does not impose any significant burden on competition; (3)
does not become operative for 30 days from July 19, 1996, the date on
which it was filed, and (4) the Exchange provided the Commission with
written notice of its intent to file the proposed rule change at least
five business days prior to the filing date, it has become effective
pursuant to Section 19(b)(3)(A)
[[Page 40059]]
of the Act \5\ and Rule 19b-4(e)(6) thereunder.\6\
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\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4(e)(6).
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The Commission notes that although it is reasonable for the
Exchange to remove the affected provisions as mandatory listing
standards,\7\ proposals that deviated from these standards might raise
novel or significant regulatory issues that would require a proposed
rule change to list the product.\8\
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\7\ The affected provisions currently prevent the listing of (1)
any cash settled product settled in any currency other than U.S.
dollars or (2) any product that had a mandatory redemption price of
less than three dollars.
\8\ See e.g., Securities Exchange Act Release No. 27753 (March
1, 1990), 55 FR 8626 (March 8, 1990) (order approving File-No. SR-
Amex-89-29). For example, a stock index-linked note that was payable
in a foreign currency would raise important regulatory issues among
which might include the need to address appropriate product term and
risk disclosure, customer suitability, and settlement procedures.
Accordingly, the Commission expects the Phlx to consult with it on
the need to file a Section 19(b) rule change to list a product with
such terms under the Rule 803(f) listing standards.
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
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. Sec. 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 also will be available for
inspection and copying at the principal office of the Exchange. All
submissions should refer to File No. SR-Phlx-96-28 and should be
submitted by August 21, 1996.
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\9\ 17 CFR 220.30-3(a)(12).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-19470 Filed 7-30-96; 8:45 am]
BILLING CODE 8010-01-M
