Federal Register / Vol. 61, No. 119 / Wednesday, June 19, 1996 / Notices 31207

33 17 CFR 200.30–3(a)(16).

deciding whether to grant Cedel’s

request for exemption from registration.

Persons desiring to make written

submissions should file six copies

thereof with the Secretary, Securities

and Exchange Commission, 450 Fifth

Street, N.W., Washington, D.C. 20549.

Reference should be made to File No.

600–29. Copies of the application and

all written comments will be available

for inspection and copying at the

Commission’s Public Reference Room,

450 Fifth Street, N.W., Washington, D.C.

20549.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.33

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–15575 Filed 6–18–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37304; File No. SR–MSRB–

96–5]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of a Proposed Rule Change by the

Municipal Securities Rulemaking

Board Relating to Preservation of

Records

June 11, 1996.

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 June 4, 1996, the

Municipal Securities Rulemaking Board

(‘‘Board’’ or ‘‘MSRB’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) a proposed

rule change (SR–MSRB–96–5). The

proposed rule change is described in

Items I and II below, which Items have

been prepared by the Board. 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 Board is proposing to amend rule

G–9, on preservation of records. The

proposed rule change would require

that brokers, dealers and municipal

securities dealers (collectively,

‘‘dealers’’) retain the records required by

rule G–8(a)(xv) for a period of three

years. The Board requests that the

Commission set the effective date for the

proposed rule for 30 days after filing.

II. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

In its filing with the Commission, the

Board 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 texts of these

statements may be examined at the

places specified in Item IV below. The

Board 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

Among other things, Board rule G–36

requires that, with certain exceptions,

each dealer acting as an underwriter in

a primary offering of municipal

securities submit a copy of the final

official statement, if one is prepared, to

the Board. Underwriters also are

required to send advance refunding

documents to the Board if an offering of

municipal securities ‘‘advance refunds’’

an outstanding issue of municipal

securities.

Rule G–8(a)(xv) requires that dealers

maintain a record of sending to the

Board, Forms G–36(O/S) and G–

36(ARD) and the corresponding

required documentation. Rule G–9, on

preservation of records, currently does

not state a time period for preservation

of these records.

The proposed amendment to rule G–

9 would require that dealers retain the

records required by rule G–8(a)(xv) for

a period of three years. This three-year

period would coincide with the record

retention requirement for the

documentation supporting proof of

delivery of official statements to

purchasers of new issues securities as

required by rule G–32 on disclosures in

connection with new issues.

The Board believes the proposed rule

change is consistent with Section

15B(b)(2)(G) of the Act, which requires,

in pertinent part, that the Board’s rules:

prescribe records to be made and kept by

municipal securities brokers and municipal

securities dealers and the periods for which

such records shall be preserved.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The Board does not believe that the

proposed rule change will impose any

burden on competition 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 were neither

solicited nor received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the foregoing proposed rule

change: (i) does not significantly affect

the protection of investors or the public

interest; (ii) does not impose any

significant burden on competition; (iii)

was provided to the Commission for its

review at least five days prior to the

filing date; and (iv) does not become

operative for thirty (30) days from the

date of its filing, the Board has

submitted this proposed rule change to

become effective pursuant to Section

19(b)(3)(A) of the Act and Rule 19b–

4(e)(6) thereunder. In particular, the

Board believes that the proposed rule

change qualifies as a ‘‘non-controversial

filing’’ in that the proposed amendment

does not significantly affect the

protection of investors or the public

interest and does not impose any

significant burden on competition. At

any time within sixty 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

purpose 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, NW.,

Washington, DC 20549. Copies of the

submissions, 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

Room. Copies of the filing will also be

available for inspection and copying at

the Board’s principal offices. All

submissions should refer to File No.
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