21216 Federal Register / Vol. 61, No. 91 / Thursday, May 9, 1996 / Notices

2See Securities Exchange Act Release No. 27753

(Mar. 1, 1990), 55 FR 8626 (Mar. 8, 1990).

3 15 U.S.C. 78s(b)(3)(A).

4 17 CFR 240.19b-4(e)(6).

5The affected provisions currently prevent the

listing of (1) any cash settled product settled in any

currency other than U.S. dollars or (2) any product

that had a mandatory redemption price of less than

three dollars.

6See Securities Exchange Act Release No. 27753

(Mar. 1, 1990), 55 FR 8626 (Mar. 8, 1990) (order

approving File-No. SR–Amex–89–29). For example,

a stock index-linked note that was payable in a

foreign currency would raise important regulatory

issues among which might include the need to

address appropriate product term and risk

disclosure, customer suitability, and settlement

procedures. Accordingly, the Commission expects

the Amex to consult with it on the need to file a

Section 19(b) rule change to list a product with

such terms under the Rule 107A listing standards.

7 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3NASD Manual,. Schedules to the By-Laws,

Schedule D, Part II (CCH) ¶¶ 1803–06A.

4 Interim reports are reports that are voluntarily

distributed by an issuer as part of its shareholder

relations activities and do not include quarterly

financial reports required to be filed with the

Commission pursuant to Sections 13(a) and 15(d) of

the Act, 15 U.S.C. 78m(a), 78o(d).

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

In March 1990, the Commission

approved the adoption of Section 107 of

the Amex Company Guide containing

guidelines for listing securities that have

features common to both equity and

debt securities, yet do not fit within the

traditional definitions of such

securities.2 Sometimes referred to as

‘‘hybrids,’’ these securities can take a

variety of forms. For example, the

Exchange has listed under Section 107

a zero coupon intermediate term note,

which at maturity returns the face

amount of the note plus a percentage of

the appreciation, if any, in a well known

index such as the S&P 500, or a debt

security with a relatively high fixed

return, but whose value at maturity is

linked to the performance of an

unrelated common stock.

Section 107A currently specifies the

minimum issuer qualifications, the

minimum public distribution and

aggregate market value of the security

and other criteria to assist the Exchange

in its case by case review and

determination of the suitability of each

security prior to its approval for listing.

The Exchange now proposes to

conform its listing criteria for hybrid

securities to those of the NYSE by

eliminating the current requirements of

Section 107A that require a certain

minimum redemption price and only

allow cash settlement of covered

instruments if settled in U.S. dollars.

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) in particular in that it is

designed to promote just and equitable

principles of trade and to protect

investors and the public interest in that

it conforms the Exchange’s listing

standards for hybrid securities to those

of the NYSE.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The proposed rule change does not

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

The Exchange has neither solicited

nor received written comments on the

proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the foregoing proposed rule

change: (1) does not significantly affect

the protection of investors or the public

interest; (2) does not impose any

significant burden on competition; (3)

does not become operative for 30 days

from April 26, 1996, the date on which

it was filed, and the Exchange provided

the Commission with written notice of

its intent to file the proposed rule

change at least five business days prior

to the filing date, it has become effective

pursuant to Section 19(b)(3)(A) of the

Act 3 and Rule 19b–4(e)(6) thereunder.4

The Commission notes that although

it is reasonable for the Exchange to

remove the affected provisions as

mandatory listing standards,5 proposals

that deviate from these standards might

raise novel or significant regulatory

issues that would require a proposed

rule change to list the product.6

At any time within 60 days of the

filing of the proposed rule change, the

Commission may summarily abrogate

such rule change if it appears to the

Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

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 also will be available for

inspection and copying at the principal

office of the Exchange. All submissions

should refer to File No. SR–Amex–96–

15 and should be submitted by May 30,

1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–11624 Filed 5–8–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37163; File No. SR–NASD–

96–09]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change by

National Association of Securities

Dealers, Inc. Relating to the

Distribution of Interim Reports to

Beneficial Owners and the Use of New

Technology to Communicate Such

Information to Shareholders

May 2, 1996.

On March 13, 1996, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’) filed with

the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

a proposed rule change pursuant to

Section 19(b)(1) of the Securities

Exchange Act of 1934 (‘‘Act’’) 1 and Rule

19b–4 thereunder.2 The rule change

amends Part II of Schedule D to the

NASD By-Laws (‘‘Schedule D’’) 3 by

adding precatory language

recommending that Nasdaq issuers

distribute interim reports to both

shareholders of record and beneficial

shareholders 4 to shareholders if they
Federal Register / Vol. 61, No. 91 / Thursday, May 9, 1996 / Notices 21217

5The substance of this portion of the proposed

rule change has been adopted by the New York

Stock Exchange and American Stock Exchange. See

NYSE Company Manual Rule 203.02 and American

Stock Exchange Company Guide Section 623.

6The securities of Nasdaq issuers are ‘‘included

in’’ The Nasdaq Stock Market; they are not ‘‘listed

on’’ the Nasdaq Stock Market. However, for

purposes of this filing, the term ‘‘listed’’ will apply

to Nasdaq, as well as exchange-listed securities.

7See supra note 5.

8See supra note 5.

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

2Letters from Julie Beyers, Associate Counsel,

NSCC, to Christine Sibille, Division of Market

Regulation, Commission (February 7 and 15, 1996).

3Securities Exchange Act Release No. 36907

(February 29, 1996), 61 FR 8997.

4A CNS security is a cleared security eligible for

transfer on the books of each qualified securities

depository (e.g., The Depository Trust Company, or

the Philadelphia Depository Trust Company), and

Continued

distribute such reports to shareholders

of record 5 and encouraging issuers to

utilize communications technology to

communicate to shareholders in a

timely manner.

Notice of the proposed rule change,

together with the substance of the

proposal, was provided by issuance of a

Commission release (Securities

Exchange Act Release No. 37010, March

21, 1996) and by publication in the

Federal Register (61 FR 13909, March

28, 1996). No comment letters were

received. This order approves the

proposed rule change.

The rule change approved today adds

new Section 1(d) to Part II of Schedule

D recommending that Nasdaq issuers

distribute interim reports to both

shareholders of record and beneficial

shareholders if they distribute such

reports to shareholders of record. The

rule change also adds new Section 2(f)

of Part II to Schedule D regarding the

qualification requirements for issuers of

non-Canadian foreign securities and

American Depositary Receipts that are

included in The Nasdaq Stock Market.

Such issuers also are recommended to

distribute interim reports to both

shareholders of record and beneficial

shareholders if they distribute such

reports to shareholders of record. The

rule change will apply to both the

Nasdaq National Market and The

Nasdaq SmallCap Market tiers of The

Nasdaq Stock Market.

The rule change is the product of a

review by various industry groups,

including the American Society of

Corporate Secretaries and the Securities

Industry Association, of listed 6

companies’ dissemination of interim

earnings reports to shareholders. The

industry groups have been attempting to

achieve some uniformity among listed

companies in the handling of interim

earning reports. Presently, some listed

companies distribute interim reports to

both record and beneficial shareholders,

some listed companies send interim

reports to shareholders of record only,

and some do not send interim reports to

any shareholders. The portion of the

proposed rule change recommending

that Nasdaq issuers distribute interim

reports to both shareholders of record

and beneficial shareholders to

shareholders if they distribute such

reports to shareholders of record is

consistent with voluntary provisions

adopted by the New York Stock

Exchange and the American Stock

Exchange 7 and, therefore, would

provide uniformity among these markets

regarding the handling of listed

company interim earnings reports.

New Sections 1(d) and 2(f) to Part II

of Schedule D also encourage Nasdaq

issuers to consider additional

technological methods to communicate

such information to shareholders in a

timely and less costly manner as such

technology becomes available. This

provision is intended to encourage

Nasdaq issuers to utilize new

communications technology available to

many but not all beneficial

shareholders. The NASD stated in its

filing that Nasdaq issuers should

consider this provision of the rule

change as a supplement to the first

provision of the proposed rule change

recommending that Nasdaq issuers

distribute interim reports to both

shareholders of record and beneficial

shareholders to shareholders if they

distribute such reports to shareholders

of record.

The rule change is precatory and does

not impose new requirements on

issuers. Nasdaq issuers that distribute

interim reports to shareholders of record

only would not be subject to Nasdaq

actions for non-compliance with Nasdaq

listing requirements.

The Commission finds that the rule

change is consistent with the provisions

of Section 15A(b)(6) of the Act. The rule

change is designed to prevent

fraudulent and manipulative acts and

practices, to promote just and equitable

principles of trade, 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 by, among other things,

encouraging Nasdaq issuers to distribute

interim reports to both shareholders of

record and beneficial shareholders to

shareholders if they distribute such

reports to shareholders of record. This

provision of the proposed rule change is

consistent with provisions adopted by

the New York Stock Exchange and the

American Stock Exchange 8 and,

therefore, will provide uniformity

among these markets regarding the

handling of listed company interim

earnings reports. The rule change also

encourages Nasdaq issuers to consider

new technological means to

communicate the information contained

in their interim reports to shareholders

in a timely and less costly manner.

These provisions are intended to

enhance shareholder communications

in The Nasdaq Stock Market.

It is Therefore Ordered, pursuant to

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

proposed rule change SR–NASD–96–09

be, and hereby is, approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority, 17 CFR 200.30–3(a)(12).

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–11536 Filed 5–7–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37162; File No. SR–NSCC–

96–01]

Self-Regulatory Organizations;

National Securities Clearing

Corporation; Order Approving a

Proposed Rule Change Establishing

Standard Prices for Transfers of NonContinuous Net Settlement Assets

through the Automated Customer

Account Transfer Service

May 2, 1996.

On January 5, 1996, the National

Securities Clearing Corporation

(‘‘NSCC’’) filed with the Securities and

Exchange Commission (‘‘Commission’’)

a proposed rule change (File No. SR–

NSCC–96–01) pursuant to Section

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

of 1934 (‘‘Act’’) 1 to establish standard

prices for certain assets transferred

through NSCC’s Automated Customer

Account Transfer (‘‘ACAT’’) service. On

February 8 and 20, 1996, NSCC filed

amendments to the proposed rule

change.2 Notice of the proposal was

published on March 6, 1996, in the

Federal Register to solicit comments on

the proposed rule change.3 No comment

letters were received. For the reasons

discussed below, the Commission is

approving the proposed rule change.

I. Description

NSCC’s proposed rule change

modifies NSCC’s rules to coincide with

its practice of establishing systemized,

standard default prices based on asset

type for assets which are not eligible for

NSCC’s Continuous Net Settlement

(‘‘CNS’’) 4 system and which are