Securities Lawyer's Deskbook                          published by The University of Cincinnati College of Law

Rule 3a55-4 -- Exclusion from Definition of Narrow-Based Security Index for Indexes Composed of Debt Securities.

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1. An index is not a narrow-based security index if:
   
   
   1. 
      
      
      1. Each of the securities of an issuer included in the index is a security, as defined in section 2(a)(1) of the Securities Act of 1933 and section 3(a)(10) of the Act and the respective rules promulgated thereunder, that is a note, bond, debenture, or evidence of indebtedness;
         
         
      2. None of the securities of an issuer included in the index is an equity security, as defined in section 3(a)(11) of the Act (15 U.S.C. 78c(a)(11)) and the rules promulgated thereunder;
         
         
      3. The index is comprised of more than nine securities that are issued by more than nine non-affiliated issuers;
         
         
      4. The securities of any issuer included in the index do not comprise more than 30 percent of the index's weighting;
         
         
      5. The securities of any five non-affiliated issuers included in the index do not comprise more than 60 percent of the index's weighting;
         
         
      6. Except as provided in paragraph (a)(1)(viii) of this section, for each security of an issuer included in the index one of the following criteria is satisfied:
         
         
         1. The issuer of the security is required to file reports pursuant to section 13 or section 15(d) of the Act (15 U.S.C. 78m and 78o(d));
            
            
         2. The issuer of the security has a worldwide market value of its outstanding common equity held by non-affiliates of $700 million or more;
            
            
         3. The issuer of the security has outstanding securities that are notes, bonds, debentures, or evidences of indebtedness having a total remaining principal amount of at least $1 billion;
            
            
         4. The security is an exempted security as defined in section 3(a)(12) of the Act (15 U.S.C. 78c(a)(12)) and the rules promulgated thereunder; or
            
            
         5. The issuer of the security is a government of a foreign country or a political subdivision of a foreign country;
            
            
      7. Except as provided in paragraph (a)(1)(viii) of this section, for each security of an issuer included in the index one of the following criteria is satisfied:
         
         
         1. The security has a total remaining principal amount of at least $250,000,000; or
            
            
         2. The security is a municipal security, as defined in section 3(a)(29) of the Act and the rules promulgated thereunder that has a total remaining principal amount of at least $200,000,000 and the issuer of such municipal security has outstanding securities that are notes, bonds, debentures, or evidences of indebtedness having a total remaining principal amount of at least $1 billion; and
            
            
      8. Paragraphs (a)(1)(vi) and (a)(1)(vii) of this section will not apply to securities of an issuer included in the index if:
         
         
         1. All securities of such issuer included in the index represent less than five percent of the index's weighting; and
            
            
         2. Securities comprising at least 80 percent of the index's weighting satisfy the provisions of paragraphs (a)(1)(vi) and (a)(1)(vii) of this section; or
            
            
   2. 
      
      
      1. The index includes exempted securities, other than municipal securities, as defined in section 3(a)(29) of the Act and the rules promulgated thereunder, that are:
         
         
         1. Notes, bonds, debentures, or evidences of indebtedness; and
            
            
         2. Not equity securities, as defined in section 3(a)(11) of the Act and the rules promulgated thereunder; and
            
            
      2. Without taking into account any portion of the index composed of such exempted securities, other than municipal securities, the remaining portion of the index would not be a narrow-based security index meeting all the conditions under paragraph (a)(1) of this section.
         
         
2. For purposes of this section:
   
   
   1. An issuer is affiliated with another issuer if it controls, is controlled by, or is under common control with, that issuer.
      
      
   2. For purposes of this section, control means ownership of 20 percent or more of an issuer's equity, or the ability to direct the voting of 20 percent or more of the issuer's voting equity.
      
      
   3. The term issuer includes a single issuer or group of affiliated issuers.

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