25410 Federal Register / Vol. 65, No. 84 / Monday, May 1, 2000 / Notices

case may be, of the securities is fair to

the Fund and that the Fund’s

participation or choice not to participate

in the sale on a lock-step basis is not the

result of overreaching by any other

Fund, and Private Fund, and/or the

Adviser or its affiliate, as applicable. If

such a finding is not made, then the

relevant Fund must participate in such

sale on the basis of lock-step

disposition. Like a Fund, a Private Fund

may elect not to participate in a sale of

securities held as Co-Investments or not

to participate on a lock-step basis. If at

any time the result of a proposed

disposition of any portfolio security

held by a Fund or a Private Fund would

alter the proportionate holdings of each

class of securities held by the other

Funds, Private Funds, and/or the

Adviser or its affiliate, as applicable,

holding the Co-Investment, then the

Non-Interested Trustees of the Fund or

Funds involved must determine that

such a result is fair to the relevant

Fund(s) and is not the result of

overreaching by any other Fund, any

Private Fund, and/or the Adviser or its

affiliate, as applicable. The NonInterested Trustees will record in the

records of the Fund the basis for their

decisions as to whether to participate in

such sale.

9. If a Fund or a Private Fund

determines that it should make a

‘‘follow-on’’ investment (i.e., an

additional investment in a portfolio

company in which a Co-Investment has

been made pursuant to the order

requested hereby) in a particular

portfolio company whose securities are

held by it and one or more Funds, or to

exercise warrants or other rights to

purchase securities of such an issuer,

notice of such transaction will be

provided to such other Fund(s),

including its or their Non-Interested

Trustees at the earliest practical time.

The Adviser will formulate a

recommendation as to the proposed

participation by a Fund in a follow-on

investment and provide the

recommendation to the Non-Interested

Trustees of the Fund along with notice

of the total amount of the follow-on

investment. Each Fund’s Non-Interested

Trustees will make their own

determination with respect to follow-on

investments. Follow-on investments

will be entered into on the same basis

as initial Co-investments and will be

subject to the same approval procedure

as those required for initial CoInvestments. Assuming that the amount

of a follow-on investment available to a

Fund is not based on the amount of the

fund’s initial Co-Investment, the relative

amount of investment by each Fund

participating in a follow-on investment

will be based on a ratio derived by

comparing the capital available for

investment of each participating Fund,

Private Fund and/or the Adviser or its

affiliate, as applicable, with the total

amount of the available follow-on

investment. Each Fund will participate

in such investment if a majority of its

Non-Interested Trustees determines that

such action is in the best interest of the

Fund. The Non-Interested Trustees of

each Fund will record in their records

the recommendation of the Adviser and

their decision as to whether to engage in

a follow-on transaction with respect to

that portfolio company, as well as the

basis for such decision.

10. A decision by the Trustees of a

Fund (i) not to participate in a CoInvestment, (ii) to take less or more than

the Fund’s full pro rata allocation, or

(iii) not to sell, exchange, or otherwise

dispose of a Co-Investment in the same

manner and at the same time as another

Fund or a Private Fund shall include a

finding that such decision is fair and

reasonable to the Fund and not the

result of overreaching of the Fund or its

securityholders by the Private Funds

and/or the Adviser or its affiliate, as

applicable. The Non-Interested Trustees

of each Fund will be provided quarterly

for review all information concerning

Co-Investments made by the Funds, the

Private Funds, and/or the Adviser or its

affiliate, as applicable, including CoInvestments in which the Fund declined

to participate, so they may determine

whether all Co-Investments made

during the preceding quarter, including

those Co-Investments they declined,

complied with the conditions set forth

above. In addition, the Non-Interested

Trustees of each Fund will consider at

least annually the continuing

appropriateness of the standards

established for Co-Investments by the

Fund, including whether use of such

standards continues to be in the best

interest of the Fund and its

securityholders and does not involve

overreaching of the Fund or its

securityholders on the part of any party

concerned.

11. No Non-Interested Trustee of a

Fund will be an affiliated person of a

Private Fund or have had, at any time

since the beginning of the last two

completed fiscal years of any Private

Fund, a material business or

professional relationship with any

Private Fund.

12. A Fund, each Private Fund, and/

or the Adviser or its affiliate, as

applicable, will each bear its own

expenses associated with the

disposition of portfolio securities. The

expenses, if any, of distributing and

registering securities under the

Securities Act sold by the Fund, one or

more Private funds, and/or the Adviser

or its affiliate, as applicable, at the same

time will be shared by the Fund, the

selling Private Fund(s), and/or the

Adviser or its affiliate, as applicable, in

proportion to the relative amounts they

are selling.

13. Other than as provided in

condition 5, neither the Adviser nor any

of its affiliates (other than the Private

Funds pursuant to any order issued on

this application) nor any director of the

Fund will participate in a CoInvestment with the Fund unless a

separate exemptive order with respect to

such Co-Investment has been obtained.

For this purpose, the term ‘‘participate’’

shall not include either the existing

interests of the Adviser or its affiliates

in, or their management fee and expense

reimbursement arrangements with,

Private Funds, and the term

‘‘participate’’ shall also not include any

reimbursement from direct investment

issuers described in condition 5 above.

14. The Fund will maintain all

records required of it by the Act, and all

records referred to or required under

these conditions will be available for

inspection by the SEC. The Fund will

also maintain the records required by

section 57(f)(3) of the Act as if the Fund

was a business development company

and the Co-Investments were approved

by the Non-Interested Trustees under

section 57(f).

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–10730 Filed 4–28–00; 8:45 am]

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Agency Meeting

Notice is hereby given, pursuant to

the provisions of the Government in the

Sunshine Act, Pub. L. 94–409, that the

Securities and Exchange Commission

will hold the following meeting during

the week of May 1, 2000.

A closed meeting will be held on

Wednesday, May 3, 2000 at 11 a.m.

Commissioners, Counsel to the

Commissioners, the Secretary to the

Commission, and recording secretaries

will attend the closed meeting. Certain

staff members who have an interest in

the matters may also be present.

The General Counsel of the

Commission, or his designee, has

certified that, in his opinion, one or

more of the exemptions set forth in 5

Federal Register / Vol. 65, No. 84 / Monday, May 1, 2000 / Notices 25411

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

2Securities Exchange Act Release No. 42323

(January 7, 2000), 65 FR 2449 (January 14, 2000).

3 DTC’s current procedures relating

collateralization and risk management controls are

set forth in memorandums dated March 17, 1995,

which are attached as Exhibit 3 to DTC’s filing.

4For a complete description of DTC’s

collateralization procedures, refer to Exhibit 2 of

DTC’s rule filing. 5 15 U.S.C. 78q–1(b)(3)F).

6 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

U.S.C. 552(c)(4), (8), (9)(A) and (10) and

17 CFR 200.402(a)(4), (8), (9)(A) and

(10), permit consideration for the

scheduled matters at the closed meeting.

The subject matter of the closed

meeting scheduled Wednesday, May 3,

2000 will be:

Institution and settlement of

injunctive actions; and, Institution and

settlement of administrative

proceedings of an enforcement nature.

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact: The Office

of the Secretary at (202) 942–7070.

Dated: April 26, 2000.

Jonathan G. Katz,

Secretary.

[FR Doc. 00–10836 Filed 4–26–00; 4:20 pm]

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[Release No. 34–42711; File No. SR–DTC–

99–24]

Self-Regulatory Organizations; The

Depository Trust Company; Order

Approving a Proposed Rule Change

Relating to Collateralization

Procedures

April 21, 2000.

On October 27, 1999, The Depository

Trust Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) a proposed rule change

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

Securities Exchange Act of 1934

(‘‘Act’’).1 Notice of the proposal was

published in the Federal Register on

January 14, 2000.2 No comment letters

were received. For the reasons

discussed below, the Commission is

approving the proposed rule change.

I. Description

The rule change revises DTC’s

collateralization procedures 3 to provide

for a systemic monitor to withhold

collateral value for collateral associated

with the participant (e.g., the

participant’s own commercial paper). 4

Specifically, DTC will implement an

Issuer/Participant Number (‘‘IPN’’

control to systemically monitor

collateral received in each participant’s

account.

The IPN will identify securities

related to a participant and will

withhold from the participant any

collateral value associated with the

securities. For example, transactions

related to an issuing/paying agent

(‘‘IPA’’) account (e.g., receives versus

payment) will continue to be processed

in essentially same manner except that

no value will be given to the IPA’s

collateral monitor for the collateral

value of securities received that are

associated with the IPA.

IPN is based on the legal structure of

a participant; therefore, the IPA control

will apply to every participant’s

account. For example, if a participant

has an IPA account through which it

issues money market instrument

securities (‘‘MMI securities’’) on its own

behalf and also has a custody account

and if the participant processes an MMI

issuance delivery of its own MMI

securities from its IPA account to its

custody account, the participant would

receive no collateral value in the

custody account for the delivery of the

MMI securities. IPN will not affect

DTC’s calculations of a participant’s net

debit cap or largest provisional net

credit.

II. Discussion

Section 17A(b)(3)(F) 5 of the Act

requires that the rules of a clearing

agency be designed to assure the

safeguarding of securities and funds

which are in the custody or control of

the clearing agency or for which the

clearing agency is responsible. The

Commission believes that DTC’s

proposed rule change is consistent with

DTC’s obligations under the Act because

the new procedures will reduce the risk

that a participant’s collateral will not be

sufficient to satisfy its settlement

obligations.

DTC uses collateralization as a

method to protect itself and its

participant from the inability of one or

more participants to pay its settlement

obligations. Collateralization ensures

that at all times each participant

maintains collateral in its account equal

to or greater than its net cash settlement

obligation (i.e., its net debit). If a

participant were to fail to pay its

settlement obligation, DTC would use

the collateral in the failing participant’s

account to support any borrowings

necessary to finance the failing

participant’s settlement obligation or

could liquidate the collateral to cover

the participant’s settlement obligation. If

a participant were to receive value in

DTC’s collateral monitor for collateral

that is associated with the participant,

DTC would probably not have sufficient

collateral if that participant were to

default because the participant’s

collateral would probably have little or

no value in a default situation.

Accordingly, the rule change establishes

a systemic monitor that will withhold

collateral value for collateral associated

with a participant. This should help

ensure that DTC will have sufficient

resources to satisfy outstanding

settlement obligations in the event of a

participant default.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposal is

consistent with the requirements of the

Act and in particular with the

requirements of Section 17A of the Act

and the rules and regulations

thereunder.

It Is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act, that the

proposed rule change (File No. SR–

DTC–99–24) be, and hereby is,

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–10729 Filed 4–28–00; 8:45 am]

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[Release No. 34–42715; File No. SR–NASD–

00–19]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the National

Association of Securities Dealers, Inc.

Relating to Level I Market Data Fees

April 24, 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 April 13,

2000, the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), through its whollyowned subsidiary, Nasdaq Stock

Market, Inc. (‘‘Nasdaq’’), filed with the

Securities and Exchange Commission

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

rule change as described in Items I and

II below, which Items have been