Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Notices 62781

14See Nasdaq Rule 4450(d).

15 15 U.S.C. 78s(b)(2).

16 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

capitalization set forth neither the time

frames for determining non-compliance

nor compliance. Thus, the proposed

rule change provides additional

information that is critical to the

determination of an issuer’s continuing

compliance with the standards relating

to the number of market makers and

market capitalization should an issuer

fail to comply with either category.

Shareholder Approval for the Potential

Issuance of Shares

Making clear that shareholder

approval is required in the case of actual

or potential issuance of shares promotes

just and equitable principles of trade,

and removes an impediment to and

perfects the mechanism of a free and

open market and a national market

system. The Commission notes that

Nasdaq has consistently interpreted the

shareholder approval rules to include

the potential issuance of shares and

therefore the proposed rule change

explicitly codifies accepted practice.

Additionally, the Commission finds that

requiring shareholder approval for the

potential issuance of shares protects a

shareholder’s ability to vote on a

significant corporate transaction that

might affect the rights of the voting

shareholder.

Changes to Reflect the Underlying

Security for ADRs

The proposed rule change relating to

the requirement that the underlying

security be considered in determining

compliance with initial or continued

listing standards is appropriate because

Nasdaq has consistently looked to the

security underlying an ADR in other

contexts involving ADRs (e.g.,

determining round lot shareholders,

number of shares in the public float,

market value of public float, and market

capitalization). Thus, the proposed rule

change removes an impediment to and

perfects the mechanism of a free and

open market by conforming the analysis

of whether an ADR meets the initial or

continued listing standards to other

situations involving ADRs, and

explicitly making clear that Nasdaq

should consider the security underlying

the ADR. The proposed rule change also

protects the mechanism of a free and

open market by explicitly stating the

continued listing requirement time

frames for ADRs.

Rights and Warrants

Finally, the Commission believes that

the proposed rule change clarifying that

rights as well as warrants are subject to

the initial listing standards of Nasdaq

Rule 4420(d)(1) will protect investors

and the public interest. The

Commission notes that the continued

listing standards address both rights and

warrants,14 and thus the proposed rule

change rightly conforms the initial

listing standards to the continued listing

standards. Furthermore, the

Commission finds that clarifying that

rights and warrants need not meet the

publicly held shares, market value of

publicly held shares, or bid price initial

listing standards is in the public interest

because Nasdaq has represented that

industry practices for pricing rights and

warrants are such that Nasdaq has not

historically required issuers to satisfy

these requirements. Thus, the proposed

rule change clarifies that these

standards are not applicable to rights

and warrants. Furthermore, the

Commission notes that rights and

warrants will be to satisfy all other

initial inclusion requirements before

they can be listed on Nasdaq, which

should help to ensure that only bona

fide companies with substantial float,

investor base, and trading interest list

rights and warrants on Nasdaq.

Accelerated Approval of Amendment

No. 3

The Commission believes that it is

consistent with the protection of

investors and the public interest and

therefore finds good cause for approving

Amendment No. 3 to proposed rule

change prior to the thirtieth day after

the date of publication of notice thereof

in the Federal Register. Amendment

No. 3 merely withdraws the portion of

the proposed rule change that defines

market capitalization to enable Nasdaq

to more carefully consider how it wants

to define the term without delaying

approval of the remaining provisions of

the proposed rule change.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment No.

3, including whether the amendment is

consistent with the Act. Persons making

written submissions should file six

copies thereof with the Secretary,

Securities and Exchange Commission,

450 Fifth Street, NW., Washington, DC

20549–0609. Copies of the submissions,

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 at

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to the File No.

SR–NASD–99–69 and should be

submitted by November 9, 2000.

V. Conclusion

For the foregoing reasons, the

Commission finds that the proposed

rule change is consistent with the

requirements of the Act and the rules

and regulations thereunder.

It Is Therefore Ordered, pursuant to

section 19(b)(2) of the Act,15 that the

amended proposed rule change (SR–

NASD–99–69) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.16

Jonathan G. Katz,

Secretary.

[FR Doc. 00–26803 Filed 10–18–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43429; File No. SR–NYSE–

00–42]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by New York

Stock Exchange, Inc. Extending the

Pilot Fee Structure Governing the

Reimbursement of Member

Organizations for Costs Incurred in the

Transmission of Proxy and Other

Shareholder Communications

Materials

October 10, 2000.

Pursuant to section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 (the ‘‘Act’’) and Rule 19b–4

thereunder,2 notice is hereby given that

on October 10, 2000, the New York

Stock Exchange, Inc. (‘‘Exchange’’ or

‘‘NYSE’’) filed with the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by the NYSE. The Commission

is publishing this notice to solicit

comments on the proposed rule change

from interested persons.

62782 Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Notices

3The text of Rule 451 also is included at Para.

402.10(A) of the Exchange’s Listed Company

Manual.

4The Exchange submitted a proposed rule change

to set forth the minimum functions that an

intermediary is expected to perform to recover the

nominee coordination fee. See Securities Exchange

Act Release No. 43159 (August 16, 2000), 65 FR

51384 (August 23, 2000).

5 15 U.S.C. 78f(b)(4).

6 15 U.S.C. 78f(b)(5).

7 15 U.S.C 78s(b)(3)(A).

8 17 CFR 240.19b–4(f)(6).

9As required under Rule 19b–4(f)(6)(iii), the

Exchange provided the Commission with written

notice of its intent to file the proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The NYSE is proposing to extend the

pilot fee structure (‘‘Pilot Fee

Structure’’) regarding Exchange Rules

451 and 465 (‘‘Rules’’).3 Among other

things, the Rules establish guidelines for

the reimbursement of expenses by NYSE

issuers to NYSE member organizations

for the processing of proxy materials

and other issuer communications

(collectively, ‘‘Material’’) with respect to

security holders whose securities are

held in street name. The Pilot Fee

Structure is scheduled to expire on

October 10, 2000. NYSE proposes to

extend the pilot through November 20,

2000.

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

NYSE included statement 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 NYSE 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

Among other things, the Pilot Fee

Structure lowers certain guidelines

concerning the reimbursement of fees

for the distribution of Material, creates

incentive fees to eliminate duplicative

mailings, and establishes a

supplemental fee for intermediates that

coordinate multiple nominees. The

proposed rule change would extend the

Pilot Fee Structure termination date

from October 10, 2000, to November 20,

2000.

An extension of the Pilot Fee

Structure’s termination date will give

the Commission additional time to

consider the pilot fees as well as the

proposed nominee coordination fee,4

without a lapse in the current rules.

Absent an extension of the Pilot Fee

Structure’s termination date, the fees in

effect prior to the pilot program would

return to effectiveness after October 10,

2000, creating confusion in the market.

2. Basis

The Exchange believes that the

proposed rule change is consistent with

section 6(b)(4) 5 of the Act, which

requires an exchange’s rules to provide

for the equitable allocation of reasonable

dues, fees and other charges among its

members and other persons using its

facilities. In addition, the Exchange

believes that the proposed rule change

is consistent with section 6(b)(5) 6 of the

Act, which requires that an exchange

have rules that are 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 regulating, clearing, settling,

processing information with respect to,

and facilitating transactions in

securities, to remove impediments to

and perfect the mechanism of a free and

open market and a national market

system, and, in general, to protect

investors and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes that the

proposed rule changes 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

NYSE has not solicited, and does not

intend to solicit, comments on the

proposed rule change. NYSE has not

received any unsolicited comments

from members or other interested

parties.

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; and

(3) does not become operative for 30

days from the date of filing, or such

shorter time that the Commission may

designate if consistent with the

protection of investors and the public

interest, the proposed rule change has

become effective pursuant to section

19(b)(3)(A)7 of the Act and Rule 19b–

4(f)(6) 8 thereunder.9

A proposed rule change filed under

rule 19b–4(f)(6) may not become

operative prior to 30 days after the date

of filing. However, Rule 19b–4(f)(6)(iii)

permits the Commission to designate a

shorter time if such action is consistent

with the protection of investors and the

public interest. NYSE seeks to have the

proposed rule change become operative

on or before October 10, 2000, in order

to allow the Pilot Fee Structure to

continue in effect on an uninterrupted

basis.

The Commission, consistent with the

protection of investors and the public

interest, has determined to make the

proposed rule change operative

immediately through November 20,

2000. This extension of the Pilot Fee

Structure will provide the Commission

with additional time to review and

evaluate the pilot fees as well as the

proposed nominee coordination fee

components.

The Commission notes that unless the

current expiration date of the Pilot Fee

Structure is extended, the

reimbursement rates for Material

distributed after October 10, 2000, will

revert to those in effect prior to March

14, 1997. The Commission believes that

such a result could be confusing and

counterproductive.

Based on these reasons, the

Commission believes that it is

consistent with the protection of

investors and the public interest that the

proposed rule change become operative

immediately through November 20,

2000. 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,

including whether the proposed rule

change is consistent with the Act.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 20549–0609. Copies of

the submission, all subsequent

Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Notices 62783

10 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 27753

(March 1, 1990), 55 FR 8626 (March 8, 1990).

4See Securities Exchange Act Release No. 35518

(March 21, 1995), 60 FR 15804 (March 27, 1995).

5See Securities Exchange Act Release No. 36885

(February 26, 1996), 61 FR 8315 (March 4, 1996).

6When the Amex originally filed its proposed

rule change with the SEC, the Amex was uncertain

as to whether the Securities would trade as

preferred equity securities or debt securities. The

Amex has since determined that the Securities will

trade as debt securities. As per telephone

conversation between Scott Van Hatten, Legal

Counsel, Derivative Securities, and Heather Traeger,

Attorney, Division of Market Regulation, SEC, on

September 29, 2000.

7The underwriter has advised the Amex that the

Securities will comply with the ‘‘hybrid

exemption’’ of the Commodity Futures Trading

Commission (‘‘CFTC’’), 17 CFR Part 34. The

underwriter further advised that it has presented a

description of the structure and sample termsheet

of the Securities to the staff of the CFTC in order

to facilitate the approval of the registration and

listing of the Securities.

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

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the NYSE. All

submissions should refer to File No.

SR–NYSE–00–42 and should be

submitted by November 9, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Jonathan G. Katz,

Secretary.

[FR Doc. 00–26802 Filed 10–18–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43427; File No. SR–AMEX–

00–40]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the American Stock

Exchange LLC Relating to the Listing

and Trading of Inflation Indexed

Securities

October 10, 2000.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on August 3,

2000, the American Stock Exchange LLC

(‘‘Amex’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(‘‘SEC’’ or ‘‘Commission’’) the proposed

rule change as described in Items I and

II below, which Items have been

prepared by the Exchange. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons and to

grant accelerated approval to the

proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to approve for

listing and trading under Section 107A

of the Amex Company Guide, index

linked debt securities based in whole or

in part on changes in the value of the

U.S. Consumer Price Index. 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

Exchange 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

exchange 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

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.3 Under Section 107A, in

March of 1995, the Commission

approved the Exchange’s proposed rule

change relating to the listing and trading

of commodity linked notes (‘‘COINS’’).4

And in February of 1996, the

Commission approved the Exchange’s

proposed rule change relating to the

listing and trading of commodity

indexed securities (‘‘ComPS’’).5 The

Amex now proposes to list for trading

under Section 107A of the Company

Guide, indexed linked debt securities 6

(‘‘Securities’’) whose value in whole or

in part will be based upon the nonseasonally adjusted U.S. City Average

All Items Consumer Price Index for All

Urban Consumers (the ‘‘CPI–U’’ or

‘‘Index’’), published monthly by the

U.S. Department of Labor Bureau of

Labor Statistics (‘‘BLS’’). Holders of the

Securities receive at maturity a payment

linked to the value of the Index based

on the following formula: Face Value +

(Ending Index Value—Beginning Index

Value), but not less than zero.

The ‘‘Beginning Index Value,’’ which

is approximately equal to the forward

value of the CPI–U on the pricing date,

will be announced at the time of the

offering. The ‘‘Ending Index Value’’ will

be equal to the ending level of the CPI–

U, as published by the BLS and used by

the U.S. Treasury for its Treasury

Inflation Protected Securities (‘‘TIPS’’).

CPIS Description

The Securities will be non-convertible

and will conform to the listing

guidelines under Section 107A of the

Company Guide, which provide that

such issues have: (1) Assets in excess of

$100 million and stockholders’ equity of

at least $10 million; (2) a minimum

public distribution of 1 million trading

units with a minimum of 400 public

shareholders; except, if traded in

thousand dollar denominations, then no

minimum number of holders; (3) a

market value of not less than $4 million.

Although a specific maturity date will

not be established until the time of the

offering, the Securities will provide for

maturity of not less than one year from

the date of issue. The Securities may

provide for periodic payments and/or

payments at maturity based in whole or

in part on changes in the value of the

Index. At maturity holders of the

Securities may receive less than 100%

of the initial issue price.

The redemption price of the

Securities will be based on, in part, the

ending Reference CPI–U level for the

maturity date. At redemption, holders

will receive Face Value plus (Ending

Index Value minus Beginning Index

Value); but not less than zero. Thus, at

redemption, the holder could receive

less than the Face Value or the Issue

Price of the Securities, but never less

than zero.7 The denomination will be at

least $1000 and the redemption will be

multiplied by a gross-up factor to

produce a $1000 face value, i.e. Grossup × Face Value plus (Ending Index

Value minus Beginning Index Value).

Equity margin rules will apply to the

trading of the Securities. The Securities

are designed to produce an everVerDate 11<MAY>2000 21:53 Oct 18, 2000 Jkt 194001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 E:\FR\FM\19OCN1.SGM pfrm02 PsN: 19OCN1