[Federal Register Volume 60, Number 159 (Thursday, August 17, 1995)]
[Notices]
[Pages 42926-42927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20398]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36079; File No. SR-Amex-95-23]
Self-Regulatory Organizations; American Stock Exchange, Inc.;
Order Granting Approval to Proposed Rule Change Relating to the
Discontinuation of the Emerging Company Marketplace
August 9, 1995.
On June 9, 1995, the American Stock Exchange, Inc. (``Amex'' 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 discontinue the listing of new
companies on the Emerging Company Marketplace (``ECM'').
\1\ 15 U.S.C. 78s(b)(1) (1988).
\2\ 17 CFR 240.19b-4 (1994).
---------------------------------------------------------------------------
The proposed rule change was published for comment in Securities
Exchange Act Release No. 35863 (June 19, 1995), 60 FR 32719 (June 23,
1995).
In March 1992, the Commission approved a rule change to amend the
Amex Company Guide to add a new section establishing listing criteria
for an Emerging Company Marketplace (``ECM'').\3\ The ECM rules
established quantitative listing standards that were below those
required for listing on the Amex's main list. In May 1994, the United
States General Accounting Office (``GAO'') issued a report (``GAO
Report'') that examined the Amex's methodology for deciding whether to
approve a company's securities for ECM listing and trading.\4\ The
Commission concurred with the GAO's recommendations and noted that they
were consistent with the Division of Market Regulation's conclusions
following its prior inspection of the ECM.\5\ In December 1994, the
Commission approved amendments to the ECM rules that substantially
responded to the Commission and GAO recommendations.\6\
\3\ See Securities Exchange Act Release No. 30445 (March 5,
1994), 57 FR 8693 (March 11, 1992) (approving File No. SR-Amex-91-
25).
\4\ GAO, American Stock Exchange--More Changes Needed in
Screening Emerging Companies for the Marketplace (May 1994).
\5\ See letter from Brandon Becker, Director, Division, to
Richard L. Fogel, Assistant Comptroller General, GAO, dated February
18, 1994, reprinted in GAO Report, supra noted 4.
\6\ See Securities Exchange Act Release No. 35104 (December 15,
1994), 59 FR 66381 (December 23, 1994).
---------------------------------------------------------------------------
The Amex now has determined to discontinue the listing of new
companies on the ECM and proposes to eliminate the ECM guidelines that
allow for such new listings. Under the proposal, companies currently
trading pursuant to the ECM listing requirements will continue to trade
on the Amex as ECM listed companies.\7\ The Amex does not have a
deadline for removing these companies from the ECM list. Companies
presently trading on the ECM will continue to do so until they graduate
to the Amex's main list by meeting the appropriate listing standards,
or delist, either voluntarily or because they fail to meet the ECM
listing standards. During this transition time, ECM companies will
continue to be subject to all the rules applicable to ECM issues,
including the continued listing guidelines. Quotes and trades in such
securities will continue to be reported to vendors with the ``.EC''
designator.
\7\ The continued listing guidelines for ECM companies will
remain in place for these companies.
---------------------------------------------------------------------------
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).\8\ 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
promote just and equitable principles of trade, to prevent fraudulent
and manipulative acts, and, in general, to protect investors and the
public.
\8\ 15 U.S.C. 78f(b) (1988).
---------------------------------------------------------------------------
A self-regulatory organization has the discretion to determine the
type of companies it desires to list in its marketplace, so long as
such listing decisions are consistent with the requirements of the Act
and in accordance with the organizations listing rules. Similarly, the
Commission believes that it is reasonable for the Amex to determine
that it no longer wants to continue to list a certain class of
securities, such as new companies on the ECM.
Despite the Amex's determination to discontinue listing new ECM
companies, the Amex's proposal ensures that existing listed ECM
companies and their shareholders will not be disadvantaged because
companies currently listed on the ECM will not be immediately delisted.
In addition, because the existing ECM companies will remain subject to
the Exchange's continued listing standards, as well as its regular
surveillance program, the Commission believes that the Exchange's
proposal will ensure the continued protection of investors in ECM
listed companies.\9\ Once all of the ECM companies have delisted,
either voluntarily or because they fail to meet the ECM maintenance
standards, the Commission expects that the Amex will file a proposed
rule change to remove
[[Page 42927]]
the remaining ECM Rules from its Company Guide.
\9\ As the Commission noted in the last amendment of the ECM
Rules, see supra note 6, it believes that enforcement of maintenance
standards is vital to the continued integrity of exchange markets.
The Commission expects that the Amex will continue to strictly
enforce the maintenance criteria contained in the ECM Rules and
maintenance criteria contained in the ECM Rules and will delist
companies that fail to meet these standards.
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-Amex-95-23) is approved.
\10\ 15 U.S.C. 78s(b)(2) (1988).
---------------------------------------------------------------------------
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
\11\ 17 CFR 200.30-3(a)(12) (1994).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-20398 Filed 8-16-95; 8:45 am]
BILLING CODE 8010-01-M
