[Federal Register Volume 65, Number 127 (Friday, June 30, 2000)]
[Notices]
[Pages 40712-40715]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16582]



[[Page 40712]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42975; File No. SR-CHX-00-14]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change and Amendment No. 
1 Thereto by the Chicago Stock Exchange, Inc. Relating to Generic 
Listing Standards Applicable to Listing Portfolio Depository Receipts 
and Investment Company Units Pursuant to Rule 19b-4(e) under the 
Securities Exchange Act of 1934

June 22, 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 May 3, 2000, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') 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 prepared by the Exchange. 
The CHX filed Amendment No. 1 to the proposed rule change on May 5, 
2000.\3\ The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons and to approve the 
proposal, as amended, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Letter from Ellen Neely, Vice President and General 
Counsel, CHX, to Nancy Sanow, Assistant Director, Division of Market 
Regulation (``Division''), SEC, dated May 4, 2000 (``Amendment No. 
1''). Amendment No. 1 adds a product description delivery 
requirement for certain series of Investment Company Units 
(``ICUs'') and clarifies the timing for compliance with eligibility 
criteria relating to indexes underlying a series of Portfolio 
Depository Receipts (``PDRs''). Amendment No. 1 is more fully 
described in Section II below.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to amend its listing standards for Investment 
Company Units (``ICUs'') (CHX Article XXVIII, Rule 24) and Portfolio 
Depositary Receipts (``PDRs'') (CHX Article XXVIII, Rule 25) to provide 
standards that permit listing and trading, or trading pursuant to 
unlisted trading privileges (``UTP''), of certain products pursuant to 
Rule 19b-4(e) under the Act.\4\ The Exchange also proposes related 
amendments to CHX Article XX, Rule 22, its minimum trading variation 
rule. The text of the proposed rule change is available upon request 
from the Office of the Secretary, CHX or the Commission.
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    \4\ 17 CFR 240.19b-4(e). Rule 19b-4(e) permits self-regulatory 
organizations (``SROs'') to list and trade new derivatives products 
that comply with existing SRO trading rules, procedures, 
surveillance programs and listing standards, without submitting a 
proposed rule change under Section 19(b). See Securities Exchange 
Act Release No. 40761 (December 8, 1998), 63 FR 70952 (December 22, 
1998).
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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 on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item III below. The Exchange has prepared summaries, set forth in 
section 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 currently trades a number of securities pursuant to 
UTP under its listing standards for ICUs and PDRs.\5\ These standards, 
found in CHX Artlcle XXVIII, Rule 24 and Rule 25, are similar to those 
maintained by other exchanges.\6\ The Exchange's proposed amendments to 
CHX Article XXVIII, Rules 24 and 25 would permit it to list and trade 
ICUs and PDRs pursuant to Rule 19b-4(e) under the Act.\7\ The Exchange 
believes that application of Rule 19b-4(e) to these securities will 
further the intent of that rule by allowing trading to begin in these 
securities, subject to the proposed generic standards, without the need 
for notice and comment and Commission approval. The Exchange believes 
that this new procedure has the potential to reduce time frame for 
bringing these securities to market or for trading them pursuant to 
UTP.
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    \5\ See Securities Exchange Act Release No. 37589 (August 21, 
1996), 61 FR 44370 (August 28, 1996) (ICUs) and Securities Exchange 
Act Release No. 39076 (September 15, 1997), 62 FR 49270 (September 
19, 1997) (PDRs).
    \6\ See American Stock Exchange (``Amex'') Rules 1000 (Portfolio 
Depositary Receipts) and 1000A (Index Fund Shares).
    \7\ See supra note 4.
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2. Generic Listing Criteria
    The Exchange is proposing to implement generic listing criteria 
that are intended to ensure that a substantial portion of the weight of 
an index or portfolio underlying ICUs or PDRs is composed of securities 
with substantial market capitalization and trading volume. The proposed 
amendments to CHX Rules 24 and 25 provide that the Exchange may approve 
for trading pursuant to Rule 19b-4(e) a series of ICUs or PDRs if the 
components that, in the aggregate, account for at least 90% of the 
weight of the underlying index or portfolio have a minimum market value 
of at least $75 million. In addition, the component stocks representing 
at least 90% of the weight of the index or portfolio must have a 
minimum monthly trading volume during each of the last six months of at 
least 250,000 shares.
    Moreover, the most heavily weighted component stocks in an 
underlying index or portfolio cannot together exceed 25% of the weight 
of the index or portfolio, and the five most heavily weighted component 
stocks cannot together exceed 65% of the weight of the index or 
portfolio. The index or portfolio must include a minimum of 13 
stocks,\8\ and all securities in an underlying index or portfolio must 
be listed on a national securities exchange or The Nasdaq Stock Market 
(including The Nasdaq SmallCap Market). Finally, any series of ICUs or 
PDRs traded pursuant to generic standards must meet these eligibility 
criteria as the date of the initial deposit of securities and cash into 
the trust or fund.\9\
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    \8\ Thirteen stocks is the minimum number to permit 
qualification as a regulated investment company under Subchapter M 
of the Internal Revenue Code. Under Subchapter M of the Internal 
Revenue Code, for a fund to qualify as regulated investment company 
the securities of a single issuer can account for no more than 25% 
of a fund's total assets, and at least 50% of a fund's total assets 
must be comprised of cash (including government securities) and 
securities of single issuers whose securities account for less than 
5% of the fund's total assets.
    \9\ See Amendment No. 1, supra note 3.
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    Under the proposed amendments to CHX Rules 24 and 25, the 
underlying index or portfolio will be calculated based on either the 
market capitalization, modified market capitalization, price, equal-
dollar or modified equal-dollar weighting methodology. In addition, if 
the index is maintained by a broker-dealer, the broker-dealer must 
erect a ``fire wall'' around the personnel who have access to 
information concerning changes and adjustments to the index or 
portfolio, and the index must be calculated by a third party who is not 
a broker-dealer.
    The current index value must be disseminated every 15 seconds over 
the Consolidated Tape Association's Network B.\10\ Additionally, the

[[Page 40713]]

Reporting Authority must disseminate for each series of ICUs or PDRs an 
estimate, updated every 15 seconds, of the value of a share of each 
series. This estimate may be based, for example, upon current 
information regarding the required deposit of securities and cash 
amount to permit creation of new shares of the series or upon the index 
value.
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    \10\ The CHX represents that it understands that the information 
described in this section will be disseminated by or through the 
primary exchange or another entity working with that exchange.
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    A minimum of 100,000 shares of a series of ICUs or PDRs must be 
outstanding at the time trading begins. The Exchange represents that it 
believes that this minimum number is sufficient to establish a liquid 
Exchange market at the start of trading. The minimum trading variation 
for a series of PDRs must be \1/64\ of $1.00 and, for ICUs, \1/16\, \1/
32\ or \1/64\ of $1.00, as determined by the Exchange for a specific 
series.
    The Exchange will implement written surveillance procedures for the 
PDRs and the ICUs that it trades pursuant to Rule 19b-4(e). In 
addition, the Exchange will comply with the recordkeeping requirements 
of Rule 19b-4(e), and will file Form 19b-4(e) for each series of ICUs 
or PDRs within five business days of commencement of trading.\11\
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    \11\ 17 CFR 240.19b-4(e).
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    The provisions of CHX Rules 22 et seq., 24 et seq. or 25 et seq. 
will apply to all series of PDRs and ICUs listed under Rule 19b-4(e). 
In addition to the requirements of amended CHX Rules 22, 24 and 25, 
PDRs and ICUs will be subject to Exchange procedures and rules, 
discussed below, comparable to those applied to existing PDRs and 
ICUs.\12\
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    \12\ Telephone conversation between Ellen Neely, Vice President 
and General Counsel, CHX, and Melinda Diller, Attorney, Division, 
SEC, on June 13, 2000.
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    ICUs and PDRs are subject to the Exchange's rule relating to 
trading halts due to extraordinary market volatility (CHX Article IX, 
Rule 10A) and the Exchange's rule that provides discretion to Exchange 
officials to halt trading in specific securities under certain 
circumstances (CHX Article IX, Rule 10(b)). In exercising the 
discretion described in CHX Article IX, Rule 10(b), appropriate 
Exchange officials may consider a variety of factors, including the 
extent to which trading is not occurring in a stock underlying the 
index or portfolio and whether other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present.
    Further, the Exchange will issue a Notice to Members for each 
series to be listed pursuant to Rule 19b-4(e). The notice will describe 
the characteristics of the securities and will inform members of any 
obligation to deliver a written product description or prospectus, as 
applicable, to purchasers of ICUs or PDRs. In addition, the notice will 
inform members of their responsibilities under Article VIII, Rule 25 
(``Business Conduct'') in connection with customer transactions in 
these securities.
    The proposal also requires members and member organizations to 
provide purchasers of a series of ICUs with a product description of 
the terms and characteristics of such securities in a form prepared by 
the open-end management investment company issuing such securities, not 
later than the time a confirmation of the first transaction is such 
series is delivered to the purchaser. This requirement applies only if 
the particular series has been granted relief from the prospectus 
delivery requirements of section 24(d) off the Investment Company Act 
of 1940.\13\ Additionally, members and member organizations are 
required to include the product description with any sales materials 
relating to a series of ICUs that are provided to the public. Any other 
written materials provided to customers by a member or member 
organization referring to a series of ICUs must include a statement 
relating to the product description, in substantially the form set 
forth in the proposed amendment to CHX Rule 24.
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    \13\ 15 U.S.C. 80a-24(d).
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    The proposal also provides that a member or member organization 
carrying an omnibus account for a non-member broker-dealer is required 
to inform such non-member that execution of an order to purchase a 
series of ICUs for such account will be deemed to constitute agreement 
by the non-member to make such product description available to its 
customers on the same terms as are directly applicable to members and 
member organizations under the proposed amendment to CHX Rule 24. 
Finally, the proposal provides that a member or member organization 
must provide a prospectus for a particular series of ICUs upon the 
customer's request.
3. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6 of the Act \14\ in general, and in particular, with 
section 6(b)(5),\15\ in that it is designed to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition. The CHX believes that the proposed 
rule change will encourage competition among markets by allowing more 
than one exchange to list and trade the products described in the 
proposed rule change pursuant to Rule 19b-4(e).

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange did not receive any written comments on the proposed 
rule change.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Act. Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, 
D.C. 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 may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying at the Commission's Public Reference Room. Copies of such 
filing will also be available for inspection and copying at the 
principal office of the Exchange. All submissions should refer to File 
No. SR-CHX-00-14 and should be submitted by July 21, 2000.

IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange, and, in particular, with the requirements of section 6(b)(5) 
of the Act.\16\ Specifically, the Commission finds that the CHX 
proposal to establish generic standards

[[Page 40714]]

to permit the trading of PDRs and ICUs pursuant to Rule 19b-4(e) 
furthers the intent of that rule by facilitating commencement of 
trading in these securities without the need for notice and comment and 
Commission approval under section 19(b) of the Act. Thus, by 
establishing generic standards, the proposal should reduce the 
Exchange's regulatory burden, as well as benefit the public interest, 
by enabling the Exchange to bring qualifying products to the market mre 
quickly. Accordingly, the Commission finds that the Exchange's proposal 
will promote just and equitable principles of trade, foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, and, in general, protect investors and the 
public interest consistent with section 6(b)(5) of the Act.\17\
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    \16\ 15 U.S.C. 78f(b)(5).
    \17\ Id. In approving this rule, the Commission notes that it 
has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
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    In general, ICUs represent an interest in a registered investment 
company that holds securities based on, or representing an interest in, 
an index or portfolio of securities. The Exchange currently trades a 
number of securities pursuant to UTP under its ICU and PDR listing 
standards.\18\ The Commission has also approved amendments to CHX Rule 
24 to permit the trading, pursuant to UTP, of ICUs based on certain 
Morgan Stanley Capital International Indices (``WEBS\SM\'') and nine 
series of Select Sector SPDRs \SM\.\19\
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    \18\ See supra note 5. These listing standards are similar to 
those maintained by other exchanges. See, e.g., Amex Rules 1000 
(Portfolio Depositary Receipts) and 1000A (Index Fund Shares).
    \19\ See Securities Exchange Act Release No. 39117 (September 
22, 1997), 62 FR 50973 (September 29, 1997) (WEBS); Securities 
Exchange Act Release No. 40950 (Janary 15, 1999), 64 FR 3730 
(January 25, 1999) (Select Sector SPDRs). ``WEBS'' is a service mark 
of Morgan Stanley Group, Inc. ``Select Sector SPDR'' is a service 
mark of The McGraw-Hill Companies, Inc.
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    PDRs represent interests in a unit investment trust that holds 
securities which comprise an index or portfolio. Each trust is intended 
to provide investors with an instrument that closely tracks the 
underlying securities index or portfolio, that trades like a share of 
common stock, and that pays holders a periodic cash payment 
proportionate to the dividends paid, on the underlying portfolio of 
securities, less certain expenses, as described in the applicable trust 
prospectus. The Commission has approved rule proposals that allow the 
Exchange to trade, pursuant to UTP, PDRs based on the Standard and 
Poor's 500 Index (``SPDRs<Register>'') and the S&P MidCap 400 Index\TM\ 
(``MidCap SPDRs''\TM\.\20\
    Rule 19b-4(e) provides that the listing and trading of a new 
derivative securities product by an SRO shall not be deemed a proposed 
rule change, pursuant to paragraph (c)(1) of Rule 19b-4, if the 
Commission has approved, pursuant to section 19(b) of the Act, the 
SRO's trading rules, procedures and listing standards for the product 
class that include the new derivative securities product and the SRO 
has a surveillance program for the product class.\21\
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    \20\ See Securities Exchange Act Release No. 39076 (September 
15, 1997), 62 FR 49270 (September 19, 1997). ``S&P Midcap 400 
Index,'' ``MidCap SPDRs'' and ``SPDRs'' are trademarks of The 
McGraw-Hill Companies, Inc.
    \21\ See Securities Exchange Act Release No. 40761 (December 8, 
1998), 63 FR 70952 (December 22, 1998).
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    As noted above, the Commission has previously approved CHX Rules 24 
et seq. and 25 et seq. that permit the listing and trading of ICUs and 
PDRs. In approving these securities for trading, the Commission 
considered the structure of these securities, their usefulness to 
investors and to the markets, and the CHX rules that govern their 
trading. Moreover, the Exchange has separately filed proposed rule 
changes pursuant to Rule 19b-4 for each of the series of ICUs or PDRs 
currently trading on the Exchange.
    The Commission's approval of the proposed generic listing standards 
for these securities will allow those series of PDRs and ICUs that 
satisfy those standards to start trading under Rule 19b-4(e), without 
the need for notice and comment and Commission approval. The Exchange's 
ability to rely on Rule 19b-4(e) for these products potentially reduces 
the time frame for bringing these securities to the market or for 
permitting the trading of these securities pursuant to UTP, and thus 
enhances investors' opportunities. The Commission notes that while the 
proposal reduces the Exchange's regulatory burden, the Commission 
maintains regulatory oversight over any products listed under the 
generic standards through regular inspection oversight.
    The Commission previously concluded that PDRs and ICUs trading 
under the existing Exchange rules would allow investors to: (1) Respond 
quickly to market changes through intra day trading opportunities; (2) 
engage in hedging strategies similar to those used by institutional 
investors; and (3) reduce transactions costs for trading a portfolio of 
securities.\22\ The Commission believes, for the reasons set forth 
below, that the product classes that satisfy the proposed generic 
standards for PDRs and ICUs should produce the same benefits to 
investors.
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    \22\ See Securities Exchange Act Release No. 42787 (May 15, 
2000), 65 FR 33598 (May 24, 2000)(approving SR-Amex-00-14); 
Securities Exchange Act Release No. 42542 (March 17, 2000), 65 FR 
16437 (March 28, 2000) (Noticing SR-Amex-00-14).
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    The Commission also finds that the proposal contains adequate rules 
and procedures to govern the trading of PDRs and ICUs under Rule 19b-
4(e). All series of PDRs and ICUs listed under the generic standards 
will be subject to the full panoply of CHX rules and procedures that 
now govern the trading of existing PDRs and ICUs on the Exchange or 
pursuant to UTP. Accordingly, any new series of PDRs and ICUs listed 
and traded under Rule 19b-4(e) will be subject to CHX rules governing 
the trading of equity securities, including, among others, rules and 
procedures governing trading halts, disclosures to members, 
responsibilities of the specialist, account opening and customer 
suitability requirements, the election of a stop or limit order, and 
margin.
    In addition, the CHX has developed specific listing criteria for 
series of PDRs or ICUs qualifying for Rule 19b-4(e) treatment that will 
help to ensure that a minimum level of liquidity will exist to allow 
for the maintenance of fair and orderly markets. Specifically, the 
proposed generic listing standards require that a minimum of 100,000 
shares of a series of PDRs or ICUs is outstanding as of the start of 
trading. The Commission believes that this minimum number of securities 
is sufficient to establish a liquid Exchange market at the commencement 
of trading.
    The Commission believes that the proposed generic listing standards 
ensure that the securities composing the indexes and portfolios 
underlying the ICUs and PDRs are well capitalized and actively traded. 
These capitalization and liquidity criteria serve to prevent fraudulent 
or manipulative acts and are therefore consistent with section 6(b)(5) 
of the Act.
    In addition, as previously noted, all series of PDRs and ICUs 
listed or traded under the generic standards will be subject to the 
Exchange's existing continuing listing criteria. This requirement 
allows the CHX to consider the suspension of trading and the delisting 
of a series if an event occurs that makes further dealings in such 
securities inadvisable. The Commission believes that this will give the 
CHX flexibility to delist PDRs or ICUs if circumstances warrant such 
action.

[[Page 40715]]

    Furthermore, the Commission finds that the Exchange's proposal to 
trade PDRs in minimum fractional increments of \1/64\ of $1.00 and ICUs 
in increments of \1/16\, \1/32\, or \1/64\ of 1.00 is consistent with 
the Act. The Commission believes that such trading should enhance 
market liquidity, and should promote more accurate pricing, tighter 
quotations, and reduced price fluctuations, all of which benefit the 
investor. The Commission also believes that such trading should allow 
customers to receive the best possible execution of their transactions 
in the PDRs or ICUs, thereby protecting customers and the public 
interest consistent with section 6(b)(5) of the Act.\23\
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    \23\ 15 U.S.C. 78f(b)(5).
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    The Exchange represents that the Reporting Authority will 
disseminate for each series of PDRs or ICUs an estimate, updated every 
15 seconds, of the value of a share of each series. The Exchange 
further represents that the information that is reported will be 
disseminated by or through the primary exchange or another entity 
working with the exchange, when the CHX trades one of these products 
pursuant to UTP. The Commission believes that the information the 
Exchange proposes to have disseminated will provide investors with 
timely and useful information concerning the value of each series.
    The CHX has developed surveillance procedures for PDRs and ICUs 
listed under the generic standards that incorporate and rely upon 
existing CHX surveillance procedures governing PDRs, ICUs, and 
equities. The Commission believes that these surveillance procedures 
are adequate to address concerns associated with listing and trading 
PDRs and ICUs under the generic standards. Accordingly, the Commission 
believes that the rules governing the trading of such securities 
provide adequate safeguards to prevent manipulative acts and practices 
and to protect investors and the public interest, consistent with 
section 6(b)(5) of the Act.\24\ The Exchange further represents that it 
will file Form 19b-4(e) with the Commission within five business days 
of commencement of trading a series under the generic standards, and 
will comply with all Rule 19b-4(e) recordkeeping requirements.
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    \24\ 15 U.S.C. 78f(b)(5).
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    The Commission also notes that certain concerns are raised when a 
broker-dealer is involved in both the development and maintenance of a 
stock index upon which a product such as PDRs or ICUs is based. The 
proposal requires that, in such circumstances, the broker-dealer must 
have procedures in place to prevent the misuse of material, non-public 
information regarding changes and adjustments to the index and that the 
index value be calculated by a third party who is not a broker-dealer. 
The Commission believes that these requirements should help address 
concerns raised by a broker-dealer's involvement in the management of 
such an index.
    Finally, the Commission believes that the Exchange's proposal will 
ensure that investors have information that will allow them to be 
adequately apprised of the terms, characteristics, and risks of trading 
PDRs and ICUs. Members and member organizations will be required to 
provide to all purchasers of ICUs or PDRs a written description of the 
terms and characteristics of these securities, to include their product 
description in sales materials provided to customers or the public, to 
include a specific statement relating to the availability of the 
description in other types of materials distributed to customer or the 
public, and to provide a copy of the prospectus, when requested by a 
customer. The proposal also requires a member or member organization 
carrying an omnibus account for a non-member broker-dealer, to notify 
the non-member that execution of an order to purchase an ICU or PDR 
constitutes an agreement by the non-member to provide the product 
description to its customers.
    The Commission also notes that upon the initial listing, or trading 
pursuant to UTP, of any PDRs or ICUs under the generic standards, the 
Exchange will issue a circular to its members explaining the unique 
characteristics and risks of this particular type of security. The 
circular also will note the Exchange members' prospectus or product 
description delivery requirements, and highlight the characteristics of 
purchases in a particular series of PDRs or ICUs. The circular also 
will inform members of their responsibilities under CHX Article VIII, 
Rule 25 in connection with customer transactions in these securities. 
The Commission believes that these requirements ensure adequater 
disclosure to investor about the terms and characteristics of a 
particular series and is consistent with section 6(b)(5) of the 
Act.\25\
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    \25\ 15 U.S.C. 78f(b)(5).
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    The Commission finds good cause for approving the proposed rule 
change, as amended, prior to the thirtieth day after the date of 
publication of notice thereof in the Federal Register pursuant to 
section 19(b)(2) of the Act. The Commission notes that the proposed 
rule change is based on the generic listing standards in Amex Rule 1000 
et seq. (PDRs) and 1000A et seq. (Index Fund Shares), which the 
Commission previously approved after soliciting public comment on the 
proposal pursuant to section 19(b)(1) of the Act.\26\ The Commission 
does not believe that the proposed rule changes raises novel regulatory 
issues that were not addressed in the Amex filing. Accordingly, the 
Commission believes it is appropriate to permit investors to benefit 
from the flexibility afforded by these new instruments by trading them 
as soon as possible. Accordingly, the Commission finds that there is 
good cause, consistent with section 6(b)(5) of the Act,\27\ to approve 
the proposal on an accelerated basis.
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    \26\ See supra note 22.
    \27\ 15 U.S.C. 78s(b)(5).
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V. Conclusion

    It Is Therefore Ordered, pursuant to section 19(b)(2) of the 
Act,\28\ that the proposed rule change (SR-CHX-00-14) and Amendment No. 
1 thereto, are hereby approved on an accelerated basis.
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    \28\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-16582 Filed 6-29-00; 8:45 am]
BILLING CODE 8010-01-M