[Federal Register Volume 60, Number 102 (Friday, May 26, 1995)]
[Notices]
[Pages 27996-27997]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12925]



-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35740 ; File No. SR-PSE-95-14]


Self-Regulatory Organizations; The Pacific Stock Exchange, 
Incorporated; Notice of Filing of Proposed Rule Change Regarding 
Depository Eligibility Requirements

May 19, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 15, 1995, The Pacific 
Stock Exchange, Incorporated (``PSE'') 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 PSE. The Commission is publishing this notice to solicit 
comments from interested persons.

    \1\15 U.S.C. Sec. 78s(b)(1) (1988).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

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

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.\2\

    \2\The Commission has modified the language in these sections.
---------------------------------------------------------------------------

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

    Under the proposed rule change, PSE will adopt a uniform depository 
eligibility rule for issuers that desire to list their securities on 
PSE. 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 PSE'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 Releases 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).
---------------------------------------------------------------------------

    The proposed rule change will require domestic issuers to represent 
to PSE before issues of securities are listed that the CUSIP numbers 
identifying the securities have 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. In addition, the rule will not apply to 
American Depository Receipts for securities of a foreign issuer.

    \4\15 U.S.C. Sec. 78q-1 (1988).
---------------------------------------------------------------------------

    The proposed rule change sets forth additional requirements that 
must be met before a security will be deemed to be ``depository 
eligible'' within the meaning of PSE Rule 5.9(c)(4). The proposed rule 
specifies different requirements for depository eligibility 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 tracking system'').
    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 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 tracking system, a new issue will be deemed to be depository 
eligible upon commencement of trading on PSE.
    The proposed rule change is consistent with Section 6(b)(5) of the 
Act\5\ in that it is designed to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system.

    \5\15 U.S.C. Sec. 78f(b)(5) (1988).
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    PSE does not believe that the proposed rule change will 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

    Written comments on the proposed rule change were neither solicited 
nor received.

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 PSE 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.
    PSE has requested accelerated effectiveness of the proposed rule 
change in order that the rule can become effective on June 7, 1995.\6\

    \6\Supra note 3 and accompanying text. [[Page 27997]] 
---------------------------------------------------------------------------

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. Sec. 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 PSE. All submissions 
should refer to file number SR-PSE-95-14 and should be submitted by 
June 15, 1995.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\

    \7\17 CFR 200.30-3(a)(12) (1994).
---------------------------------------------------------------------------

Jonathan G. Katz,
Secretary.
[FR Doc. 95-12925 Filed 5-25-95; 8:45 am]
BILLING CODE 8010-01-M