H. R. 4535

One Hundred Third Congress

of the

United States of America

AT THE SECOND SESSION

Begun and held at the City of Washington on Tuesday,

the twenty-fifth day of January, one thousand nine hundred and ninety-four

An Act

To amend the Securities Exchange Act of 1934 with respect to the extension of

unlisted trading privileges for corporate securities, and for other purposes.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Unlisted Trading Privileges

Act of 1994’’.

SEC. 2. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.

(a) UNLISTED TRADING PRIVILEGES.—Section 12(f) of the Securities Exchange Act of 1934 (15 U.S.C. 78l(f)) is amended by striking

paragraphs (1) and (2) and inserting the following:

‘‘(f)(1)(A) Notwithstanding the preceding subsections of this section, any national securities exchange, in accordance with the

requirements of this subsection and the rules hereunder, may

extend unlisted trading privileges to— ‘‘(i) any security that is listed and registered on a national securities exchange, subject to subparagraph (B); and ‘‘(ii) any security that is otherwise registered pursuant

to this section, or that would be required to be so registered

except for the exemption from registration provided in subparagraph (B) or (G) of subsection (g)(2), subject to subparagraph

(E) of this paragraph.

‘‘(B) A national securities exchange may not extend unlisted trading privileges to a security described in subparagraph (A)(i)

during such interval, if any, after the commencement of an initial

public offering of such security, as is or may be required pursuant

to subparagraph (C). ‘‘(C) Not later than 180 days after the date of enactment of

the Unlisted Trading Privileges Act of 1994, the Commission shall

prescribe, by rule or regulation, the duration of the interval referred

to in subparagraph (B), if any, as the Commission determines

to be necessary or appropriate for the maintenance of fair and

orderly markets, the protection of investors and the public interest,

or otherwise in furtherance of the purposes of this title. Until

the earlier of the effective date of such rule or regulation or 240

days after such date of enactment, such interval shall begin at

the opening of trading on the day on which such security commences

trading on the national securities exchange with which such security

is registered and end at the conclusion of the next day of trading.

‘‘(D) The Commission may prescribe, by rule or regulation such

additional procedures or requirements for extending unlisted trading privileges to any security as the Commission deems necessary
H. R. 4535—2

or appropriate for the maintenance of fair and orderly markets,

the protection of investors and the public interest, or otherwise

in furtherance of the purposes of this title.

‘‘(E) No extension of unlisted trading privileges to securities

described in subparagraph (A)(ii) may occur except pursuant to

a rule, regulation, or order of the Commission approving such

extension or extensions. In promulgating such rule or regulation

or in issuing such order, the Commission—

‘‘(i) shall find that such extension or extensions of unlisted

trading privileges is consistent with the maintenance of fair

and orderly markets, the protection of investors and the public

interest, and otherwise in furtherance of the purposes of this

title;

‘‘(ii) shall take account of the public trading activity in

such securities, the character of such trading, the impact of

such extension on the existing markets for such securities,

and the desirability of removing impediments to and the

progress that has been made toward the development of a

national market system; and

‘‘(iii) shall not permit a national securities exchange to

extend unlisted trading privileges to such securities if any

rule of such national securities exchange would unreasonably

impair the ability of a dealer to solicit or effect transactions

in such securities for its own account, or would unreasonably

restrict competition among dealers in such securities or between

such dealers acting in the capacity of market makers who

are specialists and such dealers who are not specialists.

‘‘(F) An exchange may continue to extend unlisted trading

privileges in accordance with this paragraph only if the exchange

and the subject security continue to satisfy the requirements for

eligibility under this paragraph, including any rules and regulations

issued by the Commission pursuant to this paragraph, except that

unlisted trading privileges may continue with regard to securities

which had been admitted on such exchange prior to July 1, 1964,

notwithstanding the failure to satisfy such requirements. If unlisted

trading privileges in a security are discontinued pursuant to this

subparagraph, the exchange shall cease trading in that security,

unless the exchange and the subject security thereafter satisfy

the requirements of this paragraph and the rules issued hereunder. ‘‘(G) For purposes of this paragraph— ‘‘(i) a security is the subject of an initial public offering

if—

‘‘(I) the offering of the subject security is registered

under the Securities Act of 1933; and

‘‘(II) the issuer of the security, immediately prior to

filing the registration statement with respect to the offering, was not subject to the reporting requirements of section

13 or 15(d) of this title; and

‘‘(ii) an initial public offering of such security commences

at the opening of trading on the day on which such security

commences trading on the national securities exchange with

which such security is registered.

‘‘(2)(A) At any time within 60 days of commencement of trading

on an exchange of a security pursuant to unlisted trading privileges,

the Commission may summarily suspend such unlisted trading

privileges on the exchange. Such suspension shall not be reviewable

under section 25 of this title and shall not be deemed to be a
H. R. 4535—3

final agency action for purposes of section 704 of title 5, United

States Code. Upon such suspension—

‘‘(i) the exchange shall cease trading in the security by

the close of business on the date of such suspension, or at

such time as the Commission may prescribe by rule or order

for the maintenance of fair and orderly markets, the protection

of investors and the public interest, or otherwise in furtherance

of the purposes of this title; and

‘‘(ii) if the exchange seeks to extend unlisted trading privileges to the security, the exchange shall file an application

to reinstate its ability to do so with the Commission pursuant

to such procedures as the Commission may prescribe by rule

or order for the maintenance of fair and orderly markets, the

protection of investors and the public interest, or otherwise

in furtherance of the purposes of this title.

‘‘(B) A suspension under subparagraph (A) shall remain in

effect until the Commission, by order, grants approval of an application to reinstate, as described in subparagraph (A)(ii).

‘‘(C) A suspension under subparagraph (A) shall not affect

the validity or force of an extension of unlisted trading privileges

in effect prior to such suspension.

‘‘(D) The Commission shall not approve an application by a

national securities exchange to reinstate its ability to extend

unlisted trading privileges to a security unless the Commission

finds, after notice and opportunity for hearing, that the extension

of unlisted trading privileges pursuant to such application is consistent with the maintenance of fair and orderly markets, the protection

of investors and the public interest, and otherwise in furtherance

of the purposes of this title. If the application is made to reinstate

unlisted trading privileges to a security described in paragraph

(1)(A)(ii), the Commission—

‘‘(i) shall take account of the public trading activity in

such security, the character of such trading, the impact of

such extension on the existing markets for such a security,

and the desirability of removing impediments to and the

progress that has been made toward the development of a

national market system; and

‘‘(ii) shall not grant any such application if any rule of

the national securities exchange making application under this

subsection would unreasonably impair the ability of a dealer

to solicit or effect transactions in such security for its own

account, or would unreasonably restrict competition among

dealers in such security or between such dealers acting in

the capacity of marketmakers who are specialists and such

dealers who are not specialists.’’.

(b) CONFORMING AMENDMENT.—Section 12(f)(3) of the Securities

Exchange Act of 1934 (15 U.S.C. 78l(f)(3)) is amended by striking
H. R. 4535—4

‘‘The Commission’’ and inserting ‘‘Notwithstanding paragraph (2),

the Commission’’.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.