Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Notices 61563

1The Prior Orders were issued for Energy

Initiatives, Inc. (‘‘EII’’). GPU International is the

entity which succeeded EII.

adviser except to the extent permitted

by the Act, the rules under the Act, noaction letter, or any exemptive order

granted after the date of an order

granting this application, provided that

the application requesting the

subsequent order refers specifically to

this application.

2. Goldman Sachs and its affiliated

persons will engage in principal

transactions with a Portfolio in reliance

on any order granting this application

only if (i) Goldman Sachs is not

affiliated with any investment adviser to

the Portfolio, (ii) neither Goldman Sachs

nor any affiliated person of Goldman

Sachs is responsible for the selection of

particular securities to be acquired for

the Portfolio, and (iii) neither Goldman

Sachs nor any affiliated person of

Goldman Sachs is responsible for the

selection of any particular broker-dealer

or other counterparty for transactions

effected by the Portfolio.

3. Goldman Sachs and its affiliated

persons will engage in principal

transactions with a Portfolio in reliance

on any order granting this application

only if no affiliated person of Goldman

Sachs is serving as a director of the

Fund of which the Portfolio is a part.

4. Transactions between Goldman

Sachs or its affiliated persons and any

Portfolio made in reliance on any order

granting this application will be effected

only pursuant to arm’s length

negotiations with the Portfolio, acting

through its investment adviser or other

person unaffiliated with Goldman

Sachs, and will be consistent with the

policy of the Portfolio.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–30179 Filed 11–17–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–26777]

Filings Under the Public Utility Holding

Company Act of 1935, as amended

(‘‘Act’’)

November 10, 1997.

Notice is hereby given that the

following filing(s) has/have been made

with the Commission pursuant to

provisions of the Act and rules

promulgated thereunder. All interested

persons are referred to the application(s)

and/or declaration(s) for complete

statements of the proposed

transaction(s) summarized below. The

application(s) and/or declaration(s) and

any amendments thereto is/are available

for public inspection through the

Commission’s Office of Public

Reference.

Interested persons wishing to

comment or request a hearing on the

application(s) and/or declaration(s)

should submit their views in writing by

December 4, 1997, to the Secretary,

Securities and Exchange Commission,

Washington, DC 20549, and serve a

copy on the relevant applicant(s) and/or

declarant(s) at the address(es) specified

below. Proof of service (by affidavit or,

in case of an attorney at law, by

certificate) should be filed with the

request. Any request for hearing shall

identify specifically the issues of fact or

law that are disputed. A person who so

requests will be notified of any hearing,

if ordered, and will receive a copy of

any notice or order issued in the matter.

After said date, the application(s) and/

or declaration(s), as filed or as amended,

may be granted and/or permitted to

become effective.

GPU, Inc. and GPU International, Inc.

(70–7727)

GPU, Inc. (‘‘GPU’’), 100 Interpace

Parkway, Parsippany, New Jersey 07054,

a registered holding company, and GPU

International, Inc. (‘‘GPU

International’’), One Upper Pond Road,

Parsippany, New Jersey 07054, a

nonutility subsidiary of GPU, have filed

a post-effective amendment under

sections 6(a), 7, 9(a), 10 and 12(b) of the

Act and rules 45, 53 and 54 under the

Act to their application-declaration filed

under sections 6(a), 7, 9(a), 10, 12(b),

12(c) and 13(b) of the Act and rules 45,

50, 51, 90 and 91 under the Act.

By orders dated November 16, 1995,

June 14, 1995, December 28, 1994,

September 12, 1994, December 18, 1992,

and June 26, 1990 (HCAR Nos. 26409,

26307, 26205, 26123, 25715, and 25108)

(‘‘Prior Orders’’), GPU International 1

was authorized to engage in preliminary

project development and administrative

activities (‘‘Project Activities’’) for its

investments in: (i) Qualifying facilities

(‘‘QFs’’), as defined in the Public Utility

Regulatory Policies Act of 1978, as

amended (‘‘PURPA’’); (ii) exempt

wholesale generators (‘‘EWGs’’), as

defined in section 32 of the Act; and (iii)

foreign utility companies (‘‘FUCOs’’), as

defined in section 33 of the Act.

The Prior Orders also authorized GPU

from time to time through December 31,

1997 to: (i) Enter into guarantees,

support instruments, and bank letters of

credit reimbursement agreements or

similar financial instruments or

undertakings (‘‘Guarantees’’) to secure

GPU International’s agreement with any

person (including without limitation

project lenders) in connection with GPU

International’s Project Activities and the

acquisition of ownership or

participation interests in QF, EWG, or

FUCO projects; (ii) guarantee the

securities or other obligations of EWGs

and FUCOs; and (iii) assume liabilities

of EWGs and FUCOs, in an amount of

up to $500 million. The Prior Orders

also authorized GPU International to

enter into guarantees, and to assume

liabilities of EWGs and FUCOs, in an

aggregate amount of up to $50 million

from time to time through December 31,

1997.

GPU and GPU International

(‘‘Applicants’’) propose to: (i) Expand

the purposes for which GPU may enter

into Guarantees on behalf of GPU

International to include Guarantees of

any security or other obligation of GPU

International or a subsidiary of GPU

International (‘‘GPUI Subsidiary’’),

provided the issuance and sale of any

such security is exempt from the

requirement of prior Commission

approval under section 6(a) of the Act

or has been otherwise authorized by the

Commission; (ii) to increase to $150

million the aggregate principal amount

of Guarantees which GPU International

may have outstanding hereunder and to

expand the purposes for which GPU

International may enter into Guarantees

to include guarantees of the securities or

other obligations of GPUI Subsidiaries,

provided the issuance and sale of any

such security is exempt from the

requirement of prior Commission

approval under section 6(a) of the Act

or has been otherwise authorized by the

Commission; (iii) to extend until

December 31, 2000 the period during

which Applicants may enter into

Guarantees; and (iv) to permit any GPUI

Subsidiary which is not an EWG or

FUCO to guarantee the securities or

other obligations of their direct or

indirect subsidiaries from time to time

through December 31, 2000 in an

aggregate amount not to exceed, together

with the aggregate amount of GPU

International Guarantees outstanding,

$150 million, provided the issue and

sale of any such security is exempt from

the requirement of prior Commission

approval under section 6(a) of the Act

or has been otherwise authorized by the

Commission.

The term of each Guarantee and any

letter of credit (‘‘L/C’’) reimbursement

agreement, would not exceed 35 years.

L/C fees would not exceed 1% annually

of the face amount of the L/C. Drawings

under each L/C would bear interest at

not more than 5% above the prime rate
61564 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Notices

as in effect from time to time. The

interest rate on GPU International debt

guaranteed by GPU, and fees payable,

would not exceed rates and fees which

are generally obtainable for debt bearing

similar terms, conditions and features

and which is issued by companies of the

same or reasonably comparable credit

quality.

GPU agrees that it will not enter into

any Guarantee which: (i) Guarantees the

securities or obligations of an EWG or

FUCO; or (ii) guarantees the

performance of a Guarantee executed by

GPU International or a GPUI Subsidiary

of the securities or other obligations of

an EWG or FUCO, unless in any such

case the conditions set forth in the

Commission’s supplemental order dated

November 5, 1997 (HCAR No. 26773)

have been satisfied. Furthermore, any

such Guarantee by GPU would be

included in GPU’s ‘‘aggregate

investment’’ as defined in rule 53(a).

Allegheny Power System, Inc., et al.

(70–7888)

Allegheny Power System, Inc.

(‘‘Allegheny’’), 10435 Downsville Pike,

Hagerstown, Maryland 21740, a

registered holding company, Allegheny

Power Service Corporation, 800 Cabin

Hill Drive, Greensburg, Pennsylvania

15601, Allegheny’s service company

subsidiary, three electric utility

subsidiary companies of Allegheny—(i)

Monongahela Power Company

(‘‘Monongahela’’), 1310 Fairmont

Avenue, Fairmont, West Virginia 26554,

(ii) The Potomac Edison Company

(‘‘Potomac Edison’’), 10435 Downsville

Pike, Hagerstown, Maryland 21740, and

(iii) West Penn Power Company (‘‘West

Penn’’), 800 Cabin Hill Drive,

Greensburg, Pennsylvania 15601, and

Allegheny Generating Company

(‘‘AGC’’), 10435 Downsville Pike,

Hagerstown, Maryland 21740, an

electric utility subsidiary of

Monongahela, Potomac Edison and

West Penn (collectively, ‘‘Applicants’’)

have filed a post-effective amendment to

their application-declaration filed under

sections 6(a), 7, 9(a), 10 and 12(b) of the

Act and rules 43, 45, 53 and 54 under

the Act.

By orders dated January 29, 1992,

February 28, 1992, July 14, 1992,

November 5, 1993, November 28, 1995,

and April 18, 1996 (HCAR Nos. 25462,

25481, 25581, 25919, 26418, and 26506)

(‘‘Prior Orders’’), Applicants were

authorized to engage in certain shortterm financing programs and operation

of the Allegheny System Money Pool

(‘‘Money Pool’’). Applicants now

propose, from December 31, 1997

through December 31, 2002, to continue

certain short-term financing programs

and operation of the Money Pool,

described below.

Allegheny, Monongahela, Potomac

Edison, West Penn, and AGC (the

‘‘Companies’’) request that, from

December 31, 1997 to December 31,

2002, they be authorized to engage in

short-term financing, including notes to

banks (‘‘Notes’’), commercial paper

(‘‘CP’’), and Money Pool borrowings, in

aggregate amounts not to exceed the

following amounts outstanding at any

one time for each of the following

Applicants: Allegheny—$400 million;

Monongahela—$106 million; Potomac

Edison—$130 million; West Penn—

$182 million; AGC—$100 million.

The Companies have established bank

lines of credit ranging from $10 million

to $40 million for an aggregate total of

$295 million available for short-term

borrowings. The Companies have agreed

to pay for each of these lines of credit

an annual cash fee no greater than 10

basis points on all or the balance of the

line of credit.

Each Note payable to a bank will be

dated as of the date of the borrowing

which it evidences, will mature not

more than 270 days after the date of

issuance or renewal thereof, will bear

interest at a mutually agreed upon rate,

provided that the effective rate for any

30-day period, on an annualized basis,

will not exceed prime plus 2 percentage

points and may or may not have

prepayment privileges, as set forth in

the Prior Orders. It is estimated that the

maximum aggregate amount of any

short-term borrowings on behalf of

Applicants at any one time outstanding,

when taken together with any CP then

outstanding and funds borrowed by

such affiliates under the Money Pool,

will not be in excess of $918 million.

The CP will be in the form of

promissory notes and will be of varying

maturities, with no maturity more than

270 days after the date of issue. The CP

will have the other terms and conditions

as authorized by the Prior Orders.

Applicants state that no Notes or CP

will mature after June 30, 2003.

Applicants also propose to continue

the Allegheny Power System Money

Pool from December 31, 1997 to

December 31, 2002. Allegheny is a

participant in the Money Pool only to

the extent it has funds available for

lending through the Money Pool.

Allegheny may not borrow from the

Money Pool. AGC will be allowed to

borrow from, but not invest in, the

Money Pool.

The calculation of interest income

and expense have been revised in the

Money Pool agreement (‘‘Agreement’’).

Interest income and expense are now

calculated using the previous day’s Fed

Funds Effective Interest Rate as quoted

by the Federal Reserve Bank of New

York as long as this rate is at least four

basis points lower than the previous

day’s seven-day commercial paper rate

as quoted by the same source. Whenever

the Fed Funds rate is not at least four

basis points lower than the seven-day

commercial paper rate, the Agreement

provides that the seven-day commercial

paper rate minus four basis points

should be used.

The Agreement has been revised in

the following additional ways. The

interest income resulting from the

external investments will be accrued

daily instead of booked upon receipt. In

addition, interest income will be

allocated to members of the Money Pool

on a basis equal to their pro rata share

of net contributions in the Money Pool

throughout the month, instead of on the

net contributions on the day the

investment was placed. Also, a sentence

was added to the Agreement providing

that the allocation of interest income

will be settled on a cash basis on the last

business day of each month.

Allegheny proposes to use the

proceeds from the proposed borrowings

to: (1) Acquire common stock of

subsidiaries; (2) make capital

contributions to subsidiaries (which, in

turn, may use the proceeds for

investments in exempt wholesale

generators or foreign utility companies);

and (3) purchase shares of Allegheny

common stock in order to fund its

Dividend Reinvestment and Stock

Purchase Plan and Employee Stock

Option and Stock Purchase Plan in lieu

of issuing additional new shares of

common stock pursuant to such plans.

Northeast Utilities, et al. (70–8507)

Northeast Utilities (‘‘NU’’), 174 Brush

Hill Avenue, West Springfield,

Massachusetts 01089, a registered

holding company, and its wholly owned

subsidiaries, Northeast Utilities Service

Company (‘‘Service’’), PO Box 270,

Hartford, Connecticut 06141–0270,

Charter Oak Energy, Inc. (‘‘Charter

Oak’’) and COE Development

Corporation (‘‘COE Development’’), both

located at 107 Seldon Street, Berlin,

Connecticut 06037, (collectively,

‘‘Applicants’’) have filed a post-effective

amendment to their applicationdeclaration under sections 6(a), 7, 9(a)

10, 12(b), 12(c), 13(b), 32 and 33 of the

Act and rules 45, 46, 53, 54, 83, 86,

87(b)(1), 90 and 91 under the Act.

By orders dated December 30, 1994

(HCAR No. 26213), as amended on

August 7, 1995 (HCAR No. 26345),

December 12, 1996 (HCAR No. 26623),

and March 25, 1997 (HCAR No. 26691)

(collectively, ‘‘Prior Orders’’), the
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Notices 61565

2The services that may be rendered will include:

management, administrative, legal, tax and

financing advice, accounting, engineering

consulting, language skills and software

development, provided that, such software

development will not involve proprietary software

owned by Service.

3The investment may take the form of

acquisitions of common stock, capital

contributions, open account advances, and/or

subordinated loans. Open account advances or

subordinated loans will either bear no interest or

bear interest at a rate based on NU’s cost of funds

in effect on the date of issue, but in no case in

excess of the prime rate at a bank designated by NU.

Any investment by NU in the equity securities of

a subsidiary that have a stated par value will be in

an amount equal or greater to that value.

Commission generally authorized,

among other things, Charter Oak and

COE Development to invest in, and

finance the acquisition of, exempt

wholesale generators within the

meaning of section 32 of the Act

(‘‘EWGs’’) and foreign utility companies

within the meaning of section 33 of the

Act (‘‘FUCOs,’’ and together with EWGs,

‘‘Exempt Projects’’), subject to certain

limitations. Specifically, the Prior

Orders authorized: (1) The formation of

intermediate subsidiary companies

(‘‘Intermediate Companies’’) to acquire

an interest in, finance the acquisition

and hold the securities of Exempt

Projects, through the issuance by the

Intermediate Companies of up to $600

million of equity securities and debt

securities to third parties, of which $150

million would be recourse; (2)

Intermediate Companies to make partial

sales of certain projects; (3)

participation in joint ventures with

nonassociate companies; (4) 1% of the

total NU system employees and no more

than 2% of the total of NU Service

Company employees to provide services

to Intermediate Companies, EWGs and

FUCOs; and (5) certain Intermediate

Companies, EWGs and FUCOs to pay

dividends to their parent companies,

from time to time out of capital or

unearned surplus, and for Charter Oak

to use such funds to pay dividends to

NU, to the extent permitted by

applicable corporate law.

The Prior Orders authorized Charter

Oak and COE Development to invest

and hold interests in qualifying

cogeneration and small power

production facilities as defined in the

Public Utility Regulatory Policies Act of

1978 (‘‘QF’’), throughout the United

States; independent power production

facilities that would constitute a part of

NU’s ‘‘integrated public utility system’’

within the meaning of section

2(a)(29)(A) of the Act (‘‘Qualified IPPs’’);

and Exempt Projects. Charter Oak and

COE Development were also authorized

to provide consulting services to the

projects. In addition, the Applicants

have authority to issue guarantees and

assume the liabilities of subsidiary

companies for pre-development

activities, and for both pre-development

and contingent liabilities subsequent to

operation with regard to Exempt

Projects, subject to certain restrictions.

To date, NU has invested

approximately $115 million in Charter

Oak and expects to invest an additional

$5 million through December 31, 1997.

NU has $80 million remaining from its

previous authorization to engage in

power development activities

(‘‘Remaining Amount’’). Charter Oak

and COE Development may invest in QF

and Qualified IPPs after obtaining

Commission approval.

NU has announced its intention to

sell its interest in Charter Oak and the

majority of its subsidiaries to an

unaffiliated third party (‘‘Sale’’). Charter

Oak may sell the voting stock of some

or all of its subsidiaries to third parties

prior to NU’s sale of the voting

securities of Charter Oak. NU may retain

an indirect interest in one or more of

Charter Oak’s Exempt Projects by

transferring the stock of that Exempt

Project or its Intermediate Company

parent to another NU subsidiary.

As a result of the proposed Sale, the

Applicants are requesting authorization

to extend NU’s period of authorization

to invest directly in Charter Oak and

indirectly, in COE Development, the

Remaining Amount, and engage in the

related transactions, pursuant to the

terms and conditions set forth in the

Prior Orders, through December 31,

1998.

The Applicants also request

modification of the Prior Orders to

authorize: (1) Charter Oak and its

subsidiaries to pay dividends to their

parent companies out of capital or

unearned surplus, in compliance with

rule 46 and relevant corporate law, to

ensure that the NU system receives the

full amount of funds available to it in

connection with the sale or transfer of

these entities; (2) Service employees

(which include the current employees of

Charter Oak) to continue to provide

services 2 to Exempt Projects and

Intermediate Companies after they have

been sold to unaffiliated buyers, subject

to the de minimis amount limitation

established under the Prior Orders; and

(3) NU to invest a maximum of $75

million to fund the acquisition by an

NU subsidiary of any Exempt Project or

Intermediate Company currently owned

by Charter Oak.3

Service company employees may

continue to provide services at market

rates to any Exempt Project or

Intermediate Company retained by the

system subject to the terms and

conditions set forth in the Prior Orders.

GPU, Inc. et al. (70–8593)

GPU, Inc. (‘‘GPU’’), of 100 Interpace

Parkway, Parsippany, New Jersey 07054,

a registered holding company, and two

of its nonutility subsidiaries, GPU

International, Inc. and EI Services, Inc.,

both of One Upper Pond Road,

Parsippany, New Jersey 07054, its

operating companies, Jersey Central

Power & Light Company, Metropolitan

Edison Company and Pennsylvania

Electric Company, each of P.O. Box

16001, Reading, Pennsylvania 19640,

and its service company, GPU Service,

Inc., of 100 Interpace Parkway,

Parsippany, New Jersey 07054, have

filed a post-effective amendment under

sections 6(a), 7, 9(a), 10, 12(b), 32 and

33 of the Act and rules 43, 45, 53 and

54 thereunder, to their applicationdeclaration, under sections 6(a), 7, 9(a),

10, 12(b), 32 and 33 of the Act and rules

45, 52, 53 and 54 thereunder, in the

above file.

By orders of the Commission dated

November 5, 1997, January 19, 1996 and

July 6, 1995 (HCAR Nos. 26773, 26457

and 26326, respectively) (‘‘Orders’’),

among other things, GPU is authorized

to acquire and own interests in exempt

wholesale generators (‘‘EWGs’’) and

foreign utility companies (‘‘FUCOs’’ and

EWGs, ‘‘Exempt Entities’’) through GPU

subsidiaries (‘‘Project Parents’’) that are

not Exempt Entities, but are engaged,

directly or indirectly, and exclusively,

in the business of owning and holding

the interests and securities of one or

more Exempt Entities and related

project development activities. GPU is

authorized to make equity investments

in Project Parents in the form of capital

stock or shares, trust certificates,

partnership interests or other equity or

participation interests. GPU is also

authorized, through December 31, 1997,

to make investments in one or more

Project Parents in the form of: Loans

evidenced by promissory notes;

guarantees by GPU of the principal of,

or interest on, any promissory notes or

other evidences of indebtedness or

obligations of any Project Parent or an

undertaking by GPU to contribute

equity; assumption of liabilities of a

Project Parent; and reimbursement

agreements with banks which support

letters of credit delivered as security for

GPU’s obligations to contribute equity to

a Project Parent or otherwise in

connection with the project

development activities of a Project

Parent.

GPU is also authorized to make

investments in Exempt Entities, through

December 31, 1997, in the form of:
61566 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Notices

4Applicants represent that these guarantees will

support only securities issuances authorized by the

Commission or exempt from the requirement of

prior Commission approval under section 6(a) of

the Act.

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

2 17 CFR 240.19b–4.

3The Commission notes that the minimum size

for an opening transaction in a Request for Quotes

is 250 contracts for any FLEX series in which there

is no open interest, and 100 contracts in any

currently opened FLEX series. See Amex Rule

903G(a)(4)(ii) and (iii).

Guarantees of the indebtedness or other

obligations of one or more Exempt

Entities; assumption of liabilities of one

or more Exempt Entities; and guarantees

and letter of credit reimbursement

agreements in support of equity

contribution obligations or otherwise in

connection with project development

activities for one or more Exempt

Entities.

Under the Orders, GPU’s ‘‘aggregate

investment’’ (as defined in rule

53(a)(1)(i)) in Project Parent and Exempt

Entities cannot exceed 100% of GPU’s

‘‘consolidated retained earnings’’ (as

defined in rule 53(a)(1)(ii)).

Applicants now propose to extend the

authorizations under the Orders through

December 31, 2000. In addition,

applicants request authorization for

Project Parent to guarantee or assume

liabilities of the securities issued by, or

other obligations of, their direct or

indirect subsidiaries in an aggregate

amount not to exceed $1 billion,

through December 31, 2000.4

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–30180 Filed 11–17–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

Agency Meeting; Sunshine Act

Meeting

Notice is hereby given, pursuant to

the provisions of the Government in the

Sunshine Act, Pub. L. 94–409, that the

Securities and Exchange Commission

will hold the following meeting during

the week of November 17, 1997.

A closed meeting will be held on

Thursday, November 20, 1997, at 10:00

a.m.

Commissioners, Counsel to the

Commissioners, the Secretary to the

Commission, and recording secretaries

will attend the closed meeting. Certain

staff members who have an interest in

the matters may also be present.

The General Counsel of the

Commission, or his designee, has

certified that, in his opinion, one or

more of the exemptions set forth in 5

U.S.C. 552b(c)(4), (8), (9)(A) and (10)

and 17 CFR 200.402(a)(4), (8), (9)(i) and

(10), permit consideration of the

scheduled matters at the closed meeting.

Commissioner Hunt, as duty officer,

voted to consider the items listed for the

closed meeting in a closed session.

The subject matter of the closed

meeting scheduled for Thursday,

November 20, 1997, at 10:00 a.m., will

be:

Institution and settlement of injunctive

actions.

Institution and settlement of

administrative proceedings of an

enforcement nature.

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact: The Office

of the Secretary at (202) 942–7070.

Dated: November 14, 1997.

Jonathan G. Katz,

Secretary.

[FR Doc. 97–30338 Filed 11–14–97; 11:03 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39315; File No. SR–AMEX–

97–43]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

American Stock Exchange, Inc.

Relating to a Reduction in Minimum

Size for Closing Transactions in FLEX

Equity Options

November 10, 1997.

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

Securities Exchange Act of 1934

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

notice is hereby given that on November

4, 1997, the American Stock Exchange,

Inc. (‘‘Amex’’ or ‘‘Exchange’’) filed with

the Securities and Exchange

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

the proposed rule change as described

in Items I, II and III below, which Items

have been prepared by the Amex. 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 Amex proposes to amend

Exchange Rule 903G to decrease from

100 contracts to 25 contracts the

minimum value size of closing

transactions and quotes for Flex Equity

Options. The text of the proposed rule

change is available at the Office of the

Secretary, the Amex 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

Amex 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 Amex 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 rule

change is to reduce from 100 contracts

to 25 contracts the minimum value size

of closing transactions in and exercises

of FLEX Equity Options, and to make a

comparable reduction in the minimum

value size of FLEX Equity Quotes in

response to a Request for Quotes.

Currently, Rule 903G(a)(4)(iii)

imposes a 100 contract minimum on all

transactions in FLEX Equity Options

unless the transaction is for the entire

remaining position in the account. The

Exchange believes that the current

minimum value size of closing and

exercise transactions in FLEX Equity

Options is too large to accommodate the

needs of certain member firms and their

customers. These firms may purchase

100 or more FLEX Equity Options in an

opening transaction for a single firm

account in which more than one of the

firm’s clients have an interest.3 If one of

these clients wants to redeem its

investment in the account, the firm

likely will want to engage in a closing

or exercise transaction in order to

reduce the account’s position in those

FLEX Equity Options by the number

being redeemed. Thus, if the redeeming

client’s interest is less than 100 FLEX

Equity Options and does not represent

the total remaining position in the

account, Rule 903G(a)(4)(iii), as it stands

presently, prevents the firm from

closing or exercising positions of this

size.