Federal Register / Vol. 60, No. 245 / Thursday, December 21, 1995 / Notices 66329

[FR Doc. 95–31005 Filed 12–20–95; 8:45 am]

BILLING CODE 3110–01–C
66330 Federal Register / Vol. 60, No. 245 / Thursday, December 21, 1995 / Notices

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

2 17 CFR 240.19b–4 (1994).

3See letter from Claudia Crowley, Amex, to Glen

Barrentine, Senior Counsel, Division of Market

regulation, SEC, dated December 12, 1995.

Amendment No. 1 supplemented the proposal by

specifying that (1) the underlying equities of listed

convertible debt must be subject to real-time last

sale reporting in the United States, (2) specialists

assigned to municipal debt must comply with

MSRB Rule G–3, (3) municipal securities will not

be subject to off-board trading restrictions, and (4)

unrated debt securities of unaffiliated issuers may

be listed if an NRSRO has currently assigned an

investment grade rating to an immediately senior

issue by the same company.

4The Amex guidelines provide for the issuer to

have stockholders’ equity of at least $4,000,000 and

pre-tax income of at least $750,000 in its last fiscal

year, or in two of its last three fiscal years.

5The Commission notes that the new guidelines

for listing debt securities are substantially similar

to the NYSE’s debt listing standards, which the

Commission approved in Securities Exchange Act

Release No. 34019 (May 5, 1994), 59 FR 24765 (May

12, 1994).

6A company is in ‘‘good standing’’ if it is above

the relevant continued listing guidelines.

7An unaffiliated issuer is one that has no equity

securities listed on the Amex or NYSE; is not,

directly or indirectly, majority-owned by, nor under

common control with, an issuer of Amex or NYSElisted equity securities; and is not issuing a debt

security guaranteed by an issuer of equity securities

listed on the Amex or NYSE.

8To be investment grade, an issue must be

assigned a rating no lower than an S&P Corporation

rating of ‘‘BBB-’’ (or another NRSRO’s equivalent

thereof). The Amex amended the proposal to

specify that it will apply this standard only to

unrated bonds that are immediately junior to

another rated class of securities issued by the same

company. See Amendment No. 1, supra note 3.

9A pari passu issue has equal standing with the

debt issue proposed to be listed.

10See Securities Exchange Act Release No. 36225

(September 13, 1995), 60 FR 46734 (September 20,

1995) (notice of this proposed rule change).

11 Id.

12 Id.

13See Amendment No. 1 supra note 3 (specifying

that last trade reporting must be available in the

United States).

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–36594; File No. SR–Amex–

95–29]

Self-Regulatory Organizations;

American Stock Exchange, Inc.; Order

Approving Proposed Rule Change and

Notice of Filing and Order Granting

Accelerated Approval to Amendment

No. 1 to Proposed Rule Change

Relating to Bond Listing Standards

December 14, 1995.

I. Introduction

On July 19, 1995, the American Stock

Exchange, Inc. (‘‘Amex’’ or ‘‘Exchange’’)

submitted to the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder, 2 a proposed rule change to

revise its standards for the listing and

delisting of debt securities. On

December 12, 1995, the Amex submitted

to the Commission Amendment No. 1 to

the proposed rule change.3

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 36225

(September 13, 1995), 60 FR 48734

(September 20, 1995). No comments

were received on the proposal. This

order approves the proposed rule

change, including Amendment No. 1 on

an accelerated basis.

II. Description of the Proposal

Section 104 of the Amex’s Company

Guide sets forth the current standards

for listing bonds and debentures.

Presently, the Amex will consider

listing a debt security if: (1) The

company appears to be in a financial

position sufficient to satisfactorily

service the debt issue; (2) the issuer

meets the size and earnings guidelines

applicable to issuers listing common

stock; 4 and (3) the issue has an

aggregate market value and principal

amount of at least $5 million for issuers

that have common stock listed on the

Amex or the New York Stock Exchange

(‘‘NYSE’’), or at least $20 million and

100 holders for issuers that do not have

securities listed on the Amex or NYSE.

The Amex presently gives consideration

to delisting a bond issue if the aggregate

market value or principal amount falls

below $400,000. For convertible debt,

continued listing is dependent upon the

underlying security remaining in

compliance with the Amex’s numerical

criteria for that security.

The Amex proposes to amend its

standards for the listing of debt

securities with a view towards making

the Exchange more accessible to debt

issuers and facilitating the listing of

such securities.5 Specifically, the

proposal eliminates the requirements

that the issuer demonstrate that it will

be able to satisfactorily service the debt

issue, and that the issuer meet the size

and earnings guidelines applicable to

companies listing common stock. The

proposal also removes the requirement

that issuers that do not have securities

listed on the Amex or NYSE have at

least 100 holders and an aggregate

market value and principal amount of

$20 million. Finally, the proposal

modifies the current aggregate market

value and principal amount requirement

by stating that the issuer must have at

least $5 million in aggregate market

value or principal amount.

In place of the current guidelines, the

proposal provides that the Amex may

list an issuer’s debt securities if an

issuer of an equity security listed on the

Amex or NYSE is in ‘‘good standing’’

with the respective exchange,6 and has

an aggregate market value or principal

amount of at least $5 million. This

standard also will apply to an issuer

that is owned by, or under common

control with, an issuer of equity

securities listed on the Exchange or the

NYSE (‘‘listed issuer’’); and to an issuer

whose debt securities are guaranteed by

a listed issuer.

In contrast, debt securities of an

‘‘unaffiliated’’ issuer 7 will not be

eligible for initial listing on the Amex

unless a nationally recognized securities

rating organization (‘‘NRSRO’’) has

assigned a certain minimum rating to

the bonds (or to other bonds issued by

the same company). Specifically, debt

securities of an unaffiliated issuer will

not be eligible for initial listing on the

Amex unless:

• An NRSRO has assigned a current rating

to the debt security that is no lower than a

Standard and Poor’s (‘‘S&P’’) Corporation

‘‘B’’ rating or an equivalent rating by another

NRSRO; or

• If no NRSRO has assigned a rating to the

issue, an NRSRO has currently assigned an

investment grade rating to an immediately

senior issue,8 or a rating that is no lower than

an S&P Corporation ‘‘B’’ rating (or an

equivalent rating by another NRSRO) to a

pari passu9 or junior issue.

As under its current rules, the Amex

will give consideration to delisting a

bond issue if the issuer is unable to

meet its obligations on the listed debt,

or if the debt’s aggregate market value or

principal amount falls below $400,000.

The Amex proposal amends the

delisting standards to clarify that any

debt issuer that is unable to meet its

obligation on the listed debt securities

may be delisted. In applying this

standard, the Exchange states that it

normally will not delist the debt if there

is value in the security and continued

Exchange trading is in the best interests

of investors.10 However, if an issuer is

unable to meet its financial obligations

and there is minimal or no value in the

security, the Exchange will give serious

consideration to delisting the debt

issue.11 The Exchange states that it also

will consider delisting debt that was

listed based on the issuer being either

majority-owned or guaranteed by an

Amex or NYSE issuer when the equity

securities of such owner or guarantor

are delisted.12

Convertible bonds will be reviewed

for continued listing when the

underlying equity security is delisted,

and will be delisted when the related

security is no longer subject to real-time

last sale reporting in the United States.13

Further, if the underlying equity
Federal Register / Vol. 60, No. 245 / Thursday, December 21, 1995 / Notices 66331

14See Sections 121–123 of the Amex’s Company

Guide.

15This does not include debt issued or

guaranteed by the United States Government or

agencies thereof that presently may be admitted to

dealings on the Exchange pursuant to Amex Rule

140.

16The Amex intends to require specialist units

applying for appointment and registration in

municipal securities to be in compliance with

MSRB Rule G–3 regulations regarding municipal

securities principals and representatives. See

Amendment No. 1 supra note 3. The National

Association of Securities Dealers, Inc. (‘‘NASD’’)

has authority to enforce MSRB rules for listed

municipal securities. The Amex enforcement in this

regard will not preempt or limit in any manner the

NASD’s authority to act in this area.

17 15 U.S.C. 78f(b) (1988).

18As noted above, the current listing standards

require that a company appear to be in a financial

position sufficient to satisfactorily service in the

debt issue to be listed.

19The Commission notes that the NRSRO ratings

being adopted by the Amex are the same standards

as the Commission approved for the NYSE in

Securities Exchange Act Release No. 34019, supra

note 5.

20See Standard & Poor’s High Yield Directions,

January 1994.

21 Id.

security is delisted due to a violation of

the Amex ‘‘corporate responsibility’’

criteria (including, but not limited to,

the outside director, audit committee

and shareholder voting requirements),14

the Exchange will delist all debt

securities convertible into that equity

security.

The Amex also proposes to simplify

the listing process for debt issuers by

reducing the number of documents that

an applicant must file in support of its

debt listing application. Specifically, the

Exchange will eliminate the schedule of

distribution and the listing resolution.

In addition, the Exchange will no longer

require that trustees certify certain

issuer-specific information.

Finally, the Amex is adopting a new

rule to permit the listing of municipal

and sovereign debts (i.e., debt issued by

foreign governments, and by American

states, localities, or government

agencies).15 The Exchange will evaluate

whether to list there issuers on a caseby-case basis and will treat the issuer as

an ‘‘unaffiliated’’ corporate issuer for

purposes of the initial listing guidelines

described above. Municipal debt will be

subject to the same delisting standards

as corporate debt. The Amex will assign

municipal securities accepted for listing

on the Exchange to specialists that will

trade the securities in accordance with

all Amex regulations otherwise

applicable to the trading of securities on

the trading floor.16 All Exchange

contracts in municipal securities will be

compared, settled and cleared in

accordance with the applicable

regulations of the Municipal Securities

Rulemaking Board (‘‘MSRB’’).

III. Discussion

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange, and, in particular, with the

requirements of Section 6(b).17

Specifically, the Commission believes

the proposal is consistent with the

Section 6(b)(5) requirements that the

rules of an exchange be designed to

promote just and equitable principles of

trade, to prevent fraudulent and

manipulative acts, and, in general, to

protect investors and the public interest.

The development and enforcement of

adequate standards governing the initial

and continued listing of securities on an

exchange is an activity of critical

importance to financial markets and the

investing public. Listing standards serve

as a means for a self-regulatory

organization to screen issuers and to

provide listed status only to bona fide

companies with sufficient float, investor

base and trading interest to maintain fair

and orderly markets. Once a security

has been approved for initial listing,

maintenance criteria allow an exchange

to monitor the status and trading

characteristics of that issue to ensure

that it continues to meet the exchange’s

standards for market depth and

liquidity. For the reasons set forth

below, the Commission believes that the

proposed rule change will provide the

Amex with greater flexibility in

determining which debt securities

warrant inclusion in its bond trading

and disclosure systems, while

continuing the protections that the

Exchange’s listing standards provide

investors.

After careful review, the Commission

has concluded that the proposed initial

listing standards should help the Amex

to ensure that only substantial

companies capable of meeting their

financial obligations are eligible to have

their debt listed on the Exchange. As

before, the proposed rule change will

require that the Amex evaluate an

issuer’s ability to cover the interest

charges on its debt securities. Although

the Exchange currently makes this

interest coverage determination itself,18

the amended standards will rely instead

on either the issuer’s relationship with

the Amex of NYSE, or the debt’s NRSRO

rating.

The Commission agrees that, to the

extent that the Amex and the NYSE

have adequate listing standards for

common stock, the Amex reasonably

may assume that listed companies (and

certain affiliates thereof) should not

pose a significant risk of defaulting on

their obligations so long as the

companies remain in ‘‘good standing’’

on the exchanges. Moreover, debt

securities enjoy seniority over equity

securities. Because the Amex (or NYSE)

presumably would not have listed the

junior equity issue unless it was

satisfied with the quality of the

company, the Commission believes it is

reasonable for the Amex to assume that

the senior debt issue also warrants listed

status.

For ‘‘unaffiliated’’ issuers, the

Commission finds that it is not

unreasonable for the Exchange to defer

to the expertise of an NRSRO, rather

than conducting its own analysis of the

company’s financial condition, as is

presently the case. Although the

Commission would be concerned by any

potential misuse of NRSRO ratings, the

Commission notes that the NRSROs

routinely evaluate interest coverage,

among other things, when they rate

bonds. In addition, their methodology

incorporates extrinsic factors, such as

characteristics of the issuer’s industry

group. The Commission therefore agrees

with the Exchange that, under these

circumstances, NRSRO ratings can be

relied upon for determinations about the

creditworthiness of issuers.

Moreover, the Commission is satisfied

that the distinctions in NRSRO ratings

drawn by the Amex are valid.19

According to the S&P Corporation’s debt

rating definitions,20 bonds rated ‘‘B’’ (or

higher) currently have the capacity to

meet interest payments and principal

repayments, whereas bonds rated

‘‘CCC’’ (or lower) are dependent upon

favorable business, financial or

economic conditions to meet timely

payments of interest and repayment of

principal. The Commission also believes

that it is logical for the Amex to assume

that an unrated debt issue which is pari

passu with (or senior to) an issue with

at least a ‘‘B’’ rating would, if rated,

receive an equal (or higher) rating.

Finally, to permit the Amex to list

unrated bonds that are immediately

junior to an investment grade issue is

appropriate because those bonds

generally would be rated no more than

one rating category lower (i.e., a S&P

Corporation ‘‘BB’’ rating).21

As for the other provisions in the

proposal, the Commission finds that

they strike an appropriate balance

between protecting investors and

enhancing the flexibility of the debt

listing process. For instance, the

proposed rule change provides that, to

be eligible for listing, a bond issue must

have an aggregate market value or
66332 Federal Register / Vol. 60, No. 245 / Thursday, December 21, 1995 / Notices

22See Securities Exchange Act Release No. 32909

(September 15, 1993), 58 FR 49537 (September 23,

1993) (File No. SR–NYSE–93–21) (approving

amendments to Paragraph 703.06 of the NYSE’s

Listed Company Manual to eliminate requirement

that distribution information be submitted as

supporting document to debt listing application).

23The Exchange will continue to require an

opinion of counsel that the issuance of the debt has

been approved by the company’s board of directors.

See Section 213.6(c) of the Amex’s Company Guide.

Not requiring a listing resolution is consistent with

NYSE procedures. See Paragraph 703.06 of the

NYSE’s Listed Company Manual.

24This is consistent with NYSE requirements. See

Paragraph 703.06 of the NYSE’s Listed Company

Manual.

25See Securities Exchange Act release No. 36225,

supra note 10.

26See Securities Exchange Act Release No. 34019,

supra note 5.

27For example, the Commission believes that the

Amex should delist the debt of companies in

bankruptcy that file a plan of reorganization

providing no recovery for debt holders.

28See Amendment No. 1, supra note 3 (specifying

that last trade reporting must be available in the

United States).

29See supra note 14 and accompanying text.

30The Amex confirmed in Amendment No. 1,

supra note 3, that municipal securities will not be

subject to off-board trading restrictions.

31See Amendment No. 1, supra note 3.

32See Securities Exchange Act Release No. 36225,

supra note 10.

33See Securities Exchange Act Release No. 34019,

supra note 5.

34 15 U.S.C. 78s(b)(2) (1988).

35 17 CFR 200.30–3(a)(12) (1994).

principal amount of at least $5 million.

This should enable the Amex to deny

listed status to companies whose

securities do not have sufficient

liquidity for a fair and orderly market,

without infringing upon bona fide

issuers’ access to the Exchange’s bond

trading and disclosure systems.

Conversely, the Commission does not

believe that eliminating the distribution

requirement for unaffiliated issuers will

have a significant adverse effect on

investors in the bond market. In the

past, the Commission has recognized

that such information may be difficult to

estimate accurately and may be

relatively less pertinent than other

factors.22 Additionally, the Commission

believes that the proposed elimination

of certain documents that the Exchange

currently requires from applicants is

reasonable. Specifically, the Exchange is

eliminating the schedule of distribution

because distribution is no longer a

listing guideline, and the listing

resolution because it is essentially

ceremonial in nature and does not serve

any significant purpose.23 The Amex

also will cease to require that trustees

certify issuer-specific information.

Accordingly, the Exchange only will

require that the certificate show the

trustee’s acceptance of the trust.24

In terms of the delisting criteria, the

Commission has concluded that the

revised standards should enable the

Amex to identify listed companies that

may have insufficient resources to meet

their financial obligations or whose debt

securities may lack adequate trading

depth and liquidity. This, in turn, will

allow the Exchange to take appropriate

action to protect bondholders. The

Amex delisting standards, however, do

not include a minimum market value for

debt securities. The Exchange states that

if an issuer is unable to meet its

financial obligations and there is

minimal or no value in the security, the

Exchange will give serious

consideration to delisting the debt

issue.25 As the Commission discussed in

its approval of similar debt standards for

the NYSE,26 the Commission expects

the Amex to consider carefully the

propriety of continued exchange trading

of the securities of bankrupt or

distressed companies,27 and expects

debt securities with minimal value to be

delisted.

In addition, the Amex will delist

convertible bonds whenever the

underlying equity security is no longer

subject to real-time last sale reporting in

the United States.28 If the related equity

merely moves from the Amex to another

market, it is not inconsistent with the

Act for the Exchange to have discretion

to continue listing the convertible debt.

This would not be the case, however, if

the underlying security is delisted

because the issuer violated one of the

Amex’s corporate responsibility criteria.

As a general matter, the Commission

would have serious concerns about any

proposal that does not provide for the

delisting of convertible bonds where a

company acts to disadvantage its

shareholders. The Amex proposal

addresses this concern by including in

its guidelines that the Exchange will

delist convertible bonds when the

issuer’s equity security is delisted due

to a violation of the Exchange’s

corporate governance listing

standards.29

Finally, the Commission believes that

the Amex’s initial listing and delisting

criteria are appropriate for determining

whether municipal debt should be

trading on the Exchange. Because

municipal securities will trade under

the Amex’s existing regulatory regime

for trading securities (which includes

specialist obligations, margin

requirements, and surveillance

programs), the Commission believes that

adequate safeguards are in place to

ensure the protection of investors in

municipal securities.30

The Commission notes that the

MSRB’s regulatory scheme for the

comparison, settlement, and clearing of

municipal securities will continue to

apply to municipal securities listed on

the Amex. Additionally, the Amex will

require specialist units applying for

appointment and registration in

municipal securities to be in

compliance with MSRB Rule G–3

regarding municipal securities

principals and representatives.31 The

Commission believes that it is important

that any specialist selected by the Amex

for a listed municipal security be

familiar with the characteristics of such

security.

The Commission finds good cause for

approving Amendment No. 1 prior to

the thirtieth day after the date of

publication of notice of filing thereof.

Amendment No. 1 clarifies and codifies

the intent of certain language used in

the original filing. Finally, the

Commission did not receive any

comments on the original proposal,32

which was noted for the full statutory

period, nor did it receive comments on

a similar NYSE proposal that was also

noticed for the full statutory period.33

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

1 to the proposed rule change. Persons

making written submissions should file

six copies thereof with the Secretary,

Securities and Exchange Commission,

450 Fifth Street, NW, Washington, DC

20549. Copies of the submission, all

subsequent amendments, all written

statements with respect to the proposed

rules change that are filed with the

Commission, and all written

communications relating to Amendment

No. 1 between the Commission and any

persons, 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, DC 20549. Copies of such

filing will also be available at the

principal office of the Amex. All

submissions should refer to File No.

SR–Amex–95–29 and should be

submitted by January 11, 1996.

IV. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,34 that the

proposed rule change (SR–Amex–95–

29), including Amendment No. 1 on an

accelerated basis, is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.35
Federal Register / Vol. 60, No. 245 / Thursday, December 21, 1995 / Notices 66333

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

2Cf. PSE Const., Art. IV, § 5(a) (similar provision

for Equity Allocation Committee).

3The OAC currently evaluates Market Makers

and Lead Market Makers pursuant to Options Floor

Procedure Advice B–13.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–31087 Filed 12–20–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36592; File No. SR–PSE–

95–29]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Pacific Stock Exchange, Inc.

Relating to the Composition and

Duties of the Options Allocation

Committee of the Exchange

December 14, 1995.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

November 15, 1995, the Pacific Stock

Exchange Incorporated (‘‘PSE’’ 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 self-regulatory

organization. The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The PSE proposes to amend the rules

relating to the composition and duties of

its Options Allocation Committee

(‘‘OAC’’).

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

The Exchange proposes to make five

changes to PSE Rule 11.10(c). First, the

Rule currently provides in part that the

OAC shall consist of Floor Brokers and

Market Makers. The Exchange proposes

to amend this provision to provide that

the OAC shall consist of Market Makers,

Lead Market Makers, Floor Brokers,

and/or persons associated with floor

members, office members or office allied

members.2

Second, Commentary .01 to Rule

11.10(c) currently provides that the

OAC shall be comprised of (i) two Floor

Brokers from either the Options Floor

Trading Committee or the Options

Listing Committee; (ii) two Market

Makers or Lead Market Makers from

either the Options Floor Trading

Committee or the Options Listing

Committee; (iii) three at-large Floor

Brokers; and (iv) three at-large Market

Makers or Lead Market Makers. The

Exchange proposes to amend this

provisions to provide that attempts shall

be made in order for the OAC to have

a composition that includes: Floor

Brokers from either the Options Floor

Trading Committee or the Options

Listing Committee; Market Makers or

Lead Market Makers from either the

Options Floor Trading Committee or the

Options Listing Committee; at-large

Floor Brokers; and at-large Market

Makers or Lead Market Makers.

Third, the Exchange proposes to

eliminate the provision in Commentary

.01 that the OAC shall be limited to no

more than three members of the Options

Floor Trading Committee and no more

than three members of the Options

Listing Committee.

Fourth, Rule 11.10(c) currently

provides that it shall be the duty of the

OAC to allocate, reallocate and evaluate

options issues. The Exchange proposes

to change this provision to provide that

the OAC shall allocate and reallocate

option issues.

Finally, Rule 11.10(c) currently

provides that the OAC shall be

responsible for monitoring the

performances of trading crowds and

Lead Market Makers. The Exchange

proposes to change this provision to

provide that the OAC shall be

responsible for evaluating and

monitoring the performances of Market

Makers, trading crowds and Lead

Market Makers.3

The Exchange believes that the

current rules on the composition of the

OAC are unnecessarily restrictive and

that the proposed changes to these rules

are appropriate in order to allow for

greater flexibility in the committee

selection process and the process for

replacing committee members who

resign or change their status in regard to

floor membership or service on other

committees of the Exchange. With

regard to the proposed changes to the

rules on the duties of the OAC, the

Exchange believes that they clarify the

existing rules and do not otherwise

change the way business is conducted

on the Exchange.

The Exchange believes that the

proposal is consistent with Section 6(b)

of the Act, in general, and Section

6(b)(5), in particular, in that it promotes

just and equitable principles of trade,

and Section 6(b)(4), in particular, in that

it assures a fair representation of

members in the administration of the

affairs of the Exchange.

(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 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 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

organizations 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.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 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