# Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Chicago Stock Exchange, Incorporated Relating to Tier 1 Listing Standards > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A97-17668 ## Record - **Collection:** Federal Register - **Document type:** Notice - **Published:** July 8, 1997 - **Citation:** 62 FR 36594 ## Text SECURITIES AND EXCHANGE COMMISSION [Release No. 34-38795; File No. SR-CHX-97-17] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Chicago Stock Exchange, Incorporated Relating to Tier 1 Listing Standards June 30, 1997. 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 June 25, 1997, the Chicago Stock Exchange, Inc. (``CHX'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Article XXVIII, rule 14 of the Exchange's Rules relating to Tier 1 listing standards. The text of the proposed rule change is available at the Office of the Secretary, CHX, 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 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 Sections A, B, and C below, of the most significant aspect of such statements. A. Self-Regulatory Organization's Statement of the Purposes of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The National Securities Markets Improvement Act of 1996 \3\ amended Section 18 of the Securities Act of 1933 \4\ to provide for exclusive federal registration of securities listed, or authorized for listing, on the New York Stock Exchange (``NYSE''), the American Stock Exchange (``Amex'') or listed on the National Market System of the Nasdaq Stock Market (``Nasdaq/NMS''), or any other national securities exchange designated by the Commission by rule to have substantially similar listing standards to those markets. The CHX petitioned the SEC in February of this year to adopt a rule finding the CHX's Tier 1 listing standards to be substantially similar to those of the NYSE, Amex or Nasdaq/NMS. If the SEC adopts such a rule, any security listed on the CHX under its Tier 1 [[Page 36595]] standards would be exempt from registration in all fifty states. --------------------------------------------------------------------------- \3\ Pub. L. No. 104-290, 110 Stat. 3416 (1996) \4\ 15 U.S.C. 77s. --------------------------------------------------------------------------- The SEC has recently published for comment proposed Rule 146(b) which would designate various exchanges' listing standards as being substantially similar to those of the NYSE, Amex or Nasdaq/NMS. The SEC has indicated that it preliminarily believes that the only deficiency in the CHX Tier 1 standards, which precludes it from designating the CHX Tier 1 securities as qualifying, is that there is no minimum share price requirement for continued listing on Tier 1. If such deficiency was corrected, the SEC indicated that it would consider including CHX's Tier 1 securities in the final Rule 146(b). As a result of the above, the CHX is proposing to amend Article XXVIII, rule 14 of the Exchange rules to add a minimum share price requirement for continued listing of common stock on Tier 1. The proposed amendment is virtually identical to Amex's requirement. In essence, the proposed amendment states that an issuer that has a common stock listed under Tier 1 that is selling for a substantial period of time at a low price per share must effect a reverse split within a reasonable period of time after being notified that the Exchange deems such action to be appropriate. The proposed amendment then sets forth examples of pertinent factors which the Exchange will review in determining whether a reverse split is appropriate. If the issuer fails to effect a reverse split, then the Exchange would initiate a proceeding to delist the issuer's common stock from Tier 1. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b)(5) of the Act \5\ in that it is 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. --------------------------------------------------------------------------- \5\ 15 U.S.C. 78f(b). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange 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, and 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 my 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 Room. 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-CHX-97-17 and should be submitted by July 29, 1997. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. \6\ --------------------------------------------------------------------------- \6\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Margaret H. McFarland, Deputy Secretary. [FR Doc. 97-17668 Filed 7-7-97; 8:45 am] BILLING CODE 8010-01-M --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-17668. Public record. Not legal advice.