(a) Requirements for inclusion on the list of marginable OTC stocks. Except as provided in paragraph (f) of this section, OTC margin
stock shall meet the following requirements:
(1) four or more dealers stand willing
to, and do in fact, make a market in such stock and regularly submit
bona fide bids and offers to an automated quotations system for their
own accounts;
(2) the
minimum average bid price of such stock, as determined by the Board,
is at least $5 per share;
(3) the stock is registered under section 12 of the act, is issued
by an insurance company subject to section 12(g)(2)(G) of the act,
is issued by a closed-end investment management company subject to
registration pursuant to section 8 of the Investment Company Act of
1940 (15 USC 80a-8), is an American Depository Receipt (ADR) of a
foreign issuer whose securities are registered under section 12 of
the act, or is a stock of an issuer required to file reports under
section 15(d) of the act;
(4) daily quotations for both bid and asked prices for the stock
are continuously available to the general public;
(5) the stock has been publicly traded
for at least six months;
(6) the issuer has at least $4 million of capital, surplus, and undivided
profits;
(7) there are
400,000 or more shares of such stock outstanding in addition to shares
held beneficially by officers, directors, or beneficial owners of
more than 10 percent of the stock;
(8) there are 1,200 or more holders of
record, as defined in SEC Rule 12g5-1 (17 CFR 240.12g5-1), of the
stock who are not officers, directors, or beneficial owners of 10
percent or more of the stock, or the average daily trading volume
of such stock as determined by the Board, is at least 500 shares;
and
(9) the issuer or a predecessor-in-interest
has been in existence for at least three years.
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(b) Requirements for continued inclusion
on the list of marginable OTC stocks. Except as provided in paragraph
(f) of this section, OTC margin stock shall meet the following requirements:
(1) three or more dealers
stand willing to, and do in fact, make a market in such stock and
regularly submit bona fide bids and offers to an automated quotations
system for their own accounts;
(2) the minimum average bid price of such
stocks, as determined by the Board, is at least $2 per share;
(3) the stock is registered
as specified in paragraph (a)(3) of this section;
(4) daily quotations for both bid and asked
prices for the stock are continuously available to the general public;
(5) the issuer has at
least $1 million of capital, surplus, and undivided profits;
(6) there are 300,000 or more
shares of such stock outstanding in addition to shares held beneficially
by officers, directors, or beneficial owners of more than 10 percent
of the stock; and
(7)
there continue to be 800 or more holders of record, as defined in
SEC Rule 12g5-1 (17 CFR 240.12g5-1), of the stock who are not officers,
directors, or beneficial owners of 10 percent or more of the stock,
or the average daily trading volume of such stock, as determined by
the Board, is at least 300 shares.
5-441.1
(c) Requirements for inclusion on the list
of foreign margin stocks. Except as provided in paragraph (f)
of this section, a foreign security shall meet the following requirements
before being placed on the list of foreign margin stocks:
(1) the security is an equity security
that is listed for trading on or through the facilities of a foreign
securities exchange or a recognized foreign securities market and
has been trading on such exchange or market for at least six months;
(2) daily quotations for
both bid and asked or last sale prices for the security provided by
the foreign securities exchange or foreign securities market on which
the security is traded are continuously available to creditors in
the United States pursuant to an electronic quotation system;
(3) the aggregate market value
of shares, the ownership of which is unrestricted, is not less than
$1 billion;
(4) the
average weekly trading volume of such security during the preceding
six months is either at least 200,000 shares or $1 million; and
(5) the issuer or a predecessor-in-interest
has been in existence for at least five years.
5-441.2
(d) Requirements for continued inclusion
on the list of foreign margin stocks. Except as provided in paragraph
(f) of this section, a foreign security shall meet the following requirements
to remain on the list of foreign margin stocks:
(1) the security continues to meet the
requirements specified in paragraphs (c)(1) and (2) of this section;
(2) the aggregate market
value of shares, the ownership of which is unrestricted, is not less
than $500 million; and
(3) the average weekly trading volume of such security during the
preceding six months is either at least 100,000 shares or $500,000.
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(e) Removal from the lists. The Board shall periodically remove from the lists any stock that—
(1) ceases to exist or of which the issuer
ceases to exist; or
(2) no longer substantially meets the provisions of paragraphs (b)
or (d) of this section or the definition of OTC margin stock.
(f) Discretionary authority
of Board. Without regard to other paragraphs of this section,
the Board may add to, or omit or remove from the list of marginable
OTC stocks and the list of foreign margin stocks an equity security
if, in the judgment of the Board, such action is necessary or appropriate
in the public interest.
(g) Unlawful representations. It shall be unlawful for any creditor
to make, or cause to be made, any representation to the effect that
the inclusion of a security on the list of marginable OTC stocks or
the list of foreign margin stocks is evidence that the Board or the
SEC has in any way passed upon the merits of, or given approval to,
such security or any transactions therein. Any statement in an advertisement
or other similar communication containing a reference to the Board
in connection with the lists or stocks on those lists shall be an
unlawful representation.
