52166 Federal Register / Vol. 62, No. 193 / Monday, October 6, 1997 / Notices

1No Trust will hold Contracts relating to the

Shares of more than one issuer.

NUCLEAR REGULATORY

COMMISSION

Draft Regulatory Guide; Issuance,

Availability

The Nuclear Regulatory Commission

has issued for public comment a draft of

a guide planned for its Regulatory Guide

Series. This series has been developed

to describe and make available to the

public such information as methods

acceptable to the NRC staff for

implementing specific parts of the

Commission’s regulations, techniques

used by the staff in evaluating specific

problems or postulated accidents, and

data needed by the staff in its review of

applications for permits and licenses.

The draft guide, temporarily

identified by its task number, DG–1070

(which should be mentioned in all

correspondence concerning this draft

guide), is titled ‘‘Sampling Plans Used

for Dedicating Simple Metallic

Commercial Grade Items for Use in

Nuclear Power Plants.’’ The guide is

intended for Division 1, ‘‘Power

Reactors.’’ This draft guide is being

developed to describe methods

acceptable to the NRC staff for

complying with the NRC’s regulations

with regard to quality assurance

requirements when using a sampling

plan for dedicating simple metallic

commercial grade items for unrestricted

use in nuclear power plants.

The draft guide has not received

complete staff review and does not

represent an official NRC staff position.

Public comments are being solicited

on Draft Regulatory Guide DG–1070.

Comments may be accompanied by

additional relevant information or

supporting data. Written comments may

be submitted to the Rules and Directives

Branch, Office of Administration, U.S.

Nuclear Regulatory Commission,

Washington, DC 20555. Copies of

comments received may be examined at

the NRC Public Document Room, 2120

L Street NW., Washington, DC.

Comments will be most helpful if

received by December 1, 1997.

You may also provide comments via

the NRC’s interactive rulemaking

website through the NRC home page

(http://www.nrc.gov). This site provides

the availability to upload comments as

files (any format), if your web browser

supports that function. For information

about the interactive rulemaking

website, contact Ms. Carol Gallagher,

(301) 415–5905; e-mail CAG@nrc.gov.

Although a time limit is given for

comments on this draft guide,

comments and suggestions in

connection with items for inclusion in

guides currently being developed or

improvements in all published guides

are encouraged at any time.

Regulatory guides are available for

inspection at the Commission’s Public

Document Room, 2120 L Street NW.,

Washington, DC. Requests for single

copies of draft or final guides (which

may be reproduced) or for placement on

an automatic distribution list for single

copies of future draft guides in specific

divisions should be made in writing to

the U.S. Nuclear Regulatory

Commission, Washington, DC 20555,

Attention: Printing, Graphics and

Distribution Branch; or by fax at (301)

415–5272. Telephone requests cannot be

accommodated. Regulatory guides are

not copyrighted, and Commission

approval is not required to reproduce

them.

(5 U.S.C. 552(a))

Dated at Rockville, Maryland, this 19th day

of September 1997.

For the Nuclear Regulatory Commission.

Lawrence C. Shao,

Director, Division of Engineering Technology,

Office of Nuclear Regulatory Research.

[FR Doc. 97–26400 Filed 10–3–97; 8:45 am]

BILLING CODE 7590–01–U

SECURITIES AND EXCHANGE

COMMISSION

[REl. No. IC–22837; 812–10802]

Salomon Brothers Inc; Notice of

Application

September 30, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for an

Order under section 12(d)(1)(J) of the

Investment Company Act of 1940 (the

‘‘Act’’) for an exemption from section

12(d)(1), under section 6(c) of the Act

for an exemption from section 14(a), and

under section 17(b) of the Act for an

exemption from section 17(a) of the Act.

SUMMARY OF APPLICATION: Salomon

Brothers Inc. (‘‘Salomon’’) requests an

order with respect to DECS Trusts and

future trusts that are substantially

similar and for which Salomon will

serve as a principal underwriter

(collectively, the ‘‘Trusts’’) that would

(i) permit other registered investment

companies to own a greater percentage

of the total outstanding voting stock (the

‘‘Securities’’) of any Trust than that

permitted by section 12(d)(1), (ii)

exempt the Trusts from the initial net

worth requirements of section 14(a), and

(iii) permit the Trusts to purchase U.S.

government securities from Salomon at

the time of a Trust’s initial issuance of

securities.

FILING DATES: The application was filed

on September 26, 1997. By letter dated

September 30, 1997, applicant’s counsel

stated that an amendment, the substance

of which is incorporated in this notice,

will be filed during the notice period.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving Salomon with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

October 20, 1997, and should be

accompanied by proof of service on

Salomon, in the form of an affidavit, or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons may request notification of a

hearing by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, N.W., Washington, D.C. 20549.

Salomon, Seven World Trade Center,

New York, New York 10048.

FOR FURTHER INFORMATION CONTACT:

Brian T. Hourihan, Senior Counsel, at

(202) 942–0526, or Mary Kay Frech,

Branch Chief, at (202) 942–0564

(Division of Investment Management,

Office of Investment Company

Regulation).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee from the SEC’s

Public Reference Branch, 450 Fifth

Street, N.W., Washington, D.C. 20549

(tel. (202) 942–8090).

Applicant’s Representations

1. Each Trust will be a limited-life,

grantor trust registered under the Act as

a non-diversified, closed-end

management investment company.

Salomon will serve as a principal

underwriter (as defined in section

2(a)(29) of the Act) of the Securities

issued to the public by each Trust.

2. Each Trust will, at the time of its

issuance of Securities, (i) enter into one

or more forward purchase contracts (the

‘‘Contracts’’) with a counterparty to

purchase a formulaically-determined

number of a specified equity security or

securities (the ‘‘Shares’’) of one

specified issuer,1 and (ii) in some cases,

purchase certain U.S. Treasury

securities (‘‘Treasuries’’), which may

include interest-only or principal-only

securities maturing at or prior to the
Federal Register / Vol. 62, No. 193 / Monday, October 6, 1997 / Notices 52167

2A formula is likely to limit the Holder’s

participation in any appreciation of the underlying

Shares, and it may, in some cases, limit the Holder’s

exposure to any depreciation in the underlying

Shares. It is anticipated that the Holders will

receive a yield greater than the ordinary dividend

yield on the Shares at the time of the issuance of

the Securities, which is intended to compensate

Holders for the limit on the Holders’ participation

in any appreciation of the underlying Shares. In

some cases, there may be an upper limit on the

value of the Shares that a Holder will ultimately

receive.

3The contracts may provide for an option on the

part of a counterparty to deliver Shares, cash, or a

combination of Shares and cash to the Trust at the

termination of each Trust.

4A ‘‘majority of the Trust’s outstanding

Securities’’ means the lesser of (i) 67% of the

Securities represented at a meeting at which more

than 50% of the outstanding Securities are

represented, and (ii) more than 50% of the

outstanding Securities.

Trust’s termination. The Trusts will

purchase the Contracts from

counterparties that are not affiliated

with either the relevant Trust or

Salomon. The investment objective of

each Trust will be to provide to each

holder of Securities (‘‘Holder’’) (i)

current cash distributions from the

proceeds of any Treasuries, and (ii)

participation in, or limited exposure to,

changes in the market value of the

underlying Shares.

3. In all cases, the Shares will trade

in the secondary market and the issuer

of the Shares will be a reporting

company under the Securities Exchange

Act of 1934. The number of Shares, or

the value of the Shares, that will be

delivered to a Trust pursuant to the

Contracts may be fixed (e.g., one Share

per Security issued) or may be

determined pursuant to a formula, the

product of which will vary with the

price of the Shares. A formula generally

will result in each Holder of Securities

receiving fewer Shares as the market

value of the Shares increases, and more

Shares as their market value decreases.2

At the termination of each Trust, each

Holder will receive the number of

Shares per Security, or the value of the

Shares, as determined by the terms of

the Contracts, that is equal to the

Holder’s pro rata interest in the Shares

or amount received by the Trust under

the Contracts.3

4. Securities used by the Trusts will

be listed on a national securities

exchange or traded on the National

Association of Securities Dealers

Automated Quotation System. Thus, the

Securities will be ‘‘national market

system’’ securities subject to public

price quotation and trade reporting

requirements. After the Securities are

issued, the trading price of the

Securities is expected to vary from time

to time based primarily upon the price

of the underlying Shares, interest rates,

and other factors affecting conditions

and prices in the debt and equity

markets. Salomon currently intends, but

will not be obligated, to make a market

in the Securities of each Trust.

5. Each Trust will be internally

managed by three trustees and will not

have any separate investment adviser.

The trustees will have no power to vary

the investments held by each Trust. A

bank qualified to serve as a trustee

under the Trust Indenture Act of 1939,

as amended, will act as custodian for

each Trust’s assets and as paying agent,

registrar, and transfer agent with respect

to the Securities of each Trust. The bank

will have no other affiliation with, and

will not be engaged in any other

transaction with, and Trust. The day-today administration of each Trust will be

carried out by Salomon or the bank.

6. The Trusts will be structured so

that the trustees are not authorized to

sell the Contracts or Treasuries unless a

default occurs under a Contract and the

Contract is accelerated. The Trusts will

hold the Contracts until maturity, at

which time they will be settled

according to their terms. However, in

the event of the bankruptcy or

insolvency of any counterparty to a

Contract with a Trust, or the occurrence

of any other default provided for in the

Contract, the obligations of the

counterparty under the Contract will be

accelerated and the available proceeds

of the Contract will be distrubited to the

Security Holders.

7. The trustees of each Trust will be

selected initially by Salomon, together

with any other initial Holders, or by the

grantors of the Trust. The Holders of

each Trust will have the right, upon the

declaration in writing or vote of more

than two-thirds of the outstanding

Securities of the Trust, to remove a

trustee. Holders will be entitled to a full

vote for each Security held on all

matters to be voted on by Holders and

will not be able to cumulate their votes

in the election of trustees. The

investment objectives and policies of

each Trust may be changed only with

the approval of a ‘‘majority of the

Trust’s outstanding Securities’’ 4 or any

greater number required by the Trust’s

constituent documents. Unless Holders

so request, it is not expected that the

Trusts will hold any meetings of

Holders, or that Holders will ever vote.

8. The Trusts will not be entitled to

any rights with respect to the Shares

until any Contracts requiring delivery of

the Shares of the Trust are settled, at

which time the Shares will be promptly

distributed to Holders. The Holders,

therefore, will not be entitled to any

rights with respect to the Shares

(including voting rights or the right to

receive any dividends or other

distributions) until receipt by them of

the Shares at the time the Trust is

liquidated.

9. Each Trust will be structured so

that its organizational and ongoing

expenses will not be borne by the

Holders, but rather, directly or

indirectly, by Salomon, the

counterparties, or another third party, as

will be described in the prospectus for

the relevant Trust. At the time of the

original issuance of the Securities of any

Trust, there will be paid to each of the

administrator, the custodian, and the

paying agent, and to each trustee, a onetime amount in respect of such agent’s

fee over its term. Any expenses of the

Trust in excess of this anticipated

amount will be paid as incurred by a

party other than the Trust itself (which

party may be Salomon).

Applicant’s Legal Analysis

A. Section 12(d)(1)

1. Section 12(d)(1)(A)(i) of the Act

prohibits any registered investment

company from owning more than 3% of

the total outstanding voting stock of any

other investment company. Section

12(d)(1)(C) of the Act similarly prohibits

any investment company, other

investment companies having the same

investment adviser, and companies

controlled by such investment

companies from owning more than 10%

of the total outstanding voting stock of

any closed-end investment company.

2. Section 12(d)(1)(J) of the Act

provides that the SEC may exempt

persons or transactions from any

provision of section 12(d)(1), if, and to

the extent that, the exemption is

consistent with the public interest and

protection of investors.

3. Salomon believes, in order for the

Trusts to be marketed most successfully,

and to be traded at a price that most

accurately reflects their value, that it is

necessary for the Securities of each

Trust to be offered to large investment

companies and investment company

complexes. Salomon states that these

investors seek to spread the fixed costs

of analyzing specific investment

opportunities by making sizable

investments in those opportunities.

Conversely, Salomon asserts that it may

not be economically rational for these

investors, or their advisers, to take the

time to review an investment

opportunity if the amount that the

investor would ultimately be permitted

to purchase is immaterial in light of the

total assets of the investment company

or investment company complex.

Therefore, Salomon argues that these
52168 Federal Register / Vol. 62, No. 193 / Monday, October 6, 1997 / Notices

investors should be able to acquire

Securities in each Trust in excess of the

limitations imposed by sections

12(d)(1)(A)(i) and 12(d)(1)(C). Salomon

requests that the SEC issue an order

under section 12(d)(1)(J) exempting the

Trusts from these limitations.

4. Salomon states that section 12(d)(1)

was designed to prevent one investment

company from buying control of other

investment companies and creating

complicated pyramidal structures.

Salomon also states that section 12(d)(1)

was intended to address the layering of

costs to investors.

5. Salomon believes that the concerns

about pyramiding and undue influence

generally do not arise in the case of the

Trusts because neither the trustees nor

the Holders will have the power to vary

the investments held by each Trust or to

acquire or dispose of the assets of the

Trusts. To the extent that Holders can

change the composition of the board of

trustees or the fundamental policies of

each Trust by vote, Salomon argues that

any concerns regarding undue influence

will be eliminated by a provision in the

charter documents for the Trusts that

will required any investment companies

owning voting stock of any Trust in

excess of the limits imposed by sections

12(d)(1)(A)(i) and 12(d)(1)(C) to vote

their Securities in proportion to the

votes of all other Holders. Salomon also

believes that the concern about undue

influence through a threat to redeem

does not arise in the case of the Trusts

because the Securities will not be

redeemable.

6. Section 12(d)(1) also was designed

to address the excessive costs and fees

that may result from multiple layers of

investment companies. Salomon

believes that these concerns do not arise

in the case of the Trusts because of the

limited ongoing fees and expenses

incurred by the Trusts and because

generally these fees and expenses will

be borne, directly or indirectly, by

Salomon or another third party, not by

the Holders. In addition, the Holders

will not, as a practical matter, bear the

organizational expenses (including

underwriting expenses) of the Trusts.

Salomon asserts that the organizational

expenses effectively will be borne by the

counterparties in the form of a discount

in the price paid to them for the

Contracts, or will be borne directly by

Salomon, the counterparties, or other

third parties. Thus, a Holder will not

pay duplicative charges to purchase

Securities of any Trust. Finally, there

will be no duplication of advisory fees

because the Trusts will be internally

managed by their trustees.

7. Salomon believes that the

investment product offered by the

Trusts serves a valid business purpose.

The Trusts, unlike most registered

investment companies, are not marketed

to provide investors with either

professional investment asset

management or the benefits of

investment in a diversified pool of

assets. Rather, Salomon asserts that the

Securities are intended to provide

Holders with an investment having

unique payment and risk characteristics,

including an anticipated higher yield

than the ordinary dividend yield on the

Shares at the time of the issuance of the

Securities.

8. Salomon believes that the purposes

and policies of section 12(d)(1) are not

implicated by the Trusts and that the

requested exemption from section

12(d)(1) is consistent with the public

interest and the protection of investors.

B. Section 14(a)

1. Section 14(a) of the Act requires, in

pertinent part, that an investment

company have a net worth of at least

$100,000 before making any public

offering of its shares. The purpose of

section 14(a) is to ensure that

investment companies are adequately

capitalized prior to or simultaneously

with the sale of their securities to the

public. Rule 14a–3 exempts from

section 14(a) unit investment trusts that

meet certain conditions in recognition

of the fact that, once the units are sold,

a unit investment trust requires much

less commitment on the part of the

sponsor than does a management

investment company. Rule 14a–3

provides that a unit investment trust

investing in eligible trust securities shall

be exempt from the net worth

requirement, provided that the trust

holds at least $100,000 of eligible trust

securities at the commencement of a

public offering.

2. Salomon argues that, while the

Trusts are classified as management

companies, they have the characteristics

of unit investment trusts. Investors in

the Trusts, like investors in a unit

investment trust, will not be purchasing

interests in a managed pool of

securities, but rather in a fixed and

disclosed portfolio that is held until

maturity. Salomon believes that the

make-up of each Trust’s assets,

therefore, will be ‘‘locked-in’’ for the life

of the portfolio, and there is no need for

an ongoing commitment on the part of

the underwriter.

3. Salomon states that, in order to

ensure that each Trust will become a

going concern, the Securities of each

Trust will be publicly offered in a firm

commitment underwriting, registered

under the Securities Act of 1933, and

resulting in net proceeds to each Trust

of at least $10,000,000. Prior to the

issuance and delivery of the Securities

of each Trust to the underwriters, the

underwriters will enter into an

underwriting agreement pursuant to

which they will agree to purchase the

Securities subject to customary

conditions to closing. The underwriters

will not be entitled to purchase less

than all of the Securities of each Trust.

Accordingly, Salomon states that either

the offering will not be completed at all

or each Trust will have a net worth

substantially in excess of $100,000 on

the date of the issuance of the

Securities. Salomon also does not

anticipate that the net worth of the

Trusts will fall below $100,000 before

they are terminated.

4. Section 6(c) of the Act provides that

the SEC may exempt persons or

transactions if, and to the extent that,

the exemption is necessary or

appropriate in the public interest and

consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the Act. Salomon requests that the SEC

issue an order under section 6(c)

exempting the Trusts from the

requirements of section 14(a). Salomon

believes that the exemption is

appropriate in the public interest and

consistent with the protection of

investors and the policies and

provisions of the Act.

C. Section 17(a)

1. Sections 17(a) (1) and (2) of the Act

generally prohibit the principal

underwriter, or any affiliated person of

the principal underwriter, of a

registered investment company from

selling or purchasing any securities to or

from that investment company. The

result of these provisions is to preclude

the Trusts from purchasing Treasuries

from Salomon.

2. Section 17(b) of the Act provides

that the SEC shall exempt a proposed

transaction from section 17(a) if

evidence establishes that the terms of

the proposed transaction are reasonable

and fair and do not involve

overreaching, and the proposed

transaction is consistent with the

policies of the registered investment

company involved and the purposes of

the Act. Salomon requests an exemption

from sections 17(a) (1) and (2) to permit

the Trusts to purchase Treasuries from

Salomon.

3. Salomon states that the policy

rationale underlying section 17(a) is the

concern that an affiliated person of an

investment company, by virtue of this

relationship, could cause the investment

company to purchase securities of poor

quality from the affiliated person or to
Federal Register / Vol. 62, No. 193 / Monday, October 6, 1997 / Notices 52169

1 15 U.S.C. 78s(b)(1) (1994).

2 17 CFR 240.19b–4 (1997).

3Securities Exchange Act Release No. 38975

(August 26, 1997), 62 FR 46535 (September 3, 1997)

[File No. SR–NASD–97–59].

4See also companion release Securities Exchange

Act Release No. 39140. The short sale rule was

originally adopted in June of 1994 for Nasdaq

National Market securities on a pilot basis with a

termination date of March 5, 1996. Securities

Exchange Act Release No.34277 (June 29, 1994), 59

FR 34885 (July 7, 1994) [File No. SR–NASD–92–12].

The pilot was subsequently extended through

Continued

overpay for securities. Salomon argues

that it is unlikely that it would be able

to exercise any adverse influence over

the Trusts with respect to purchases of

Treasuries because Treasuries do not

vary in quality and are traded in one of

the most liquid markets in the world.

Treasuries are available through both

primary and secondary dealers, making

the Treasury market very competitive.

In addition, market prices on Treasuries

can be confirmed on a number of

commercially available information

screens. Salomon argues that because it

is one of a limited number of primary

dealers in Treasuries, it will be able to

offer the Trusts prompt execution of

their Treasury purchases at very

competitive prices.

4. Salomon states that it is only

seeking relief from section 17(a) with

respect to the initial purchase of the

Treasuries and not with respect to an

ongoing course of business.

Consequently, investors will know

before they purchase a Trust’s Securities

the Treasuries that will be owned by the

Trust and the amount of the cash

payments that will be provided

periodically by the Treasuries to the

Trust and distributed to Holders.

Salomon also asserts that whatever risk

there is of overpricing the Treasuries

will be borne by the counterparties and

not by the Holders because the cost of

the Treasuries will be calculated into

the amount paid on the Contracts.

Salomon argues that, for this reason, the

counterparties will have a strong

incentive to monitor the price paid for

the Treasuries, because any

overpayment could result in a reduction

in the amount that they would be paid

on the Contracts.

5. Salomon believes that the terms of

the proposed transaction are reasonable

and fair and do not involve

overreaching on the part of any person,

that the proposed transaction is

consistent with the policy of each of the

Trusts, and that the requested

exemption is appropriate in the public

interest and consistent with the

protection of investors and purposes

fairly intended by the policies and

provisions of the Act.

Applicant’s Condition

Salomon agrees that the order

granting the requested relief will be

subject to the following conditions:

1. Any investment company owning

voting stock of any Trust in excess of

the limits imposed by section 12(d)(1) of

the Act will be required by the Trust’s

charter documents to vote its Trust

shares in proportion to the vote of all

other Holders.

2. The trustees of each Trust,

including a majority of the trustees who

are not interested persons of the Trust,

(i) will adopt procedures that are

reasonably designed to provide that the

conditions set forth below have been

complied with; (ii) will make and

approve such changes as deemed

necessary; and (iii) will determine that

the transactions made pursuant to the

order were effected in compliance with

such procedures.

3. The Trusts (i) will maintain and

preserve in an easily accessible place a

written copy of the procedures (and any

modifications to such procedures), and

(ii) will maintain and preserve for the

longer of (a) the life of the Trusts and

(b) six years following the purchase of

any Treasuries, the first two years in an

easily accessible place, a written record

of all Treasuries purchased, whether or

not from Salomon, setting forth a

description of the Treasuries purchased,

the identity of the seller, the terms of

the purchase, and the information or

materials upon which the

determinations described below were

made.

4. The Treasuries to be purchased by

each Trust will be sufficient to provide

payments to Holders of Securities that

are consistent with the investment

objectives and policies of the Trust as

recited in the Trust’s registration

statement and will be consistent with

the interests of the Trusts and the

Holders of its Securities.

5. The terms of the transactions will

be reasonable and fair to the Holders of

the Securities issued by each Trust and

will not involve overreaching of the

Trust or the Holders of Securities of the

Trust on the part of any person

concerned.

6. The fee, spread, or other

remuneration to be received by Salomon

will be reasonable and fair compared to

the fee, spread, or other remuneration

received by dealers in connection with

comparable transactions at such time,

and will comply with section 17(e)(2)(C)

of the Act.

7. Before any Treasuries are

purchased by the Trust, the Trust must

obtain such available market

information as it deems necessary to

determine that the price to be paid for,

and the terms of, the transaction is at

least as favorable as that available from

other sources. This will include the

Trust obtaining and documenting the

competitive indications with respect to

the specific proposed transaction from

two other independent government

securities dealers. Competitive

quotation information must include

price and settlement terms. These

dealers must be those who, in the

experience of the Trust’s trustees, have

demonstrated the consistent ability to

provide professional execution of

Treasury transactions at competitive

market prices. They also must be those

who are in a position to quote favorable

prices.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–26399 Filed 10–3–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39139; File No. SR–NASD–

97–59]

Self-Regulatory Organizations; Order

Granting Temporary Approval on an

Accelerated Basis of Proposed Rule

Change by National Association of

Securities Dealers, Inc. Relating to the

Short Sale Rule

September 26, 1997.

On August 14, 1997, the national

Association of Securities Dealers, Inc.

(‘‘NASD’’) or ‘‘Association‘‘) filed with

the Securities and Exchange

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

the proposed rule change pursuant to

Section 19(b)(1) of the Securities

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

19b–4 2 thereunder to amend Rule IM–

3350 to provide that a ‘‘legal’’ short sale

must be effected at a price equal to or

greater than the offer price when the

inside spread is less than 1⁄16th. Notice

of the proposed rule change, together

with the substance of the proposal, was

published in the Federal Register.3 No

comments on the proposed rule change

have been received, to date. This order

grants temporary approval on an

accelerated basis to the proposed rule

change through January 15, 1998. At the

expiration of rule, the Commission will

consider permanent approval of the

proposed rule change in unison with the

Commission’s consideration of the

permanent approval of the NASD’s short

sale rule.4