Federal Register / Vol. 62, No. 247 / Wednesday, December 24, 1997 / Notices 67423

3Conversation between Richard Paley, Associate

Counsel, MBSCC, and Jeffrey Mooney, Attorney,

Division of Market Regulation, Commission

(November 6, 1997).

4 15 U.S.C. 78q–1.

5 15 U.S.C. 78s(b)(3)(A)(i).

6 17 CFR 240.19b–4(e)(1). 7 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

‘‘On Send’’ fees of $.25/million current

face from 8:00 a.m. to 1:00 p.m. and

$1.25/million current face from 3:00

p.m. to 5:00 p.m. MBSCC also assesses

a message processing ‘‘On Receive’’ fee

of $.50/million current face 8:00 a.m. to

1:00 p.m. MBSCC does not charge a

message processing On Receive fee from

3:00 p.m. to 5:00.

On occasion, MBSCC may open the

EPN service before 8:00 a.m. or close it

after 5:00 p.m. to accommodate the

processing needs of its participants.3

When this happens, MBSCC does not

charge higher fees for the additional

usage. The proposed rule change

codifies this practice by amending the

EPN Schedule of Charges to reflect that

the ‘‘On Send’’ fee will be $.25/million

from the opening of business to 1:00

p.m. and $1.25/million from 3:00 p.m.

to the close of business. The proposed

rule change also amends fees to reflect

that the EPN ‘‘On Receive’’ fee will be

$.50/million from the opening of

business to 1:00 p.m. and no charges

from 3:00 p.m. to the close of business.

As a result, MBSCC’s schedule of

charges now reflects that message

processing fees will not be altered when

the normal hours of operation for the

EPN service are extended. MBSCC

believes that the proposed rule change

is consistent with the requirements of

Section 17A of the Act 4 and the rules

and regulations thereunder because it

will promote the prompt and accurate

clearance and settlement of securities

transactions.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

MBSCC does not believe that the

proposed rule change will impact or

impose a 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 have been

solicited or received. MBSCC will notify

the Commission of any written

comments received by MBSCC.

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)(i) of the Act 5 and pursuant

to Rule 19b–4(e)(1)6 promulgated

thereunder because the proposal

constitutes a stated policy, practice, or

interpretation with respect to the

meaning, administration, or

enforcement of existing MBSCC rules.

At any time within sixty days of the

filing of such 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, NW.,

Washington, DC 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, NW.,

Washington, DC 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of MBSCC. All submissions

should refer to File No. SR–MBSCC–97–

08 and should be submitted by January

14, 1998.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–33527 Filed 12–23–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39458; File No. SR–NASD–

97–87]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the National

Association of Securities Dealers, Inc.

Relating to Extending the Pilot

Injunctive Relief Rule

December 17, 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 December

8, 1997, the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’) 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

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

NASD Regulatory is herewith filing a

proposed rule change to extend for six

months the pilot injunctive relief rule,

Rule 10335 (formerly Section 47) of the

Code of Arbitration Procedure (‘‘Code’’).

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

NASD Regulation’s injunctive relief

rule, Rule 10335 of the Code, provides

a procedure for obtaining injunctive

relief in arbitration and for expediting

proceedings for injunctive relief in
67424 Federal Register / Vol. 62, No. 247 / Wednesday, December 24, 1997 / Notices

3See Securities Exchange Act Release No. 38069

(December 20, 1996), 61 FR 68806 (December 30,

1996).

4A copy of Notice to Members 97–59 is attached

as Exhibit 2 to the filing.

5The comment letters are attached as Exhibit 3

to the filing. 6 15 U.S.C. 78o–3.

7 15 U.S.C. 78o–3(b)(6).

8 15 U.S.C. 78s(b)(2).

9 17 CFR 200.30–3(a)(12).

intra-industry disputes. Rule 10335 took

effect on January 3, 1996, for a one-year

pilot period. The initial pilot period was

subsequently extended on January 3,

1997 for another year in order to permit

NASD Regulation’s Office of Dispute

Resolution to gain additional experience

with the rule before determining

whether the rule should be made

permanent, the pilot period should be

extended, or the rule should be

permitted to terminate by its terms.3

In September 1997, the NASD

published a Notice to Members (97–59)

requesting comment on the rule.4 At

that time, approximately 433 cases had

been filed in which injunctive relief was

sought pursuant to the rule. The average

number of days between filing and the

arbitrator’s initial injunctive relief order

was approximately 7.5 days. The

majority of cases in which injunctive

relief was sought involved associated

persons leaving one firm for another. In

most but not all cases, the associated

person’s former firm was the petitioner.

The Notice to Members sought comment

on how the injunctive relief and

expedited proceedings work and how

they could be improved, and identified

more than twenty specific questions

based on previous comments received

from users of the rule. The comment

period closed on October 31, 1997. The

NASD has received 19 comment letters

in response to the Notice to Members.5

On the basis of NASD Regulation’s

experience and the comments of the

participants, NASD Regulation believes

that the procedures set forth in Rule

10335 represent a significant

improvement to the procedures for

resolving intra-industry disputes.

However, NASD Regulation also

believes that additional time is

necessary to adequately review the

comments received about the rule and

to evaluate how the Rule could be

improved to meet the needs of the

participants more effectively.

Accordingly, NASD Regulation is

proposing to extend the injunctive relief

Rule as a pilot program for another six

months. During the next six months

NASD Regulation will review the

comments received in response to

Notice to Members 97–59, as well as

comments from arbitrators and NASD

employees who have had experience

with the application of the rule, and

will develop modifications or

interpretations of the Rule in response

thereto.

The NASD requests the Commission

to find good cause, pursuant to Section

19(b)(2) of the Act, for approving the

proposed rule change prior to the

thirtieth day after publication in the

Federal Register. Rule 10335 expires by

its terms on January 3, 1998. As

discussed above, NASD Regulation

believes that Rule 10335 represents a

significant improvement to the

procedures for resolving intra-industry

disputes, and that an extension will

permit more careful consideration of

modifications in response to comments.

Accordingly, NASD Regulation believes

that it is in the interest of users of Rule

10335 for the procedures to remain in

effect without interruption.

2. Statutory Basis

NASD Regulation believes that the

proposed rule change is consistent with

the provisions of Section 15A(b)(6) of

the Act 6 in that extending the

effectiveness of the injunctive relief

procedures will serve the public interest

by enhancing the satisfaction with the

arbitration process afforded by

expeditious resolution of certain

disputes.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD does not believe that the

proposed rule change will impose any

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. 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 NASD. All

submissions should refer to File No.

SR–NASD–97–87 and should be

submitted by January 14, 1998.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission finds that the

proposed rule change to extend the pilot

injunctive relief rule is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange, and particularly with Section

15A(b)(6) of the Act.7 Rule 10335 is

intended to provide a pilot system

within the NASD arbitration forum to

process requests for temporary

injunctive relief. The Rule is intended

principally to facilitate the disposition

of employment disputes and related

disputes concerning whether registered

representatives who move to other firms

may transfer their accounts to their new

firms. The Commission finds it is

appropriate to extend the pilot for six

months. During that time the NASD

Regulation will be able to evaluate the

success of the Rule, to adequately

review the comments received, and to

determine whether to extend the pilot

further or make the Rule permanent.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice of filing thereof

in the Federal Register. The

Commission believes that accelerated

approval of the proposal is appropriate

because members will continue to have

the benefit of injunctive relief in

arbitration without interruption. The

Rule was previously available through

the pilot and the Commission is

extending the pilot for only six months.

The Commission believes, therefore,

that granting accelerated approval of the

proposed rule change is consistent with

Section 15A of the Act.

It is therefore ordered, pursuant to

Section 19(b)(2) 8 that the proposed rule

change (SR–NASD–97–87) is hereby

approved on an accelerated basis for a

six-month pilot basis, through July 3,

1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9
Federal Register / Vol. 62, No. 247 / Wednesday, December 24, 1997 / Notices 67425

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

2 17 CFR 240.19b–4.

3Customized FCOs provide investors with the

ability, within specified limits, to trade FCOs with

customized strike prices, cross-rate FCOs on any

two approved currencies, and FCOs where the U.S.

dollar is the underlying currency. In addition, FCO

participants may express quotes for customized

FCOs as a percentage of the underlying currency,

in addition to quoting in terms of the base currency

per unit of the underlying currency. See Securities

Exchange Act Release No. 34925 (November 1,

1994), 59 FR 55720 (November 8, 1995) (‘‘Release

No. 34–34925’’).

4 In Amendment No. 1, the Phlx clarified the

contract specifications for the U.S. dollar/Mexican

Peso contract, the inverse contract (Mexican Peso/

U.S. dollar), and the Canadian dollar cross-rates, as

described more fully herein. See Letter from

Nandita Yagnik, Phlx, to Margaret Blake, Office of

Market Supervision (‘‘OMS’’), Division of Market

Regulation (‘‘Market Regulation’’), Commission,

dated May 21, 1997.

5See Securities Exchange Act Release No. 38667

(May 22, 1997), 62 FR 29385.

6 In Amendment No. 2, the Phlx proposes to set

the position limit for the Mexican Peso at 100,000

contracts. See Letter from Nandita Yagnik, Phlx, to

Margaret Blake, OMS, Market Regulation,

Commission, dated July 11, 1997 (‘‘Amendment No.

2’’).

7 In Amendment No. 3, the Phlx proposes to

increase the proposed customer margin for FCOs on

the Mexican Peso from 8% to 17%. Further, the

Phlx states that the margin level of 17% will remain

in effect until the Phlx receives Commission

approval for the new customer margining system

which will be filed with the Commission after it is

approved by the Phlx Board of Directors. If

approved by the Commission, margin for options on

the Mexican peso would then be set at levels

established by the new margining system. See Letter

from Nandita Yagnik, Phlx, to John Ayanian, OMS,

Market Regulation, Commission, dated December

10, 1997.

8See Securities Exchange Act Release No. 34925

(November 1, 1994), 59 FR 55720 (November 8,

1994).

9See Securities Exchange Act Release No. 36255

(September 20, 1995), 60 FR 50229 (September 28,

1995).

10Based on an exchange rate of 8.1070 Mexican

peso/U.S. dollars on December 9, 1997, as

published in The Wall Street Journal, this would

correspond to an opening position for a Mexican

peso FCO transaction (i.e., 100 contracts) valued at

approximately $3,083,000.

11For these purposes, ‘‘add-on’’ is the percentage

of the current market value of the currency a

Customized FCO that the holder of a ‘‘short’’

position must pay in addition to the current market

value of each Customized FCO. The 17% add-on

applies to both initial and maintenance margin

positions in Mexican peso options.

12See Amendment No. 3, supra note 7.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–33526 Filed 12–23–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39460; International Series

Release No. 1109; File No. SR–Phlx–97–22]

Self-Regulatory Organizations; Order

Approving a Proposed Rule Change,

as Amended, and Notice of Filing and

Order Granting Accelerated Approval

of Amendment Nos. 2 and 3 to the

Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.,

Relating to the Trading of Customized

Foreign Currency Options on the

Mexican Peso

December 17, 1997.

I. Introduction

On May 2, 1997, the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’ or

‘‘Exchange’’) pursuant to Section

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

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 filed with the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) a proposed rule change

to amend its rules to accommodate the

trading of customized foreign currency

options (‘‘FCOs’’) on the Mexican peso.3

On May 21, 1997, the Phlx submitted to

the Commission Amendment No. 1 to

the proposal.4 Notice of the proposal

was published for comment and

appeared in the Federal Register on

May 30, 1997.5 On July 15, 1997, the

Phlx submitted to the Commission

Amendment No. 2 to the proposal.6 On

December 12, 1997, the Phlx submitted

to the Commission Amendment No. 3 to

the proposal.7 No comment letters were

received on the proposed rule change.

This order approves the Exchange’s

proposal, as amended.

II. Description of the Proposal

The Phlx proposes to amend its rules

to accommodate the trading of

customized foreign currency options on

the Mexican peso. Currently, the Phlx

offers listed FCOs on the British pound,

French franc, Swiss franc, Japanese yen,

Canadian dollar, Australian dollar,

German mark and the European

Currency Unit. Since November 1994,

the Exchange has offered the ability to

trade customized contracts on all of the

above currencies in relation to the U.S.

dollar or in relation to each other.8 In

1995, the Exchange listed for trading

customized options on the Italian Lira

and the Spanish peseta.9 The Exchange

is proposing to list and trade

customized options on the Mexican

peso pursuant to Phlx Rule 1069. The

Exchange is requesting approval to trade

the peso only against the U.S. dollar and

the Canadian dollar. In making this

proposal, the Exchange states that it

wants to capitalize upon Mexico’s

position near the forefront of the world’s

emerging markets, as well as the

increased activity in Mexican equities

and derivative securities based on

Mexican markets.

Because the peso would only trade as

a customized contract, there would be

no continuously quoted series of peso

contracts. Phlx Rule 1069(a)(1) provides

that customized options contracts may

be traded on any approved underlying

foreign currency pursuant to Phlx Rule

1009. Therefore, the Exchange proposes

to amend Phlx Rule 1009 to add the

Mexican peso to the list of approved

underlying foreign currencies. Pursuant

to Phlx Rule 1069(a)(1)(B), users would

be able to trade customized contracts

between the Mexican peso (‘‘MXP’’) and

the U.S. dollar (‘‘USD’’) in U.S. terms

(USD/MXP), or as an inverse contract

(MXP/USD) (i.e., the trading currency is

Mexican pesos and the underlying

currency is U.S. dollars). The contract

size for the customized contract in U.S.

terms would be 250,000 MXP.10 The

premium will be .00001 USD per unit or

2.50 USD for an option contract having

a unit of trading of 250,000 MXP. The

contract size for the inverse would be

50,000 USD. The premium will be .0001

MXP per unit or 5.00 MXP for an option

contract having a unit of trading of

50,000 USD.

No cross rate FCO on the peso will be

offered at this time except for the

Mexican peso against the Canadian

dollar (‘‘CAD’’). The contract size for the

cross-rate (CAD/MXP) would be 250,000

MXP. The premium will be .00001 CAD

per unit or 2.50 CAD for an option

contract having a unit of trading of

250,000 MXP. The contract size for the

cross-rate (MXP/CAD) would be 50,000

CAD. The premium will be .0001 MXP

per unit or 5.00 MXP for an option

contract having a unit of trading of

50,000 CAD.

Consistent with Exchange Rule

1069(j), no quote spread parameters will

apply to these contracts. The Exchange

also proposes to amend Rules 1033 and

1034 to explain how premiums will be

quoted and what the minimum

fractional change will be for USD/MXP.

The Exchange proposes to apply

customer margin ‘‘add-on’’ percentage

of 17% for customized MXP contracts.11

In no event will the Exchange reduce

the margin levels for customized FCOs

involving the peso below the 17% level

without the prior approval of the

Commission pursuant to Section 19(b)

of the Act. Whenever the customer

margin levels for customized FCOs on

the peso are changed, the Exchange will

promptly notify the Exchange’s

membership and the public. The

Exchange represents that this margin

level covers at least 99% of all five day

price movements over the last three

years.12

As with customized FCOs currently

being listed by the Phlx. The Options