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pension of two individuals from allied exchange membership, and censure of a number of individuals and firms. Commission Rate Study
On February 20, 1959, the Commission announced the completion by its staff of a study of commission rates charged by members of the New York Stock Exchange undertaken as a result of an increase in commission rates adopted by the Exchange on May 1, 1958. The study was made in view of the responsibilities and duties imposed upon the Commission by section 19(b) of the Securities Exchange Act of 1934 with respect to the rules of national securities exchanges including rules relating to the fixing of reasonable commission rates.?
In line with suggestions of the Commission, the Exchange took steps falling into three general areas. First, the Exchange reduced commission rates on transactions ranging from $100 to $2,400 by approximately 5 percent. These modifications were suggested in view
5 of the fact that the May 1958 percentage increases on transactions from $100 to $2,400 were relatively greater than the average percentage increase. The Exchange also eliminated the so-called "round turn" commission rate under which a reduced rate was granted to persons whose purchase and sale of the security was completed within 14 days. It was the view of the Commission that this type of transaction was not entitled to a special discount and the Exchange felt this rate had not achieved its desired objective.
Following the action of the New York Stock Exchange other registered national securities exchanges, including the American Stock Exchange, adopted a schedule of commission rates identical with that of the New York Stock Exchange.
Second, it was decided that an Exchange committee would study the use of a so-called volume or block discount for transactions involving multiple round lot units. The Exchange also agreed to study the possibility of further developing its income and expense survey of member firms as a source of data in connection with commission rates and to work with the staff of the Commission and consultants employed by the Exchange to prepare an outline for the basis of a cost study being made by the Exchange.
Third, the Exchange amended its rules to provide that any proposed constitutional amendment to change commission rates or other charges would be announced 30 days in advance of action by the Board of Governors of the Exchange. Also, it was agreed that the Commission would be advised of any steps taken by the Exchange looking toward changes in commission rates or other charges.
1 Securities Exchange Act Release No. 5889. * Securities Exchange Act Release No. 5678.
Activities of Floor Traders and Specialists
a activities of floor traders and specialists on the American Stock Exchange, certain steps have been taken by that Exchange to impose further controls upon the activities of these members. The Commission concluded from the study that further restrictions were necessary upon floor trading activities on that Exchange; that these restrictions should prevent floor traders from stimulating public interest in a stock by active and concerted buying; and that floor traders should be restricted from aggravating demand in present markets where many issues on the Exchange are peculiarly susceptible to extreme fluctuations because of a small floating supply. The Commission permitted the Exchange to put into effect on an experimental basis for six months a rule which the Exchange believes will minimize the undesirable features of floor trading, yet preserve certain asserted benefits. The effect of the rule is to impose restrictions upon floor trading purchases in a rising market.
In line with suggestions of the Commission, the Exchange has also taken certain steps to regulate further the activities of specialists. Several new rules relating to specialists have been adopted, the most important of which makes subject to Exchange approval all off-floor transactions, with certain limited exceptions, by specialists in securities in which they are registered. The Exchange also has instituted a program for making periodic inspections of specialist dealer transactions in the securities in which they are registered. Under the program specialists will be required to report to the Exchange several times each year the details of their dealings for unannounced periods selected at random by the Exchange.
REGISTRATION OF SECURITIES ON EXCHANGES
A member of a national securities exchange or a broker or dealer may not effect any transaction in a security on an exchange unless the security is registered on that exchange under the Securities Exchange Act or is exempt from such registration. In general, the act exempts from registration obligations issued or guaranteed by a State or the Federal Government or by certain subdivisions or agencies thereof and authorizes the Commission to adopt rules and regulations exempting such other securities as the Commission may find necessary or appropriate to exempt in the public interest or for the protection of investors. Under this authority the Commission has exempted securities of certain banks, certain securities secured by property or leasehold interests, certain warrants and, on a temporary basis, certain securities issued in substitution for or in addition to listed securities.
* Securities Exchange Act Release No. 5981.
Section 12 of the Exchange Act provides that an issuer may register a class of securities on an exchange by filing with the Commission and the exchange an application which discloses pertinent information concerning the issuer and its affairs, including information in regard to the issuer's business, capital structure, the terms of its securities, the persons who manage or control its affairs, the remuneration paid to its officers and directors, the allotment of options, bonuses and profitsharing plans, and financial statements certified by independent accountants.
Form 10 is the form used for registration by most commercial and industrial companies. There are specialized forms for certain types of securities, such as voting trust certificates, certificates of deposit and securities of foreign governments.
Section 13 requires issuers having securities registered on an exchange to file periodic reports keeping current the information furnished in the application for registration. These periodic reports include annual reports, semiannual reports, and current reports. The principal annual report form is Form 10-K which is designed to keep up to date the information furnished in Form 10. Semiannual reports required to be furnished on Form 9-K are devoted chiefly to furnishing mid-year financial data. Current reports on Form 8-K are required to be filed for each month in which any of certain specified events have occurred such as changes in control of the registrant, important acquisitions or dispositions of assets, the institution or termination of important legal proceedings and important changes in the issuer's capital securities or in the amount thereof outstanding. Statistics Relating to Registration of Securities on Exchanges
As of June 30, 1959, a total of 2,236 issuers had 3,808 classes of securities listed and registered on national securities exchanges, of which 2,631 were classified as stocks and 1,177 as bonds. 1,294 issuers had 1,512 stock issues and 1,124 bond issues listed and registered on the New York Stock Exchange. Thus, 58 percent of the issuers, 57 percent of the stock issues and 95 percent of the bond issues were on the Now York Stock Exchange.
During the 1959 fiscal year, 73 issuers listed and registered securities for the first time on a national securities exchange, while registration of all securities of 73 issuers was terminated. The total number of applications for registration of classes of securities on national securities exchanges filed during the 1959 fiscal year was 203.
The following table shows the number of annual, semiannual, and current reports filed during the fiscal year by issuers having securities listed and registered on national securities exchanges. The table also shows the number of reports filed under section 15(d) of the Securities Exchange Act of 1934 by issuers obligated to file reports by reason
of having publicly offered securities effectively registered under the Securities Act of 1933. The securities of such issuers are traded generally in the over-the-counter markets. As of June 30, 1959, there were 1,503 such issuers, including 247 also registered under the Investment Company Act of 1940.
Number of annual and other periodic reports filed by issuers under the Securities
Exchange Act of 1934 during the fiscal year ended June 30, 1959
The market value on December 31, 1958, of all stocks and bonds admitted to trading on one or more stock exchanges in the United States was approximately $419,585,963,000.
1 Bonds on the New York Stock Exchange included 50 U.S. Government and New York State and City issues with $77,690,873,000 aggregate market value.
The New York Stock Exchange and American Stock Exchange figures were reported by those exchanges. There is no duplication of issues between them. The figures for all other exchanges are for the net number of issues appearing only on such exchanges, excluding the many issues on them which were also traded on one or the other of the New York exchanges. The number of issues as shown excludes those suspended from trading and a few others for which quotations were not available. The number and market value as of December
31, 1958, of preferred and common stocks separately was as follows:
Listed on registered exchanges..
June 30, 1959 *
December 31 each year
$8, 400, 005, 000
8, 893, 788,000
1 Issues admitted to unlisted trading privileges only or listed on exempt exchanges.
The New York Stock Exchange has reported aggregate market values of all stocks thereon monthly since December 31, 1924, when the figure was $27.1 billion. The aggregate market value rose to $89.7 billion in 1929, declined to $15.6 billion in 1932, and was $298.8 billion in June 1959. The American Stock Exchange has reported December 31 totals annually since 1936. Aggregates for stocks exclusively on the remaining exchanges have been compiled as of December 31 annually by the Commission since 1948.
Share values on exchanges, in billions of dollars
New York American Exclusively
$282, 313, 930,000 21, 453, 528, 000
1 Total values 1936-47 inclusive are for the New York Stock Exchange and the American Stock Exchange only.
*As reported by the New York Stock Exchange and estimated for all others.
At the time of passage of the Securities Exchange Act of 1934,
reached in 1932, and a Indices turned downShare volumes on the ex
stock prices were rising from their low point, substantial recovery occurred through 1936. ward with the stock market decline in 1937. changes dropped from 962 million in 1936 to 221 million in 1942 and dollar volumes thereof from $23.6 billion in 1936 to $4.3 billion in 1942. Thereafter, recovery set in. For the calendar year 1958, the exchange turnover reached 1.4 billion shares with $38.4 billion dollar volume of sales, and for the first 6 months of 1959, the turnover