6596 Federal Register / Vol. 62, No. 29 / Wednesday, February 12, 1997 / Notices

3The maximum NDML for any participant is the

amount of PTC’s committed line of credit for

settlement, which is currently $2 billion. 4 15 U.S.C. 78q–1(b)(3)(F). 5 17 CFR 200.30–3(a)(12).

the participant as pledgee or pursuant to

financing arrangements; and various seg

and hold-in-custody accounts associated

with the proprietary and agency

accounts for purposes of segregation.

Each proprietary account, agency

account, and pledgee account has a cash

balance associated with it against which

credits and debits are posted, including

amounts owing with respect to

securities delivered versus payment

intraday to the transfer account

associated with the account. Each cash

balance is either a credit balance or

debit balance depending on whether the

participant is in a net funds credit

position or debit position with respect

to the applicable account to which the

cash balance relates at the time the

determination is made.

PTC restricts the net debit amount

each participant may owe PTC by

imposing a net debit cap by means of a

Net Debit Monitoring Level (‘‘NDML’’).3

A participant’s NDML is compared to

the total of the net cash balances in its

proprietary accounts, agency accounts,

and pledgee accounts. PTC will not

process a transaction that will result in

a net debit balance that exceeds a

participant’s NDML. If a participant is at

its NDML limit, it must take steps to

reduce the net debit balance. The ability

to apply a defaulting participant’s

proprietary, agency, and pledgee credit

balances against its unpaid settlement

obligations is implicit in the NDML

structure to assure that the failure of a

single participant is covered by PTC’s

committed line of credit for settlement.

PTC’s rules however are silent on the

application of pledgee and agency credit

balances in the event a participant does

not make complete payment of all

account obligations at settlement. In

addition, PTC’s ‘‘default rule’’ states

that PTC will set-off any credit balance

in a proprietary account of a defaulting

participant against an unpaid debit

balance in another account. This rule

does not make reference to PTC’s right

to set-off against agency and pledgee

credit balances of a defaulting

participant.

The proposed rule change clarifies

that upon a participant’s default in

payment of a debit balance PTC is

authorized to apply any credit balances

in the participant’s proprietary

accounts, pledgee accounts, and agency

accounts to reduce any unpaid

obligations of the participant. The

proposed rule change also will extend

PTC’s right of set-off in the event of a

participant’s default to include any

agency seg credit balances of the

defaulting participant.

II. Discussion

Section 17A(b)(3)(F) 4 of the Act

requires that the rules of a clearing

agency be designed to assure the

safeguarding of securities and funds in

the custody or control of the clearing

agency or for which it is responsible. As

discussed below, the Commission

believes that PTC’s rule change is

consistent with this obligation under the

Act.

One of the principal risks to PTC and

its participants is that a participant will

not pay its net debit balance and will

cause PTC or its participants to incur

substantial losses. Default by one or

more participants with a large net debit

balance relative to PTC’s committed

lines of credit would strain PTC’s ability

to meet its settlement obligations on the

day of default.

As previously discussed, the

proposed rule change clarifies PTC’s

right to apply any credit balances in the

participant’s proprietary accounts,

pledgee accounts, and agency accounts

to reduce the unpaid obligation of the

participant upon the participant’s

default, modifies the NDML calculation

to include agency seg credit balances,

and authorizes PTC to set-off against

agency seg credit balances in the event

a participant defaults in the payment of

its debit balances.

The Commission believes that

clarifying and extending PTC’s right of

set-off upon the default of a participant

reduces the risks to PTC and its

participants. PTC’s set-off and NDML

procedures are designed to safeguard

PTC and its participants against the risk

of participant default and provide PTC

with sufficient liquidity to complete

settlement in the event of a participant

default. PTC’s NDML also assures PTC

and its participants that one or more

participants will not accumulate an

intraday net debit so large as to

compromise the integrity of PTC’s

system. The proposed rule change

should not only better enable PTC to

fulfill its safeguarding obligations under

the Act but should benefit participants

by including agency seg credit balances

in the NDML calculation which will

allow participants to have the benefit of

these credits in the calculation of their

net obligation to PTC.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposed

rule change 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–

PTC–96–07) be, and hereby is,

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–3478 Filed 2–11–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38247; File No. SR–Phlx–

97–05]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.,

To Reduce the Value of the Super Cap

Index

February 5, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on January 9, 1997,

the Philadelphia Stock Exchange, Inc.

(‘‘Phlx’’ 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 reduce the

value of its Super Cap Index (‘‘Index’’)

option (‘‘HFX’’) to one-half its present

value by doubling the divisor used in

calculating the Index. The Index is

comprised of the top five optionseligible common stocks of U.S.

companies traded on the New York

Stock Exchange, as measured by

capitalization. The other contract

specifications for the HFX will remain

unchanged.

The text of the proposed rule change

is available at the Office of the

Secretary, Phlx 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

Phlx included statements concerning
Federal Register / Vol. 62, No. 29 / Wednesday, February 12, 1997 / Notices 6597

1See Securities Exchange Act Release No. 36369

(October 13, 1995), 60 FR 54274 (October 20, 1995).

2See letter from Theresa A. McCloskey, Vice

President, Regulatory Services, Phlx, to James T.

McHale, Attorney, Office of Market Supervision,

Division of Market Regulation, Commission, dated

January 31, 1997 (‘‘Phlx letter’’).

3See Securities Exchange Act Release No. 37536

(August 7, 1996) (SR–Phlx–96–17). The Options

Clearing Corporation was not able to accept certain

strike prices resulting from a three-for-one split,

because dividing certain strike prices by three

resulted in a strike price with too many decimal

places. This operational limitation does not arise in

a two-for-one split.

4See Phlx Rule 1001A(c).

5After this six month period, the position and

exercise limits will return to the current level of

5,500 contracts.

6See Securities Exchange Act Release Nos. 36577

(December 12, 1995), 60 FR 65705 (December 20,

1995) (reducing the value of the Phlx National

Over-the-Counter Index); and 35999 (July 20, 1995),

60 FR 38387 (July 26, 1995) (reducing the value of

the Phlx Semiconductor Index).

7Specifically, because the Index value would be

less than 500, the applicable strike price interval

would be $5 in the first four months and $25 in the

fifth month. See Rule 1101A(a).

8The Exchange will issue more than one

memorandum, including one naming the effective

date of the split and the specific strike prices for

the new, split option.

9With the Index at 540, a February 540 call on

January 29, 1997 was priced at approximately 211⁄4,

multiplied by 100=$2125. See Phlx letter, supra

note 2.

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 Phlx 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

The Exchange began trading the HFX

in November, 1995.1 The Index value

was created with a value of 350 on its

base date of May 31, 1995 and has risen

to 540 on January 29, 1997. Thus, the

value of the Index has increased 54%

since it was first created.2 Consequently,

the premium for HFX options has also

risen. In May, 1996, the Exchange filed

a proposed rule change to reduce the

value of the Index by one-third;

although this proposal was approved by

the Commission, operational limitations

prevented its implementation.3 Thus,

the Index has never been split.

As a result, the Exchange proposes to

conduct a ‘‘two-for-one split’’ of the

Index, such that the value would be

reduced to one-half of its present value.

In order to account for the split, the

number of HFX contracts will be

doubled, such that for each HFX

contract currently held, the holder

would receive two contracts at the

reduced value, with a strike price onehalf of the original strike price. For

instance, the holder of a HFX 540 call

will receive two HFX 270 calls. In

addition to the strike price being

reduced by one-half, the position and

exercise limits applicable to the HFX

will be doubled, from 5,500 contracts 4

to 11,000 contracts, for a six month

period after the split is effectuated.5

This procedure is similar to the one

employed respecting equity options

where the underlying security is subject

to a two-for-one stock split, as well as

previous reductions in the value of

other Phlx indexes.6 The trading symbol

will remain HFX.

In conjunction with the split, the

Exchange will list strike prices

surrounding the new, lower index

value, pursuant to Phlx Rule 1101A.7

The Exchange will announce the

effective date by way of an Exchange

memorandum to the membership, also

serving as notice of the strike price and

position limit changes.8

The purpose of the proposal is to

attract additional liquidity to the

product in those series that public

customers are most interested in

trading. For example, a near-term, atthe-money call option series currently

trades at approximately $2,125 per

contract.9 The Exchange believes that

certain investors and traders currently

may be impeded from trading at such

levels. With the Index split, that same

option series (once adjusted), with all

else remaining equal, could trade at

approximately $1,062 per contract. The

Phlx believes that a reduced premium

value should encourage additional

investor interest.

The Exchange believes that Super Cap

Index options provide an important

opportunity for investors to hedge and

speculate upon the market risk

associated with the underlying stocks.

By reducing the value of the Index, such

investors will be able to utilize this

trading vehicle, while extending a

smaller outlay of capital. This, in turn,

should attract additional investors and

create a more active and liquid trading

environment.

The Exchange believes that the

proposed rule change is consistent with

Section 6 of the Act in general, and in

particular, with Section 6(b)(5), in that

it is designed to promote just and

equitable principles of trade, as well as

to protect investors and the public

interest, by establishing a lower index

value, which should, in turn, facilitate

trading in Super Cap Index options. The

Exchange believes that reducing the

value of the Index does not raise

manipulation concerns and would not

cause adverse market impact, because

the Exchange will continue to employ

its surveillance procedures and has

proposed an orderly procedure to

achieve the index split.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes the proposed

rule change will impose no

inappropriate burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

The Exchange has neither solicited

nor received written comments on the

proposed rule change.

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

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the Phlx. All submissions

should refer to File No. SR–Phlx–97–05

and should be submitted by [insert date

21 days from date of publication].
6598 Federal Register / Vol. 62, No. 29 / Wednesday, February 12, 1997 / Notices

9 17 CFR 200.30–3(a)(12).

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–3477 Filed 2–11–97; 8:45 am]

BILLING CODE 8010–01–M

SOCIAL SECURITY ADMINISTRATION

Agency Information Collection

Activities: Request for Emergency

Review by the Office of Management

and Budget

The Social Security Administration

publishes a list of information collection

packages that will require clearance by

OMB in compliance with P.L. 104–13

effective October 1, 1995, The

Paperwork Reduction Act of 1995. The

information collection listed below has

been submitted to OMB for emergency

clearance. OMB approval has been

requested by February 7, 1997:

0960–NEW. The information collected

on form SSA–538 will be used by SSA

and the State Disability Determination

Services (DDS) to record medical and

functional findings concerning the

severity of impairments of children

claiming SSA benefits based on

disability. The form will be used for

initial determinations of eligibility, in

appeals and in initial continuing

disability reviews. The respondents are

State DDS offices.

Number of Respondents: 1,066,000.

Frequency of Response: 1.

Average Burden Per Response: 20

minutes.

Estimated Annual Burden: 355,333

hours.

To receive a copy of the form or

clearance packages, call the SSA

Reports Clearance Officer on (410) 965–

4125 or write to her at the address listed

below. Written comments and

recommendations regarding the

information collection(s) should be

directed to the OMB Desk Officer and

SSA Reports Clearance Officer at the

following addresses:

(OMB), Office of Management and

Budget, OIRA, Attn: Laura Oliven,

New Executive Office Building, Room

10230, 725 17th St., NW, Washington,

D.C. 20503

(SSA), Social Security Administration,

DCFAM, Attn: Judith T. Hasche, 6401

Security Blvd, 1–A–21 Operations

Bldg., Baltimore, MD 21235

Dated: February 5, 1997.

Frederick W. Brickenkamp,

Team Leader, FMRCT, Social Security

Administration.

[FR Doc. 97–3343 Filed 2–11–97; 8:45 am]

BILLING CODE 4190–29–P

Supplementary Agreement on Social

Security Between the United States

and Austria; Entry Into Force

The Commissioner of Social Security

gives notice that a supplementary

agreement entered into force on January

1, 1997, which amends the Social

Security agreement between the United

States (U.S.) and Austria that has been

in effect since November 1, 1991. The

supplementary agreement, which was

signed on October 5, 1995, was

concluded pursuant to section 233 of

the Social Security Act.

The supplementary agreement

amends the original agreement to

update and clarify several of its

provisions. The most important of these

amendments introduces a new method

of computing Austrian benefits under

the agreement. The new computation

method replaces a provision in the

original agreement that would have

resulted in reduced Austrian Social

Security benefits for certain individuals

who have divided their careers between

the U.S. and Austria. This reduction

provision was scheduled to take effect

on November 1, 1996 (5 years after the

effective date of the original agreement)

but, as a result of the supplementary

agreement, it will not be implemented.

Individuals who wish to obtain copies

of the supplementary agreement or want

general information about its provisions

may write to the Social Security

Administration, Office of International

Policy, Post Office Box 17741,

Baltimore, Maryland 21235. Individuals

who wish to obtain information about

how the new computation method will

affect their Austrian benefits should

write to the Main Association of

Austrian Social Insurance Agencies

(Hauptverband der Oesterreichischen

Sozialversicherungstraeger),

Kundmanngasse 21, 1030 Vienna,

AUSTRIA.

Dated: February 3, 1997.

Shirley S. Chater,

Commissioner of Social Security.

[FR Doc. 97–3468 Filed 2–11–97; 8:45 am]

BILLING CODE 4890–29–P

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

Application of Jim Air, Inc. for New

Certificate Authority

AGENCY: Department of Transportation.

ACTION: Notice of order to show cause

(Order 97–2–3), Dockets OST–96–1676.

SUMMARY: The Department of

Transportation is directing all interested

persons to show cause why it should

not issue an order (1) finding Jim Air,

Inc., fit, willing, and able, and (2)

awarding it a certificate of public

convenience and necessity to engage in

interstate scheduled air transportation

of persons, property, and mail.

DATES: Persons wishing to file

objections should do so no later than

02–28–97.

ADDRESSES: Objections and answers to

objections should be filed in Dockets

OST–96–1676 and addressed to the

Department of Transportation Dockets

(SVC–120.30, Room PL–401), U.S.

Department of Transportation, 400

Seventh Street, S.W., Washington, D.C.

20590 and should be served upon the

parties listed in Attachment A to the

order.

FOR FURTHER INFORMATION CONTACT: Mrs.

Kathy Lusby Cooperstein, Air Carrier

Fitness Division (X–56, Room 6401),

U.S. Department of Transportation, 400

Seventh Street, S.W., Washington, D.C.

20590, (202) 366–2337.

Dated: February 7, 1997.

Charles A. Hunnicutt,

Assistant Secretary for International and

Aviation Affairs.

[FR Doc. 97–3511 Filed 2–11–97; 8:45 am]

BILLING CODE 4910–62–P

White House Commission on Aviation

Safety and Security; Open Meeting

AGENCY: Office of the Secretary,

Department of Transportation.

ACTION: Notice of meeting.

SUMMARY: The White House

Commission on Aviation Safety and

Security will hold its final meeting to

discuss aviation safety and security

issues. Part of the meeting is open to the

public and part is not. This meeting

supplements the open meeting already

announced for February 12, 1997 in the

Commerce Department Auditorium.

DATES: The meeting will be held on

Tuesday, February 11, 1997, from 9:00

AM to 5:00 PM.

ADDRESSES: The meeting will take place

in the GSA Auditorium, 18th & F

Streets, NW., Washington, DC.