50644 Federal Register / Vol. 62, No. 187 / Friday, September 26, 1997 / Notices

1On October 11, 1996, President Clinton signed

into law the National Securities Markets

Improvement Act of 1996 (‘‘1996 Act’’). Title III of

the 1996 Act, the Investment Advisers Supervision

Coordination Act (‘‘Coordination Act’’), amended

the Investment Advisers Act of 1940 to, among

other things, reallocate the responsibilities for

regulating investment advisers between the

Commission and the securities regulatory

authorities of the states.

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

2 17 CFR 240.19b–4.

registered as a broker-dealer under the

Securities Exchange Act of 1934

(‘‘Exchange Act’’), provided the adviser

is in compliance with Rule 15c3–1

under the Exchange Act, or, if a member

of an exchange, in compliance with

exchange requirements with respect to

financial responsibility and the

segregation of funds or securities carried

for the account of the customer.

The information required by Rule

206(4)–2 is used by the Commission in

connection with its investment adviser

inspection program to ensure that

advisers are in compliance with Rule

206(4)–2. The information required by

paragraphs (3) and (4) of the rule is also

used by clients. Without the information

collected under the rule, the

Commission would be less efficient and

effective in its inspection program and

clients would not have information

valuable for monitoring the adviser’s

handling of their accounts.

The Commission recently adopted

amendments to the rule to restrict the

application of the rule to those advisers

registered with the Commission. The

likely respondents to this information

collection are those investment advisers

that are registered with the Commission

after July 8, 1997, are not also registered

as broker-dealers, and have custody of

clients’ funds or securities. The

Commission estimates that 111 advisers

would be subject to Rule 206(4)–2. The

number of responses under Rule 206(4)–

2 will vary considerably depending on

the number of clients for which an

adviser has custody or possession of

funds or securities. It is estimated that

an adviser subject to this rule would be

required to provide an average of 250

responses annually at an average of .5

hours per response. The total annual

burden for each respondent is estimated

to be 125 hours. The total annual

aggregate burden for all respondents is

estimated to be 13,875 hours.

Rule 0–2 requires certain non-resident

persons to furnish to the Commission a

written irrevocable consent and power

of attorney that designates the

Commission as an agent for service of

process, and that stipulates and agrees

that any civil suit or action against such

person may be commenced by service of

process on the Commission. Regulation

279.4, 279.5, 279.6, and 279.7 [17 CFR

279.4, 279.5, 279.6, and 279.7] designate

Forms 4–R, 5–R, 6–R, and 7–R as the

irrevocable appointments of agent for

service of process, pleadings and other

papers to be filed by an individual nonresident adviser or an unincorporated

nonresident investment adviser, a

partnership nonresident investment

adviser, or a nonresident general partner

of an investment adviser or a

nonresident ‘‘managing agent’’ of an

unincorporated investment adviser,

respectively, which is registered or

applying for registration with the

Commission as an investment adviser.

It is necessary to obtain the

appropriate consent to ensure that the

Commission and other persons can

institute injunctive actions against

nonresident investment advisers and

non-resident partners or managers of

investment advisers in cases involving

violation of the Investment Advisers Act

of 1940 (‘‘Advisers Act’’) that may result

in civil liabilities.

The Commission estimates that there

may be an increase in the number of

non-resident registered investment

advisers, which may be offset by those

non-resident general partners or nonresident managing agents of investment

advisers that would not register or be

registered with the Commission after

July 8, 1997 who would no be subject

to the Rule 0–2 or the forms.1 Therefore,

non-resident general partners or nonresident managing agents of investment

advisers that would be registered with

the states after the July 8, 1997 effective

date would no longer be subject to Rule

0–2 or be required to file the forms.

The Commission estimates that there

would be approximately 300 registrants

subject to Rule 0–2. An adviser subject

to this rule would be required to file

only once, and the Commission

estimates that the preparation and filing

of any of the forms designated for use

pursuant to Rule 0–2 would require

approximately one hour of the

registrant’s time. The total annual

burden would be 300 hours.

Rule 203–2 governs withdrawal from

registration under the Advisers Act and

Form ADV–W is the form for

withdrawing registration under the

Advisers Act.

To enforce the registration provisions

of the Advisers Act and to fulfill its

responsibilities under Section 203(h),

the Commission must obtain certain

information from persons seeking to

withdraw from registration. The

information required by Form ADV–W

enables the Commission to satisfy itself

that the activities of person seeking to

withdraw from registration do not

require such person to be registered and

to determine whether terms and

conditions should be imposed upon a

registrant’s withdrawal. Such terms and

conditions might include the making of

appropriate arrangements with respect

to the transfer to clients of client funds

and securities in the custody and

possession of the adviser or the return

to clients of prepaid advisory fees.

After July 8, 1997 (effective date of the

Coordination Act), the Commission

estimates that only 28 percent of

investment advisers currently registered

with the Commission will remain

eligible for Commission registration. It

is estimated that approximately 616

advisers will be withdrawing their

registration from the Commission by

filing Form ADV–W. The total annual

burden for each respondent is estimated

to be one hour. The annual aggregate

burden for all respondents is estimated

to be 616 hours.

An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless it displays a currently valid

control number.

Written comments regarding the

above information should be directed to

the following persons: (i) Desk Officer

for the Securities and Exchange

Commission, Office of Information and

Regulatory Affairs, Office of

Management and Budget, Room 3208,

New Executive Office Building,

Washington, D.C. 20503; and (ii)

Michael E. Bartell, Associate Executive

Director, Office of Information

Technology, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Comments

must be submitted to OMB within 30

days of this notice.

Dated: September 19, 1997.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–25604 Filed 9–25–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39100; File No. SR–CBOE–

97–41]

Self-Regulatory Organizations;

Proposed Rule Change By Chicago

Board Options Exchange, Incorporated

Relating to the Definition of Stop

Orders

September 19, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on August
Federal Register / Vol. 62, No. 187 / Friday, September 26, 1997 / Notices 50645

3 17 CFR 200.30–3(a)(12).

25, 1997, the Chicago Board Options

Exchange, Incorporated (‘‘CBOE or

Exchange’’) filed with the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by the CBOE. The Commission

is publishing this notice to solicit

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 CBOE proposes to amend its Rule

6.53 (‘‘Rule’’) governing the definition of

stop orders to clarify that a stop order

on the CBOE is triggered when the

option contract reaches a specified price

‘‘on the CBOE floor.’’ The text of the

proposed rule change is available at the

Office of the Secretary, CBOE and at the

Commission.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

CBOE 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. The CBOE has

prepared summaries, set forth in

sections A, B, and C below, of the most

significant aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The purpose of the proposed change

is to amend the definition of a stop

order to clarify that the stop order

becomes triggered when the option

contract reaches a specified price ‘‘on

the CBOE floor.’’

Currently, paragraph (c)(iii) of

Exchange Rule 6.53 defines a stop order

as a contingency order to buy or sell

when the market for a particular option

contract reaches a specified price. The

Rule does not specify, but has always

been interpreted to mean, that the

contingency to buy or sell is satisfied

when the option contract is bid at or

above the stop price (in the case of a by

order) or is offered at or below the stop

price (in the case of a sell order) ‘‘on the

floor of the CBOE.’’ The proposed

amendment will make it clear, therefore,

that a stop order is not activated when

the bid or offer (as appropriate) reaches

the stop limit on another exchange.

Unlike the equity markets, the option

markets are not electronically linked to

each other. Thus, options traders have

no way of knowing whether a contract

has reached a specified ‘‘stop’’ in

another market place, as would an

equity securities trader. Accordingly,

there is no rule prohibiting tradethroughs in options market places as

there is in the equity market places.

The CBOE believes that the proposed

rule change will clarify the CBOE’s

responsibility in this regard, and will

prevent any perception that CBOE

members have a duty to execute stop

orders when the ‘‘stop’’ price has not

been reached on the CBOE floor.

2. Statutory Basis

The basis under the Act for this

proposed rule change is the requirement

under Section 6(b)(5) that an exchange

have rules that are designed to prevent

fraudulent and manipulative acts and

practices, to promote just and equitable

principles of trade, to foster cooperation

and coordination with persons engaged

in regulating, clearing, settling,

processing information with respect to,

and facilitating transactions in

securities, to remove impediments to

protect and perfect the mechanism of a

free and open market and a national

market system, and in general, to protect

investors and the public interest. By

clarifying the definition of a ‘‘stop

order,’’ the proposed rule change will

more accurately describe the obligations

of CBOE members with regard to stop

orders executed on the Exchange.

Therefore, the Exchange believes that

amending the rule is consistent with,

and furthers, the objectives of Section

6(b)(5) of the Act.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The CBOE does not believe that the

proposed rule change will impose any

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 were solicited

or received with respect to the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 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

90 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 the self-regulatory

organization consents, the Commission

will:

(A) By order approve such proposed

rule change, or

(B) Institute proceedings to adtermine

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 will also be available for

inspection and copying at the principal

office of the CBOE. All submissions

should refer to the file number SR–

CBOE–97–41 and should be submitted

by October 17, 1997.

For the Commission by the Division of

Market Regulation, pursuant to the delegated

authority.3

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–25518 Filed 9–25–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39105; File No. SR–CSE–

97–07]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change by

the Cincinnati Stock Exchange, Inc.

Relating to Minor Rule Plan Violations

September 22, 1997.

On August 5, 1997, The Cincinnati

Stock Exchange, Incorporated (‘‘CSE’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) the proposed

rule change pursuant to Section 19(b)(1)