42274 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Notices

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

SUPPLEMENTARY INFORMATION: Following

is a summary of the application. The

complete application may be obtained

for a fee from the Public Reference

Branch of the SEC.

Applicant’s Representations

1. Applicant is an open-end,

diversified management investment

company organized as a corporation

under Maryland law. On July 27, 1983,

Applicant filed a notification of

registration as an investment company

on Form N–8A and a registration

statement on Form N–1 under the 1940

Act and the Securities Act of 1933. The

registration statement became effective

and the initial public offering of

Applicant’s shares commenced on June

26, 1984.

2. On September 27, 1996,

Applicant’s board of directors (the

‘‘Board’’) approved the following

agreement and plan of reorganization: (i)

The transfer of all assets and liabilities

of each of the Applicant’s portfolios to

a corresponding portfolio of NASL

Series Trust (‘‘NASL’’), a Massachusetts

business trust, in exchange for shares of

the corresponding NASL portfolio and

the assumption by that NASL portfolio

of the liabilities of Applicant’s portfolio

and (ii) the distribution of the shares

received from each NASL portfolio to

the shareholders of the corresponding

portfolio of Applicant in liquidation of

Applicant and each of its portfolios.

3. On or about November 15, 1996,

proxy materials relating to the special

meeting at which the agreement and

plan of reorganization was considered

were mailed to contract owners entitled

to instruct as to the voting of

Applicant’s shares. At the special

meeting held on December 20, 1996, the

agreement and plan of reorganization

was approved by the necessary vote of

shareholders of each of Applicant’s

portfolios.

4. On December 19, 1996, Applicant,

NASL and other related parties obtained

an order pursuant to Section 17(b) of the

Act and Rule 17d–1 thereunder to

permit certain transactions

contemplated by the reorganization.

5. On December 31, 1996, Applicant

transferred assets and liabilities of each

of its portfolios to a corresponding

portfolio of NASL in exchange for

shares of the corresponding NASL

portfolio and distributed the NASL

shares held by each portfolio pro rata to

the shareholders of such portfolio in

complete liquidation of the portfolio

and of Applicant. The aggregate net

asset value of the NASL shares received

by each of Applicant’s portfolios was

equal to the aggregate net asset values of

such portfolio.

6. The expenses of the reorganization,

other than fees payable for the

registration of shares of the NASL

portfolios in connection with the

reorganization, were borne by the

Applicant’s and NASL’s affiliates, other

than Applicant and NASL. No brokerage

commissions were paid in connection

with the reorganization.

7. Within the last 18 months,

Applicant has not transferred any of its

assets to a separate trust, the

beneficiaries of which were or are

security holders of Applicant.

8. At the time the application was

filed, Applicant had no assets, no

liabilities and no security holders.

Applicant is not a party to any litigation

or administrative proceeding, and is not

now engaged, nor does it propose to

engage, in any business activities other

than those necessary for winding up its

affairs.

9. On December 31, 1996, Applicant

filed Articles of Transfer with

Maryland’s Department of Assessments

and Taxation. Applicant intends to file

Articles of Dissolution with that office

upon receipt of the order requested in

the application.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–20614 Filed 8–5–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[File No. 500–1]

Discovery Zone, Inc., Order of

Suspension of Trading

August 1, 1997.

It appears to the Securities and

Exchange Commission that there is a

lack of adequate information concerning

the cancelled common stock of

Discovery Zone, Inc. (‘‘Discovery’’),

which emerged from Chapter 11

bankruptcy protection on July 29, 1997.

On July 18, 1997, the Third Amended

Joint Plan of Reorganization (‘‘the Plan’’)

was confirmed by the United States

Bankruptcy Court for the District of

Delaware. On July 29, 1997, the Plan

became effective. Pursuant to the Plan,

all of the common stock, common stock

options and partnership interests

existing as of the date of the bankruptcy

petition, March 25, 1996, shall be

cancelled, annulled and extinguished as

of the effective date of the Plan, July 29,

1997. Accordingly, the common stock,

common stock options and partnership

interests cancelled on July 29, 1997 no

longer represent an economic or

beneficial interest in Discovery.

Despite press releases and notification

by the company that Discovery’s

common stock was cancelled and no

longer represented any economic or

beneficial value, the daily trading

volume of Discovery’s common stock

was approximately six million shares

and four million shares for July 30, 1997

and July 31, 1997, respectively, the two

days following the cancellation of the

common stock. Trading in Discovery’s

common stock was continuing today,

August 1, 1997.

The Commission is of the opinion that

the public interest and the protection of

investors require a suspension of trading

in Discovery’s common stock, common

stock options and partnership interests

that were cancelled pursuant to the

Plan. This order of suspension of

trading does not affect any securities

issued by Discovery pursuant to the

Plan.

Therefore, it is ordered, pursuant to

Section 12(k) of the Securities Exchange

Act of 1934, that trading in the above

company is suspended for the period

from 3:30 p.m. (EDT), August 1, 1997,

through 3:29 p.m. (EDT), on August 15,

1997.

By the Commission.

Jonathan G. Katz,

Secretary.

[FR Doc. 97–20831 Filed 8–4–97; 12:50 pm]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38889; File No. SR–NSCC–

96–21]

Self-Regulatory Organizations;

National Securities Clearing

Corporation; Notice of Filing of a

Proposed Rule Change to Establish

the Annuities Processing Service

July 30, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

December 26, 1996, the National

Securities Clearing Corporation

(‘‘NSCC’’) filed with the Securities and

Exchange Commission (‘‘Commission’’)

and on February 27, 1997, and May 12,

1997, amended the proposed rule

change (File No. SR–NSCC–96–21) as

described in Items I, II, and III below,

which items have been prepared

primarily by NSCC. The Commission is

publishing this notice to solicit
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Notices 42275

2The Commission has modified the text of the

summaries prepared by NSCC.

3Letter from Julie Beyers, Associate Counsel,

NSCC (February 26, 1997).

4NSCC intends to implement additional phases

in the future to include the processing of annuity

contract applications and the settlement of

premium payments. In addition, the scope of

information included in APS may be expanded

beyond position and valuation information. NSCC

will be required to make the appropriate rule filings

with the Commission at such times as NSCC is

ready to implement these additional components.

5Although no clearing fund deposit will be

required from agency members and carrier

members, NSCC has amended Rule 4 of its rules to

state that an agency member or carrier member may

be required to make a deposit in the clearing fund

in the event that in the future NSCC determines that

a clearing fund deposit should be required.

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 proposed rule change will amend

NSCC’s rules to establish the Annuities

Processing Service (‘‘APS’’).

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NSCC 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 IV below. NSCC has prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

aspects of such statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The proposed rule change will amend

NSCC’s rules to establish APS. APS will

be a centralized communication link

that connects participating insurance

carriers with broker-dealers, banks, and

the broker-dealers’ or banks’ affiliated

life insurance agencies where

appropriate. NSCC believes that APS

will reduce the time and costs

associated with the processing of

annuities by standardizing and

automating the processing. Only those

annuity plans that are purchased by

individuals from insurance carriers

through broker-dealers, banks, or their

affiliated insurance agencies will be

eligible for processing through APS.

Initially, NSCC intended to only process

variable rate annuity products through

APS. As a result of requests by its

participants, both variable rate and fixed

rate annuity products will be processed

through APS.3

NSCC proposes to implement APS in

phases. Phase I will provide NSCC’s

participants with the ability to send and

receive daily information regarding

annuity contract positions, the value of

a contract’s underlying assets, and

settlement of commission monies.4 This

information will be transmitted through

the Phase I ‘‘position and valuation,’’

and ‘‘commission and charge back’’

components.

The position and valuation

component will permit insurance

carriers to transmit information

regarding the value of individual

annuity contracts and the value of the

assets underlying the contracts to

broker-dealers and insurance agencies.

Insurance carriers will submit position

and valuation information to NSCC,

which NSCC will forward to the party

designated as recipient by the insurance

carrier.

The commission and charge back

component will permit insurance

carriers and agencies to communicate

concerning periodic trail or asset-based

compensation and transaction-based

commission payments, each paid by an

insurance carrier to an agency, as well

as charge backs paid by an agency to an

insurance carrier. Insurance carriers and

agencies will settle these payments

through NSCC’s money settlement

system.

Insurance carriers will be able to

initiate commission and charge back

transactions by submitting instructions

to NSCC. On any day prior to

settlement, an agency or carrier member

may submit a cancel instruction if the

member does not recognize the

transaction or an exit instruction if the

member recognizes the transaction but

wants that transaction to be processed

outside of APS. A properly submitted

exit or cancellation will cause the

payment transaction to which it relates

to be deleted from APS.

Unless NSCC receives a cancellation

or exit instruction, the commission and

charge back transaction will settle in the

three-day settlement cycle following

their completion unless the parties have

agreed that the transaction will settle on

an extended basis. However, no

transaction will be allowed to settle

more than five business days after the

day on which the last instruction

pertaining to the transaction was

submitted to NSCC.

The proposed rule change provides

that NSCC will not be responsible for

the completeness or accuracy of any

APS data or for any errors, omissions, or

delays that may occur relating to the

APS data. The proposed rule change

also states that the processing of any

transaction through APS will not relieve

a party from its legal or regulatory rights

or its obligations relating to a

transaction.

The proposed rule change will amend

NSCC’s Rule 2 to permit a corporation,

partnership, or agency, including a

registered broker-dealer, bank, or trust

company, that is licensed to sell

insurance products and is subject to

supervision or regulation pursuant to

the provisions of state insurance laws to

become a member of the NSCC. If the

entity agrees to limit their activities to

APS services only, the entity would be

classified as an ‘‘annuities agency

member.’’

The proposed rule change would

permit broker-dealers to join NSCC as

agency members regardless of whether

they conduct their insurance business

in-house or through an affiliated or

subsidiary insurance agency. The

proposed rule change provides that

NSCC may restrict the activities of the

broker-dealers’ insurance agency

affiliates and subsidiaries who become

agency members and require them to

enter into agreements for operational

support services with an entity that is

acceptable to NSCC. The entity can be,

but is not required to be, another agency

member and cannot be replaced without

the prior approval of NSCC. In addition,

broker-dealers and banks who are not

currently NSCC members that sell

annuity products also will be permitted

to join NSCC for the purpose of using

APS.

The proposed rule change amends

NSCC’s rules to establish the ‘‘annuities

carrier member’’ category. As proposed,

NSCC Rule 2 will define carrier member

as a company, partnership, limited

liability corporation, or other

organization or entity that is not a

member of NSCC but is subject to the

supervision or regulation pursuant to

state insurance laws. Carrier members

will not be required to make a deposit

to the clearing fund.5

The proposed rule change also will

create NSCC Rule 56 to establish the

financial and operational standards for

carrier members. Carrier members will

be required to have an A.M. Best rating

of ‘‘A¥’’ if rated by (i) Standard &

Poor’s, the carrier member must have a

claims paying ability rating of not less

than ‘‘AAA;’’ (ii) Moody’s, the carrier

member must have a long-term debt

rating of not less than ‘‘Aaa;’’ or (iii)

Duff & Phelps, the carrier member must
42276 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Notices

6 It should be noted that applicants will not be

required to be rated by any rating agency other than

A.M. Best in order to qualify as carrier members.

The standards set forth for the other rating agencies

apply only if a carrier member determines to utilize

a rating agency in addition to A.M. Best.

7The full text of each of these technical rule

changes is set forth in Exhibit A of NSCC’s filing

and subsequent amendments thereto, each of which

is available for inspection and copying at the

Commission’s Public Reference Room or through

NSCC.

8 15 U.S.C. 78q–1(b)(3)(F).

have a long-term debt rating of not less

than ‘‘A¥.’’6

Alternatiely, if the carrier member

does not satisfy the above-mentioned

criteria, Rule 56 will require that the

carrier member have an A.M. Best rating

of not less than ‘‘B+’’ and if rated by (i)

Standard & Poor’s, the carrier member

must have a claims-paying ability rating

of not less than ‘‘BBB;’’ (ii) Moody’s, the

carrier member must have a long-term

debt rating of not less than ‘‘A;’’ or (iii)

Duff & Phelps, the carrier member must

have a long-term debt rating of not less

than ‘‘BBB¥.’’ In this case, Rule 56 also

will require that the carrier member

demonstrate to NSCC’s Board of

Directors that its business and

capabilities are such that it could

reasonably expect material benefit from

access to APS, and NSCC must

determine that the financial condition of

such carrier member does not pose an

undue risk to NSCC or its members.

The proposed rule change will amend

NSCC Rule 15 to require that all agency

members and carrier members file

certain financial information with

NSCC. In addition to some of the

financial information required of full

NSCC members, Rule 15 as proposed

will require agency member’s and

carrier member’s to file with NSCC

reports filed with relevant state

insurance departments as may be

determined by NSCC from time to time.

The proposed rule change amends

Addendum B of NSCC’s rules

(‘‘Standards of Financial Responsibility

& Operational Capability’’) to include

membership standards for applicants

that will use only APS. The proposed

rule change will require a broker-dealer

whose membership is limited to the use

of APS to have $25,000 in excess net

capital over the minimum net capital

requirement imposed by the

Commission or such higher minimum

capital requirement imposed by the

broker-dealer’s designated examining

authority. In addition, the broker-dealer

must have a capital ratio or percentage

that would not require it to be placed on

immediate surveillance at NSCC and

must not be on ‘‘closer-than-normal’’

surveillance by its designated

examining authority. If the applicant is

a bank or trust company, it must have

$100,000 minimum excess capital over

the capital requirement imposed by its

state or federal regulatory authority. A

bank or trust company must not be

operating at a loss at the time of its

application and not have operated at a

loss in any of its previous three fiscal

quarters. All others which apply for use

of APS only must have the operational

capability for membership or have an

agreement concerning the provision of

operational support services to such

applicant with an entity acceptable to

NSCC and which may not be replaced

without prior approval by NSCC and

must agree to restrict its business

activities as NSCC may require.

Addendum B also will require that all

agency members file certain prescribed

information annually. Such information

includes, among other things, general

information concerning the member’s

corporate organizational structure and

licensing, the nature of its business,

bonding, pending investigations, and

litigation.

The proposed rule change explicitly

sets forth that, like NSCC’s Mutual Fund

Services and New York Window

Service, APS will not be a guaranteed

service. An additional paragraph has

been added to Addendum K

(Interpretation of the Board of

Directors—Application of Clearing

Fund) to make it clear that APS is a nonguaranteed service. Furthermore, NSCC

states that it has not yet determined the

fees for APS. NSCC will make the

appropriate rule filing pursuant to

Section 19(b)(3)(A) of the Act at such

time as NSCC determines the fees to be

charged for APS services.

The proposed rule change amends

NSCC’s Rule 3 (Lists to be Maintained)

to indicate that NSCC will maintain a

list of annuity plans that may be the

subject of orders processed through

APS. The proposed rule change amends

NSCC’s Rule 57 (Annuities Processing

Service) to clarify what governs these

Phase I aspects of APS.

The proposed rule change also makes

technical amendments to the following

NSCC rules to accommodate the APS

service, agency members, and carrier

members: Rule 1 (Definitions and

Descriptions), Rule 5 (General

Provisions), Rule 6 (Distribution

Facilities), Rule 12 (Settlement), Rule 17

(Fine Payments), Rule 18 (Procedures

For When the Corporation Declines or

Ceases to Act), Rule 20 (Insolvency),

Rule 22 (Suspension of Rules), Rule 24

(Charges for Services Rendered), Rule 26

(Bills Rendered), Rule 27 (Admission to

Premises of the Corporation—Powers of

Attorney, Etc.), Rule 29 (Qualified

Securities Depositories), Rule 32

(Facsimile Signatures), Rule 33

(Procedures), Rule 34 (Insurance), Rule

35 (Financial Reports), Rule 36 (Rule

Changes), Rule 37 (Hearing Procedures),

Rule 39 (Special Representative/Index

Receipt Agent), Rule 45 (Notices), Rule

46 (Restrictions on Access to Services),

Rule 48 (Disciplinary Proceedings), Rule

55 (Settling Banks), Procedure VIII

(Money Settlement Service), Procedure

XV (Clearing Fund Formula and Other

Matters), Addendum D (Statement of

Policy—Envelope Settlement Service),

and Addendum F (Statement of Policy—

In Relation to Same Day Funds

Settlement).7

NSCC believes that the proposed rule

change is consistent with Section

17A(b)(3)(F) of the Act 8 and the rules

and regulations thereunder because it

will facilitate the prompt and accurate

clearance and settlement of securities

transactions and, in general, protect

investors and the public interest.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

NSCC does not believe that the

proposed rule change will have an

impact on or impose a burden on

competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No written comments relating to the

proposed rule change have been

solicited or received. NSCC will notify

the Commission of any written

comments received by NSCC.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within thirty-five days of the date of

publication of this notice in the Federal

Register or within such longer period (i)

as the Commission may designate up to

ninety days of such date if it finds such

longer period to be appropriate and

publishes its reasons for so finding or

(ii) as to which NSCC consents, the

Commission will:

(A) By order approve such proposed

rule change or

(B) Institute proceedings to determine

whether the proposed rule change

should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Notices 42277

9 17 CFR 200.30–3(a)(12).

Washington, DC 20549. 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 in

the Commission’s Public Reference

Room, 450 Fifth Street, N.W.,

Washington, DC 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of NSCC. All Submissions should

refer to the file number SR–NSCC–96–

21 and should be submitted by August

27, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–20615 Filed 8–5–97; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

[Declaration of Disaster #2970]

State of Idaho

As a result of the President’s major

disaster declaration on June 13, 1997 for

Public Assistance only, and an

amendment thereto on July 22 adding

Individual Assistance, I find that

Bingham and Jefferson Counties in the

State of Idaho constitute a disaster area

due to damages caused by severe

storms, snowmelt, land and mud slides,

and flooding which occurred March 14

through July 3, 1997. Applications for

loans for physical damages may be filed

until the close of business on September

22, 1997, and for loans for economic

injury until the close of business on

April 22, 1998 at the address listed

below or other locally announced

locations: U.S. Small Business

Administration, Disaster Area 4 Office,

P.O. Box 13795, Sacramento, CA 95853–

4795.

In addition, applications for economic

injury loans from small businesses

located in the following contiguous

Idaho counties may be filed until the

specified date at the above location:

Bannock, Blaine, Bonneville, Butte,

Caribou, Clark, Fremont, Madison, and

Power.

Percent

For Physical Damage:

Homeowners with credit available elsewhere ........................ 7.625

Homeowners without credit available elsewhere ........................ 3.875

Businesses with credit available

elsewhere ................................ 8.000

Businesses and non-profit organizations without credit available elsewhere ........................ 4.000

Others (including non-profit organizations) with credit available

elsewhere ................................ 7.250

For Economic Injury:

Businesses and small agricultural

cooperatives without credit

available elsewhere ................. 4.000

The number assigned to this disaster

for physical damage is 297006 and for

economic injury the number is 955700.

(Catalog of Federal Domestic Assistance

Program Nos. 59002 and 59008)

Dated: July 25, 1997.

Herbert L. Mitchell,

Acting Associate Administrator for Disaster

Assistance.

[FR Doc. 97–20624 Filed 8–5–97; 8:45 am]

BILLING CODE 8025–01–P

SMALL BUSINESS ADMINISTRATION

[Declaration of Disaster #2971]

State of Louisiana

Plaquemines and Jefferson Parishes

and the contiguous Parishes of

Lafourche, Orleans, St. Bernard, and St.

Charles in the State of Louisiana

constitute a disaster area as a result of

damages caused by severe

thunderstorms, rain, and tornadoes

produced by Hurricane Danny on July

17 and 18, 1997. Applications for loans

for physical damage may be filed until

the close of business on September 25,

1997 and for economic injury until the

close of business on April 27, 1998 at

the address listed below or other locally

announced locations: U.S. Small

Business Administration, Disaster Area

3 Office, 4400 Amon Carter Blvd., Suite

102, Fort Worth, TX 76155.

The interest rates are:

Percent

For Physical Damage:

Homeowners with credit available elsewhere ........................ 8.000

Homeowners without credit available elsewhere ........................ 4.000

Businesses with credit available

elsewhere ................................ 8.000

Business and non-profit organizations without credit available

elsewhere ................................ 4,000

Percent

Others (including non-profit organizations) with credit available

elsewhere ................................ 7.250

For Economic Injury:

Businesses and small agricultural

cooperatives without credit

available elsewhere ................. 4.000

The number assigned to this disaster

for physical damage is 297108 for

economic injury the number is 956500.

(Catalog of Federal Domestic Assistance

Program Nos. 59002 and 59008.

Dated: July 25, 1997.

Aida Alvarez,

Administrator.

[FR Doc. 97–20618 Filed 8–5–97; 8:45 am]

BILLING CODE 8025–01–M

SMALL BUSINESS ADMINISTRATION

[Declaration of Disaster # 2969]

State of Washington

As a result of the President’s major

disaster declaration on July 21, 1997, I

find that Pend Oreille County in the

State of Washington constitutes a

disaster area due to damages caused by

snowmelt and flooding which occurred

April 10 through June 30, 1997.

Applications for loans for physical

damages may be filed until the close of

business on September 19, 1997, and for

loans for economic injury until the close

of business on April 21, 1998 at the

address listed below or other locally

announced locations: U.S. Small

Business Administration, Disaster Area

4 Office, P. O. Box 13795, Sacramento,

CA 95853–4795.

In addition, applications for economic

injury loans from small businesses

located in the contiguous Counties of

Spokane and Stevens in Washington

and Bonner and Boundary in Idaho may

be filed until the specified date at the

above location.

Percent

For Physical Damage:

Homeowners with credit available elsewhere ........................ 8.000

Homeowners without credit available elsewhere ........................ 4.000

Businesses with credit available

elsewhere ................................ 8.000

Businesses and non-profit organizations without credit available elsewhere ........................ 4.000

Others (including non-profit organizations) with credit available

elsewhere ................................ 7.250