IB
Union Calendar No. 341
103D CONGRESS
2D SESSION
H. R. 4535
[Report No. 103–626]
To amend the Securities Exchange Act of 1934 with respect to the extension
of unlisted trading privileges for corporate securities, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 26, 1994
Mr. WYDEN (for himself, Mr. DINGELL, Mr. MARKEY, Miss COLLINS of
Michigan, Mr. SYNAR, Mr. COOPER, Mr. HASTERT, and Ms. MARGOLIES-
MEZVINSKY) introduced the following bill; which was referred to the Com-
mittee on Energy and Commerce
JULY 28, 1994
Additional sponsors: Mr. RICHARDSON, Mrs. COLLINS of Illinois, and Mr.
MOORHEAD
JULY 28, 1994
Committed to the Committee of the Whole House on the State of the Union
and ordered to be printed
A BILL
To amend the Securities Exchange Act of 1934 with respect
to the extension of unlisted trading privileges for cor-
porate securities, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives 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 Securities Exchange Act of 1934 (15 U.S.C. 78l(f))
is amended by striking paragraphs (1) and (2) and insert-
ing the following:
‘‘(f)(1)(A) Notwithstanding the preceding subsections
of this section, any national securities exchange, in accord-
ance 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 subpara-
graph (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 subparagraph (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 sub-
paragraph (A)(i) during such interval, if any, after the
commencement of an initial public offering of such secu-
rity, as is or may be required pursuant to subparagraph
(C).
‘‘(C) Not later than 180 days after the date of enact-
ment of the Unlisted Trading Privileges Act of 1994, the
Commission shall prescribe, by rule or regulation, the du-
ration of the interval referred to in subparagraph (B), if
any, as the Commission determines to be necessary or ap-
propriate for the maintenance of fair and orderly markets,
the protection of investors and the public interest, or oth-
erwise 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 regu-
lation such additional procedures or requirements for ex-
tending unlisted trading privileges to any security as the
Commission deems necessary or appropriate for the main-
tenance of fair and orderly markets, the protection of in-
vestors 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 ex-
cept pursuant to a rule, regulation, or order of the Com-
mission approving such extension or extensions. In pro-
mulgating 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 protec-
tion of investors and the public interest, and other-
wise in furtherance of the purposes of this title;
‘‘(ii) shall take account of the public trading ac-
tivity in such securities, the character of such trad-
ing, 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 ex-
change to extend unlisted trading privileges to such
securities if any rule of such national securities ex-
change would unreasonably impair the ability of a
dealer to solicit or effect transactions in such securi-
ties for its own account, or would unreasonably re-
strict 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, in-
cluding any rules and regulations issued by the Commis-
sion pursuant to this paragraph, except that unlisted trad-
ing 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 sub-
ject 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, imme-
diately prior to filing the registration statement
with respect to the offering, 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 na-
tional securities exchange with which such security
is registered.
‘‘(2)(A) At any time within 60 days of commence-
ment of trading on an exchange of a security pursuant
to unlisted trading privileges, the Commission may sum-
marily suspend such unlisted trading privileges on the ex-
change. Such suspension shall not be reviewable under sec-
tion 25 of this title and shall not be deemed to be a 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 se-
curity 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 privileges 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 re-
main in effect until the Commission, by order, grants ap-
proval of an application to reinstate, as described in sub-
paragraph (A)(ii).
‘‘(C) A suspension under subparagraph (A) shall not
affect the validity or force of an extension of unlisted trad-
ing privileges in effect prior to such suspension.
‘‘(D) The Commission shall not approve an applica-
tion by a national securities exchange to reinstate its abil-
ity to extend unlisted trading privileges to a security un-
less the Commission finds, after notice and opportunity
for hearing, that the extension of unlisted trading privi-
leges pursuant to such application is consistent with the
maintenance of fair and orderly markets, the protection
of investors and the public interest, and otherwise in fur-
therance of the purposes of this title. If the application
is made to reinstate unlisted trading privileges to a secu-
rity described in paragraph (1)(A)(ii), the Commission—
‘‘(i) shall take account of the public trading ac-
tivity 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 sys-
tem; and
‘‘(ii) shall not grant any such application if any
rule of the national securities exchange making ap-
plication 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 deal-
ers 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 ‘‘The Commission’’ and inserting
‘‘Notwithstanding paragraph (2), the Commission’’.