[Federal Register Volume 63, Number 83 (Thursday, April 30, 1998)]
[Notices]
[Pages 23821-23822]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11448]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39906; File No. SR-CHX-98-7]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Stock Exchange, Inc. Regarding Maintenance 
Standards and Listing Requirements

April 23, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 18, 1998, the 
Chicago Stock Exchange, Incorporated (``CHX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'' or ``SEC'') 
the proposed rule change, as described in Items I, II, and III 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 proposes to amend Rules 14, 15, 16, 17 and 22 of 
Article XXVIII and the interpretation and policy .01 of Rule 2 of 
Article XXVIII. The Exchange further proposes to add interpretation and 
policy .03 to Rule 2 of Article XXVIII. The proposed rule amendments 
would clarify the requirements for listing and/or maintenance on the 
CHX a security that is also listed on another primary market and modify 
the maintenance and delisting standards regarding securities listed on 
Tier II of the Exchange.

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
    The proposed rule change relates to four listing issues: (i) Tier 
II listing standards for stock warrants, (ii) listing application 
requirements for securities that are listed or approved for listing on 
certain other markets, (iii) delisting of a security for lack of 
sufficient trading volume, and (iv) the elimination of certain 
maintenance listing standards for securities currently listed on 
certain other markets.
    Tier II Stock Warrants. The exchange does not currently have 
maintenance standards for stock warrants listed on Tier II of the 
Exchange. The proposed rule change would require that, in the case of 
Tier II stock warrants, the common stock of the company or other 
security underlying the stock warrants meet the applicable Tier II 
maintenance requirements. The proposed rule change would allow the 
Exchange to delist stock warrants that did not have adequate 
``backing'' of an underlying security.
    Listing Application Requirements For Certain Securities Listed on 
Other Markets. Currently, the Exchange may list a security of an issuer 
that is listed or has been approved for listing on another primary 
market. The proposed rule change would clarify that if the Exchange 
chooses to list, under either Tier I or Tier II, a security listed or 
approved for listing, within the past twelve months, on the New York 
Stock Exchange (``NYSE''), the American Stock Exchange (``Amex''), 
except for Emerging Company Marketplace

[[Page 23822]]

securities, or the Nasdaq National Market, the issuer shall not be 
required to fulfill all the requirements for an original listing 
application. Instead, the issuer shall only be required to submit to 
the Exchange (1) a copy of the application for listing on the NYSE, 
Amex or Nasdaq National Market, together with all supporting materials, 
(2) a board resolution of the issuer authorizing listing on the 
Exchange, (3) the issuer's Form 10-K, most recent three Form 10-Qs, and 
most recent proxy statement (for non-IPOs), or the issuer's latest 
registration statement and exhibits (for IPOs), (4) the required 
listing fee, (5) an executed Exchange listing agreement, (6) evidence 
of approval for listing by the NYSE, Amex or Nasdaq National Market, 
(7) a specimen stock certificate, (8) the issuer's registration 
statement filed under the Securities Exchange Act of 1934, and (9) a 
Letter of Reliance authorizing the Exchange to process the application 
and supporting materials as if addressed to the Exchange in lieu of an 
original listing application.
    Delisting For Lack of Sufficient Volume. Current Rule 22(c) of 
Article XXVIII provides that Tier II listed issues will normally be 
considered for delisting if the company fails to maintain a net worth 
which is the greater of (i) 150% of the prior year's consolidated net 
loss or (ii) $500,000 or when the volume of trading declines to a level 
which will not support a listed market in the judgment of the Exchange 
and its Committee on Floor Procedure. The proposed rule change would 
eliminate the specific reference to volume of trading as vague and 
unnecessary in light of the authority Rule 22(a) grants the Exchange to 
delist Tier II securities.
    Maintenance Listing Standards. Currently, Rules 14, 15, 16, 17 and 
22 of Article XXVIII provide for certain maintenance standards that 
Tier I and Tier II listed securities must meet in order to continue to 
be listed on the Exchange. The proposed rule change would provide that 
if a security that is listed on the Exchange is also listed on the 
NYSE, Amex or Nasdaq National Market, as long as the security continues 
to be listed on such other market, it shall not be required to meet 
certain of the maintenance standards contained in the Exchange's 
rules.\2\ This provision will avoid a situation where the Exchange 
might be forced to delist a security that fails certain maintenance 
tests, when it continues to meet the requirements of such other market.
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    \2\ The proposal would exempt from the Exchange's quantitative 
maintenance standards securities that are also listed on the NYSE, 
Amex, or Nasdaq National Market. The quantitative maintenance 
standards govern, for example, net tangible assets, the number of 
public beneficial shareholders, and the market value of an issuer's 
shares publicly held. The Commission notes that the proposed rule 
change would not provide an exemption from the Exchange's corporate 
governance and disclosure requirements for securities that maintain 
a listing on the CHX and are otherwise listed on the NYSE, Amex, or 
Nasdaq National Market.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b)(5) \3\ of 
the Act in that it is designed to promote just and equitable principles 
of trade, to foster cooperation and coordination with persons 
regulating securities transactions, 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.
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    \3\ 15 U.S.C. 78f(b)(5).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition.

(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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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, N.W., Washington, D.C. 20549. 
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. 522, will be available for inspection and copying at the 
Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, 
D.C. 20549. Copies of such filing will also be available for inspection 
and copying at the principal office of the CHX. All submissions should 
refer to File No. SR-CHX-98-7 and should be submitted May 21, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-11448 Filed 4-29-98; 8:45 am]
BILLING CODE 8010-01-M