Self-Regulatory Organizations; American Stock Exchange LLC; Order Granting Approval to a Proposed Rule Change as Modified by Amendment No. 1 Thereto Clarifying the Continued Listing Standards for Units, 24638-24639 [E7-8397]

Download as PDF 24638 Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices Guide so that, in the event a component of a unit does not meet its continued listing standards, the Exchange would [Release No. 34–55675; File No. SR–Amex– no longer ‘‘consider’’ suspending or 2006–114] delisting the unit, but would commence a formal continued listing evaluation of Self-Regulatory Organizations; such component and unit in accordance American Stock Exchange LLC; Order with Section 1009 of the Amex Granting Approval to a Proposed Rule Company Guide.4 Change as Modified by Amendment The Exchange also proposes to add No. 1 Thereto Clarifying the Continued language to Section 1003(g) on the Listing Standards for Units applicability of certain continued listing standards relating to components of April 26, 2007. units that have separated. Under the I. Introduction proposal, when units in good standing On December 4, 2006, the American begin to separate into their component Stock Exchange LLC (‘‘Amex’’ or securities, the remaining units that are ‘‘Exchange’’) filed with the Securities still intact and the components of those and Exchange Commission units which have separated may all be (‘‘Commission’’) the proposed rule separately listed and continue to trade, change pursuant to Section 19(b)(1) of provided that they meet the applicable the Securities Exchange Act of 1934 continued listing standards. The (‘‘Act’’) 1 and Rule 19b–4 thereunder.2 proposal specifies that, in determining On February 22, 2007, Amex filed whether an individual component meets Amendment No. 1 to the proposed rule the continued listing distribution change. The proposed rule change, as standards (i.e., number of shares amended, was published for comment publicly held, number of public in the Federal Register on March 22, shareholders, and aggregate market 2007 for a 21-day comment value of shares publicly held) set forth period.3 The Commission received in Section 1003(b) of the Company no comments on the proposal. This Guide,5 the units that are intact and order approves the proposed rule freely separable into their component change, as modified by Amendment No. parts will be aggregated with the 1. separately-traded components. For example, Amex stated that if 120,000 II. Description of the Proposal shares of common stock are publicly Section 1003(g) of the Amex Company held after their separation from their Guide currently provides that the units, and 210,000 intact and freely Exchange will ‘‘normally consider’’ separable units are publicly held, the suspending or delisting units if any of common stock would be credited with their component parts do not meet the having 330,000 shares publicly held, applicable continued listing standards. enabling it to satisfy one of the However, if one or more of the distribution standards for common components is otherwise qualified for stock, which requires at least 200,000 listing, such component may remain shares of common stock to be publicly listed. For example, a unit comprised of held.6 If the units are no longer freely both a common stock component and a separable and/or listed on the Exchange, debt component would face suspension 4 See Section 1009(j) of the Amex Company or delisting procedures if either the Guide. Section 1009 generally sets forth the common stock or the debt component suspension and delisting procedures, timelines, and no longer met its applicable continued requirements applicable to issuers identified as listing standards. As a result, if the debt being below certain continued listing standards. For component failed to meet the continued example, an issuer of particular securities that receives notification from the Exchange that it is listing standards for bonds, both the unit and such debt component would be below the continued listing criteria for such securities must publicly announce receipt of such subject to suspension or delisting notification and the policies and standards upon procedures, but the common stock which the determination is based. 5 See, e.g., Section 1003(b)(i) of the Amex component could independently remain Company Guide (in the case of common stock, listed and continue to trade on the number of publicly Exchange, provided such common stock requiring the200,000, thesharesnumber ofheld to be no less than total public component met the continued listing shareholders to be no less than 300, and the standards for equity securities. aggregate market value of shares publicly held to be no less than $1,000,000 for more than 90 The Exchange proposes to amend consecutive days). See also Sections 1003(b)(ii)–(v) Section 1003(g) of the Amex Company of the Amex Company Guide (setting forth the mmaher on DSK3CLS3C1PROD with $$_JOB SECURITIES AND EXCHANGE COMMISSION 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 55479 (March 15, 2007), 72 FR 13540 (‘‘Notice’’). 1 VerDate Mar 15 2010 05:02 Aug 19, 2011 Jkt 223001 applicable distribution and market value requirements for warrants, preferred stock, bonds, and closed-end funds, respectively). 6 See Section 1003(b)(i)(A) of the Amex Company Guide. PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 the separately-traded components would still be required to meet their applicable continued listing standards, but the distribution values would not be aggregated.7 Despite the fact that the aggregated distribution values satisfy the continued listing distribution standards, under the proposal, the Exchange would also consider suspending trading in, or removing from listing, an individual component or unit when the public distribution or aggregate market value of such component or unit becomes so reduced as to make continued listing inadvisable. In its review of the advisability of the continued listing of an individual component or unit under such circumstances, the Exchange proposes to take into account the trading characteristics of the component or unit and whether it would be in the public interest for trading in such component or unit to continue. The Exchange also proposes to make technical revisions to Sections 1003(a), (c), (d) and (f) to consistently use the term ‘‘issuer’’ as opposed to ‘‘company.’’ III. Discussion and Commission’s Findings After careful consideration, 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.8 In particular, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of Section 6(b)(5) of the Act,9 which requires, among other things, that the Exchange’s rules be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. The Commission believes that the proposal strengthens the procedures applicable to units when their components fall below continued listing standards, by providing that, in such instances, the Exchange would commence a formal evaluation of the components and unit pursuant to 7 See proposed Section 1003(g) of the Amex Company Guide. The Commission notes that under proposed Section 1003(g), if in the above example the units are no longer freely separable into common stock, there would be no aggregation of units with the common stock for purposes of evaluating whether the units and common stock meet the continued listing standards. 8 In approving this proposed rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 9 15 U.S.C. 78f(b)(5). E:\FEDREG\03MYN1.LOC 03MYN1 24639 mmaher on DSK3CLS3C1PROD with $$_JOB Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices Section 1009 of the Amex Company Guide. In addition, the proposal sets forth the application of continued listing standards to individual components comprising units once some, but not all, of the units have separated into their component parts, by specifying that the units that are intact and freely separable into their component parts will be counted toward the total distribution numbers 10 required for continued listing of the component. The rule change recognizes the practical situation that as investors decide whether to separate their unit, there may be a period of time at the outset of the separation period when there may be less components outstanding than necessary to meet the distribution requirements. However, to immediately delist these components during the separation period may be unfair to those investors who still have an opportunity to separate their components and want to trade them in a public market. The rule ensures that to be able to count the units for purposes of the distribution requirements for the component parts, the units must be freely separable into the components, so there is a reasonable basis for assuming that as more units are separated, which adds liquidity to the components, the distribution requirements for the components can, in fact, be separately met. Under the rule however, if it appears that not enough units will be separated to allow the components to meet the public distribution and aggregate market value requirements independently or there are other concerns, the rule makes clear that Amex should consider delisting the components or unit. This recognizes the fact that although the rule allows the aggregation of units and components for purposes of distribution standards, Amex will need to ensure that there is some minimal level of liquidity in each component and unit and should consider delisting if the public distribution or the aggregate market value of the components or unit has become so reduced as to make continued listing on the Exchange inadvisable. In this regard, the Exchange will take into account the individual distribution values and the trading characteristics of the component or unit and whether it would be in the public interest for continued trading of such component or unit.11 See supra note 5 and accompanying text. 11 The Commission notes that minimum distribution requirements are extremely important to ensure, among other things, the liquidity of a security and an active public market. The changes being approved for meeting the distribution standards applicable to units and their components 10 VerDate Mar 15 2010 05:02 Aug 19, 2011 Jkt 223001 As Amex noted in its filing, the proposal should help to promote transparency of the Exchange rules relating to the continued listing of units and their components and provide clearer guidance for members and investors trading in such units and/or components. Finally, the technical changes to Section 1003 of the Company Guide ensure that the rule’s language will be consistent throughout. Based on the above, the Commission believes the proposal promotes just and equitable principles of trade in such securities and is designed to protect investors and the public interest, consistent with Section 6(b)(5) of the Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (SR–Amex–2006– 114), as modified by Amendment No. 1, be, and it hereby is, approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 J. Lynn Taylor, Deputy Secretary. [FR Doc. E7–8397 Filed 5–2–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [(Release No. 34–55674; File No. SR–CBOE– 2006–101] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change as Modified by Amendment Nos. 1 and 2 Thereto To Amend CBOE’s Rules To Reflect the Migration of Its TPF Technology Platform Over to the Existing CBOEdirect Technology Platform. April 26, 2007. 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 November 30, 2006, the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been substantially prepared by the Exchange. recognize the unique trading characteristics and challenges that can occur in meeting the minimum standards during the separation period of the units, while containing certain protections to ensure certain minimum standards will be met. 12 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 The Exchange submitted Amendment No. 1 to the proposed rule change on February 15, 2007. The Exchange submitted Amendment No. 2 to the proposed rule change on April 13, 2007.3 The Commission is publishing this notice and order to solicit comments on the proposal, as amended, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend CBOE’s rules to reflect the migration of its TPF technology platform over to the existing CBOEdirect technology platform. The text of the proposed rule change, incorporating Amendment Nos. 1 and 2, is set forth below. Proposed new language is in italics; proposed deletions are in brackets. Chicago Board Options Exchange, Incorporated Rules * * * * * CHAPTER I Definitions Rule 1.1. Definitions When used in these Rules, unless the context otherwise requires: (a) Any term defined in Article I of the Constitution and not otherwise defined in this Chapter shall have the meaning assigned to such term in such Article I. Hybrid Trading System (aaa) ‘‘Hybrid Trading System’’ refers to the Exchange’s trading platform that allows individual Market-Makers to submit electronic quotes in their appointed classes. ‘‘ Hybrid 2.0 Platform’’ is an enhanced trading platform that allows remote quoting by authorized categories of members. ‘‘Hybrid 3.0 Platform’’ is an electronic trading platform on the Hybrid Trading System that allows a single quoter to submit an electronic quote which represents the aggregate Market-Maker quoting interest in a series for the trading crowd. Classes authorized by the Exchange for trading on the Hybrid Trading System shall be referred to as Hybrid Classes. Classes authorized by the Exchange for trading on the Hybrid 2.0 Platform shall be referred to as Hybrid 2.0 Classes. Classes authorized by the Exchange for trading on the Hybrid 3.0 Platform shall be referred to as Hybrid 3.0 Classes. References to ‘‘Hybrid,’’ ‘‘Hybrid System,’’ or ‘‘Hybrid Trading System’’ in the Exchange’s 3 Amendment No. 2 replaced and superseded Amendment No. 1 and the original filing in their entireties. E:\FEDREG\03MYN1.LOC 03MYN1

Agencies

[Federal Register Volume 72, Number 85 (Thursday, May 3, 2007)]
[Notices]
[Pages 24638-24639]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-8397]



[[Page 24638]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55675; File No. SR-Amex-2006-114]


Self-Regulatory Organizations; American Stock Exchange LLC; Order 
Granting Approval to a Proposed Rule Change as Modified by Amendment 
No. 1 Thereto Clarifying the Continued Listing Standards for Units

April 26, 2007.

I. Introduction

    On December 4, 2006, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change pursuant to Section 19(b)(1) 
of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder.\2\ On February 22, 2007, Amex filed Amendment No. 1 to the 
proposed rule change. The proposed rule change, as amended, was 
published for comment in the Federal Register on March 22, 2007 for a 
21-day comment period.\3 \The Commission received no comments on the 
proposal. This order approves the proposed rule change, as modified by 
Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55479 (March 15, 
2007), 72 FR 13540 (``Notice'').
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II. Description of the Proposal

    Section 1003(g) of the Amex Company Guide currently provides that 
the Exchange will ``normally consider'' suspending or delisting units 
if any of their component parts do not meet the applicable continued 
listing standards. However, if one or more of the components is 
otherwise qualified for listing, such component may remain listed. For 
example, a unit comprised of both a common stock component and a debt 
component would face suspension or delisting procedures if either the 
common stock or the debt component no longer met its applicable 
continued listing standards. As a result, if the debt component failed 
to meet the continued listing standards for bonds, both the unit and 
such debt component would be subject to suspension or delisting 
procedures, but the common stock component could independently remain 
listed and continue to trade on the Exchange, provided such common 
stock component met the continued listing standards for equity 
securities.
    The Exchange proposes to amend Section 1003(g) of the Amex Company 
Guide so that, in the event a component of a unit does not meet its 
continued listing standards, the Exchange would no longer ``consider'' 
suspending or delisting the unit, but would commence a formal continued 
listing evaluation of such component and unit in accordance with 
Section 1009 of the Amex Company Guide.\4\
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    \4\ See Section 1009(j) of the Amex Company Guide. Section 1009 
generally sets forth the suspension and delisting procedures, 
timelines, and requirements applicable to issuers identified as 
being below certain continued listing standards. For example, an 
issuer of particular securities that receives notification from the 
Exchange that it is below the continued listing criteria for such 
securities must publicly announce receipt of such notification and 
the policies and standards upon which the determination is based.
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    The Exchange also proposes to add language to Section 1003(g) on 
the applicability of certain continued listing standards relating to 
components of units that have separated. Under the proposal, when units 
in good standing begin to separate into their component securities, the 
remaining units that are still intact and the components of those units 
which have separated may all be separately listed and continue to 
trade, provided that they meet the applicable continued listing 
standards. The proposal specifies that, in determining whether an 
individual component meets the continued listing distribution standards 
(i.e., number of shares publicly held, number of public shareholders, 
and aggregate market value of shares publicly held) set forth in 
Section 1003(b) of the Company Guide,\5\ the units that are intact and 
freely separable into their component parts will be aggregated with the 
separately-traded components. For example, Amex stated that if 120,000 
shares of common stock are publicly held after their separation from 
their units, and 210,000 intact and freely separable units are publicly 
held, the common stock would be credited with having 330,000 shares 
publicly held, enabling it to satisfy one of the distribution standards 
for common stock, which requires at least 200,000 shares of common 
stock to be publicly held.\6\ If the units are no longer freely 
separable and/or listed on the Exchange, the separately-traded 
components would still be required to meet their applicable continued 
listing standards, but the distribution values would not be 
aggregated.\7\
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    \5\ See, e.g., Section 1003(b)(i) of the Amex Company Guide (in 
the case of common stock, requiring the number of shares publicly 
held to be no less than 200,000, the total number of public 
shareholders to be no less than 300, and the aggregate market value 
of shares publicly held to be no less than $1,000,000 for more than 
90 consecutive days). See also Sections 1003(b)(ii)-(v) of the Amex 
Company Guide (setting forth the applicable distribution and market 
value requirements for warrants, preferred stock, bonds, and closed-
end funds, respectively).
    \6\ See Section 1003(b)(i)(A) of the Amex Company Guide.
    \7\ See proposed Section 1003(g) of the Amex Company Guide. The 
Commission notes that under proposed Section 1003(g), if in the 
above example the units are no longer freely separable into common 
stock, there would be no aggregation of units with the common stock 
for purposes of evaluating whether the units and common stock meet 
the continued listing standards.
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    Despite the fact that the aggregated distribution values satisfy 
the continued listing distribution standards, under the proposal, the 
Exchange would also consider suspending trading in, or removing from 
listing, an individual component or unit when the public distribution 
or aggregate market value of such component or unit becomes so reduced 
as to make continued listing inadvisable. In its review of the 
advisability of the continued listing of an individual component or 
unit under such circumstances, the Exchange proposes to take into 
account the trading characteristics of the component or unit and 
whether it would be in the public interest for trading in such 
component or unit to continue.
    The Exchange also proposes to make technical revisions to Sections 
1003(a), (c), (d) and (f) to consistently use the term ``issuer'' as 
opposed to ``company.''

III. Discussion and Commission's Findings

    After careful consideration, 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.\8\ In particular, the Commission finds that the proposed rule 
change, as amended, is consistent with the requirements of Section 
6(b)(5) of the Act,\9\ which requires, among other things, that the 
Exchange's rules be designed to promote just and equitable principles 
of trade, to remove impediments to and perfect the mechanism of a free 
and open market and a national market system and, in general, to 
protect investors and the public interest.
---------------------------------------------------------------------------

    \8\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposal strengthens the 
procedures applicable to units when their components fall below 
continued listing standards, by providing that, in such instances, the 
Exchange would commence a formal evaluation of the components and unit 
pursuant to

[[Page 24639]]

Section 1009 of the Amex Company Guide.
    In addition, the proposal sets forth the application of continued 
listing standards to individual components comprising units once some, 
but not all, of the units have separated into their component parts, by 
specifying that the units that are intact and freely separable into 
their component parts will be counted toward the total distribution 
numbers \10\ required for continued listing of the component. The rule 
change recognizes the practical situation that as investors decide 
whether to separate their unit, there may be a period of time at the 
outset of the separation period when there may be less components 
outstanding than necessary to meet the distribution requirements. 
However, to immediately delist these components during the separation 
period may be unfair to those investors who still have an opportunity 
to separate their components and want to trade them in a public market. 
The rule ensures that to be able to count the units for purposes of the 
distribution requirements for the component parts, the units must be 
freely separable into the components, so there is a reasonable basis 
for assuming that as more units are separated, which adds liquidity to 
the components, the distribution requirements for the components can, 
in fact, be separately met.
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    \10\ See supra note 5 and accompanying text.
---------------------------------------------------------------------------

    Under the rule however, if it appears that not enough units will be 
separated to allow the components to meet the public distribution and 
aggregate market value requirements independently or there are other 
concerns, the rule makes clear that Amex should consider delisting the 
components or unit. This recognizes the fact that although the rule 
allows the aggregation of units and components for purposes of 
distribution standards, Amex will need to ensure that there is some 
minimal level of liquidity in each component and unit and should 
consider delisting if the public distribution or the aggregate market 
value of the components or unit has become so reduced as to make 
continued listing on the Exchange inadvisable. In this regard, the 
Exchange will take into account the individual distribution values and 
the trading characteristics of the component or unit and whether it 
would be in the public interest for continued trading of such component 
or unit.\11\
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    \11\ The Commission notes that minimum distribution requirements 
are extremely important to ensure, among other things, the liquidity 
of a security and an active public market. The changes being 
approved for meeting the distribution standards applicable to units 
and their components recognize the unique trading characteristics 
and challenges that can occur in meeting the minimum standards 
during the separation period of the units, while containing certain 
protections to ensure certain minimum standards will be met.
---------------------------------------------------------------------------

    As Amex noted in its filing, the proposal should help to promote 
transparency of the Exchange rules relating to the continued listing of 
units and their components and provide clearer guidance for members and 
investors trading in such units and/or components. Finally, the 
technical changes to Section 1003 of the Company Guide ensure that the 
rule's language will be consistent throughout. Based on the above, the 
Commission believes the proposal promotes just and equitable principles 
of trade in such securities and is designed to protect investors and 
the public interest, consistent with Section 6(b)(5) of the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-Amex-2006-114), as modified by 
Amendment No. 1, be, and it hereby is, approved.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Deputy Secretary.
 [FR Doc. E7-8397 Filed 5-2-07; 8:45 am]
BILLING CODE 8010-01-P