[Federal Register Volume 59, Number 27 (Wednesday, February 9, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-2894] [[Page Unknown]] [Federal Register: February 9, 1994] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-33569; File No. SR-CSE-93-06] Self-Regulatory Organizations; Filing and Order Granting Accelerated Approval of Proposed Rule Change by the Cincinnati Stock Exchange, Inc. Relating to the Exchange's Listing and Maintenance Standards for Preferred Stocks February 1, 1994. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on December 20, 1993, the Cincinnati Stock Exchange, Inc. (``CSE'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\15 U.S.C. 78s(b)(1) (1988). \2\17 CFR 240.19b-4 (1993). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The CSE hereby proposes to amend the Exchange's listing and maintenance standards for preferred stocks to conform them to the standards used by the New York Stock Exchange (``NYSE'')\3\ and the American Stock Exchange (``Amex'').\4\ --------------------------------------------------------------------------- \3\The Commission notes that the NYSE has not set any minimum numerical criteria for the listing of preferred stock. The NYSE states that the preferred stock must be of sufficient size and distribution to warrant trading in the Exchange market system. NYSE Listed Company Manual 703.05. The NYSE, however, has set certain numerical delisting criteria for preferred stock, stating that it will ``normally give consideration to suspending or removing a preferred stock if the aggregate market value of publicly-held shares is less than $2,000,000 and the number of publicly-held shares is less than 100,000.'' Id. These two measures are the minimum standards which the CSE is proposing to add to its listing requirements for preferred stock. \4\The CSE's proposed listing requirements for preferred stock are the same as the current Amex requirements. See Amex Company Guide Sec. 103. The numerical size and earning criteria for companies to list on the Exchanges remain different for the NYSE, Amex, and CSE. See NYSE Listed Company Manual 102.01; Amex Company guide Sec. 101; CSE By-Laws Article IV, Section 1.3. --------------------------------------------------------------------------- The Exchange requests the Commission to find good cause, pursuant to section 19(b)(2) of the Act, for approving the proposed rule change prior to the thirtieth day after publication in the Federal Register. Accelerated approval would allow the CSE to have in place listing and maintenance standards which conform to those currently used by the NYSE and Amex. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization 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 text of these statements may be examined at the places specified in Item III below. The self-regulatory organization has prepared summaries, set forth in Sections 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 1. Purpose The proposed amendment is to Article IV, Section 1 of the CSE By- Laws, Rule 1.3(2). It will apply to listed preferred stock and will conform the rules of the Exchange to those currently in place at the NYSE and Amex. The proposed standards for preferred stocks will apply to both initial and maintenance requirements for those securities.\5\ --------------------------------------------------------------------------- \5\The CSE Rules do not contain separate maintenance requirements for listed securities. The CSE Rule for the delisting of securities, however, states that a security may be delisted if it fails to meet the listing standards. CSE By-Laws, Article IV, Section 3, Rule 3.1(c). --------------------------------------------------------------------------- 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)(5) in particular in that it will promote just and equitable principles of trade and remove impediments to and perfect the mechanism of a free and open market and a national market system. B. Self-Regulatory Organization's Statement on Burden on Competition The CSE does not believe that the proposed rule change will impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. 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 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, NW., Washington, DC 20549. Copies of such filing will also be available for inspection and copying at the principal office of the CSE. All submissions should refer to File No. SR-CSE-93-06 and should be submitted by March 2, 1994. IV. Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change The Commission finds that the CSE's proposal to increase its listing standards for preferred stock is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. Specifically, the Commission finds that the proposed rule change is consistent with section 6(b)(5) of the Act\6\ in that it will promote just and equitable principles of trade and remove impediments to and perfect the mechanism of a free and open market and a national market system. --------------------------------------------------------------------------- \6\15 U.S.C. 78f(b)(5) (1988). --------------------------------------------------------------------------- The Commission believes that the development and enforcement of adequate standards governing the listing of securities on an exchange is 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. The proposed rule change increases in some respects the CSE's listing standards for preferred stock. The old standards required 500 recordholders for which trading privileges had been granted or were requested, 200,000 shares for which trading privileges had been granted or were requested exclusive of the holdings of officers and directors, and a class of common stock that was listed on the Exchange or was otherwise eligible for listing. For issuers whose common stock is traded on the CSE, NYSE, or Amex, the rule change requires 100,000 publicly held shares,\7\ an aggregate market value of $2 million, and a price of $10. For issuers of preferred stock not listed on the CSE, NYSE, or Amex, the rule change requires 400,000 publicly held preferred shares, 800 public round-lot holders, an aggregate market value of $4 million, and a price of $10. --------------------------------------------------------------------------- \7\Publicly held shares excludes the holdings of officers, directors, controlling shareholders and other concentrated or family holdings,and restricted securities. --------------------------------------------------------------------------- The Commission believes that the initial listing and maintenance criteria for preferred sock, as described above, are consistent with section 6(b)(5) of the Act in that these criteria should help to ensure the maintenance of fair and orderly markets, as well as enhance benefits and protections for investors who trade in these securities. Requiring a minimum number of publicly held shares, and a minimum aggregate market value and price per share should help ensure a wide public distribution of the securities, which should decrease the opportunities for manipulation, as well as help create a more liquid market for trading. The Commission finds good cause for approving the proposed rule change prior to the thirtieth day after the date of publication of notice of filing thereof in the Federal Register. The Commission believes that accelerated approval of the proposal is appropriate in order to allow the CSE to conform its listing standards for preferred stocks with those of the NYSE and Amex. The rule change serves to create a uniformity of enhanced listing standards among the various exchanges, which benefits the marketplace as a whole, and thereby serves the public's interest. It is therefore ordered, Pursuant to section 19(b)(2) of the Act\8\ that the proposed rule change is hereby approved. --------------------------------------------------------------------------- \8\15 U.S.C. 78s(b)(2) (1988). For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\9\ --------------------------------------------------------------------------- \9\17 CFR 200.30-3(a)(12) (1993). --------------------------------------------------------------------------- Margaret H. McFarland, Deputy Secretary. [FR Doc. 94-2894 Filed 2-8-94; 8:45 am] BILLING CODE 8010-01-M