June 8, 1994
TO: SEC RULES COMMITTEE NO. 60-94
SUBCOMMITTEE ON CREDITORS' RIGHTS
RE: SEC PROPOSAL TO EXEMPT LISTED DEBT SECURITIES FROM CERTAIN
PROVISIONS
__________________________________________________________
The Securities and Exchange Commission recently proposed new
Rule 3a12-11 and revisions to certain other rules under the
Securities Exchange Act of 1934 to exempt listed debt securities
from certain provisions of the Act. A copy of the Commission's
proposing release is attached.
Section 12 of the Exchange Act requires all securities listed
on a national exchange to be registered under the Act, and
registration subjects these securities to restrictions under other
provisions of the Act. In particular, Section 8(a) restricts the
ability of broker-dealers to borrow using exchange-traded
securities as collateral, Section 13(a) imposes periodic reporting
requirements on the issuers of registered securities, and Section
14 subjects these securities to proxy regulation. In contrast,
debt securities traded in the over-the-counter market are not
required to be registered under the Act and are generally not
subject to the borrowing restrictions, the periodic reporting
requirements, or proxy regulation.
After receiving a request from the New York Stock Exchange,
the Commission issued its proposal to exempt listed debt securities
from the borrowing restrictions and proxy rules under the Act. The
Commission also is considering whether to extend the periodic
reporting requirements to issues of OTC-traded debt securities.
The Commission has requested comment concerning (among other
issues) whether periodic reporting should be extended to OTC debt
securities, whether the proposed exemption from the borrowing
restrictions would affect investor protection in the debt market
and the transparency and liquidity of that market, and whether the
benefits to debtholders of the proxy rules outweigh the costs.
The comment period on the Commission's proposal ends 60 days
from the date that the release appears in the Federal Register.
If you have any comments on the proposal, please contact me by
Thursday, June 30th. My direct number is 202/326-5819.
Thomas M. Selman
Assistant Counsel
Attachment