Federal Register / Vol. 62, No. 176 / Thursday, September 11, 1997 / Notices 47855

40 15 U.S.C. 78s(b)(2).

41 17 CFR 200.30–3(a) (12) and (51).

1The NASD granted an extension of the time for

Commission action on this rule filing until thirtyfive days after NASD Regulation filed an

amendment advising of the action of the NASD

Board of Governors. Letter from Craig L. Landauer,

Associate General Counsel, NASD Regulation, Inc.,

to Katherine A. England, Assistant Director,

Division of Market Regulation, SEC, dated June 24,

1997. The NASD Board of Governors reviewed this

proposed rule change on June 26, 1997. Letter from

Craig L. Landauer, Associate General Counsel,

NASD Regulation, Inc., to Katherine A. England,

Assistant Director, Division of Market Regulation,

SEC, dated June 27, 1997.

2 15 U.S.C. § 78s(b)(1).

3 17 CFR 240.19b–4.

4Securities Exchange Act Release No. 38781

(June 26, 1997), 62 FR 35870.

5Letter from Allen W. Croessmann, President,

BankBoston Investor Services, to Jonathan G. Katz,

Secretary, SEC, dated July 22, 1997 and Letter from

Joseph P. Savage, Assistant Counsel, Investment

Company Institute, to Jonathan G. Katz, Secretary,

SEC, dated July 22, 1997.

6See NASD Rule 3010(g)(2).

index futures. In particular, FLEX

options will never expire on any

‘‘Expiration Friday’’ because the

expiration date of a FLEX option may

not occur on a day that is on, or within,

two business days of the expiration date

of a Non-FLEX option. The Commission

believes that this should reduce the

possibility that the exercise of FLEX

options at expiration will cause any

additional pressure on the market for

underlying securities at the same time

that Non-FLEX options expire.

Nevertheless, because the position

limits for FLEX index options on the

DJTA are much higher than those

currently proposed for the

corresponding non-FLEX Index (i.e., 4

times the existing 15,000 contract

limits) options and open interest in one

or more FLEX option series could grow

to significant levels, it is possible that

FLEX options on the DJTA might have

an impact on the securities markets for

the securities underlying FLEX options.

The Commission expects the Exchange

to monitor the actual effect of FLEX

options on the DJTA once trading

commences and take prompt action

(including timely communication with

the self-regulatory organizations

responsible for oversight of trading in

the underlying securities) should any

unusual market effects develop.

F. Accelerated Approval of Amendment

No. 1

The Commission finds good cause for

approving 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. Amendment No. 1,

does not raise any novel issues. It

merely states that the Exchange will

notify the Commission in the event that

the Index fails to meet a set of

maintenance standards that are

substantially similar to existing

maintenance standards for narrow-based

indices. These representations are

nearly identical in all material respects

to those made by the Exchange in

connection with similar proposals to list

options on stock indexes. In addition,

Amendment No. 1 sets position limits

for FLEX options at 4 times the limits

applicable for industry index options

and includes an attached letter from

Dow Jones & Company describing their

procedures for replacing Index

components and outlining their conflict

of interest policy. The Commission

believes, therefore, that Amendment No.

1 further strengthens and clarifies the

proposal, and raises no new regulatory

issues. Further, the Commission notes

that the original proposal was published

for the full 21-day comment period and

no comments were received by the

Commission. Accordingly, the

Commission believes it is consistent

with Sections 19(b)(2) and 6(b)(5) of the

Act to approve Amendment No. 1 to the

Exchange’s proposal on an accelerated

basis.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

1. 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 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 abovementioned self-regulatory organization.

All submissions should refer to File No.

SR–CBOE–97–27 and should be

submitted by October 2, 1997.

V. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,40 that the

proposed rule change (SR–CBOE–97–

27) is approved, as amended. In

addition, for purposes of trading FLEX

options on the Index, the Commission

also finds, pursuant to Rule 9b–1 under

the Act, that such options are

standardized options for purposes of the

options disclosure framework

established under Rule 9b–1.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.41

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–24132 Filed 9–10–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

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[Release No. 34–39019; File No. SR–NASD–

97–41]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change by

National Association of Securities

Dealers, Inc. Relating to the Definition

of Branch Office

September 4, 1997.

I. Introduction

On June 17, 1997,1 the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’) submitted

to the Securities and Exchange

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

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

Securities Exchange Act of 1934

(‘‘Act’’)2 and Rule 19b–4 thereunder,3 a

proposed rule change to amend Rule

3010 of the NASD’s Conduct Rules to

create another exception to the

definition of branch office. A notice of

the proposed rule change appeared in

the Federal Register on July 2, 1997.4

The Commission received two comment

letters endorsing the proposed rule

change.5 The Commission is approving

the proposed rule change.

II. Description of the Proposal

The definition of a branch office,

found in NASD Rule 3010, includes any

location identified by any means to the

public or customers as a location at

which the member conducts an

investment banking or securities

business, subject to several exceptions.6

If a business location of a member meets

the definition of a branch office, such

office must be identified to the NASD

through the filing of a Schedule E to
47856 Federal Register / Vol. 62, No. 176 / Thursday, September 11, 1997 / Notices

7Board of Governors of the Federal Reserve

System et al., Interagency Statement on Retail Sales

of Non-deposit Investment Products, p. 10

(February 15, 1994).

8Section 15A(b)(6) requires the Commission to

determine that a registered national securities

association’s rules are designed to promote just and

equitable principles of trade, to remove

impediments to and perfect the mechanism of a free

and open market and national market system; and

are not designed to permit unfair discrimination

among customers, issuers, brokers, or dealers.

9The Commission has considered the proposed

rule’s impact on efficiency, competition, and capital

formation. 15 U.S.C. § 78c(f).

10The NASD plans to issue a Notice to Members

to clarify member firms’ supervisory

responsibilities concerning non-branch offices.

11 15 U.S.C. 78s(b)(2).

12 17 CFR 200.30–3(a)(12).

1The NASD filed Amendment No. 1 to the

proposed rule change on July 25, 1997, the

substance of which was incorporated into the

notice. See letter from Elliott R. Curzon, Assistant

General Counsel, NASDR, to Katherine A. England,

Assistant Director, Market Regulation, Commission,

dated July 25, 1997 (‘‘Amendment No. 1’’).

2 15 U.S.C. 78s(b)(1).

3 17 CFR 240.19b–4.

4The rule, in pilot form, became effective for one

year on May 2, 1995, was extended to August 1,

1996, extended again until August 1, 1997, and

temporarily extended until approval of this rule

proposals. See Securities Exchange Act Release

Nos. 35314 (February 1, 1995), 60 FR 7241

(February 7, 1995) (original approval of pilot

program); 37154 (April 30, 1996), 61 FR 20301 (May

6, 1996) (temporary extension until August 1, 1996);

37513 (August 1, 1996), 61 FR 41438 (August 8,

1996) (exentsion until August 1, 1997); and 38879

(July 28, 1997), 62 FR 41454 (August 1, 1997)

(temporary extension).

Form BD and such location is subject to

an annual NASD fee of $75.00.

Rule 3010 does not address the

circumstance in which a business

location is used exclusively for

appointments from time to time

between registered representatives and

customers. This issue may arise under

networking arrangements between

NASD members and banks. In this

context, registered representatives of the

member may periodically schedule

appointments with bank customers at a

bank location where the NASD member

conducts no securities activities. Under

the Interagency Statement on Retail

Sales of Non-deposit Investment

Products, banks are required to use

signage at the place of the appointment

to identify the NASD member that

employ the registered person.7 Thus, the

presence of this signage at the place of

appointment could be interpreted as the

member or its agent designating the

location as a branch office for which

branch office registration requirements

would apply. Thus, the NASD has

created another exception to the

definition of branch office to address

this type of situation.

The proposed amendment adds

language to paragraph (g) of Rule 3010

to exempt from the definition of branch

office certain locations where a person

conducts business for the member firm

occasionally and exclusively by

appointment for the convenience of

customers, and where the member

maintains no other tangible presence.

To be consistent with other provisions

of Rule 3010, the persons conducting

business at such locations would be

required to provide each customer with

the address and telephone number of

the branch office or office of supervisory

jurisdiction of the firm from which the

person who is conducting the meeting is

supervised.

III. Discussion

The Commission believes the

proposed rule change is consistent with

the Act and rules and regulations

promulgated thereunder. Specifically,

the Commission believes that approval

of the proposed rule change is

consistent with Section 15A(b)(6)8 of

the Act.9 Pursuant to Section 15A(b)(6),

the proposed rule change permits

member firms and their representatives

to be flexible when scheduling

appointments at a location convenient

to their customers without being

assessed an additional branch office

registration fee. However, the

Commission reiterates that member

firms, pursuant to NASD Rules, are

required to monitor and supervise

representatives and their activity,

whether they conduct business in a

branch or non-branch office. The status

of a location as a branch or non-branch

office is not relevant to the duty to

supervise.10

IV. Conclusion

For the above reasons, the

Commission believes that the proposed

rule change is consistent with the

provisions of the Act, and in particular

with Section 15A(b)(6).

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,11 that the

proposed rule change (SR–NASD–97–

41) be, and hereby is, approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–24133 Filed 9–10–97; 8:45 am]

BILLING CODE 8010–01–M

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COMMISSION

[Release No. 34–39024; File No. SR–NASD–

97–52]

Self-Regulatory Organizations;

National Association of Securities

Dealers, Inc.; Order Granting Approval

to Proposed Rule Change Relating to

Extension of the Large and Complex

Case Rule and Making Application of

the Rule Voluntary

September 5, 1997.

I. Introduction

On July 22, 1997.1 the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’) submitted

to the Securities and Exchange

Commission (‘‘Commission’’), pursuant

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

Exchange Act of 1934 (‘‘Act’’)2 and Rule

19b–4 thereunder,3 a proposed rule

change to amend Rule 10334 of the

NADS’s Code of Arbitration Procedure

(‘‘Code’’) to extend the effectiveness of

Rule 10334 to August 1, 2002, and to

make application of Rule 10334

voluntary.

Notice of the proposed rule change,

together with the substance of the

proposal, was published for comment in

Securities Exchange Act Release No.

38879 (July 28, 1997), 62 FR 41454

(August 1, 1997). No comments were

received on the proposal. This order

approve the proposed rule change.

II. Description

Rule 10334 provides special

procedures for large and complex

cases.4 Any claim where the amount in

controversy is $1 million or more, or

where all parties agree, is eligible for

disposition under the procedures.

Currently, Rule 10334 requires that

the parties in any eligible case

participate in an administrative

conference with a member of the staff of

the Office of Dispute Resolution

(‘‘Office’’). The purpose of the

conference is to permit the parties and

staff to develop a plan for administering

the case, including planning for

discovery and narrowing the issues to

be decided at the hearing. Application

of all other provisions of the Rule to a

case is completely voluntary.

Rule 10334 was developed to meet the

special needs of parties in large and

complex cases, including the need for

arbitrators with particular experience

and the need in some cases for

additional discovery, including the

availability of depositions. NASD

Regulation’s experience in the two years

that Rule 10334 has been effective is

that few parties use the procedures.

From May 2, 1995 until January 28,

1997, 880 cases were eligible for

treatment under Rule 10334. Parties

agreed to proceed under Rule 10334,

however, in only 43 cases.