Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Notices 65113

2 15 U.S.C. 78f(b).

3 15 U.S.C. 78f(b)(5). 4 17 CFR 200.30–3(a)(12).

1On November 19, 1997, the Exchange submitted

Amendment No. 1 to the filing. See letter from

Adam W. Gurwitz, Vice President and Secretary,

CSE, to Marie Ito, Special Counsel, Division of

Market Regulation, Commission, dated November

19, 1997.

2 ‘‘CTA Network B’’ is commonly known as Tape

B, and is defined in the Consolidated Tape

Association Plan as ‘‘the [Consolidated Tape]

System as utilized to make available ‘CTA Network

B information’ (that is, last sale price information

related to Network B Eligible Securities).’’ The

Consolidated Tape Association Plan further defines

‘‘Network B Eligible Securities’’ to mean securities

‘‘admitted to dealings on the [American Stock

Exchange], [Boston Stock Exchange], [Chicago

Board Options Exchange], [Chicago Stock

Exchange], CSE, [Pacific Exchange], [Philadelphia

Stock Exchange] or on any other exchange, but not

also admitted to dealings on [the New York Stock

Exchange].’’ CTA Plan, at 1–3.

with at least 400 holders or 500,000

shares/warrants with at least 800

holders) are too high when applied to

warrants since warrants are a derivative

security and their price discovery is less

dependent upon such a high level of

liquidity. Nonetheless, the Exchange

recognizes that a minimum level of

liquidity is necessary in an auction

market environment. The Exchange

presently lists a preferred stock issued

by an Amex or NYSE listed company

provided that there are at least 100,000

shares outstanding and believes that this

would also be an appropriate guideline

for the listing of warrants. The Exchange

also recognizes that for a specialist to

continue to provide an auction market

some minimal level of public float is

necessary. Thus, the Amex is proposing

that a warrant issue would become

subject to delisting if its public float fell

below 50,000. This too is the same

guideline as is applied to preferred

stock issues. These changes will provide

the Exchange with greater flexibility in

listing warrant issues and the Amex

believes that the expanded opportunity

for side-by-side trading of stocks and

warrants will prove beneficial to the

shareholders of exchange listed

companies.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

Section 6(b) 2 of the Act in general and

furthers the objectives of Section

6(b)(5) 3 in particular in that it is

designed to promote just and equitable

principles of trade, remove

impediments to a free and open market

and a national market system, and

protect investors and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The proposed rule change will impose

no 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 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 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

Room in Washington, D.C. Copies of

such filing will also be available for

inspection and copying at the principal

office of the Amex. All submissions

should refer to the file number in the

caption above and should be submitted

by December 31, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.4

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–32231 Filed 12–9–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39395; File No. SR–CSE–

97–12]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by The

Cincinnati Stock Exchange, Inc.,

Relating to Transaction Credits

December 3, 1997.

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

Securities Exchange Act of 1934, 15

U.S.C. § 78s(b)(1) (‘‘Act’’), notice is

hereby given that on November 13,

1997, The Cincinnati Stock Exchange,

Incorporated (‘‘CSE’’ 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 CSE.1 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 its

schedule of fees in order to provide a

transaction credit for Tape B

transactions.2

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

CSE 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 CSE has prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

parts 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 implementing a

credit for transactions in all Tape B

securities in order to create an incentive

for members to trade such securities on

the Exchange. The Exchange believes

the credit is a logical next step in its

efforts to remain the low-cost provider

of exchange services in the National

Market System. Members will be

credited on a pro rata basis, based upon

the percentage of tape B transaction

market share captured by the Exchange
65114 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Notices

3The Commission notes that the filing may raise

questions concerning payment for order flow. To

the extent that it does raise such issues, exchange

members should consider any associated disclosure

obligations, namely pursuant to Rules 10b–10 and

11Ac1–3 under the Act, 17 CFR 240.10b–10 and 17

CFR 240.11Ac1–3, respectively. 4 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1).

in a given quarter. The new credit is

delineated in Exhibit A.

2. Statutory Basis

The proposed rule change is

consistent with Section 6(b) of the Act

in general, and furthers the objectives of

Section 6(b)(5) in particular in that it is

designed to promote just and equitable

principles of trade and 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. It is also consistent with

Section 6(b)(4) in that it is designed to

provide for the equitable allocation of

reasonable dues, fees, and other charges

among Exchange members by crediting

members on a pro rata basis.3

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The CSE 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 solicited

in connection with the proposed rule

change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become

effective pursuant to Section 19(b)(3)(A)

of the Act and subparagraph (e)(2) of

Rule 19b–4 thereunder because it

constitutes or changes a due, fee, or

other charge imposed by the Exchange.

At any time within 60 days of the filing

of such proposed rule change, the

Commission may summarily abrogate

such rule change if it appears to the

Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

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

filings will also be available for

inspection and copying at the principal

office of the CSE. All submissions

should refer to File No. SR–CSE–97–12

and should be submitted by December

31, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to the delegated

authority.4

Margaret H. McFarland,

Deputy Secretary.

Exhibit A

Proposed Rule Change

The Cincinnati Stock Exchange, Incorporated

Additions are italicized

Rule 11.10 National Securities Trading

System Fees

A. Trading Fees.

a.—(1) No Change.

(j) Tape ‘‘B’’ Transactions. The CSE will

not impose a transaction fee on Consolidated

Tape ‘‘B’’ securities. In addition, Members

will receive a pro rata transaction credit

based on the following schedule:

Average quarterly exchange

Tape B transaction market

share

Percentage

of Tape B

revenue

credited

1–2.99% .................................... 10

3–4.99% .................................... 25

5–6.99% .................................... 30

7% and greater ......................... 40

(k)—(n) No Change.

B. Membership Fees.

No Change.

[FR Doc. 97–32310 Filed 12–9–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39391; File No. SR–MSRB–

97–8]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Municipal Securities Rulemaking

Board Relating to Interpreatioan of

Rule G–38 on Consultants

December 3, 1997.

On November 13, 1997, the Municipal

Securities Rulemaking Board (‘‘Board’’

or ‘‘MSRB’’) filed with the Securities

and Exchange Commission

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

rule change (File No. SR–MSRB–97–8),

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

Securities Exchange Act of 1934

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

The proposed rule change is described

in Items I, II, and III below, which Items

have been prepared by the board. The

Board has designated this proposal as

constituting a stated policy, practice, or

interpretation with respect to the

meaning, administration, or

enforcement of an existing rule of the

Board under Section 19(b)(3)(A) of the

Act, which renders the proposal

effective upon receipt of this filing by

the Commission. 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 Board is filing herewith a notice

of interpretation concerning Rule G–38

on consultants (hereafter referred to as

‘‘the proposed rule change’’). The

proposed rule change is as follows:

Rule G–38 Questions and Answers

Bank Affiliates and Definition of Payment

Q: A bank and its employees communicate

with an issuer on behalf of an affiliated

dealer to obtain municipal securities

business for that dealer. In return, the bank

and its employees receive certain ‘‘credits’’

from the dealer. These credits, which do not

involve any direct or indirect cash payments

from the dealer to the bank or its employees,

are used for internal purposes to identify the

source of business referrals. Are the credits

considered a ‘‘payment’’ under rule G–38

thereby requiring the dealer to designate the

bank or its employees as consultants and

comply with the requirements of rule G–38?

A: Rule G–38 defines a consultant as any

person used by a dealer to obtain or retain

municipal securities business through direct

or indirect communication by such person

with an issuer on behalf of the dealer where

the communication is undertaken by the