[Federal Register Volume 60, Number 235 (Thursday, December 7, 1995)]
[Notices]
[Pages 62914-62915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29780]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36538; International Series Release No. 894; File No. 
SR-Amex-95-44]


Self-Regulatory Organizations; Notice of Filing of a Proposed 
Rule Change by the American Stock Exchange, Inc., Relating to the 
Listing and Trading of Equity Linked Term Notes on Non-U.S. Securities

November 30, 1995.
    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 November 9, 1995, the American Stock Exchange, Inc. (``Amex'' or 
``Exchange'') 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 by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.

    \1\15 U.S.C. 78s(b)(1).
    \2\17 CFR 240.19b-4.
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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 Section 107B of the Amex Company 
Guide to provide alternate criteria for the listing and trading of 
certain hybrid debt securities whose value is linked to the performance 
of a non-U.S. company which is traded in the U.S. market as sponsored 
American Depositary Shares, ordinary shares or otherwise. The text of 
the proposed rule change is available at the Office of the Secretary, 
the Exchange, 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. The 
test of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Section (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

    On May 20, 1993 and December 13, 1993, the Commission approved 
amendments to Section 107 of the Amex Company Guide to provide for the 
listing and trading of Equity Linked 

[[Page 62915]]
Term Notes (``ELNs'').\3\ ELNs are intermediate term (two to seven 
years), non-convertible, hybrid debt instruments, the value of which is 
linked to the performance of a highly capitalized, actively traded U.S. 
and non-U.S. companies.

    \3\See Securities Exchange Act Release Nos. 32345 (May 20, 
1993), 58 FR 30833 (May 27, 1993), and 33328 (December 13, 1993), 58 
FR 66041 (December 20, 1993).
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    In August 1994, the Exchange amended Section 107B of the Amex 
Company Guide to permit the listing and trading of ELNs linked to 
actively traded non-U.S. companies which are traded in the U.S. market 
as sponsored American Depositary Shares, ordinary shares or otherwise 
(``non-U.S. securities''), provided that (1) the Exchange has in place 
a comprehensive surveillance sharing agreement with the primary 
exchange on which the non-U.S. security trades; or (2) the trading 
volume of the non-U.S. security in the U.S. market represents at least 
50% of the world-wide trading volume in the non-U.S. security (``50% 
Test'').\4\

    \4\See Securities Exchange Act Release No. 34549 (August 18, 
1994), 59 FR 43873 (August 25, 1994).
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    The Exchange now proposes to amend its ELNs on non-U.S. security 
listing criteria by (1) revising the manner in which the applicable 
percentage of world-wide trading volume is calculated under the 50% 
Test; and (2) adding new criteria for the listing of ELNs on non-U.S. 
securities, based on the daily trading volume in the U.S. Specifically, 
the Exchange proposes to revise the 50% Test so that trading in non-
U.S. securities and other related non-U.S. securities in any market 
with which the Exchange has in place a comprehensive/effective 
surveillance sharing agreement will be added to U.S. market volume for 
the purpose of determining whether the 50% Test has been met. 
Currently, only trading in the U.S. market counts toward satisfying the 
50% Test.
    In addition, the Exchange proposes to add an alternate set of 
criteria under which the Exchange may list ELNs on non-U.S. securities 
(``Daily Trading Volume Standard''). The new standard will permit the 
Exchange to list ELNs on non-U.S. securities if all of the following 
conditions are satisfied: (1) the combined world-wide trading volume 
for the non-U.S. security in the U.S. market or in any market with 
which the Exchange has in place a comprehensive surveillance sharing 
agreement represents (on a share equivalent basis) at least 20% of the 
combined world-wide trading volume in the non-U.S. security and other 
related non-U.S. securities over the six month period preceding the 
date of selection of the non-U.S. security for an ELN listing; (2) the 
average daily trading volume for the non-U.S. security in the U.S. 
market over the six months preceding the date of selection of the non-
U.S. security for an ELN listing is at least 100,000 shares; and (3) 
the trading volume for the non-U.S. security in the U.S. market is at 
least 60,000 shares per day for a majority of the trading days for the 
six months preceding the date of selection of the non-U.S. security for 
an ELN listing.
    The Exchange believes that the alternate criteria is appropriate in 
that it limits the listing of ELNs linked to non-U.S. securities to 
those that have both a significant amount of U.S. market trading volume 
and a substantial volume of trading covered by a comprehensive/
effective surveillance sharing agreement, which gives the Exchange the 
ability to inquire into potential trading problems or irregularities in 
a market place that serves as a significant price discovery market for 
the non-U.S. security. Thus, the proposed requirement of observable, 
high trading volumes, should ameliorate any regulatory concern 
regarding investor protection and, at the same time, allow investors to 
trade ELNs linked to more non-U.S. securities.
    The Exchange also believes that the proposed amendment will benefit 
investors by expanding the number of non-U.S. securities that may be 
linked to ELNs, thereby providing investors with enhanced investment 
flexibility. The Exchange believes that it is appropriate to now 
include additional non-U.S. securities within the existing regulatory 
framework because of the significant level of U.S. investor interest in 
both U.S. and non-U.S. highly capitalized and actively traded reporting 
companies.
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act in general and furthers the objectives of 
Section 6(b)(5) in particular in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of change, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.

(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

    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 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 proposal. Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street NW., Washington, 
D.C. 20549. Copies of the submission, 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 Fifth Street 
NW., Washington, D.C. Copies of such filing will also be available for 
inspection and copying at the principal office of the CBOE. All 
submissions should refer to SR-Amex-95-44 and should be submitted by 
December 28, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\

    \5\17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-29780 Filed 12-6-95; 8:45 am]
BILLING CODE 8010-01-M