Federal Register / Vol. 62, No. 239 / Friday, December 12, 1997 / Notices 65465

5See Amendment No. 1, supra note 3.

6 15 U.S.C. § 78f(b).

7 17 CFR 200.30–3(a)(12).

1 15 U.S.C. § 78s(b)(1).

2 17 CFR 240.19b–4.

3For purposes of Exchange Rule 37, ‘‘agency

order’’ means an order for the account of a customer

but does not include professional orders.

4The ITS BBO is the best bid/offer quote among

the American, Boston, Cincinnati, Chicago, New

York, Pacific, and Philadelphia Stock Exchanges or

the Intermarket Trading System/Computer Assisted

Execution System, as appropriate.

5The NBBO is the best bid or offer disseminated

pursuant to SEC Rule 11Ac1–1.

6 15 U.S.C. § 78f(b).

7The MAX System provides an automated

delivery and execution facility for orders that are

Continued

Index.5 Surveillance procedures

currently used to monitor trading in

each of the Exchange’s other index

options will also be used to monitor

trading options on the Index.

2. Statutory Basis

The Exchange represents that the

proposed rule change is consistent with

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

designed to prevent fraudulent and

manipulative acts and practices and to

perfect the mechanism of a free and

open market.

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–97–33 and should be

submitted by January 22, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Jonathan G. Katz,

Secretary.

[FR Doc. 97–32527 Filed 12–11–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39403; File No. SR–CHX–

97–20]

Self-Regulatory Organizations;

Chicago Stock Exchange,

Incorporated; Order Granting Approval

to Proposed Rule Change Defining the

Scope and Application of the

Guarantee Available Under the

Exchange’s Guaranteed Execution

System

December 4, 1997.

I. Introduction

On September 12, 1997, the Chicago

Stock Exchange, Incorporated (‘‘CHX’’or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission

(‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

clarify the scope and application of the

guarantee available under the

Exchange’s Guaranteed Execution

System (‘‘BEST System’’).

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 39249 (Oct.

16, 1997), 62 FR 55443 (Oct. 24, 1997).

No comments were received on the

proposal. This order approves the

proposed rule change.

II. Description of the Proposal

The provision currently governing the

BEST System, Exchange Rule 37(a) of

Article XX, states that, subject to certain

exceptions, specialists must accept and

guarantee execution of all agency

orders 3 and fill such orders on the basis

of the Intermarket Trading System

(‘‘ITS’’) Best Bid or Best Offer (‘‘BBO’’) 4

for Dual Trading System issues and the

NBBO 5 for Nasdaq/NM issues. The

proposed rule change would amend

Exchange Rule 37(a) to eliminate any

ambiguity concerning the scope and

application of the guarantee available

under the BEST System and would

make it clear that the guarantee is

limited to both the size and price

associated with the ITS BBO or NBBO.

III. Discussion

For the reasons discussed below, the

Commission finds that the proposed

rule change is consistent with the

requirements of the Act and the rules

and regulations thereunder applicable to

a national securities exchange, and, in

particular with the requirements of

Section 6(b).6 In particular, the

commission believes the proposed rule

change 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

remove impediments to 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.

Each bid and offer, including the ITS

BBO and NBBO, contains two

components—price and size. Because

the Exchange’s BEST Rule requires a

specialist to accept and guarantee the

execution of an agency market order on

the basis of the ITS BBO or NBBO, the

Exchange has consistently interpreted

this guarantee as applying to both the

size and price associated with that best

bid or offer. However, the current text

of the BEST Rule does not explicitly

state that the guarantee is qualified in

such a manner. To eliminate any

uncertainty concerning the breadth of

the guarantee, the proposed rule change

adds the words ‘‘size and price

associated with’’ to the BEST Rule to

clarify that the guarantee available

under the BEST System is limited to

both the size and price associated with

the ITS BBO or NBBO.

The proposed rule change is

consistent with the automatic execution

parameters employed by the Exchange’s

Midwest Automated Execution System

(‘‘MAX’’).7 Automatic execution of a
65466 Federal Register / Vol. 62, No. 239 / Friday, December 12, 1997 / Notices

eligible for execution under the Exchange’s BEST

Rule and certain other orders. see Exchange Rule

37(b).

8Exchange Rule 37(a) states that the BEST System

is available to exchange member firms and members

of participating exchanges.

9 15 U.S.C. 78s(b)(2).

10 17 CFR 200.30–3(a)(12).

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

2Securities Exchange Act Release No. 39103

(September 22, 1997), 62 FR 50646.

3According to MBSCC’s rules, the term

‘‘account’’ generally means any account maintained

by MBSCC on behalf of a participant for the

comparison, margining, and clearing trades.

4According to MBSCC’s rules, the term

‘‘participant fund’’ means the fund for which

provision is made in Article IV to which

participants are required to make basic deposits,

minimum market margin differential deposits, and

market margin differential deposits.

5 15 U.S.C. 78q–1(b)(3)(F).

6 17 CFR 200.30–3(a)(12).

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

2The text of the proposed amendments was

submitted with Philadep’s rule filing and is

available for inspection and copying at the

Commission’s Public Reference Room and through

the principal office of Philadep.

3Securities Exchange Act Release No. 38918

(August 11, 1997) (order instituting proceedings

pursuant to Section 19(h) and 21C of the Act,

making findings, and imposing remedial sanctions)

[Administrative Proceeding File No. 3–9360]

(‘‘Order’’).

market order through the MAX System

is qualified by Exchange Rule 37(b)(11),

Article XX, which states that

‘‘notwithstanding anything in this Rule

to the contrary, no market order or limit

order that is marketable when entered

into the MAX System will be

automatically executed if the size

associated with the ITS BBO or NBBO,

as the case may be, is of a size less than

such market order or limit order.’’

The Commission believes that the

proposed rule change will bring about

certainty in the application of the

Exchange’s BEST System guarantee.

Although the Exchange currently

interprets the scope of the BEST System

guarantee as being restricted by the

price and size parameters, the absence

of such criteria in the text of the BEST

Rule may cause confusion among those

entitled to use the BEST System.8

IV. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,9 that the

proposed rule change (SR–CHX–97–20)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Jonathan G. Katz,

Secretary.

[FR Doc. 97–32483 Filed 12–11–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39405; File No. SR–

MBSCC–97–5]

Self-Regulatory Organizations; MBS

Clearing Corporation; Order Approving

a Proposed Rule Change Regarding

Participant Liability for Transactions

Submitted on Behalf of

Nonparticipants

December 5, 1997.

On August 1, 1997, MBS Clearing

Corporation (‘‘MBSCC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) a proposed rule change

(File No. SR–MBSCC–97–5) pursuant to

Section 19(b)(1) of the Securities

Exchange Act of 1934 (‘‘Act’’).1 Notice

of the proposal was published in the

Federal Register on September 26,

1997.2 No comment letters were

received. For the reasons discussed

below, the Commission is approving the

proposed rule change.

I. Description

Pursuant to MBSCC’s current rules,

participants that process any contracts

or other transactions through MBSCC

for other participants are liable as

principal for such contracts or

transactions. The proposed rule change

clarifies that participants also are liable

as principal for any contracts or other

transactions submitted to MBSCC on

behalf of entities that are not

participants (‘‘nonparticipants’’) and

that nonparticipants are not deemed to

possess any rights or benefits of

participants.

As a result, MBSCC will treat all of a

participant’s accounts 3 and obligations

as belonging to such participant

regardless of the identity of the

underlying party. Thus, a participant’s

participant fund 4 deposits will be

available for all of the participant’s

transactions regardless of the source.

II Discussion

Section 17A(b)(3)(F) of the Act 5

requires that the rules of a clearing

agency be designed to assure the

safeguarding of securities and funds

which are in its custody or control or for

which it is responsible. The

Commission believes that the proposed

rule change adds certainty as to the

treatment of the positions submitted on

behalf of nonparticipants upon default

of a participant. Thus, the proposal

should enhance MBSCC’s ability to

protect itself and its participants against

loss. Therefore, the Commission

believes that MBSCC’s proposal is

consistent with its obligations to assure

the safeguarding of securities and funds

which are in its custody or control or for

which it is responsible.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposal is

consistent with the requirements of the

Act and in particular with the

requirements of Section 17A of the Act

and the rules and regulations

thereunder.

It is therefore ordered, pursuant to

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

proposed rule change (File No. SR–

MBSCC–97–5) be and hereby is

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.6

Jonathan G. Katz,

Secretary.

[FR Doc. 97–32485 Filed 12–11–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39408; File No. SR–

Philadep–97–05]

Self-Regulatory Organizations;

Philadelphia Depository Trust

Company; Notice of Filing and Order

Granting Accelerated Approval of

Proposed Rule Change Relating to

Unclaimed Dividends and Distributions

December 5, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

September 25, 1997, Philadelphia

Depository Trust Company (‘‘Philadep’’)

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 primarily by Philadep.

The Commission is publishing this

notice and order to solicit comments on

the proposed rule change from

interested parties and to grant

accelerated approval.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Under the proposed rule change,

Philadep will amend its rules governing

unclaimed dividends and distributions.2

The amendments reflect undertakings

recently agreed to by Philadep in

connection with settling an

administrative proceeding with the

Commission.3