11158 Federal Register / Vol. 60, No. 40 / Wednesday, March 1, 1995 / Notices

1See letter from Michael D. Pierson, Senior

Attorney, Market Regulation, PSE, to Beth A.

Stekler, Attorney, Division of Market Regulation,

SEC, dated February 17, 1995 (‘‘Amendment No.

1’’).

2The proposed rule change would apply to a New

Security if at least one of the following conditions

is met:

(1) Any one or more of (A) the aggregate market

value of the New Security, (B) the aggregate book

value of the assets attributed to the business

represented by the New Security, or (C) the

revenues attributed to the business represented by

the New Security are at least 25% of the same

measure determined with respect to the Original

Security or the business represented by the Original

Security, as applicable, calculated in a comparable

manner on a basis that reflects the inclusion of the

business represented by the New Security, provided

that in the case of the qualification of a New

Security under clause (B), the aggregate book value

of the assets attributed to the business represented

by the New Security is not less than $50 million,

and in the case of the qualification of a New

Security under clause (C), the revenues to the

business represented by the New Security are not

less than $50 million;

(2) Any one or more of (A) the aggregate market

value of the New Security, (B) the aggregate book

value of the assets attributed to the business

represented by the New Security, or (C) the

revenues attributed to the business represented by

the New Security are at least 33 1/3% of the same

measure determined with respect to the Original

Security or the business represented by the Original

Security, as applicable, calculated in a comparable

manner on a basis that reflects the exclusion of the

business represented by the New Security, provided

that in the case of the qualification of a New

Security under clause (B), the aggregate book value

of the assets attributed to the business represented

by the New Security is not less than $50 million,

and in the case of the qualification of a New

Security under clause (C), the revenues attributed

to the business represented by the New Security are

not less than $50 million; or

(3) The aggregate market value represented by the

New Security is at lease five hundred million

dollars ($500,000,000).

3Under the proposed rule change, options

contracts may not initially be listed for trading in

respect of a New Security until such time as shares

of the New Security are issued and outstanding and

are the subject of trading that is not on a ‘‘when

issued’’ basis or in any other way contingent on the

issuance or distribution of the shares.

[Release No. 34–35410; File No. SR–PSE–

95–04]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

Pacific Stock Exchange, Inc. Relating

to Earlier Listing of Options on

Securities Issued by Companies in

Certain Corporate Restructuring

Transactions

February 22, 1995.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on February 15, 1995,

the Pacific Stock Exchange, Inc. (‘‘PSE’’

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. On February 21, 1995, the

Exchange submitted to the Commission

Amendment No. 1 to the proposed rule

change in order to make certain

technical corrections to the text of the

proposal.1 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 Exchange proposes to amend its

rules to permit the earlier listing of

options on securities issued by

companies in connection with certain

corporate restructuring transactions.

The text of the proposed rule change is

available at the Office of the Secretary,

PSE, 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

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 Exchange proposes to amend its

rules to permit the earlier listing of

options on securities issued by

companies in connection with certain

corporate restructuring transactions

(‘‘New Securities’’). Currently, certain of

the Exchange’s rule preclude the listing

of options on any security until that

security has been actively traded at or

above a specific price level for a certain

period of time. For example, under PSE

Rule 3.6(a)(3), trading volume in an

underlying security must be at least

2,400,000 shares during the preceding

twelve months (the ‘‘Volume Test’’).

Further, under PSE Rule 3.6(a)(4), the

market price for an underlying security

must be at least $7.50 for the majority

of business days during the three

calendar month period preceding the

date the security is selected as an

underlying security (the ‘‘Price Test’’).

The proposed rule change would

facilitate the earlier listing of options on

New Securities by permitting the

Exchange to determine whether a New

Security satisfies the Volume Test and

Price Test by reference to the trading

volume and market price history of an

outstanding equity security (the

‘‘Original Security’’) previously issued

by the issuer of the New Security (or an

affiliate thereof). Specifically, if (a) the

aggregate market value, assets or

revenue attributable to a New Security

is at least a stated percentage of the

same measure attributable to the

Original Security and if a stated

minimum value of assets or revenues

represented by the New Security, as

applicable, is satisfied or (b) the

aggregate market value of the New

Security is not less than $500 million,2

then the Exchange would be permitted

to determine whether a New Security

satisfied the Volume Test and Price Test

by reference to the trading volume and

market price history of the Original

Security. Reference may be made to the

trading volume and market price history

of the Original Security only for trading

days occurring prior to the ex-date for

the transaction in which the New

Security is issued 3 and prior to any

trading day for which these tests are

determined to be satisfied by reference

to the trading volume and market price

history of the New Security. If reference

is made to either the trading volume or

market price history of the Original

Security for this purpose for any period

of time, then reference must be made to

both such criteria in respect of the

Original Security for that period.

In addition, if the New Security is to

be listed on an exchange or in an

automatic quotation system that has an

initial listing requirement equivalent to

the requirement of PSE Rule 3.6(a)(2)

(number of shareholders must be at least

2,000), that requirement would be

deemed to be satisfied. Finally, if at

least 40 million shares of a New

Security will be outstanding in a

restructuring, the Exchange may assume

that the New Security will satisfy the

listing criteria of both PSE Rule 3.6(a)(1)

(sufficient public float) and PSE Rule

3.6(a)(2). Before relying on either of the

assumptions described above, the

Exchange must make a reasonable

investigation as to the number of

shareholders and public float of the

New Security and must not have

determined that the requirements of PSE

Rules 3.6(a)(1) and 3.6(a)(2) will, in fact,

not be satisfied.
Federal Register / Vol. 60, No. 40 / Wednesday, March 1, 1995 / Notices 11159

1See letter from Michell R. Weisbaum, Associate

General Counsel, Phlx, to Beth Stekler, Attorney,

Division of Market Regulation, SEC, dated February

21, 1995 (‘‘Amendment No. 1’’).

2This filing withdraws and replaces File No. SR–

Phlx–94–43. See letter from Michelle R. Weisbaum,

Associate General Counsel, Phlx, to Michael A.

Walinskas, Branch Chief, Division of Market

Regulation, SEC, dated February 17, 1995.

The proposed rule change also would

revise one of the Exchange’s guidelines

relating to the withdrawal of approval of

underlying securities. Currently, under

PSE Rule 3.7, Commentaries .01.2 and

.01.3, an underlying security will not be

deemed to satisfy the Exchange’s listing

criteria if the trading volume of the

underlying security in all markets was

less than 1,800,000 shares in the

preceding twelve months (the

‘‘Maintenance Volume Test’’) or if the

market price of the underlying security

closed below $5 on a majority of

business days during the preceding six

months (the ‘‘Market Price Test’’).

Because New Securities have limited

trading history, they may be unable to

satisfy the Maintenance Volume Test or

the Market Price Test at the time options

on such securities are first listed for

trading on the Exchange. Accordingly,

the proposed rule change would add a

new Commentary .01.4 to PSE Rule 3.7

to provide that the Exchange may

determine whether a New Security

satisfies the Maintenance Volume and

Market Price Tests set forth in

Commentaries .01.2 and .01.3 of Rule

3.7, as well as the comparable tests set

forth in Rule 3.7, Commentary .04, by

reference to the trading volume and

price history of the Original Security

prior to commencement of trading in the

New Security, including ‘‘when issued’’

trading.

2. Statutory Basis

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, by

removing impediments to a free and

open market in options covering

securities issued by companies engaged

in corporate restructuring transactions.

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 publication of

this notice in the Federal Register or

within such other 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 the 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, N.W.,

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 at

the Commission’s Public Reference

Section, 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 PSE. All submissions

should refer to File No. SR–PSE–95–04

and should be submitted by March 22,

1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–4932 Filed 2–28–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35409; File No. SR–Phlx–

95–12]

February 22, 1995.

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

Philadelphia Stock Exchange, Inc.

Relating to Adoption of Listing

Standards Applicable to Options on

Securities Issued in Certain Corporate

Restructuring Transactions

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. § 78s(b)(1), notice is

hereby given that on February 13, 1995,

the Philadelphia Stock Exchange, Inc.

(‘‘Phlx’’ 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. On February 21, 1995, the

Exchange submitted to the Commission

Amendment No. 1 to the proposed rule

change in order to make certain

technical corrections to the text of the

proposal.1 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 Phlx, pursuant to Rule 19b–4 of

the Act, proposes to amend Exchange

Rule 1009 in order to adopt listing

standards applicable to options on

securities issued in certain corporate

restructuring transactions.2 The text of

the proposed rule change is available 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

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 Items 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 Phlx proposes to amend

Exchange Rule 1009 in order to permit

the earlier listing of options on

securities issued by companies in

connection with certain corporate

restructuring transactions (‘‘New

securities’’). Currently, certain of the

Exchange’s rules preclude the listing of

options on any security until that

security has been actively traded at or

above a specific price level for a certain

period of time. For example, under

Exchange Rule 1009, Commentary