Release No. 34-16831

May 22, 1980

Applications for Extension, Suspension, or Termination of Unlisted Trading Privileges

ACTION: Final rules.

SUMMARY: The Commission is adopting proposed amendments to Rules 12f-1 and 12f-3 17 CFR 240.12f-1, 12f-3 under the Securities Exchange Act of 1934 ("Act") to require persons filing applications for an extension, suspension, or termination of unlisted trading privileges to certify that notice of such applications has been given to certain persons specified by Section 12(f)(5) of the Act. This will more fully satisfy the purposes of the notice provisions of Section 12(f)(5) by giving interested persons a better opportunity to comment upon these applications.

EFFECTIVE DATE: July 1, 1980.

FOR FURTHER INFORMATION CONTACT: Susan Wilk, Division of Market Regulation, Securities and Exchange Commission, Room 341, 500 North Capitol Street, Washington, D.C. 20549. (202) 272-2824.

SUPPLEMENTARY INFORMATION: On April 3, 1980, the Commission issued a release proposing for comment amendments to Rules 12f-1 and 12f-3 under the Act which would require applicants for an extension, suspension or termination of unlisted trading privileges to give notice to certain persons specified in Section 12(f)(5) of the Act. ¹

Rule 12f-1 17 CFR 240.12f-1 governs the information which must be included in an application by a national securities exchange for extension of unlisted trading privileges. Such an application is made under Section 12(f)(2) of the Act, ² and may be approved by the Commission if, after appropriate notice and opportunity for hearing, it finds that such extension is consistent with the maintenance of fair and orderly markets and the protection of investors.

Similarly, Rule 12f-3 under the Act 17 CFR 240.12f-3 prescribes the information which must be included in an application for the termination or suspension of unlisted trading privileges. Under Section 12(f)(4) of the Act, ³ the Commission may terminate or suspend unlisted trading privileges if, after appropriate notice and opportunity for hearing, the Commission finds that such action is necessary or appropriate in the public interest or for the protection of investors.

Section 12(f)(5) of the Act ⁴ provides that "appropriate notice" of not less than 10 days of applications for extension, suspension or termination of unlisted trading privileges should be given to "* * * the issuer of the security involved, to the exchange which is seeking to continue or extend unlisted trading privileges for such security, and to the exchange, if any, on which such security is listed and registered * * *"

Upon the filing of an application for extension, suspension or termination of unlisted trading privileges the Commission publishes notice by the issuance of a Commission release and by publication in the Federal Register at least 10 days prior to making a determination on the application. Constructive notice of applications filed under Rules 12f-1 and 12f-3, thus, is provided to all persons. The Commission does not provide personal notice to the parties delineated in Section 12(f)(5) as being entitled to notice.

The Commission has determined to amend Rules 12f-1 and 12f-3 to ensure that notice requirements of Section 12(f)(5) are fully satisfied and that interested persons are provided the opportunity to comment upon any application for the extension, suspension or termination of unlisted trading privileges. The amended rules will require that exchanges, when applying for the extension of unlisted trading privileges pursuant to Section 12(f)(2) of the Act, and issuers, when applying for the suspension or termination of unlisted trading privileges pursuant to Section 12(f)(4) of the Act, certify in their application that a copy of such application has been mailed or otherwise given to the persons required by Section 12(f)(5).

The Commission believes that the amendments to Rules 12f-1 and 12f-3 will more fully satisfy the purposes of the notice provisions of Section 12(f)(5) by providing interested persons a better opportunity to comment upon applications relating to unlisted trading privileges. Further, the Commission believes that the amendments will facilitate the efficient processing of such applications by this agency.

For the reasons stated above, the Commission finds that the proposed amendments are appropriate in the public interest, for the protection of investors, and otherwise in furtherance of the purposes of the Act. Accordingly, the Commission acting pursuant to its authority under Section 23(a)(1) of the Act, ⁵ hereby amends Part 240 of Chapter II of Title 17 of the Code of Federal Regulations as follows:

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934

1. By amending paragraph (a)(5) of §240.12f-1 and adding paragraph (a)(6) to read as follows:

§240.12f-1 Applications for permission to extend unlisted trading privileges.

(a)* * *

(5) Any other information which is deemed pertinent to the question of whether the continuation or extension of unlisted trading privileges in such security is consistent with the maintenance of fair and orderly markets and the protection of investors; and

(6) That a copy of the instant application has been mailed, or otherwise personally provided, to the issuer of the securities for which unlisted trading privileges are sought and to each exchange listed in item (3) of this section.

2. By amending paragraph (a)(8) of §240.12f-3 and adding paragraph (a)(9) to read as follows:

§240.12f-3: Termination or suspension of unlisted trading privileges.

(a) * * *

(8) A brief statement of the information in the applicants possession, and the source thereof, with respect to (i) the extent of public trading in such security on such exchange, and (ii) the character of trading in such security on such exchange; and

(9) A brief statement that a copy of the instant application has been mailed, or otherwise personally provided, to the exchange from which the suspension or termination of unlisted trading privileges is sought, and to any other exchange on which such security is listed or traded pursuant to unlisted trading privileges.

* * * * *

By the Commission.

²15 U.S.C. §781(f)(2)(1975).

³15 U.S.C. §781(f)(4)(1975). The issuer of any security for which unlisted trading privileges have been extended, or any other interested person, may make an application to terminate or suspend unlisted trading privileges.

⁴15 U.S.C. §781(f)(5)(1975).

⁵15 U.S.C. §78w(a)(1).