[Federal Register: January 10, 2006 (Volume 71, Number 6)]
[Notices]
[Page 1580-1581]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10ja06-63]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53050; File No. SR-Amex-2005-114]
Self-Regulatory Organizations; American Stock Exchange LLC; Order
Granting Approval of a Proposed Rule Change and Amendment No. 1 Thereto
Relating to the Amex Initial Listing Standards
January 3, 2006.
I. Introduction
On November 2, 2005, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend section 102(b) of the Amex Company Guide
(``Company Guide'') to require a minimum market price of $2 per share
for issuers seeking to qualify for initial listing pursuant to Initial
Listing Standard 3 (Section 101(c) of the Company Guide). On November
10, 2005, the Exchange filed Amendment No. 1 (``Amendment No. 1'') to
the proposed rule change to amend section 101 of the Company Guide to
include a reference to section 102(b) of the Company Guide in each of
the four initial Amex listings standards to clarify that section 102(b)
of the Company Guide applies to each standard.\3\ The proposed rule
change and Amendment No. 1 were published for comment in the Federal
Register on November 28, 2005.\4\ The Commission received no comments
on the proposal. This order approves the proposed rule change, as
amended.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 clarified the purpose section of the filing
and made proposed changes to section 101 of the Company Guide to
reference section 102(b) of the Company Guide in the listing
provisions.
\4\ Securities Exchange Act Release No. 52804 (November 18,
2005), 70 FR 71342 (November 28, 2005) (SR-Amex-2005-114).
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II. Description
In its filing, the Amex stated that an approval of an application
for the listing of securities on the Exchange is based on an
applicant's ability to satisfy a series of quantitative and qualitative
listing standards as evaluated by the Listing Qualifications
Department. The Amex represented that the quantitative standards
currently provide four alternative approaches for a company to satisfy
the Amex's initial listing standards.
For applicants to meet Initial Listing Standards 1, 2, and 4
(Company Guide Section 101(a), (b), and (d), respectively), in addition
to specified minimum numerical standards, the Exchange requires a
minimum market price of $3 per share. The Amex noted that although
Listing Standard 3 currently requires an applicant to meet minimum
specified numerical standards, it does not require the applicant to
meet a minimum market price per share.
The Exchange proposed to enhance its initial listing quantitative
standards to require applicants seeking to qualify under Initial
Listing Standard 3 pursuant to section 101(c) of the Company Guide to
have a minimum market price of $2 per share. In order to do so, the
Exchange proposed to amend section 102(b) to incorporate this
requirement. The Exchange also proposed to amend section 101 of the
Company Guide to include a reference to section 102(b) of the Company
Guide in each of the four initial listing standards to clarify that
section 102(b) of the Company Guide applies to each of the four listing
standards.\5\
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\5\ See Amendment No. 1, supra note 3.
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In addition, the Exchange proposed to delete the last sentence of
section 102(b) of the Company Guide. The Exchange noted that this
provision, which has been in place for many years, gives the Exchange
the discretion under certain circumstances to consider listing an issue
that qualified under Initial Listing Standards 1, 2, or 4 even if the
issue's share price is less than $3. The Exchange represented that this
provision was meant to cover the situation in which an applicant issuer
meets all of the initial listing standards but experiences a decline in
share price to below $3 per share just before listing. In light of the
current and proposed configuration of the initial listing standards,
the Exchange stated that it believes that this provision is no longer
necessary or appropriate.\6\
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\6\ Id.
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III. Discussion
After careful consideration, the Commission finds that the proposed
rule change, as amended, is consistent with section 6(b) of the Act,\7\
in general, and furthers the objectives of section 6(b)(5) of the
Act,\8\ 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 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, and, in general, to
protect investors and the public interest, and is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.\9\
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
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The Commission believes that the proposed rule change will allow
for the evaluation of an issuer's initial listing eligibility against
more comprehensive criteria and strengthen the listing standards of the
Amex. The Commission notes that the three other listing standards
(i.e., Listing Standards 1, 2, and 4) of the Amex already contain a $3
market price requirement.\10\ The adoption of a $2 minimum market price
for listing under section 101(c) of the Company Guide will help to
ensure that all companies initially listing on Amex under section 101
must meet a minimum price requirement. The Commission notes that under
section 101 of the Company Guide, the fact that an applicant may meet
the Amex's numerical standards does not necessarily mean its
application will be approved, and section 101 of the Company Guide sets
forth other factors the Exchange may consider for listing, including
the nature of the applicant's business and the reputation of
management, among others. The Commission expects Amex to continue
[[Page 1581]]
to review companies for listing under all the relevant factors. The new
standard being adopted, as well as the elimination of the discretionary
provision in section 102(b) of the Company Guide, will nevertheless
ensure that a minimum price must be met at the outset to be considered
for initial listing under section 101 of the Company Guide.\11\
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\10\ See Sections 101 and 102 of the Company Guide.
\11\ The Commission believes the adoption of the $2 minimum
market price standard under section 101(c) of the Company Guide is a
good, first step in strengthening Amex's listing standards and
continues to encourage the Exchange to consider adopting a minimum
market price continued listing standard.
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Finally, the Commission notes that the rule proposal does not
discriminate among different issuers because the new minimum price
standard for listing under section 101(c) of the Company Guide will
apply equally to all potential issuers for listing. Based on the above,
the Commission believes that the proposal will help investors and the
public interest by ensuring that securities that are listed on the
Exchange, pursuant to Initial Listing Standard 3 of section 101(c) of
the Company Guide, are traded initially at least with a $2 minimum
market share requirement and must meet a minimum price listing standard
at all times.
IV. Conclusion
It Is Therefore Ordered, pursuant to section 19(b)(2) of the
Act,\12\ that the proposed rule change (SR-Amex-2005-114), as amended,
is approved.
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\12\ 15 U.S.C. 78f(b).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-82 Filed 1-9-06; 8:45 am]
BILLING CODE 8010-01-P