H. R. 4535
One Hundred Third Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the twenty-fifth day of January, one thousand nine hundred and ninety-four
An Act
To amend the Securities Exchange Act of 1934 with respect to the extension of
unlisted trading privileges for corporate securities, and for other purposes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Unlisted Trading Privileges
Act of 1994’’.
SEC. 2. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.
(a) UNLISTED TRADING PRIVILEGES.—Section 12(f) of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78l(f)) is amended by striking
paragraphs (1) and (2) and inserting the following:
‘‘(f)(1)(A) Notwithstanding the preceding subsections of this sec-
tion, any national securities exchange, in accordance with the
requirements of this subsection and the rules hereunder, may
extend unlisted trading privileges to—
‘‘(i) any security that is listed and registered on a national
securities exchange, subject to subparagraph (B); and
‘‘(ii) any security that is otherwise registered pursuant
to this section, or that would be required to be so registered
except for the exemption from registration provided in subpara-
graph (B) or (G) of subsection (g)(2), subject to subparagraph
(E) of this paragraph.
‘‘(B) A national securities exchange may not extend unlisted
trading privileges to a security described in subparagraph (A)(i)
during such interval, if any, after the commencement of an initial
public offering of such security, as is or may be required pursuant
to subparagraph (C).
‘‘(C) Not later than 180 days after the date of enactment of
the Unlisted Trading Privileges Act of 1994, the Commission shall
prescribe, by rule or regulation, the duration of the interval referred
to in subparagraph (B), if any, as the Commission determines
to be necessary or appropriate for the maintenance of fair and
orderly markets, the protection of investors and the public interest,
or otherwise in furtherance of the purposes of this title. Until
the earlier of the effective date of such rule or regulation or 240
days after such date of enactment, such interval shall begin at
the opening of trading on the day on which such security commences
trading on the national securities exchange with which such security
is registered and end at the conclusion of the next day of trading.
‘‘(D) The Commission may prescribe, by rule or regulation such
additional procedures or requirements for extending unlisted trad-
ing privileges to any security as the Commission deems necessary
H. R. 4535—2
or appropriate for the maintenance of fair and orderly markets,
the protection of investors and the public interest, or otherwise
in furtherance of the purposes of this title.
‘‘(E) No extension of unlisted trading privileges to securities
described in subparagraph (A)(ii) may occur except pursuant to
a rule, regulation, or order of the Commission approving such
extension or extensions. In promulgating such rule or regulation
or in issuing such order, the Commission—
‘‘(i) shall find that such extension or extensions of unlisted
trading privileges is consistent with the maintenance of fair
and orderly markets, the protection of investors and the public
interest, and otherwise in furtherance of the purposes of this
title;
‘‘(ii) shall take account of the public trading activity in
such securities, the character of such trading, the impact of
such extension on the existing markets for such securities,
and the desirability of removing impediments to and the
progress that has been made toward the development of a
national market system; and
‘‘(iii) shall not permit a national securities exchange to
extend unlisted trading privileges to such securities if any
rule of such national securities exchange would unreasonably
impair the ability of a dealer to solicit or effect transactions
in such securities for its own account, or would unreasonably
restrict competition among dealers in such securities or between
such dealers acting in the capacity of market makers who
are specialists and such dealers who are not specialists.
‘‘(F) An exchange may continue to extend unlisted trading
privileges in accordance with this paragraph only if the exchange
and the subject security continue to satisfy the requirements for
eligibility under this paragraph, including any rules and regulations
issued by the Commission pursuant to this paragraph, except that
unlisted trading privileges may continue with regard to securities
which had been admitted on such exchange prior to July 1, 1964,
notwithstanding the failure to satisfy such requirements. If unlisted
trading privileges in a security are discontinued pursuant to this
subparagraph, the exchange shall cease trading in that security,
unless the exchange and the subject security thereafter satisfy
the requirements of this paragraph and the rules issued hereunder.
‘‘(G) For purposes of this paragraph—
‘‘(i) a security is the subject of an initial public offering
if—
‘‘(I) the offering of the subject security is registered
under the Securities Act of 1933; and
‘‘(II) the issuer of the security, immediately prior to
filing the registration statement with respect to the offer-
ing, was not subject to the reporting requirements of section
13 or 15(d) of this title; and
‘‘(ii) an initial public offering of such security commences
at the opening of trading on the day on which such security
commences trading on the national securities exchange with
which such security is registered.
‘‘(2)(A) At any time within 60 days of commencement of trading
on an exchange of a security pursuant to unlisted trading privileges,
the Commission may summarily suspend such unlisted trading
privileges on the exchange. Such suspension shall not be reviewable
under section 25 of this title and shall not be deemed to be a
H. R. 4535—3
final agency action for purposes of section 704 of title 5, United
States Code. Upon such suspension—
‘‘(i) the exchange shall cease trading in the security by
the close of business on the date of such suspension, or at
such time as the Commission may prescribe by rule or order
for the maintenance of fair and orderly markets, the protection
of investors and the public interest, or otherwise in furtherance
of the purposes of this title; and
‘‘(ii) if the exchange seeks to extend unlisted trading privi-
leges to the security, the exchange shall file an application
to reinstate its ability to do so with the Commission pursuant
to such procedures as the Commission may prescribe by rule
or order for the maintenance of fair and orderly markets, the
protection of investors and the public interest, or otherwise
in furtherance of the purposes of this title.
‘‘(B) A suspension under subparagraph (A) shall remain in
effect until the Commission, by order, grants approval of an applica-
tion to reinstate, as described in subparagraph (A)(ii).
‘‘(C) A suspension under subparagraph (A) shall not affect
the validity or force of an extension of unlisted trading privileges
in effect prior to such suspension.
‘‘(D) The Commission shall not approve an application by a
national securities exchange to reinstate its ability to extend
unlisted trading privileges to a security unless the Commission
finds, after notice and opportunity for hearing, that the extension
of unlisted trading privileges pursuant to such application is consist-
ent with the maintenance of fair and orderly markets, the protection
of investors and the public interest, and otherwise in furtherance
of the purposes of this title. If the application is made to reinstate
unlisted trading privileges to a security described in paragraph
(1)(A)(ii), the Commission—
‘‘(i) shall take account of the public trading activity in
such security, the character of such trading, the impact of
such extension on the existing markets for such a security,
and the desirability of removing impediments to and the
progress that has been made toward the development of a
national market system; and
‘‘(ii) shall not grant any such application if any rule of
the national securities exchange making application under this
subsection would unreasonably impair the ability of a dealer
to solicit or effect transactions in such security for its own
account, or would unreasonably restrict competition among
dealers in such security or between such dealers acting in
the capacity of marketmakers who are specialists and such
dealers who are not specialists.’’.
(b) CONFORMING AMENDMENT.—Section 12(f)(3) of the Securities
Exchange Act of 1934 (15 U.S.C. 78l(f)(3)) is amended by striking
H. R. 4535—4
‘‘The Commission’’ and inserting ‘‘Notwithstanding paragraph (2),
the Commission’’.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.