Federal Register / Vol. 65, No. 222 / Thursday, November 16, 2000 / Notices 69355

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

2 17 CFR 240.19b–4.

such steps as may be necessary to

comply with Rules 6e–2 and 6e–3(T), as

amended, and Rule 6e–3, as adopted, to

the extent applicable.

11. The Fund will comply with all

provisions of the Act requiring voting by

shareholders (which, for these purposes,

shall be the persons having a voting

interest in shares of the Insurance

Portfolios), and, in particular, the Fund

will either provide for annual meetings

(except to the extent that the

Commission may interpret Section 16 of

the Act not to require such meetings) or

comply with Section 16(c) of the Act

(although the Fund is not an investment

company of the type described in

Section 16(c) of the Act), as well as with

Section 16(a), and, if applicable, Section

16(b) of the Act. Further, the Fund will

act in accordance with the

Commission’s interpretation of the

requirements of Section 16(a) with

respect to periodic elections of directors

and with whatever rules the

Commission may promulgate with

respect thereto.

12. No less than annually, the

Participating Insurance Companies and/

or the Adviser shall submit to the Board

such reports, materials, or data as the

Board may reasonably request so that

the Board may carry out fully the

obligations imposed upon it by the

conditions contained in these express

conditions. Such reports, materials, and

data shall be submitted more frequently

if deemed appropriate by the Board. The

obligations of the Participating Parties to

provide these reports, materials, and

date to the Board shall be a contractual

obligation of all Participating Parties

under the agreements governing their

participation in the Insurance Portfolios.

13. In the event that a Qualified Plan

shareholder should ever become an

owner of 10% or more of the assets of

an Insurance Portfolio, that Qualified

Plan shareholder will execute a fund

participation agreement with the Fund

including the conditions set forth herein

to the extent applicable. A Qualified

Plan shareholder will execute an

application containing an

acknowledgment of this condition at the

time of its initial purchase of shares of

the Insurance Portfolio.

Conclusion

For the reasons and upon the facts

stated above, Applicants assert that the

requested exemptions are appropriate in

the public interest and consistent with

the protection of investors and the

purposes fairly intended by the policy

and provisions of the Act.

For the Commission by the Division of

Investment Management pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–29352 Filed 11–15–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43530; File No. SR–CHX–

00–28]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Chicago Stock Exchange, Inc., to

Amend its Rule Relating to Automatic

Execution of Agency Limit Orders for

Dual Trading System Issues

November 7, 2000.

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

September 14, 2000, the Chicago Stock

Exchange, Inc. (‘‘CHX’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

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

have been prepared by the Exchange.

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

rule relating to automatic execution of

agency limit orders for Dual Trading

System issues in the event of a tradethrough. Specifically, the Exchange

proposes to amend Article XX, Rule

37(b)(6). The text of the proposed rule

change is below. Proposed additions are

in italics. Proposed deletions are in

brackets.

Guaranteed Execution System And

Midwest Automated Execution System

Rule 37.

* * * * *

(b) Automated Executions. The

Exchange’s Midwest Automated

Execution System (the MAX System)

may be used to provide an automated

delivery and execution facility for

orders that are eligible for execution

under the Exchange’s BEST Rule

(Article XX, Rule 37(a)) and certain

other orders. In the event that an order

that is subject to the BEST Rule is sent

through MAX, it shall be executed in

accordance with the parameters of the

BEST Rule and the following. In the

event that an order that is not subject to

the BEST Rule is sent through MAX, it

shall be executed in accordance with

the parameters of the following:

* * * * *

(6) Execution of Dual Trading System

Issues. In Dual Trading Systems issues

there shall be a fifteen (15) second delay

between the time a market order is

entered into MAX and the time it is

automatically executed. In the event

that the spread between the ITS BEST

Bid and ITS Best Offer in a stock eligible

for automatic execution in MAX, is

equal to the minimum variation at the

time an order is entered into MAX, that

order shall be executed immediately

(i.e., in 0 seconds without the 15 second

delay). All agency market orders and all

limit orders that are marketable when

entered into the MAX System, that are

of a size less than or equal to the autoexecution threshold and are eligible for

execution under the BEST Rule will

automatically be filled at the ITS Best

Bid (for a sell order) or ITS Best Offer

(for a buy order) or better. All other

agency limit orders will be

[automatically] filled at the limit price

when there is a price penetration of the

limit price in the primary market. A

specialist may elect automatic execution

of such agency limit orders on an issueby-issue basis. [However, if the price

differential between the trade-through

price and the last sale is more than 1⁄4

point or 1% of the value of the tradethrough price, whichever is less, a

second print at a trade-through price

which is less than 1⁄4 point (or 1%) away

from the previous trade-through price is

necessary before the MAX system will

automatically execute the agency limit

order.] For purposes of this Rule,

‘‘agency order’’ shall mean an order for

the account for a customer but shall not

include professional orders as defined

in Article XXX, Rule 2, interpretation

and policy .04.

* * * * *

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

Exchange 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

Exchange has prepared summaries, set

forth in Sections A, B, and C below, of

69356 Federal Register / Vol. 65, No. 222 / Thursday, November 16, 2000 / Notices

3 15 U.S.C. 78f(b)(5).

4 17 CFR 200.30–3(a)(12).

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

2Securities Exchange Act Release No. 42961

(June 20, 2000), 65 FR 39456.

3Article IV, Rule 2, Section 9 of MBSCC’s rules,

which governs deposits of letters of credit by

MBSCC’s participants to the participants fund for

margin purposes, provides, among other things, that

MBSCC may approve as the issuer of a letter of

credit any domestic or foreign bank or trust

company meeting the requirements set forth in

procedures adopted by MBSCC.

The rule change also amends Article I, Rule 1 of

MBSCC’s Rules to add a definition of ‘‘affiliate.’’

Affiliate is defined as follows: ‘‘The term an

‘Affiliate’ of, or a person ‘Affiliated’ with, a

specified person, means a person that directly, or

indirectly, through one or more intermediaries,

controls, or is controlled by, or is under common

control with, the person specified. For purposes of

this definition, the term ‘control’ (including the

terms ‘controls,’ ‘controlled by,’ and ‘under

common control with’) means the possession, direct

or indirect, of the power to direct or cause the

direction of the management and policies of a

person, whether through the ownership of voting

securities, by contract, or otherwise.’’

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 proposes to amend

Article XX, Rule 37(b)(6) to allow a

specialist to elect, on an issue by issue

basis, to either manually or

automatically execute limit orders when

a trade-through occurs in the primary

market. The current rule provides that

agency limit orders (that are not

marketable when entered into the

Exchange’s MAX automatic execution

system) will automatically be filled at

the limit price when there is a price

penetration of the limit price in the

primary market for the subject security.

Under the proposed amended rule,

automatic execution of such limit orders

will no longer be mandated. A CHX

specialist may elect to provide for

automatic execution of agency limit

orders at the limit price when there is

a price penetration of the limit price in

the primary market for the subject

securit(ies). The obligation to fill the

order at the limit price remains the same

under either election. The Exchange

believes that this proposed amendment

reasonably anticipates the impact that

the decimal pricing environment will

have on the national market system,

where the number of small orders

executed at multiple price levels may

increase the number of inadvertent trade

throughs that could otherwise lead to

unwarranted automated executions of

large orders in a CHX specialist’s limit

order book, exposing the specialist to

substantially increased liability in the

decimal pricing environment.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder that

are applicable to a national securities

exchange. In particular, the Exchange

believes the proposed rule is consistent

with Section 6(b)(5) of the Act 3 in that

it is designed to promote just and

equitable principles of trade, to remove

impediments and to perfect the

mechanism of a free and open market

and a national market system, and, in

general, to protect investors and the

public interest.

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 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 CHX 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,

including whether the proposed rule

change is consistent with the Act.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 20549–0609. 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. Copies of such filing will also be

available for inspection and copying at

the principal office of the CHX. All

submissions should refer to File No.

SR–CHX–00–28 and should be

submitted by December 7, 2000.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.4

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–29353 Filed 11–15–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43505; File No. SR–

MBSCC–00–01]

Self-Regulatory Organizations; MBS

Clearing Corporation; Order Approving

a Proposed Rule Change Relating to

Letters of Credit

November 1, 2000.

On April 11, 2000, the MBS Clearing

Corporation (‘‘MBSCC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) a proposed rule change

(File No. SR–MBSCC–00–01) pursuant

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

Exchange Act of 1934 (‘‘Act’’).1 On June

13, 2000, MBSCC amended the

proposed rule change. Notice of the

proposal was published in the Federal

Register on June 26, 2000.2 No comment

letters were received. For the reasons

discussed below, the Commission is

approving the proposed rule change.

I. Discussion

The rule change adds subsection (b) to

Article IV, Rule 2, Section 9 of MBSCC’s

rules to prohibit MBSCC from accepting

a letter of credit from a participant that

is issued by that participant or by an

affiliate of that participant.3 This rule

change codifies MBSCC’s historical

practice of requiring that a letter of

credit deposited by a participant to the