Amex 2nd Tier Listings OKd

Small but growing companies that don’t qualify for a listing on the American Stock Exchange will get their own junior marketplace under rules changes approved Thursday by federal regulators.

The Securities and Exchange Commission voted to allow the Amex to create a second tier of listed companies with lower financial standards than those now needed to qualify for the nation’s second-largest stock exchange.

The Emerging Company Marketplace is expected to raise the corporate profile for firms with as little as $2 million in assets while they are still growing and most in need of cash, Amex officials say.

“This new market will provide a nurturing environment where growing companies can enjoy high visibility and excellent market quality demanded by companies and their investors,” exchange Chairman James R. Jones said.

Between 15 and 20 companies will be enrolled on the Amex’s junior varsity when trading begins March 18. That number is expected to grow to about 50 by year’s end.

Jones sees the second tier as an “incubator market,” with those firms eventually qualifying for a first tier listing.

A listing on the Amex or larger New York Stock Exchange traditionally was seen as a prestigious step for companies, because generally only the nation’s largest companies qualify.

To be listed on the Amex now, companies must have had pretax earnings of at least $750,000 in two of the last three years, between 400 and 800 shareholders and stock trading at $3 per share.

The NYSE has even higher standards: net tangible assets of $18 million, at least 1.1 million shares publicly held with a total market value of at least $18 million.

However, a stock exchange listing has lost some of its cachet in recent years with the growth of worldwide electronic trading.

Thursday’s vote came as SEC Chairman Richard Breeden pushes to make it easier for small companies to tap into the capital markets and raise money through selling stocks and bonds.