63576 Federal Register / Vol. 62, No. 230 / Monday, December 1, 1997 / Notices

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

2 17 CFR 240.19b–4.

3See Exchange Act Rel. No. 38571 (May 5, 1997),

62 FR 25682 (May 9, 1997) (Commission order

approving a change in the minimum increment to

1⁄16 for securities listed on the American Stock

Exchange); Exchange Act Rel. No. 38678 (May 27,

1997), 62 FR 30363 (June 3, 1997) (Commission

order approving a change in the minimum

increment to 1⁄16 for Nasdaq-listed securities); and

Exchange Act Rel. No. 38897 (Aug. 1, 1997), 62 FR

be unlawful for any depositor or trustee

of a registered unit investment trust

holding the security of a single issuer to

substitute another security for such

security unless the Commission shall

have approved such substitution.’’ The

legislative history of Section 26(b)

provides that the Commission will

approve a substitution if it is consistent

with the protection of investors and the

purposes fairly intended by the policy

and provisions of the Act. The purpose

of Section 26(b) is to protect the

expectation of investors in a unit

investment trust that the unit

investment trust will accumulate the

shares of a particular issuer, and to

prevent unscrutinized substitutions

which might, in effect, force

shareholders dissatisfied with the

substituted security to redeem their

shares, thereby incurring either a loss of

the sales load deducted from initial

proceeds, an additional sales load upon

reinvestment of the redemption

proceeds, or both. Section 26(b) affords

protection to investors by preventing a

depositor or trustee of a unit investment

trust holding shares of one issuer from

substituting for those shares the shares

of another issuer, unless the

Commission approves that substitution.

2. Applicants state that Western Life

has reserved the right to substitute

securities held by the Sub-Accounts of

the Account and that this right is

disclosed in the Contracts and

prospectus for the Contracts.

3. Applicants represent that the

Salomon Portfolio is a suitable and

appropriate investment vehicle for

Contract owners. Applicants assert that

the Salomon Portfolio has a lower

advisory fee and a lower expense ratio

than the BlackRock Portfolio.

Applicants also assert that the Salomon

Portfolio has a similar investment

objective, and to date has experienced

an investment return comparable to the

BlackRock Portfolio. Applicants

anticipate that after the proposed

substitution, the Salomon Portfolio will

provide Contract owners with

comparable or more favorable

investment results than would be the

case if the proposed substitution did not

take place.

4. Applicants represent that the

Salomon Portfolio has similar

investment policies to the BlackRock

Portfolio, with each investing in many

of the same types of fixed income

securities.

5. Applicants generally submit that

the proposed substitution meets the

standards that the Commission and its

staff have applied to substitutions that

have been approved by the Commission.

Conclusion

Applicants submit that, for the

reasons summarized above, the

proposed substitution is consistent with

the protection of investors and the

purposes fairly intended by the policy

and provisions of the 1940 Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 97–31396 Filed 11–28–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39347; File No. SR–Amex–

97–41]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the American Stock Exchange, Inc.

Relating to Trading Differentials for

Options Contracts

November 21, 1997.

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

Securities Exchange Act of 1934

(‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule

19b–4 thereunder,2 notice is hereby

given that on November 3, 1997, the

American Stock Exchange, Inc.

(‘‘Amex’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by the self-regulatory

organization. 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 Exchange proposes to amend

Rules 952 and 951C to adopt a

procedure that would allow the

Exchange to establish the minimum

fractional change (or trading

increments) for options. The text of the

proposed rule change is available at the

Office of the Secretary, 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

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 IV 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

Currently, Exchange Rule 952

provides that the minimum fractional

change for stock options trading at $3.00

or higher shall be one-eighth and for

stock options trading under $3.00 shall

be one-sixteenth. Additionally, Rule

951C provides that the minimum

fractional change for stock index

options shall be one-eighth for stock

index options trading at a premium

greater than $300.00 and stock index

options less than $300.00 shall be one

sixteenth. The Exchange now proposes

to amend Rules 952 and 951C to give

the Board of Governors the authority to

establish the minimum fractional

changes for options. Until such time as

the Board determines to use its

authority to change the minimum

fractional changes the current rules

described above will apply. The

proposal will allow the Exchange to

revise its minimum fractional changes

quickly in response to changes adopted

in the underlying stock markets and at

the other options exchanges. When the

Board of Governors has determined to

change the minimum trading

increments, the Exchange will designate

such a change as a stated policy,

practice, or interpretation with respect

to the administration of Rules 952 and

951C within the meaning of

subparagraph (3)(A) of subsection 19(b)

of the Exchange Act and will file a rule

change for effectiveness upon filing

with the Commission.

As derivatives securities, the prices of

options are determined in reference to

the prices of the underlying securities.

Consequently, the Exchange believes

that where practicable, the Exchange

should have minimum increments

comparable to those applicable to the

securities underlying its options.3
Federal Register / Vol. 62, No. 230 / Monday, December 1, 1997 / Notices 63577

42847 (Aug. 8, 1997) (Commission order approving

a change in the minimum increment to 1⁄16th for

NYSE listed-securities).

4 15 U.S.C. 78f(b).

5 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3By adding the term ‘‘appropriate’’ before the

term ‘‘Floor Procedure Committee’’ in the text of the

rule, the amendment clarified that the decision to

change the increments with respect to a particular

class of options will be made by whichever Floor

Procedure Committee has jurisdiction over trading

in that option class. The amendment also replaced

the original Exhibit 1 that was sent to the

Commission with a revised Exhibit 1. See Letter

from Timothy H. Thompson, CBOE, to Christine

Richardson, Division of Market Regulation,

Commission (Nov. 14, 1997) (‘‘Amendment No. 1’’)

2. Statutory Basis

The Exchange represents that the

proposed rule change is consistent with

Section 6(b)(5) of the Act 4 in that it is

designed to prevent fraudulent and

manipulative acts and practices, to

promote just and equitable principles of

trade, and is not designed to permit

unfair discrimination between

customers, issuers, brokers or dealers.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any inappropriate 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 either

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the 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 the proposed

rule change, or

(B) Institute proceedings to determine

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 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 Exchange. All

submissions should refer to File No.

SR–Amex–97–41 and should be

submitted by December 22, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–31391 Filed 11–28–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39348; File No. SR–CBOE–

97–49]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 Thereto by the

Chicago Board Options Exchange, Inc.

To Change the Minimum Increment for

Bids and Offers in Options

November 21, 1997.

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

Securities Exchange Act of 1934

(‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule

19b–4 thereunder,2 notice is hereby

given that on September 25, 1997, the

Chicago Board Options Exchange, Inc.

(‘‘CBOE’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by the self-regulatory

organization. On November 17, 1997,

the Exchange submitted to the

Commission an amendment to the

proposed rule change.3 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 Exchange proposes to amend

Rule 6.42 by adopting a procedure that

would allow the Exchange to establish

options trading differentials on an

expedited basis. 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

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 IV 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 Exchange is proposing to amend

Exchange Rule 6.42 to give the Board of

Directors the authority to establish the

minimum trading increments for option

contracts. Currently, Rule 6.42 states

that bids and offers shall be expressed

in eighths of $1 unless a different

increment is approved by the Floor

Procedure Committee for an option

contract of a particular series. An

interpretation to the Rule states that

bids and offers for all option series

trading below $3 shall be expressed in

sixteenths of a dollar. Until such time as

the Board determines to make a change

the current standards will apply.

The proposed change would allow the

Exchange to change the trading

increments on an expedited basis and

thus, allow the Exchange to respond

appropriately to changes in the

minimum trading increment in the

markets for the securities underlying

CBOE options or to changes in the

minimum trading increments for one of

the other options exchanges. When the

Board of Directors determines to change

the trading increments, the Exchange

will designate such change as a stated

policy, practice, or interpretation with

respect to the administration of Rule

6.42 within the meaning of

subparagraph (3)(A) of subsection 19(b)

of the Exchange Act and will file a rule

change for effectiveness upon filing

with the Commission.

There has been a movement within

the industry to reduce the minimum

trading and quotation increments