16 is thus not an essential outcome of the application of the principles above enunciated. It may be that upon a full consideration of the suggestions above advanced, factors, still unknown, will make possible complete comparability of obligation with reference to certain types of presently unregistered and registered securities and thus make possible the existence of an exchange market in all cases where the public interest is best served by such a market. PART IV RECOMMENDATIONS Pursuant to the foregoing it is recommended that— (1) Subsection (f) of section 12 of the Securities Exchange Act of 1934 should be amended to provide― (a) That unlisted trading privileges on any exchange to which any security had been admitted prior to March 1, 1934, may be continued beyond June 1, 1936, on such terms and conditions as the Commission may by rules and regulations prescribe as necessary or appropriate for the protection of investors or to prevent evasion of the purposes of the act. No expiration date should be expressly set, but the Commission should continue to have the power to bring about the termination of this situation in part or as a whole. (b) That securities the issuer of which has duly registered any security on an exchange pursuant to section 12 may, during the period when such other registration is effective, be admitted to trading on any exchange in accordance with such terms and conditions as the Commission may by rules and regulations prescribe as necessary or appropriate for the protection of investors and to prevent evasion of the purposes of the Exchange Act.1 (2) The Commission should thereupon proceed expeditiously to perfect regulations and a program of administration designed to make effective for all securities traded on an unlisted basis on exchanges requirements concerning adequacy of public distribution, degree of local trading activity, minimum information to be supplied, and other requirements necessary to assure a properly functioning market on such exchanges for such securities. Such a program could be put into effect pursuant to section 6 (a), section 12 (f), and section 19 (b) of the Securities Exchange Act of 1934. (3) The existing power of the Commission to bring about adequate reporting by issuers of substantial size, whose securities have a wide public distribution, should be perfected to the end that there be information supplied by these issuers comparable to that now furnished by those who have registered their securities on an exchange. That end being attained, the Commission should then be empowered to prescribe terms and conditions under which the securities of these issuers should be permitted to enjoy an exchange market, where the public interest, not subjected to the sole control of management, would be furthered by the creation of an exchange market. 1 See supra, p. 16; cf. pp. 22, 23. 24 PART V-APPENDIXES APPENDIX I RULE AT1. Definition of "listed."-The term "listed" means admitted to full trading privileges upon application by the issuer or its fiscal agent or, in the case of the securities of a foreign corporation, upon application by a banker engaged in distributing them; and includes securities for which authority to add to the list on official notice of issuance has been granted. RULE AT3. Definition of "admitted to unlisted trading privileges."— In addition to securities in respect of which the obligations have not been changed since the admission of such securities to unlisted trading privileges prior to March 1, 1934, the following securities shall be deemed "admitted to unlisted trading privileges" prior to March 1, 1934: (1) A bond, debenture, or note, admitted to unlisted trading privileges prior to March 1, 1934, the obligation of which has been modified since February 28, 1934, only by change of maturity and/or rate of interest; (2) A certificate of deposit, or other certificate or receipt for a security coming under (1) above, if said certificate or receipt was itself admitted to unlisted trading privileges prior to March 1, 1934; (3) Additional issues since February 28, 1934, authorized prior to March 1, 1934, with regard to a security admitted to unlisted trading privileges prior to March 1, 1934; (4) Such other stocks, bonds, and/or other securities as are substantially equivalent to or represent securities admitted to unlisted trading privileges prior to March 1, 1934, as the Commission may specify upon application by the exchange. APPENDIX II RULE JF1. Applications for temporary continuance of unlisted privileges granted prior to March 1, 1934, as to securities listed on other exchanges or not so listed.-An exchange desiring to continue, pursuant to section 12 (f) (1), unlisted trading privileges to which a security or securities had been admitted on such exchange prior to March 1, 1934, shall file with the Commission not earlier than September 16, 1934, an application conforming with the requirements prescribed for registration statements by rule A2 and containing as to each security for which temporary continuance of such privileges is desired the following information or an explanation of the reasons why any of it is unavailable: (1) Name of security (including name of issuer). (2) Amount issued (stating source of information, which may be latest report of issuer if no subsequent source is available). (3) Date of admission to unlisted trading privileges. (4) If reasonably practicable, an estimate of the amount held in the vicinity where the exchange is located and a brief indication of the geographical area which is deemed to constitute such vicinity. (5) Volume of trading (number of shares or par value of bonds) on the exchange for each of the years 1929 to 1932, inclusive, for each calendar month since December 31, 1932, and daily for the last 4 calendar weeks prior to the date of the application. (6) Monthly price range on the exchange since December 31, 1932, and daily range for the last 4 calendar weeks prior to the date of the application. (7) Names of exchanges on which the security is presently known to be (a) listed, and/or (b) admitted to unlisted trading privileges, including foreign exchanges as to which information is available. (8) The source and grounds of, and reasons for rejecting, any complaints which have been made to the exchange since December 31, 1924, on the part of the issuer or any person known to control, or to be controlled by, the issuer, objecting to the commencement or continuance of unlisted trading in the security. RULE JF2. Applications for extension of unlisted trading privileges granted since March 1, 1934, to securities listed on other exchanges.(a) An exchange desiring to extend, pursuant to section 12 (f) (2), unlisted trading privileges to a security or securities not admitted to such privileges on such exchange prior to March 1, 1934, but listed on March 1, 1934, on another exchange which has become registered as a national securities exchange, shall file with the Commission, not earlier than September 16, 1934, an application conforming with the requirements prescribed for registration statements by rule A2 and containing as to each security for which extension of such privileges is desired the following information or an explanation of the reasons why any of it is unavailable: (1) Name of security (including name of issuer). (2) Amount issued (stating source of information, which may be latest report of issuer if no subsequent source is available). (3) If reasonably practicable, an estimate of the amount held in the vicinity where the exchange is located and a brief indication of the geographical area which is deemed to constitute such vicinity. (4) If admitted to trading since February 28, 1934, volume of (5) Monthly price range in the vicinity where the exchange is (7) The source and ground of, and reasons for, rejecting any complaints which have been made to the exchange since December 31, 1924, on the part of the issuer or any person known to control, or to be controlled by, the issuer, objecting to the commencement or continuance of unlisted trading in the security. (b) No application made under this rule will be accepted with regard to a security admitted to unlisted trading privileges prior to March 1, 1934, on the exchange making the application, whether or not such security is listed on another exchange. Application for the continuance of unlisted trading privileges as to such a security must be made under rule JF1. RULE JF3. Granting and termination of permission to continue or extend unlisted trading privileges.-(a) Permission to continue or extend unlisted trading privileges shall become effective without further order of the Commission at the time the registration of the exchange as a national securities exchange becomes effective or on October 1, 1934, whichever date is later, if (1) pursuant to rule JF1 or JF2, the application for such permission is received by the Commission on or before September 22, 1934, and (2) the Commission does not by order deny the application. If the application is not received by the Commission on or before September 22, 1934, permission shall become effective upon such date as the Commission shall by order determine. (b) Permission granted pursuant to this rule upon application under rule JF1 to securities admitted to unlisted trading privileges prior to March 1, 1934, on the exchange making such application, shall |