44998 Federal Register / Vol. 62, No. 164 / Monday, August 25, 1997 / Notices

6 17 CFR 200.30–3(a)(12).

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

2The Commission has modified the text of the

summaries prepared by OCC.

3 17 CFR 240.15c3–1(e)(1)(iv). Rule 15c3–1(e)

requires broker-dealers to provide written notice to

the Commission in connection with certain

transactions involving a significant withdrawal of

equity capital.

4 15 U.S.C. 78c(a).

5 17 CFR 1.3(d).

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

The proposed rule change was

developed through discussions with

PSA acting on behalf of its members and

with several participants. Written

comments from DTC participants or

others have not been solicited or

received on the proposed rule change.

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 DTC 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, NW.,

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, NW.,

Washington, DC 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of DTC. All submissions should

refer to the file number SR–DTC–97–07

and should be submitted by September

15, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–22526 Filed 8–22–97; 8:45 am]

BILLING CODE 8010–01–M′

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38948; File No. SR–OCC–

97–05]

Self-Regulatory Organizations; The

Options Clearing Corporation; Notice

of Filing of Proposed Rule Change

Relating to Early Warning Notices

August 19, 1997.

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

Securities Exchange Act of 1934

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

May 15, 1997, The Options Clearing

Corporation (‘‘OCC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which items have been

prepared primarily by OCC. The

Commission is publishing this notice to

solicit comments from interested

persons on the proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The purpose of the proposed rule

change is to revise OCC’s Rule 303 to

expand the circumstances under which

a clearing member is to provide OCC

with early warning notices.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

OCC 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. OCC 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 purpose of the proposed rule

change is to revise OCC’s Rule 303 to

expand the circumstances under which

a clearing member is to provide OCC

with early warning notices. Currently,

Rule 303 requires a clearing member to

provide OCC with an early warning

notice if it experiences certain

enumerated financial difficulties or if it

has provided any notice required

pursuant to Commission Rule 15c3–

1(e)(1)(iv).3 Specifically, Rule 303

would be expanded to explicitly

provide that a clearing member must

immediately notify an officer of OCC of

any notice that such clearing member

gives, is required to give, or receives

from any regulatory organization

regarding any financial difficulty

affecting the clearing member or of any

failure by the clearing member to be in

compliance with the financial

responsibility rules or capital

requirements of any regulatory

organization. As proposed, Rule 303

would require the clearing member to

promptly confirm such notice in

writing. In addition, the lead-in

language of (b) and (c) of Rule 303 (as

relettered) will be revised to conform to

the requirement in new paragraph

303(a) that an officer of OCC be notified

by telephone of any notice described in

the paragraph.

The term ‘‘regulatory organization’’

will be defined in proposed

Interpretations and Policies .01 to mean

(i) the Commission and any other

federal or state regulatory agency having

jurisdiction over the clearing member

including the Commodity Futures

Trading Commission (‘‘CFTC’’) in the

case of a clearing member which is

subject to the jurisdiction of the CFTC;

(ii) any self-regulatory organization as

defined in Section 3(a) of Act 4 of which

the clearing member is a member or

participant; (iii) any clearing

organization, as defined in Regulation

Section 1.3(d) under the Commodity

Exchange Act,5 board of trade, contract

market, and registered futures

association of which the clearing

member is a member or participant; and

(iv) in the case of a non-U.S. clearing

member, any non-U.S. regulatory agency

or instrumentality or independent

organization or exchange having

jurisdiction over the non-U.S. clearing

member or of which the non-U.S.

clearing member is a member or

participant.

OCC believes that these amendments

will enhance the effectiveness of its

financial surveillance program by

providing OCC with material

information, some of which it currently
Federal Register / Vol. 62, No. 164 / Monday, August 25, 1997 / Notices 44999

6Existing paragraph (c) of Rule 303 (as relettered)

currently provides that an exempt non-U.S. clearing

member must notify OCC promptly of any violation

on its part of the rules or regulations of its non-U.S.

regulatory agency or any notice received from such

agency that alleges a violation of such rules or

regulations, informs the non-U.S. clearing member

that it may violate such rules or regulations, or

informs the non-U.S. clearing member that it has

triggered any provision relating to early warning

notices contained in such rules or regulations.

7 15 U.S.C. 78q–1. 8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 38821 (July

8, 1997), 62 FR 38180.

does not receive, concerning a clearing

member’s financial condition. For

example, many of OCC’s clearing

members are also registered as futures

commission merchants (‘‘FCMs’’) under

the Commodity Exchange Act and as

such are subject to the financial

reporting requirements of the CFTC and

the early warning notice requirements of

commodity self-regulatory

organizations. Because of differences in

the early warning notice criteria used by

the commodity regulatory organizations

and those of securities regulatory

organizations, events triggering early

warning notice requirements for an FCM

(e.g., net capital below a specified

percentage of segregated funds) would

not necessarily create an early warning

notice requirement for a registered

broker-dealer. Consequently, under

OCC’s current rules, a situation could

occur that would require a clearing

member to give early warning notice to

its commodity regulatory authority but

would not require notice to be given to

OCC. Accordingly, requiring a clearing

member to provide OCC with early

warning notices which it is required to

provide to any other regulatory

organization should assist OCC in

assessing the ongoing creditworthiness

of its clearing members.

OCC believes that there is potential

overlap between the requirements of

new Rule 303(a) and existing Rule

303(c) (as relettered), such that a nonU.S. clearing member might be required

to notify OCC of a notice from a nonU.S. regulatory agency pursuant to both

paragraphs.6 However, OCC believes

that the overlap should not impose an

inappropriate burden on non-U.S.

clearing members because the

requirement to notify OCC of an event

can be satisfied by the same notice to

OCC even if the requirement arises

under both paragraphs.

OCC believes the proposed rule

change is consistent with the purposes

and requirements of Section 17A of the

Act 7 in that it strengthens OCC’s rules

relating to financial surveillance and

financial responsibility which are

designed, in general, to protect OCC,

clearing members, and the investing

public.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

OCC does not believe that the

proposed rule change would impose any

burden on competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments were not and are

not intended to be solicited with respect

to the proposed rule change, and none

have been received.

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 OCC 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.,

Washington, D.C. 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

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of OCC. All submissions should

refer to File No. SR–OCC–97–05 and

should be submitted by September 15,

1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–22527 Filed 8–22–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38945; File No. SR–PCX–

97–27]

Order Approving Proposed Rule

Change

August 18, 1997.

Self-Regulatory Organizations; Order

Approving Proposed Rule Change by the

Pacific Exchange, Inc. Relating to The

Addition of a Public Governor to its Board of

Governors and Permitting an Additional

Public Governor to Serve on the Executive

Committee.

On June 27, 1997, the Pacific

Exchange (‘‘PCX’’ or ‘‘Exchange’’) filed

with the Securities and Exchange

Commission (‘‘Commission’’ or ‘‘SEC’’)

a proposed rule change pursuant to

Section 19(b)(1) of the Securities

Exchange Act of 1934 (‘‘Act’’) 1 and Rule

19b–4 thereunder,2 to add a public

governor to its Board of Governors and

to permit an additional public governor

to serve on the Executive Committee of

the Exchange. The Commission

published notice of the proposed rule

change in the Federal Register on July

16, 1997.3 This order approves the

proposed rule change.

I. Description of the Proposal

PCX is amending Sections 1(a) and 6

of Article II and Section 2(a) of Article

III of its Constitution so that an

additional individual from the public

sector may serve on the Board of

Governors and to permit an additional

public governor to serve on the

Executive Committee for the Exchange.

This proposed rule change will result in

the PCX Board having seven public

governors on its twenty-two person

Board. Also, the Executive Committee,

comprised of six governors, will now

have two public governors versus the

current single public governor. In

addition, the proposed rule change

contains an alteration to the text of

Section 2(a), establishing gender neutral

language for that provision.

II. Discussion

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder