[Federal Register Volume 60, Number 100 (Wednesday, May 24, 1995)]
[Notices]
[Pages 27571-27572]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12691]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35734; File No. SR-Amex-95-17]


Self-Regulatory Organizations; American Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change Regarding Depository 
Eligibility Requirements

May 18, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), \1\ notice is hereby given that on May 16, 1995, the 
American Stock Exchange, Inc. (``Amex'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I, II, and III below, which items have been prepared 
primarily by Amex. The Commission is publishing this notice to solicit 
comments from interested persons.

    \1\ 15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Amex proposes to adopt a rule which will set forth depository 
eligibility requirements for issuers that apply to list their 
securities on Amex.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, Amex 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.\2\

    \2\ The Commission has modified the language in these sections.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Under the proposed rule change, Amex will adopt a uniform 
depository eligibility rule for issuers that desire to list their 
securities on Amex. The uniform rule has been developed by the Legal 
and Regulatory Subgroup of the U.S. working Committee of the Group of 
Thirty in coordination with each of the national securities exchanges 
and the National Association of Securities Dealers (``NASD''). It is 
anticipated that each national securities exchange and the NASD will 
file rule changes proposing adoption of depository eligibility 
standards substantially similar to Amex's proposed rule and will seek 
to make such changes effective contemporaneously with the effective 
date of the transition from a five-day (``T+5'') to a three-day 
(``T+3'') settlement cycle. The transition is set to occur June 7, 
1995.\3\

    \3\ Securities Exchange Act Release Nos. 33023 (October 6, 
1993), 58 FR 52891 (adoption of Rule 15c6-1) and 34952 (November 9, 
1994), 59 FR 59137 (change of effective date of Rule 15c6-1 from 
June 1, 1995 to June 7, 1995).
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    The proposed model depository eligibility rule is intended to 
encourage issuers and underwriters to take the simple steps necessary 
to make the issuers' securities depository eligible although it is 
carefully structured so that it will not preclude from listing 
idiosyncratic securities which cannot be made to meet all depositories' 
requirements. The proposed rule will require that before any issue of 
securities of a domestic issuer (excluding American Depository Receipts 
for securities of a foreign issuer) is listed on Amex, Amex must have 
received a representation from the issuer that a CUSIP number 
identifying the securities has been included in the file of eligible 
issues maintained by a securities depository registered as a clearing 
agency under Section 17A of the Act.\4\ This requirement will not apply 
to a security if the terms of such security cannot be reasonably 
modified to meet the criteria for depository eligibility at all 
securities depositories.

    \4\ 15 U.S.C. 78q-1 (1988).
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    The need of syndicate managers to monitor ``flipping'' also has 
been recognized. As a result, the proposed rule change sets forth 
additional requirements that must be met before a security will be 
deemed to be ``depository eligible,'' as such term is used in Part IV, 
Section 3, Rule 776 of the Amex rules (``book-entry settlement of 
transactions rule'').\5\ The proposed rule specifies different 
requirements for depository eligiblilty depending upon whether a new 
issue is distributed by an underwriting syndicate before or after the 
date a securities depository system is available for monitoring 
repurchases of the distributed shares by syndicate members (``flipping 
tracing system'').

    \5\ Pursuant to Amex's book-entry settlement of transactions 
rule, trades by a member in depository eligible securities generally 
must be settled by book-entry through a securities depository.
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    Currently, a flipping tracking system is being developed that will 
include a securities depository service that (i) can be activated upon 
the request of the managing underwriter for a period of time that the 
managing underwriter specifies, (ii) in certain circumstances, will 
require the delivering participant to provide to the depository 
information sufficient to identify the seller of such shares as a 
precondition to the processing of book-entry delivery instructions for 
distributed shares, and (iii) will report to the managing underwriter 
the identity of any other syndicate member or selling group member 
whose customer(s) sold distributed shares (but will not report to the 
managing underwriter the identity of such customer[s]) and, in certain 
circumstances, will report to such syndicate member or selling group 
member the identity of such customer(s). Prior to the availability of 
[[Page 27572]] a flipping tracking system, the managing underwriter may 
delay the date a security is deemed ``depository eligible'' for up to 
three months after trading has commenced in the security. After the 
availability of a flipping tracing system, a new issue will be deemed 
to be depository eligible upon commencement of trading on Amex.
    The proposed rule change is consistent with Section 6(b)(5) of the 
Act \6\ in that it is designed 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. That proposed 
rule change is designed to improve clearing and settlement practices in 
the industry while reducing risk to investors.

    \6\ 15 U.S.C. 78f(b)(5) (1988).
(B) Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change will impose no burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received from Members, Participants or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within thirty-five 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 ninety 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 Amex 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.
    Amex has requested accelerated effectiveness of the proposed rule 
change in order that the rule can become effective on June 7, 1995.\7\

    \7\ Supra note 3 and accompanying text.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submission 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 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. 552, will be available for inspection and copying in the 
Commission's Public Reference Section, 450 5th Street, NW., Washington, 
DC 20549. Copies of such filings will also be available for inspection 
and copying at the principal office of Amex. All submissions should 
refer to file number SR-Amex-95-17 and should be submitted by June 14, 
1995.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\

    \8\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-12691 Filed 5-23-95; 8:45 am]
BILLING CODE 8010-01-M