Federal Register / Vol. 65, No. 81 / Wednesday, April 26, 2000 / Notices 24521

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

rules the Commission may promulgate

with respect thereto.

8. The Trusts will notify all

Participants that separate account

prospectus disclosure or Plan

prospectus or other Plan document

disclosure regarding potential risks of

mixed and shared funding may be

appropriate. Each trust will disclose in

its prospectus that (a) Shares of such

Trust may be offered to insurance

company separate accounts of both

variable annuity and variable life

insurance contracts and, if applicable, to

Qualified Plans, (b) due to differences in

tax treatment and other considerations,

the interests of various contract owners

participating in such Trust and the

interests of Qualified Plans investing in

such Trust, if applicable, may conflict,

and (c) the Trust’s Board will monitor

events in order to identify the existence

of any material irreconcilable conflicts

and to determine what actions, if any,

should be taken in response to any such

conflict.

9. If and to the extent that Rule 6e–

2 and Rule 6e–3(T) under the 1940 Act

are amended, or proposed Rule 6e–3

under the 1940 Act is adopted, to

provide exemptive relief from any

provision of the 1940 Act, or the rules

promulgated thereunder, with respect to

mixed or shared funding, on terms and

conditions materially different from any

exemptions granted in the order

requested in the application, then the

Trusts and/or Participating Insurance

Companies, as appropriate, shall take

such steps as may be necessary to

comply with Rules 6e–2 and 6e–3(T), or

Rule 6e–3, as such rules are applicable.

10. The Participants, at least annually,

will submit to the Board such reports,

materials, or data as a Board reasonably

may request so that the trustees of the

Board may fully carry out the

obligations imposed upon a Board by

the conditions contained in the

application, and said reports, materials,

and data will be submitted more

frequently if deemed appropriate by a

Board. The obligations of the

Participants to provide these reports,

materials, and data to a Board, when it

so reasonably requests, will be a

contractual obligation of all Participants

under this agreements governing

participation in the Funds.

11. All reports of potential or existing

conflicts received by a Board, and all

Board action with regard to determining

the existence of a conflict, notifying

Participants of a conflict, and

determining whether any proposed

action adequately remedies a conflict,

will be properly recorded in the minutes

of the Board or other appropriate

records, and such minutes or other

records shall be made available to the

Commission upon request.

12. The Trusts will not accept a

purchase order from a Qualified Plan if

such purchase would make the Plan

shareholder an owner of 10 percent or

more of the assets of such Fund unless

such Plan executes an agreement with

the relevant Trust governing

participation in such Fund that includes

the conditions set forth herein to the

extent applicable. A Plan or Plan

Participant will execute an application

containing an acknowledgment of this

condition at the time of its initial

purchase of shares of any Fund.

Conclusion

For the reasons summarized above,

Applicants believe that the requested

exemptions, in accordance with the

standards of Section 6(c), are

appropriate in the public interest and

consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the 1940 Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–10255 Filed 4–25–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42706; File No. SR–CHX–

00–09]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by The

Chicago Stock Exchange, Inc. Relating

to Operating Times of Price

Improvement Programs

April 19, 2000.

Pursuant to section 19(b)(1) of the

Securities Exchange Act of 1934 (the

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice hereby is given that on April 10,

2000, the Chicago Stock Exchange, Inc.

(‘‘CHX’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(the ‘‘Commission’’) the proposed rule

change as described in Items I, II and III

below, which Items have been prepared

by the CHX. The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to amend

Article XX, rule 37 of the Exchange’s

rules to change the starting time of each

of the Exchange’s automatic price

improvement programs from 8:45 a.m.,

Central Time to the beginning of the

Exchange’s primary trading session,

which occurs at 8:30 a.m., Central Time.

The text of the proposed rule change is

as follows:

Additions are italicized; deletions

[bracketed]

ARTICLE XX

Regular Trading Sessions

* * * * *

Guaranteed Execution System and Midwest

Automated Execution System

Rule 37.

* * * * *

(b) Automated Executions. The Exchange’s

Midwest Automated Execution System (the

MAX System) may be used to provide an

automated delivery and execution facility for

orders that are eligible for execution under

the Exchange’s BEST Rule (Article XX, Rule

37(a)) and certain other orders. In the event

that an order that is subject to the BEST Rule

is sent through MAX, it shall be executed in

accordance with the parameters of the BEST

Rule and the following. In the event that an

order that is not subject to the BEST Rule is

sent through MAX, it shall be executed in

accordance with the parameters of the

following:

* * * * *

(d) Super MAX Plus. Super MAX Plus

shall be a voluntary automatic execution

program within the MAX System. SuperMax

Plus shall be available for Dual Trading

System securities and Nasdaz/NM

Securities.***

* * * * *

(3) Operating Time. SuperMax Plus will

operate each day that the Exchange is open

for trading from [8:45 a.m. (C.T.)] the

commencement of the Primary Trading

Session until the close of the Primary

Trading Session; provided, however, that

preopening orders shall not be eligible for

SuperMax Plus price improvement. ***

* * * * *

(e) SuperMAX. Except as provided below

where SuperMAX is required to be enabled,

SuperMAX shall be a voluntary automatic

execution program within the MAX system.

SuperMAX shall be avaiable for Dual Trading

System securities for which SuperMAX plus

has been enabled. In the event that

SuperMAX Plus has been enabled for a

particular Dual Trading System security and

the maximum order size has been set at an

amount that is less than 499 shares,

SuperMAX shall be automatically enabled.

***

* * * * *

(2) Operating Time. SuperMAX will

operate each day that the Exchange is open

24522 Federal Register / Vol. 65, No. 81 / Wednesday, April 26, 2000 / Notices

3Preopening orders, however, would not be

entitled to participate in these automated price

improvement programs.

4Telephone conversation between Ellen J. Neely,

Vice President and General Counsel, CHX, and

Katherine England, Assistant Director, Division of

Market Regulation, Commission, on April 17, 2000.

5 15 U.S.C. 78f(b).

6 15 U.S.C. 78f(b)(5).

7 15 U.S.C. 78s(b)(3)(A).

8 17 CFR 240.19b–4(f)(6).

9 In reviewing this proposal, the Commission has

considered the proposal’s impact on efficiency,

competition and capital formation. 15 U.S.C. 78c(f).

for trading from [8:45 a.m. (C.T.)] the

commencement of the Primary Trading

Session until the close of the Primary

Trading Session; provided, however, that

preopening orders shall not be eligible for

SuperMAX price improvement. ***

* * * * *

(f) Enhanced SuperMAX. Enhanced

SuperMAX shall be a voluntary automatic

execution program within the MAX System.

Enhanced SuperMAX shall be available for

(i) any Dual Trading System security in

which SuperMAX Plus and SuperMAX have

both been enabled, or (ii) any Dual Trading

System security in which SuperMAX Plus

has been enabled for 499 shares or greater.

***

* * * * *

(3) Operating Time. Enhanced SuperMAX

will operate each day that the Exchange is

open for trading from [8:45 a.m. (C.T.)] the

commencement of the Primary Trading

Session until the close of the Primary

Trading Session; provided, however, the

preopening orders shall not be eligible for

Enhanced SuperMAX price improvement.

***

* * * * *

(g) Derivative SuperMAX. Derivative

SuperMAX shall be a voluntary automatic

execution program within the MAX System.

Derivative SuperMAX shall be available for

securities that trade on the Exchange in

minimum price variations of 1⁄64 of $1.00. A

specialist may choose to enable this

voluntary program within the MAX system

on a security-by-security basis. If Derivative

SuperMAX has been enabled for a particular

security and the maximum order has been set

at an amount that is less than or equal to 599

shares (or such greater amount designated by

the specialist and approved by the

Exchange), Derivative SuperMAX shall be

automatically enabled. If the security is

eligible for Derivative SuperMAX and the

specialist in such security has chosen to

engage Derivative SuperMAX for such

security, all small agency market orders in

that security will automatically be executed

in accordance with the Derivative SuperMAX

algorithm set forth below. For purposes of

this subsection (g), the term ‘‘small agency

market order’’ shall mean an agency order

from 100 shares up to and including 599

shares (or such greater amount designated by

the specialist and approved by the

Exchange).

* * * * *

(2) Operating Time. Derivative SuperMAX

will operate each day that the Exchange is

open for trading from [8:45 a.m. (Central

Time)] the commencement of the Primary

Trading Session until the close of the

Primary Trading Session; provided, however,

that preopening orders shall not be eligible

for Derivative SuperMAX price improvement.

A specialist may enable or remove Derivative

SuperMAX for a particular security only on

one given day each month, as determined by

the Exchange from time to time.

Notwithstanding the previous sentence,

during unusual market conditions,

individual securities or all securities may be

removed from Derivative SuperMAX with the

approval of two members of the Committee

on Floor Procedure.

II. Self-Regulatory Organization’s Statement

of the Purpose of, and Statutory Basis for,

the Proposed Rule Change

In its filing with the Commission, the CHX

included statements concerning the purpose

of, and basis for, the proposed rule change

and discussed any comments it received

regarding the proposed rule change. The text

of these statements may be examined at the

places specified in Item IV below. The CHX

has prepared summaries, set forth in Sections

A, B and C below, of the most significant

aspects of such statements.

A. Self-Regulatory Organization’s Statement

of the Purpose of, and Statutory Basis for, the

Proposed Rule Change

1. Purpose

The Exchange proposes to amend Article

XX, Rule 37 of the Exchange’s rules to allow

the Exchange’s automatic price improvement

programs to begin operating when CHX

trading begins.3 The Exchange proposes that

this change take effect on May 10, 2000.4

Under the Exchange’s current rules, each of

the Exchange’s automatic price improvement

programs, SuperMAX, SuperMAX Plus,

Enhanced SuperMAX and Derivative

SuperMAX, become available to specialists at

8:45 a.m., Central Time, fifteen minutes after

the Exchange begins trading. The Exchange

believes that the proposed rule change,

which would permit automated price

improvement during the first fifteen minutes

of trading, will enhance CHX specialists’

efficiency by automating a previouslymanual process. This change will permit the

CHX to better complete with other market

centers at a critical juncture in the trading

day by giving its specialists the opportunity

to provide price improvement to a greater

number of investors. Further, the Exchange

represents that the 8:45 a.m., Central Time

was originally chosen as the starting time for

the price improvement programs to allow the

Exchange to gain experience with the

operation of such programs before extending

their application to the first fifteen minutes

of Exchange trading, which are ordinarily

quite busy. Now that the Exchange has

gained experience, and seen the benefits of

the continuing evolution of technology, the

Exchange is confident that the automatic

price improvement programs can

successfully operate during the opening of

Exchange trading.

2. Statutory Basis

The proposed rule is consistent with the

requirements of the Act and the rules and

regulations thereunder that are applicable to

a national securities exchange, and, in

particular, with the requirements of section

6(b).5 In particular, the proposed rule is

consistent with section 6(b)(5) of the Act 6 in

that it is designed to promote just and

equitable principles of trade, to remove

impediments to and to perfect the

mechanism of a free and open market and a

national market system, and, in general, to

protect investors and the public interest.

B. Self-Regulatory Organization’s Statement

of Burden on Competition

The Exchange does not believe that the

proposed rule change will impose any

inappropriate burden on competition.

C. Self-Regulatory Organization’s Statement

on Comments Regarding the Proposed Rule

Change Received From Members,

Participants or Others

No written comments were either solicited

or received.

III. Date of Effectiveness of the Proposed

Rule Change and Timing for Commission

Action

Because the foregoing proposed rule

change should increase the CHX’s ability to

provide customers with price improvement,

and to compete with other market centers,

and: (1) Does not significantly affected the

protection of investors or the public interest;

(2) does not impose any significant burden

on competition; and (3) does not become

operative for 30 days from April 10, 2000, the

date on which it was filed, and the Exchange

provided the Commission with written notice

of its intent to file the proposed rule change

at least five business days prior to the filing

date, it has become effective pursuant to

Section 19(b)(3)(A) of the Act 7 and Rule 19b–

4(f)(6) 8 thereunder. At any time within 60

days of the filing of the proposed rule

change, the Commission may summarily

abrogate such rule change if it appears to the

Committee that such action is necessary or

appropriate in the public interest, for the

protection of investor, or otherwise in the

furtherance of the purposes of the Act.9

IV. Solicitation of Comments

Interested persons are invited to submit

written data, views and arguments

concerning the foregoing, including whether

the proposed rule change is consistent with

the Act. Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington DC 20549–0609. Copies of the

submission, all subsequent amendments, all

written statements with respect to the

proposed rule change that are filed with the

Commission, and all written communications

relating to the proposed rule change between

the Commission and any person, other than

those that maybe withheld from the public in

accordance with the provisions of 5 U.S.C.

552, will be available for inspection and

copying in the Commission’s Public

Reference Room in Washington, DC. Copies

of the filing will also be available for

inspection and copying at the principal office

of the Exchange. All submissions should

Federal Register / Vol. 65, No. 81 / Wednesday, April 26, 2000 / Notices 24523

10See 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3As discussed more fully below, the current

proposal replaces File No. SR–NASD–97–12 (‘‘1997

Proposal’’). The 1997 Proposal was published for

comment in the Federal Register on April 3, 1997.

NASD Regulation subsequently withdrew the 1997

Proposal. See Letter from Suzanne E. Rothwell,

Chief Counsel, Corporate Financing, NASD

Regulation, to Katherine A. England, Assistant

Director, Division of Market Regulation

(‘‘Division’’), Commission, dated March 27, 2000

(‘‘March 27 Letter’’).

refer to File No. SR–CHX–00–09 and should

be submitted by May 17, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–10368 Filed 4–25–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42698; File No. SR–NASD–

00–13]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. Relating to the Valuation

of Illiquid Direct Participation Program

and Real Estate Investment Trust

Securities on Customer Account

Statements

April 18, 2000.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 28,

2000, the National Association of

Securities Dealers, Inc. ‘‘NASD’’ or

‘‘Association’’), through its whollyowned subsidiary, NASD Regulation,

Inc. (‘‘NASD Regulation’’), filed with the

Securities and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) the proposed

rule change as described in Items I, II,

and III below, which Items have been

prepared by the NASD Regulation. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

NASD Regulation proposes to amend

NASD Conduct Rules 2340, ‘‘Customer

Account Statements,’’ 2710, ‘‘Corporate

Financing Rule—Underwriting Terms

and Arrangements,’’ and 2810, ‘‘Direct

Participation Programs.’’ 3 The text of

the proposed rule change appears

below. Proposed new language is in

italics; proposed deletions are in

brackets.

Rule 2340 Customer Account

Statements

(a) General

Each general securities member shall,

with a frequency of not less than once

every calendar quarter, send a statement

of account (‘‘account statement’’)

containing a description of any

securities positions, money balances, or

account activity to each customer whose

account had a security position, money

balance or account activity during the

period since the last such statement was

sent to the customer.

(b) DPP/REIT Securities

(1)(A) Voluntary Estimate Value

A general securities member may

provide a per share estimated value for

a direct participation program (‘‘DPP’’)

or real restate investment trust (‘‘REIT’’)

security on an account statement,

provided the member meets the

conditions of paragraphs (b)(2) and (3)

below.

(B) Mandatory Estimated Value

If the annual report of a DPP or REIT

includes a per share estimated value for

a DPP or REIT security that is held in

the customer’s account or included on

the customer’s account statement, a

general securities member must include

an estimated value from the annual

report, an independent valuation

service, or any other source, in the first

account statement issued by the

member thereafter, provided that the

member meets the conditions of

paragraphs (b)(2) and (3) below.

(2) A member may only provide a per

share estimated value for a DPP or REIT

security on an account statement if:

(A) after considering any relevant

information about the market and the

particular investment in its possession,

the member has no reason to believe

that the estimated value is inaccurate;

and

(B) the estimated value has been

developed from data that is as of a date

no more than 18 months prior to the

date that the statement is issued.

(3) If an account statement provides

an estimated value for a DPP or REIT

security, if must include:

(A) a brief description of the

estimated value, its source, and the

method by which it was developed; and

(B) disclosure that DPP or REIT

securities are generally illiquid, and that

the estimated value may not be realized

when the investor seeks to liquidate the

security.

(4) If an account statement does not

provide an estimated value for a DPPor

REIT security, it must include disclosure

that:

(A) DPP or REIT securities are

generally illiquid;

(B) the value of the security will be

different than its purchase price; and

(C) if applicable, that accurate

valuation information is not available.

(c)[(b)] Definitions

For purposes of this Rule, the

following terms will have the stated

meanings:

(1) [the term] ‘‘account activity’’

[shall] includes, but is not [be] limited

to, purchases, sales, interest credits or

debits, charges or credits, divided

payments, transfer activity, securities

receipt or delivers, and/or journal

entries relating to securities or funds in

the possession or control of the member.

(2) [(c) For purposes of this Rule,] [the

term] a ‘‘general securities member’’

[shall] refers to any member which

conducts a general securities business

and is required to calculate its net

capital pursuant to the provisions of

SEC Rule 15c3–1(a), except for

paragraph (a)(2) and (a)(3).

Notwithstanding the foregoing

definition, a member which does not

carry customer accounts and does not

hold customer funds and securities is

exempt from the provisions of this

section.

(3) ‘‘direct participation program’’ or

‘‘direct participation program security’’

refers to the publicly issued equity

securities of a direct participation

program as defined in Rule 2810

(including limited liability companies),

but does not include securities on

deposit in a registered securities

depository and settled regular way,

securities listed on a national securities

exchange or The Nasdaq Stock Market,

or any program registered as a

commodity pool with the Commodity

Futures Trading Commission.

(4) ‘‘real estate investment trust’’ or

‘‘real estate investment trust security’’

refers to the publicly issued equity

securities of a real estate investment

trust as defined in Section 856 of the

Internal Revenue Code, but does not

include securities on deposit in a

registered securities depository and

settled regular way or securities listed

on a national securities exchange or The

Nasdaq Stock Market.

(5) ‘‘annual report’’ means the most

recent annual report of the DPP or REIT

distributed to investors pursuant

Section 13(a) of the Act.

(d) Exemptions

Pursuant to the Rule 9600 Series, the

Association may exempt any member