Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the American Stock Exchange, Inc., Relating to the Listing and Trading of Warrants on the Nikkei Stock Index 300

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34365; International Series Release No. 684; File No.

SR-Amex-94-24]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by the American Stock Exchange, Inc., Relating to the Listing

and Trading of Warrants on the Nikkei Stock Index 300

July 13, 1994.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''),\1\ notice is hereby given that on June 17, 1994, the

American Stock Exchange, Inc. (``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 Amex. The Commission is publishing this notice to

solicit comments on the proposed rule change from interested persons.

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\1\15 U.S.C. 78s(b)(1) (1982).

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I. Self-Regulatory Organization's Statement of the Terms of Substance

of the Proposed Rule Change

The Exchange is proposing to list and trade under Section 106 of

the Amex Company Guide warrants based on the Nikkei Stock Index 300

(``Index'').

The text of the proposed rule change is available at the Office of

the Secretary, the Amex, and at the Commission.

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 Amex 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 Amex 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

Under Section 106 (Currency and Index Warrants) of the Amex Company

Guide, the Exchange may approve for listing warrants based on

established foreign and domestic indexes. The Exchange is proposing to

list warrants based on the Nikkei 300 Index.\2\ The Nikkei 300 Index is

comprised of 300 stocks which are representative of the first section

of the Tokyo Stock Exchange (``TSE'').

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\2\The Exchange also has proposed to list and trade options on

the Nikkei 300 Index. See Securities Exchange Act Release No. 34198

(June 10, 1994), 59 FR 31282 (June 17, 1994).

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The Index was designed and is maintained by Nihon Keizai Shimbun,

Inc. (``NKS''). The Index's component securities were selected for

their high market capitalization and high degree of liquidity, and are

representaitve of the relative distribution of industries within the

broader Japanese equity market.

The median capitalization of the companies in the Nikkei 300 Index

on March 31, 1994 was 340.1 billion ($3.3 billion at the exchange

rate of 102.75 per US$1.00 prevailing on March 31, 1994). The

average market capitalization of these companies was $7.5 billion on

the same date and using the same rate of exchange. The individual

market capitalization of these companies ranged from $875 million to

$75.5 billion on March 31, 1994. The largest stock accounted for 3.41

percent of the total weighting of the Index, while the smallest

accounted for 0.04 percent.

The Index is a capitalization weighted index and is calculated by

multiplying the price of each component security (in Japanese yen) by

its number of shares outstanding, adding those products, and dividing

by the current Index divisor. The Index divisor initially was

determined to yield a benchmark value of 100 on October 1, 1982. The

divisor is adjusted for certain changes described below. The Index's

closing value on July 8, 1994 was 301.48. For valuation purposes, one

Nikkei 300 Index unit (1.0) is assigned a fixed value of US$1.00.

The Index will be maintained by NKS. To maintain continuity of the

Index, the divisor will be adjusted to reflect certain events relating

to the component securities. These events include, but are not limited

to, changes in the number of shares outstanding, spin-offs, certain

rights issuances, and mergers and acquisitions. The competition of the

Index will be reviewed periodically by NKS.

Warrant issues on the Index will conform to the listing guidelines

under Amex Company Guide Section 106, which provide that (1) the issuer

shall have assets in excess of $100,000,000 and otherwise substantially

exceed the size and earnings requirements of Section 101(a); (2) the

term of warrants shall be for a period ranging from one to five years

from the date of issuance; and (3) the minimum public distribution of

such issues shall be 1,000,000 warrants, together with a minimum of 400

public holders, and a minimum aggregate market value of $4,000,000.

Nikkei 300 Index warrants will be direct obligations of their

issuer subject to cash settlement in dollars, and either exercisable

throughout their life (i.e., American style) or exercisable only on

their expiration date (i.e., European style). Upon exercise, or at the

warrant expiration date (if not exercisable prior to such date), the

holder of a warrant structured as a ``put'' would receive payment in

U.S. dollars to the extent that the Nikkei 300 Index has declined below

a pre-stated cash settlement value. Conversely, holders of a warrant

structured as a ``call,'' upon exercise or at expiration, would receive

payment in U.S. dollars to the extent that the Index has increased

above the pre-stated cash settlement value. If ``out-of-the-money'' at

the time of expiration, the warrants likely would expire worthless.

The Amex has adopted suitability standards applicable to

recommendations to customers of index warrants and transactions in

customer accounts. Amex Rule 421, Commentary .02, requires a Senior

Registered Options Principal or a Registered Options Principal to

approve and initial a discretionary order in index warrants on the day

entered. In addition, the Exchange, prior to the commencement of

trading, will distribute a circular to its membership calling attention

to specific risks associated with warrants on the Index.

The Exchange believes that the proposed rule change is consistent

with Section 6(b) of the Act\3\ in general, and furthers the objectives

of Section 6(b)(5) in particular, in that it is designed to prevent

fraudulent and manipulative acts and practices, promote just and

equitable principles of change, foster cooperation and coordination

with persons engaged in facilitating transactions in securities, and

remove impediments to and perfect the mechanism of a free and open

market and a national market system.

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\3\15 U.S.C. 78f(b) (1988).

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(B) Self-Regulatory Organization's Statement on Burden on Competition

The Amex 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. 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 self-regulatory organization 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. 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 in the

Commission's Public Reference Section, 450 Fifth Street, NW.,

Washington, DC. Copies of such filing also will be available for

inspection and copying at the principal office of the Amex. All

submissions should refer to File No. SR-Amex-94-24 and should be

submitted by August 10, 1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\4\

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\4\17 CFR 200.30-3(a)(12) (1993).

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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-17665 Filed 7-19-94; 8:45 am]

BILLING CODE 8010-01-M