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Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the American Stock Exchange LLC Relating to Listing Standards Applicable to Units

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Information about this document as published in the Federal Register.

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This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble September 9, 2003.

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 July 25, 2003, the American Stock Exchange LLC (“Amex” 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 prepared by the Exchange. 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 Amex proposes to amend sections 101 and 1003 of the Amex Company Guide to clarify the listing requirements applicable to units.

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 Exchange 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 IV below. The Exchange 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 Amex Company Guide specifies the standards applicable to the listing of various types of securities, including common stock, preferred stock, bonds, debentures and warrants. On occasion, issuers seek to list units consisting of two or more different types of securities (e.g., common stock and warrants, common stock and bonds). In evaluating Start Printed Page 54251the eligibility of such units for listing, Amex staff requires that each component of the unit satisfy the listing standards applicable to the particular type of security involved. Thus, in the case of a unit consisting of common stock and bonds, the common stock component would be required to satisfy the standards applicable to common stock and the bond would be required to satisfy the standards applicable to bonds. Typically, such a unit will list and trade for a limited period of time (e.g., thirty days) and then automatically separate into its component parts which will be listed and traded.

The Exchange has recently received applications for the listing of Income Deposit Securities (IDSs), which are units comprised of common stock and subordinated notes. In contrast to a typical unit, IDSs will trade as a unit for an extended period of time, although holders will have limited rights to separate the IDS into its component parts (or to combine the components into an IDS).

In order to provide greater clarity and transparency with respect to the listing standards applicable to IDSs and similar securities, the Exchange is proposing to amend section 101 of the Company Guide to specifically provide that each component of a unit must meet the applicable listing standards. Comparable amendments would be made to section 1003 with respect to the continued listing standards applicable to units.

Additionally, the Exchange is proposing changes to section 401 of the Company Guide to specify that the issuer of a unit is required to immediately publicize any change in the terms of a listed unit, such as changes to the terms and conditions of any of the components or to the ratio of the components within the unit, and to provide current information in this regard on its Web site.[3] Such changes would include those resulting from a stock split or an automatic exchange of one or more components of the unit (e.g., as a result of a secondary offering of units comprised of debt securities with original issue discount). The issuer would be expected to provide such public disclosure as soon as practicable in relation to the nature and effective date of the change. For example, changes resulting from a stock split should be subject to prior disclosure, while changes with respect to original issue discount should be disclosed as soon as such information is available. The Exchange believes that this expanded disclosure requirement is necessary in order to insure that sufficient information regarding the attributes of these securities is publicly available and readily accessible on a timely basis.

2. Statutory Basis

The proposed rule change is consistent with section 6(b) of the Act [4] in general and furthers the objectives of section 6(b)(5) of the Act [5] in particular in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, to protect investors and the public interest and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers.

B. Self-Regulatory Organization's Statement on Burden on Competition

The proposed rule change will impose no 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

No written comments were solicited or received with respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Amex consents, the Commission will:

A. By order approve such proposed rule change, or

B. Institute proceedings to determine whether the proposed rule change should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 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 in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Amex. All submissions should refer to file number SR-Amex-2003-83 and should be submitted by October 7, 2003.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[6]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble


3.  An issuer which does not maintain a website would be required to include a description of the current terms and conditions of the components of the unit, and the ratio of the components comprising the unit, in its annual report pursuant to section 610 of the Amex Company Guide.

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[FR Doc. 03-23549 Filed 9-15-03; 8:45 am]