Federal Register / Vol. 62, No. 225 / Friday, November 21, 1997 / Notices 62381

1 15 U.S.C. 78s(b)(1) (1988).

2 17 CFR 240.19b–4.

3On November 10, 1997, the Exchange submitted

an amendment to the filing, clarifying that the

requested extension of the pilot was through

October 31, 1998. See letter from Karen Aluise,

Exchange to Mike Walinskas, Commission, dated

November 10, 1997 (‘‘Amendment No. 1’’).

4See Amendment No. 1, infra note 3.

5The pilot program has not been altered since its

initial approval by the Commission. Phone

conversation between Karen Aluise, Exchange and

Janice Mitnick, Commission on November 10, 1997.

See Release No. 34–37478 (July 25, 1996), 61 FR

40268 (August 1, 1996) (approving SR–BSE–96–8

relating to the Exchange’s MOC pilot program).

6The term ‘‘expiration days’’ refers to both: (1)

the trading day, usually the third Friday of the

month, when some stock index options, stock index

futures, and options on stock index futures expire

or settle concurrently and (2) the trading day on

which end of calendar quarter index options expire.

7See Release No. 34–37478 (July 25, 1996), 61 FR

40268 (August 1, 1996), infra note 5.

December 31, 2003. The short-term

financing could include a revolving

credit agreement, the issuance of

commercial paper, bid notes issued to

individual banks, which are participants

in the revolving credit agreement, bank

borrowing, or medium-term notes

issued under its Indenture dated

November 28, 1995, between Columbia

and marine Midland Bank, Trustee, as

amended.

Columbia and the Utility Subsidiaries

also request authorization for the Utility

Subsidiaries to issue to Columbia, and

for Columbia to acquire from the utility

Subsidiaries, short-term securities

through December 31, 2003.

The authorization Columbia requests

is subject to the general conditions for

financing contained in the Omnibus

Financing Order.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–30630 Filed 11–20–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39327; File No. SR–BSE–

97–7]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Boston Stock

Exchange, Inc. to Extend a Pilot

Program Relating to Market-On-Close

Orders

November 14, 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 November

5, 1997,3 the Boston Stock Exchange,

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

the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change as described in

Items I and II below, which Items have

been prepared by the self-regulatory

organization. The Exchange has

requested accelerated approval for the

proposal, as amended. This order

approves the Exchange’s proposal, as

amended, on an accelerated basis, and

solicits comments from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange is proposing to extend

its pilot program for the handling of

Market-on-Close (‘‘MOC’’) orders

through October 31, 1998.4 The

Exchange’s pilot program procedures

mirror the procedures in place on the

primary markets, including the New

York Stock Exchange, Inc. (‘‘NYSE’’), in

order to ensure equal treatment of MOC

orders.

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

self-regulatory organization 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 III below.

The self-regulatory organization 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 extend the Exchange’s pilot

program 5 for the handling of MOC

orders on expiration days,6 nonexpiration days, and when NYSE Rule

80A is in effect. The pilot program, as

previously approved by the

Commission,7 mirrors the procedures of

the primary markets (including the

NYSE) so that the Exchange does not

become a haven for MOC orders for

pilot stocks that are prohibited on the

primary markets. In this way, all orders

sent to the Exchange will receive equal

treatment to orders sent to the primary

markets. The term ‘‘pilot stocks’’ refers

to the list of stocks designated by the

NYSE as pilot stocks for purposes of its

auxiliary closing procedures.

On non-expiration days, these

procedures include: (a) Providing a 3:50

p.m. deadline for the entry of all MOC

orders in all stocks; (b) prohibiting the

cancellation or reduction of any MOC

order in any stock after 3:50 p.m.; (c)

publishing order imbalances of 50,000

shares or more as soon as practicable

after 3:50 p.m. in the pilot stocks, stocks

being added to or dropped from an

index, and in any other stock with the

approval of a floor official; and (d)

limiting the entry of MOC orders after

3:50 p.m. to offsetting published

imbalances. With respect to item (b)

above, the Exchange will permit

cancellations of MOC orders after 3:50

p.m. in those instances where legitimate

error has been made.

If an MOC index arbitrage order to

buy (sell), to establish or increase a

position (to eliminate or reduce a

position), is entered and NYSE Rule

80A subsequently goes into effect

because of significant upward

(downward) market movement, the

MOC order must be canceled regardless

of the time NYSE Rule 80A goes into

effect. If NYSE Rule 80A goes into effect

prior to 3:50 p.m., the MOC order may

be re-entered with the instruction ‘‘buy

minus’’ (‘‘sell plus’’). If NYSE Rule 80A

goes into effect after 3:50 p.m. and there

is a published imbalance in the subject

stock, the MOC order may be re-entered

with the instruction ‘‘buy minus’’ (‘‘sell

plus’’) to offset the imbalance.

On expiration days, the pilot

procedures include: (a) Providing a 3:40

p.m. deadline for the entry of all MOC

orders in all stocks; (b) prohibiting the

cancellation or reduction of any MOC

order in any stock after 3:40 p.m.; (c)

publishing order imbalances of 50,000

shares or more as soon as practicable

after 3:40 p.m. in the pilot stocks, stocks

being added to or dropped from an

index and, upon the request of a

specialist, any other stock with the

approval of a floor official; and (d)

limiting the entry of MOC orders after

3:40 p.m. to offsetting published

imbalances. With respect to item (b)

above, the Exchange will permit

cancellations of MOC orders after 3:40

p.m. in those instances where a

legitimate error has been made.

If an MOC index arbitrage order to

buy (sell), to establish or increase a

position (to eliminate or reduce a

position), is entered and NYSE Rule

80A subsequently goes into effect

because of significant upward

(downward) market movement, the

MOC order must be canceled regardless
62382 Federal Register / Vol. 62, No. 225 / Friday, November 21, 1997 / Notices

8 In approving this proposal, the Commission

notes that it has considered the proposal’s impact

on efficiency, competion, and capital formation. 15

U.S.C. 78c(f).

9See Release No. 34–37894 (October 30, 1996), 61

FR 56987 (November 5, 1996).

10 17 CFR 200.30–3(a)(12).

of the time NYSE Rule 80A goes into

effect. If NYSE Rule 80A goes into effect

prior to 3:40 p.m., the MOC order may

be re-entered with the instruction ‘‘buy

minus’’ (‘‘sell plus’’). If NYSE Rule 80A

goes into effect after 3:40 p.m. and there

is a published imbalance in the subject

stock, the MOC order may be re-entered

with the instruction ‘‘buy minus’’ (‘‘sell

plus’’) to offset the imbalance.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

and furthers the objectives of Section

6(b)(5), in particular in that the rule is

designed to prevent fraudulent and

manipulative acts and practices, 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 in general, to protect

investors and the public interest, and is

not designed to permit unfair

discrimination between customers,

issuers, brokers, and dealers.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange states that it does not

believe that the proposed rule will

impose any burden on competition that

is not necessary or appropriate in

furtherance of the purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

The Exchange states that no written

comments were solicited or received

with respect to the proposed rule

change.

III. Solicitation of Comments

Interested person 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

changes that are filed with the

Commission, and all written

communications relating to the

proposed rule changes 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 filings also will be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to File No.

SR–BSE–97–7, and should be submitted

by December 12, 1997.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission finds that the

proposed rule change is consistent with

the Act and the rule and regulations

thereunder applicable to a national

securities exchange, and, in particular,

the requirements of Section 6(b)(5)

thereunder.8 Specifically, the

Commission believes that the proposal

is consistent with the Section 6(b)(5)

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 interest.

In recent years, the exchanges

instituted certain safeguards (including

the creation of auxiliary closing

procedures on expiration days) to

minimize excess market volatility that

may arise from the liquidation of stock

positions related to trading strategies

involving index derivative products.

The Commission believes that the MOC

order handling requirements instituted

by the Exchange, as well as those

instituted by other exchanges, work

relatively well and may result in more

orderly markets at the close on

expiration days. In addition, under

current competitive market conditions,

a regional exchange which trades NYSElisted stocks but does not have

comparable auxiliary closing procedures

could be utilized by market participants

to enter MOC orders that would be

prohibited on the NYSE. Although the

Commission has no reason to believe

that the Exchange has or will become a

significant alternative market to enter

otherwise prohibited MOC orders, the

Commission agrees with the Exchange

that if this did occur, it could have a

negative impact on the fairness and

orderliness of the national market

system. Accordingly, the Commission

finds that it is reasonable for the

Exchange to extend the pilot program

for MOC orders, and thereby maintain

procedures for MOC orders received by

the Exchange that should result in

treatment consistent with that of MOC

orders on the primary exchanges.

Further, the Commission believes that

the renewal of the pilot program does

not present any new or novel regulatory

issues not previously considered by the

Commission when initially approving

the pilot program for MOC orders.

The Commission notes that the NYSE

received permanent approval for its

MOC procedures in October 1996.9 As

stated above, the Exchange’s procedures

for MOC orders are based on those of

the NYSE. The Division of Market

Regulation staff requests that prior to

submitting another request for extension

of the pilot program, the Exchange

consider seeking permanent approval of

its MOC procedures.

The Commission finds good cause to

approve the proposal prior to the

thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register. By accelerating the

effectiveness of the Exchange’s pilot

program, the Commission will enable

the Exchange to continue the pilot

program with as little disruption as

possible. In addition, the Commission

believes that the extension of the pilot

does not present any new or novel

regulatory issues as the Exchange’s

proposal merely reflects the pilot as

previously approved by the

Commission. Accordingly, Commission

believes that it is consistent with

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

to approve the proposed rule change on

an accelerated basis.

V. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the act, that the

proposed rule change (file No. SR–BSE–

97–7) is hereby approved on an

accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–30627 Filed 11–20–97; 8:45 am]

BILLING CODE 8010–01–M