Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Philadelphia Stock Exchange Relating to Listing Standards

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-37279; File No. SR-PHLX-96-16]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by the Philadelphia Stock Exchange Relating to Listing Standards

June 5, 1996.

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

(``Act''), 15 U.S.C. Sec. 78s(b)(1), notice is hereby given that on May

20, 1996, the Philadelphia Stock Exchange, Inc. (``PHLX'' 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 self-regulatory

organization. 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 Exchange, pursuant to Rule 19b-4 of the Act, proposes to revise

PHLX Rule 804(2) in order to correct a drafting error, which occurred

when the rule was originally adopted.\1\ The text of the proposed rule

change is as follows [new text is italicized; deleted text is

bracketed]:

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\1\ See Securities Exchange Act Release No. 34235 (June 17,

1994), 59 FR 32736 (June 24, 1994) (File No. SR-PHLX-93-31) (order

approving proposed rule change establishing new listing and

maintenance standards).

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Alternative Criteria for Listing-Tier I

PHLX Rule 804 No change.

(1) No change.

(2) At least 1,000,000 shares publicly held with at least [800

public shareholders if the issuer has between 500,000 and 1 million

shares publicly held, or at least] 400 public shareholders [if the

issuer has either (i) over 1 million shares publicly held or (ii) over

500,000 shares publicly held and average daily trading volume in excess

of 2,000 shares per day for a six month period preceding the date of

application].

(3)-(7) No change.

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 IV below. The self-regulatory organization

has prepared summaries, set forth in Section 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

In June 1994, the Exchange adopted new listing criteria for equity

securities under a two tier approach.\2\ Tier I securities are listed

pursuant to Rule 803 or 804. Rule 803 is the main Tier I listing rule

whereas Rule 804 sets forth alternative criteria geared toward research

and development companies. Both Rule 803 and Rule 804 are based

substantially upon the Memorandum of Understanding (``MOU'') on the

uniform model marketplace exemption that had been approved by the

National Association of Securities Dealers, Inc. (``NASD'') and the

North American Securities Administrative Association, Inc.

(``NASAA'').\3\ Rule 804 was supposed to mirror Alternative 2 of the

MOU listing criteria, however, when it was drafted, subsection (2),

which sets forth the public float and public shareholder requirements,

incorrectly incorporated some of the language of the Alternative 1

public float/shareholder requirements. To date, the Exchange has not

listed any companies pursuant to the alternative criteria in Rule 804.

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\2\ Id.

\3\See Securities Act Release No. 6810 (Dec. 6, 1988)

(publicizing the release of the MOU).

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The proposed revision would require issuers that seek listing

pursuant to Rule 804 to show that there are at least 1,000,000 shares

publicly held and at least 400 public shareholders in the security.

This rule once revised would reflect the original intent of the

Exchange and the MOU.\4\

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\4\ The MOU between NASAA and the NASD contained the same

drafting error as the drafting error described herein. The MOU

incorrectly incorporated some of the language from Tier I public

float and public shareholder requirements into the Tier II

requirements. In the MOU between NASAA and the Exchange on October

12, 1994, the same error occurred.

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[[Page 29783]]

2. Statutory Basis

The proposed rule change is consistent with Section 6 of the Act in

general, and in particular, with Section 6(b)(5), in that it is

designed to promote just and equitable principles of trade, to prevent

fraudulent and manipulative acts and practices, to foster cooperation

and coordination with persons engaged in regulating, clearing,

settling, processing information with respect to, and facilitating

transactions in securities, to remove impediments to and perfect the

mechanism of a free and open market and a national market system, as

well as to protect investors and the public interest by adopting

minimum standards for prospective issuers which show that the company

is appropriate for public trading.

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

The PHLX does not believe that the proposed rule change will impose

any inappropriate 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 either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing

for Commission Action

Within 35 days of the 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 the 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, N.W., Washington, D.C. 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. Sec. 552, will be available for inspection and copying at

the Commission's Public Reference Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such filing will also be available

for inspection and copying at the principal office of the Exchange. All

submissions should refer to File No. SR-PHLX-96-16 and should be

submitted by July 3, 1996.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96-14812 Filed 6-11-96; 8:45 am]

BILLING CODE 8010-01-M