31208 Federal Register / Vol. 61, No. 119 / Wednesday, June 19, 1996 / Notices

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 35571

(Apr. 5, 1995), 60 FR 18649 (Apr. 12, 1995) (order

approving proposed rule change relating to

domestic listing standards).

4Previously, the NYSE required that the company

have at least 2,200 total stockholders together with

an average monthly trading volume of 100,000

shares for the most recent six months, or 2,000

round-lot holders.

5See Securities Exchange Act Release No. 35571

n. 19 (Apr. 5, 1995), 60 FR 18649 (Apr. 12, 1995).

6According to the Exchange, a small number of

companies that initially listed on the Exchange by

satisfying the minimum aggregate market value of

both publicly held shares and net tangible assets

before the original listing standards were increased

to their current levels are above the current

continued listing criteria, but are below the

proposed criteria. Upon the Commission’s approval

of the proposed rule change, the Exchange will

notify these companies of the new continued listing

criteria and inform such companies that the

Exchange expects them to be in compliance with

the new criteria within 18 months of their effective

date. The Exchange will consider those companies

that do not meet these new standards by such date

to be below the continued listing criteria at that

time.

7Companies may currently be valued on a ‘‘cash

flow’’ basis by either on listing demonstrating

earning power by meeting the minimum levels of

adjusted income or after being listed on the

Exchange switching from a reported income to a

‘‘cash flow’’ basis.

8As described above, the Exchange currently

requires 1,200 round-lot holders.

9 15 U.S.C. § 78f(b).

SR–MSRB–96–5 and should be

submitted by July 10, 1996.

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. 96–15508 Filed 6–18–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37307; File No. SR–NYSE–

96–07]

Self-Regulatory Organizations; New

York Stock Exchange, Inc.; Order

Granting Approval To Proposed Rule

Change Relating To Continued Listing

Criteria for Capital or Common Stock

June 12, 1996.

On March 18, 1996, the New York

Stock Exchange, Inc. (‘‘NYSE’’ 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

amend the criteria for continued listing

on the Exchange for capital or common

stock.

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 3707 (Apr. 1,

1996), 61 FR 15548 (Apr. 8, 1996). No

comments were received on the

proposal.

In 1995, the Exchange amended its

domestic listing standards by making

changes to the numerical criteria.3 One

of the proposals adopted an alternate

demonstrated earnings power standard

for companies that have a market

capitalization of at least $500 million

and revenues of at least $200 million in

their most recent fiscal year. Under this

new alternative, such companies are

able to qualify for listing if their

adjusted net income is positive for each

of the last three fiscal years and not less

than $25 million in the aggregate for

such period. At the same time, the

NYSE also amended its domestic listing

standards by increasing the listing

standard regarding aggregate market

value of publicly-held shares and net

tangible assets from $18 million to $40

million and added an alternate liquidity

standard of 500 total stockholders and

average monthly trading volume of

1,000,000 shares.4 When the

Commission approved these

amendments to the initial listing

standards, it noted that the Exchange

committed to propose corresponding

continued listing criteria.5

Currently, Paragraph 802 of the

NYSE’s Listed Company Manual

(‘‘Manual’’) sets forth the standards for

companies that want their equity

securities to remain listed on the

Exchange. These standards require

companies to maintain the following

minimum numerical criteria for their

capital or common stock. First, the

company must have at least 1,200

holders of 100 shares or more (or of a

unit of trading if less than 100 shares).

Second, the number of publicly-held

shares must be at least 600,000. Third,

the aggregate market value of publiclyheld shares must be at least $5,000,000.

Fourth, the company must have at least

$8,000,000 in aggregate market value of

shares outstanding (excluding treasury

stock) and in net tangible assets

available to common stock. The current

NYSE continued listing standards,

however, do not provide for continue

listing standards for companies that

were listed by satisfying the alternate

demonstrated earnings power standard

or under the alternate liquidity

standard. In its proposed rule change,

the NYSE proposes to adopt new

continued listing criteria to parallel the

adjusted net income listing standard

and to amend its current continued

listing criteria to reflect the changes

made in 1995 to the initial listing

standards.6

Adjusted Net Income Continued Listing

Criteria

Under the proposal, for companies

that are currently valued on a ‘‘cash

flow’’ basis under Paragraph 102.01 of

the Manual, the aggregate market value

of shares outstanding, excluding

treasury stock, must be at least

$25,000,000 and average adjusted net

income for the past 3 years must be at

least $6,500,000.7

Earnings and Liquidity Continued

Listing Criteria

Under the proposal, the NYSE will

require that the company maintain at

least 400 total stockholders or 1,200

total stockholders if the average

monthly trading volume in the common

stock is less than 100,000 shares for the

most recent 12 months.8 The Exchange

will also require that the company

maintain an aggregate market value of

publicly-held shares of $8,000,000 for

its common stock. With respect to

earnings, the Exchange proposes to

require that the company maintain an

aggregate market value of shares

outstanding (excluding treasury stock)

of at least $12,000,000 and average net

income after taxes for the past three

years of at least $600,000. The Exchange

will also require the net tangible assets

available to common stock to be at least

$12,000,000 and average net income

after taxes for the past 3 years to be at

least $600,000.

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).9

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;

and are not designed to permit unfair

discrimination between issuers.

The Commission believes that the

development and enforcement of

adequate standards governing the listing

of securities on an exchange is an

activity of critical importance to

exchange markets and to the investing

public. Listing standards serve as a

means for the self-regulatory

organizations (‘‘SROs’’) to screen issuers

and to provide listed status only to bona

fide companies with substantial float,

investor base, and trading interest to

ensure sufficient liquidity for fair and

orderly markets. Listing standards also

enable an exchange to assure itself of
Federal Register / Vol. 61, No. 119 / Wednesday, June 19, 1996 / Notices 31209

10See Securities Exchange Act Release No. 35571,

supra note 3.

11 15 U.S.C. 78s(b)(2).

12 17 CFR 200.30–3(a)(12).

the bona fides of the company and its

past trading history. In this regard, the

Exchange previously proposed, and the

Commission approved, amendments to

its initial listing standards that provided

for an alternate method by which a

company could meet the ‘‘demonstrated

earnings’’ listing standard, increased the

numerical criteria for the aggregate

market value of both publicly-held

shares and net tangible assets, and

adopted an alternate shareholder

distribution standard for companies

whose shares are very actively traded.10

With this rule proposal, the Exchange

proposes to amend the continued listing

criteria for common stock to reflect the

amendments made to the initial listing

standards in 1995. The Commission

believes that adequate maintenance

standards are of equal importance to the

development of adequate standards for

initial inclusion on an exchange. The

Commission notes that once an issue

has been initially approved for listing,

the Exchange must monitor continually

the status and trading characteristics of

that issue to ensure that it continues to

meet exchange standards for trading

depth and liquidity.

Specifically, with respect to the new

adjusted net income criteria, the

Commission believes that it is

appropriate to establish specific

continued listing criteria that correlate

to the alternate method for satisfying the

demonstrated earnings requirement of

the initial listing standard. Under the

new standards, companies that are

valued on a ‘‘cash flow’’ basis must have

at least an aggregate market value of

$25,000,000 (which is higher than the

proposed standard of $12,000,000

aggregate market value for other

companies) as well as satisfy an average

adjusted net income for the past three

years of $6,500,000.

Under the proposal, the Exchange is

also increasing the minimum

requirements for aggregate market value

of publicly-held shares from $5,000,000

to $8,000,000; aggregate market value of

shares outstanding (excluding treasury

stocks) from $8,000,000 to $12,000,000;

and net tangible assets available to

common stock from $8,000,000 to

$12,000,000. The Commission believes

that these substantial increases

significantly upgrade the NYSE’s

continued listing criteria and strengthen

the Exchange’s securities listing process

by adding continued listing standards

that more appropriately correspond to

the initial listing standards. Moreover,

the Commission believes that the

stringent maintenance criteria,

established by the rule proposal, should

help to ensure the stability of the

marketplace, as well as protect

investors, by enabling the NYSE to

identify listed companies that may not

have sufficient liquidity and financial

resources to warrant continued listing.

This, in turn, will allow the NYSE to

take appropriate action.

Finally, the NYSE proposes to amend

the investor base and public float

requirements of its continued listing

criteria. Although the minimum number

of investors required has decreased, the

Commission believes that establishing a

minimum of at least 400 total

stockholders in conjunction with an

average monthly trading volume of at

least 100,000 shares will not

significantly weaken the high standards

that the Exchange wants to maintain.

The requirement for an average monthly

trading volume will ensure that listed

companies with a smaller shareholder

base should have sufficient interest to

support a liquid market. Moreover, the

Exchange requirement that listed

companies have at least 1,200 total

stockholders if the average monthly

trading volume is less than 100,000 also

will ensure that there is sufficient

shareholder base to support a liquid

market. Although the Exchange

previously required at least 1,200

round-lot holders, the Commission

believes that the new shareholder

distribution standard in conjunction

with the updated numerical criteria will

permit the Exchange to monitor its

listed companies to ensure continued

depth and liquidity.

In conclusion, based upon the

analysis set forth above, the

Commission believes this rule change

will continue to ensure that NYSE listed

companies have adequate depth and

liquidity to support trading on the

NYSE. Accordingly, the Commission

believes that this rule change adequately

protects investors and the public

interest.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,11 that the

proposed rule change (SR–NYSE–96–

07) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–15576 Filed 6–18–96; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

Hartford District Advisory Council

Meeting, Public Meeting

The U.S. Small Business

Administration, Hartford District

Advisory Council will hold a public

meeting on Monday, July 1, 1996, at

8:30 a.m. at 2 Science Park, New Haven,

Connecticut 06511, to discuss matters as

may be presented by members, staff of

the U.S. Small Business Administration,

or others present.

For further information, write or call

Ms. Jo-Ann Van Vechten, District

Director, U.S. Small Business

Administration, 330 Main Street,

Hartford, Connecticut, (860) 240–4670.

Dated: June 12, 1996.

Michael P. Novelli,

Director, Office of Advisory Council.

[FR Doc. 96–15499 Filed 6–18–96; 8:45 am]

BILLING CODE 8025–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Commercial Space Transportation

Advisory Committee—ReEstablishment

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Notice of Commercial Space

Transportation Committee Reestablishment.

SUMMARY: Notice is hereby given of the

re-establishment of the Commercial

Space Transportation Advisory

Committee. The committee reviews

matters relating to the commercial space

transportation industry and provides

information, advice, and

recommendations on commercial space

transportation activities. The functions

of the committee are solely advisory and

the committee will comply with the

provisions of the Federal Advisory

Committee Act.

The Secretary of Transportation has

determined that the use of the

Commercial Space Transportation

Advisory Committee is in the public

interest in connection with the

performance of duties imposed on FAA

by law. Meetings of the committee will

be open to the public.

FOR FURTHER INFORMATION CONTACT:

Brenda Parker (AST–100), Office of the

Associate Administrator for Commercial

Space Transportation, 400 7th Street,

SW., Washington, DC, 20591, telephone

(202) 366–2932.