49266 Federal Register / Vol. 62, No. 182 / Friday, September 19, 1997 / Notices

2The nine subsidiaries are Boston Edison

Services, Inc., Energyvision, LLC, BecoCom, Inc.,

RCN/BETG, LLC, Northwind Boston, LLC, Coneco

Corporation, Coneco Financial Corporation,

TravElectric Services Corporation, and Rez-Tek

International Corporation (‘‘Nonutility

Subsidiaries’’). Boston Edison’s nonutility

operations contributed a net loss of approximately

$600,000 (or less than 1%) to Boston Edison’s

aggregate after-tax-net income in fiscal year 1996.

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

2 17 CFR 240.19b–4.

3Amendment No. 1 clarifies how the Exchange

intends to distinguish between the HK Index option

contract using the old calculation method and the

new HK Index option contract using the new

floating rate calculation method. In addition,

Amendment No. 1 states that the Exchange intends

to issue an Information Circular to advise its

members of the new calculation method, discussing

the new method and the procedures for phasing in

the contracts using the new calculation method and

phasing out those contracts using the old

calculation method. Finally, the Exchange attached

a description of the calculation method used by

WM/Reuters for calculating their closing spot rates

for the Hong Kong dollar. See letter from Claire P.

McGrath, Vice President and Special Counsel,

Amex, to Ivette Lopez, Assistant Director, Division

of Market Regulation, Commission, dated July 8,

1997.

4See Securities Exchange Act Release No. 33894

(April 11, 1994), 59 FR 18429 (April 18, 1994).

5As of April 14, 1997, the exchange rate was

approximately HK $7.75 per U.S. $1.

nonutility businesses through its wholly

owned subsidiary, Boston Energy

Technology Group (‘‘BETG’’) and

indirectly through nine BETG

subsidiaries.2

The Applicants propose to form the

holding company structure under an

Agreement and Plan of Merger to be

entered into among Boston Edison, BEC

and Merger-Sub (‘‘Plan of Merger’’).

Under the terms of the Plan of Merger,

Merger-Sub would be merged

(‘‘Merger’’) with Boston Edison, and

each outstanding share of common stock

of Merger-Sub would be converted into

one share of common stock, $1.00 per

value per share, of Boston Edison

(‘‘Boston Edison Stock’’). Subsequently,

each outstanding share of Boston Edison

Stock would be converted into one

common share, $1.00 par value per

share, of BEC (‘‘BEC Common Stock’’).

Upon consummation of the Merger,

each person that owns Boston Edison

Stock immediately prior to the Merger

will own a corresponding number of the

outstanding shares of BEC Common

Stock, and BEC will own all of the

outstanding Boston Edison Stock.

After the Merger, Boston Edison will

transfer to BEC, by stock dividend or

otherwise, the common stock of BETG.

BEC will then engage in nonutility

business activities through BETG and

the Nonutility Subsidiaries. After the

Merger, BEC will directly own Boston

Edison and BETG, and HEEC will

continue to be a public-utility

subsidiary of Boston Edison.

The preferred stock of Boston Edison

(‘‘Preferred Stock’’) and all indebtedness

of Boston Edison will remain securities

and obligations of Boston Edison after

the Merger. Consequently, the

Applicants state that the holders of

Boston Edison’s debt securities and the

Preferred Stock will not be affected by

the proposed restructuring.

BEC asserts that, following the

consummation of the proposed

restructuring, it will be a public-utility

holding company entitled to an

exemption from registration under

section 3(a)(1) of the Act, because it and

each of its public-utility subsidiaries

from which it derives a material part of

its income will be predominately

intrastate in character and will carry on

their business substantially within the

state of Massachusetts. Boston Edison

claims that it will continue to be a

public-utility holding company entitled

to an exemption under section 3(a)(2) of

the Act, because it is predominantly a

public-utility company whose

operations do not extend beyond its

state of organization or any contiguous

states.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–24971 Filed 9–18–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39064; File No. SR–Amex–

97–18]

Self-Regulatory Organizations;

American Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change and Notice of Filing and Order

Granting Accelerated Approval to

Amendment No. 1 to the Proposed

Rule Change to Amend the Manner of

Calculation of the Hong Kong Option

Index

September 12, 1997.

I. Introduction

On April 9, 1997, the American Stock

Exchange, Inc. (‘‘Amex’’ or ‘‘Exchange’’)

submitted to the Securities and

Exchange Commission (‘‘Commission’’),

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

Securities Exchange Act of 1934 (‘‘Act) 1

and Rule 19b–4 thereunder,2 a proposed

rule change to amend the manner of

calculation of the Hong Kong Option

Index (‘‘HK Index’’).

Notice of the proposed rule change,

together with the substance of the

proposal, was published for comment in

Securities Exchange Act Release No.

38651 (May 16, 1997), 62 FR 28524

(May 23, 1997). The Exchange filed

Amendment No. 1 to the proposed rule

change on July 9, 1997.3 No comments

were received on the proposal. This

order approves the proposed rule

change, as amended.

II. Description

The proposed rule change amends the

manner in which Amex calculates the

HK Index by using a floating rate of

exchange for the Hong Kong dollar

rather than a fixed value. On April 11,

1994, Amex received approval to trade

standardized options on the HK Index.4

The HK Index is a broad-based

capitalization-weighted stock index

designed and maintained by Amex,

based on the capitalizations of 30 stocks

that are traded on the Hong Kong Stock

Exchange (‘‘HKSE’’) and whose issuers

have major business interests located in

Hong Kong. The HK Index value is

calculated by multiplying the price of

each component security (in Hong Kong

dollars) by its number of shares

outstanding, adding the sums, and

dividing by the current HK Index

divisor. For valuation purposes, one HK

Index unit is assigned a fixed value of

one U.S. dollar. The Exchange adopted

a fixed value for the HK Index unit

because Hong Kong has traditionally

pegged the value of the Hong Kong

dollar to the U.S. dollar.5

At midnight on June 30, 1997,

sovereignty over Hong Kong transferred

from the United Kingdom to the

People’s Republic of China, and Hong

Kong became a Special Administrative

Region of China. In its filing, Amex

notes that while there has been much

debate over what this will mean

financially, politically, and socially for

the former British colony, statements

from the People’s Republic of China

indicate that the existing currency and

financial systems of Hong Kong will

remain unchanged. In order, however,

to be prepared for any possible changes

with respect to the Hong Kong dollar,

such as a change in the policy of

pegging its value to the U.S. dollar, the

Exchange has determined to adopt a

floating rate of exchange for the Hong

Kong dollar when calculating the value

of the HK Index.

Amex will use the WM/Reuters Hong

Kong dollar/U.S. dollar exchange rate

available at 4 p.m. London time, which

is based on market rates. These

underlying market rates will be

commercial interbank bid and offer

rates. Representative rates for each

currency are selected based on a number
Federal Register / Vol. 62, No. 182 / Friday, September 19, 1997 / Notices 49267

6The Commission notes that if, for some reason,

WM/Reuters changes the exchange rate after it has

already been disseminated, Amex will

correspondingly recalculate the Index value, if the

change occurs during the trading day. When a

change occurs on a settlement day, the new Index

value will be used for settlement purposes if it is

calculated prior to settlement. Telephone

conversation between Claire P. McGrath, Vice

President and Special Counsel, Amex, and Heather

Seidel, Attorney, Market Supervision, Commission,

on September 9, 1997.

7As of April 15, 1997, the outstanding interest in

HKO Index contracts with expiration dates after

July 1, 1997 was as follows: September 1997 series,

2042 contracts; December 1997 series, 835

contracts; and January 1998 series, 162 contracts.

Phone conversation between Claire McGrath,

Managing Director and Special Counsel, Amex, and

Heather Seidel, Attorney, Market Regulation,

Commission, on April 18, 1997.

8See Amendment No. 1, supra note 3. Currently

the Exchange has the following series on the current

HK Index option trading: July 1997; August 1997;

September 1997; October 1997; November 1997;

December 1997; March 1998; and January 1998

(reduced value). Therefore, once the March 1998

contracts expire, the Exchange will have only one

HK Index option trading which will calculate the

index using a floating rate of exchange for the Hong

Kong dollar rather than the fixed rate currently

being used. Id.

9 15 U.S.C. 78f(b).

10 15 U.S.C. 78f(b)(5).

11 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).

12For example, if the Index is at 300, the value

in U.S. dollars is $300.

13 15 U.S.C. 78s(b)(2).

14 17 CFR 200.30–3(a)(12).

of ‘‘snapshots’’ of the latest contributed

quotations taken from the Reuters

System. Amex will receive this

exchange rate between approximately

11:30 a.m. and 12:00 noon (New York

time) each trading day. The Exchange

will then use this rate in calculating and

disseminating the HK Index value after

it is received on that trading day, and

will also use the rate in calculating and

disseminating the HK Index value on

the following day until a new value is

received, again typically between 11:30

a.m. and 12:00 noon.6 If on any business

day WM/Reuters does not post a closing

spot exchange rate for the Hong Kong

dollar, the last reported closing spot rate

will remain in effect until a new rate is

posted. Amex intends to establish a

separate contract on the HK Index using

the floating rate in its calculation. The

current contract using the fixed rate will

continue to trade until the expiration of

any remaining contracts.7 No new series

will be added using the fixed rate after

the new floating rate calculation goes

into effect. Until a phase-out of the

current contract using the fixed rate is

complete, options on both indexes will

be trading simultaneously using

different symbols.8

III. Discussion

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) of the Act.9

Specifically, the Commission believes

the proposal is consistent with the

section 6(b)(5) 10 requirements that the

rules of an exchange be designed to

promote just and equitable principles of

trade, to prevent fraudulent and

manipulative acts, and, in general, to

protect investors and the public.11

The Commission believes that the

proposed rule change will help to

protect investors and the public by

guarding against the possibility of a

change in the exchange rate for the

Hong Kong dollar, now that control of

Hong Kong has reverted to China, as of

midnight on June 30, 1997. The current

exchange rate is a fixed rate that does

not change and which is pegged to the

U.S. dollar so that each Hong Kong

Index unit is valued at one U.S. dollar.12

The new rate will be a floating rate,

based upon the daily exchange rate

calculated by WM/Reuters, and the

Index level will be multiplied by the

exchange rate in order to determine the

Index value. This change will allow

Amex to protect against fluctuations in

the exchange rate between the U.S.

dollar and the Hong Kong dollar.

The Commission also notes that the

Exchange has adequately addressed

concerns about investor confusion over

the simultaneous trading of HK Index

options contracts using the current

valuation method, and the HK Index

options using the new fluctuating rate

method for a certain period of time. The

two contracts will be assigned different

trading symbols for identification

purposes. In addition, the Exchange will

issue an Information Circular to its

members discussing the new calculation

method and the procedures for phasing

in the contracts using the new

calculation and phasing out those

contracts using the old calculation

method.

The Commission finds good cause to

approves Amendment No. 1 to the

proposed rule change prior to the

thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register. Specifically, by

clarifying that Amex will distinguish

between the old and new contracts by

using different symbols, and by stating

that Amex will advise its members of

the change in the method of calculation

for the HKO Index, Amendment No. 1

will help ensure that members of the

Exchange receive adequate notice of the

change in the method of calculation of

the HKO Index and the procedures for

phasing in the contracts using the new

method of calculation and phasing out

the contracts using the old calculation

method. Accordingly, the Commission

believes that it is consistent with section

6(b)(5) of the Act to approve

Amendment No. 1 to the proposal on an

accelerated basis.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment No.

1 to the rule proposal. 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 at

the Commission’s Public Reference

Room. Copies of such filing also will be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to File No.

SR–Amex–97–18 and should be

submitted by October 10, 1997.

V. Conclusion

It is therefore ordered, pursuant to

section 19(b)(2) of the Act,13 that the

proposed rule change (SR–AMEX–97–

18), as amended, is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.14

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–24861 Filed 9–18–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

22821; 812–10520]

The Reserve Private Equity Series, et

al.; Notice of Application

September 12, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under section 6(c) of the

Investment Company Act of 1940 (the