9470 Federal Register / Vol. 62, No. 41 / Monday, March 3, 1997 / Notices

1See letters from Karen A. Aluise, Assistant Vice

President, BSE, to Michael Walinskas, Senior

Special Counsel, Market Regulation, Commission,

dated February 10, 1997 (‘‘Amendment No. 1’’) and

February 13, 1997 (‘‘Amendment No. 2’’)

respectively.

2Proposed paragraph (a) states that specialists

will guarantee execution on all agency market and

Investors Associates, Inc., a New Jersey

broker-dealer; and

(2) The accuracy of TFCH’s February

12, 1997 pubic announcement that it

‘‘welcomes’’ the Commission’s inquiry,

offers ‘‘full cooperation’’ and states that

company officials would be able to

provide the Commission with the

information it requires within nine

days, when Joe Davis, who is TFCH’s

president, Loretta Davis, who was its

founder and formerly its president, and

Barclay Davis, who formerly was its

secretary and director but who

continues to act on behalf of TFCH,

have all stated through counsel that they

refuse to testify in the investigation in

reliance on their Fifth Amendment

privileges against self-incrimination.

The Commission is of the opinion that

the public interest and the protection of

investors require a suspension of trading

in the securities of the above-listed

company.

Therefore, it is ordered pursuant to

Section 12(k) of the Securities Exchange

Act of 1934, that trading in the above

listed company is suspended for the

period from 9:00 a.m. EST, February 27,

1997, through 11:59 p.m. EST, March

12, 1997.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–5279 Filed 2–27–97; 1:41 pm]

BILLING CODE 8010–01–M

[Release No. 34–38331; File No. SR–BSE–

96–10]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Boston Stock Exchange, Inc.

Relating to Amending the Execution

Guarantee Rule and BEACON Rule 5

February 24, 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 December 1, 1996,

the Boston Stock Exchange,

Incorporated (‘‘BSE’’ 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 selfregulatory organization. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons. The

Exchange also filed Amendment Nos. 1

and 2 on February 14 and 19, 1997,

respectively, the substance of which is

incorporated into this notice.1

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

BSE proposes to amend Chapter II,

Section 33, the Execution Guarantee

Rule (‘‘Execution Guarantee Rule’’), and

Chapter XXXIII, Section 5, the Boston

Exchange Automated Communication

Order-Routing Network (‘‘BEACON

System’’) Rule (‘‘BEACON Rule 5’’).

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 IV below.

The self-regulatory organization has

prepared summaries, set forth in Section

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

The main purpose of the proposed

rule change is to amend certain

provisions of the Execution Guarantee

Rule and BEACON Rule 5. The

Execution Guarantee Rule was adopted

to provide customers with primary

market price protection on small size

orders. The Exchange states that the

guarantee was intended to apply to

orders ranging in size from 100 shares

up to and including 1,299 shares,

regardless of the displayed bid or offer

size at the time. Orders over 1,299

shares were not intended to receive a

partial execution of 1,299 shares, but

were to be handled based on prints in

the primary market. The proposed rule

change is designed to clarify that BSE

specialists must guarantee execution on

all agency market and marketable limit

orders from 100 up to and including

1,299 shares. The current language of

the Execution Guarantee Rule indicates

that this guarantee applies ‘‘regardless

of the size of the order.’’ The Exchange

is proposing to delete this phrase. The

Exchange states that in drafting the

original text of the rule, the phrase

‘‘regardless of the size of the order’’ was

incorrectly stated.

The proposed rule change also

eliminates the 2,500 execution

guarantee for most actively traded

stocks (‘‘MATS’’) from the Execution

Guarantee Rule. The Exchange believes

that market conditions should dictate

the appropriate execution size for a

customer order in a given trading

situation. The Exchange believes that

because market conditions do not

always provide a 2,500 share liquidity

level in the MATS issues, it is

appropriate to allow natural liquidity

level in the MATS issues, it is

appropriate to allow natural liquidity

levels to establish price and size

parameters on larger orders. In addition,

the Exchange notes that it has never

received a customer complaint

regarding the failure of a specialist to

honor the 2,500 share MATS guarantee.

The Exchange believes that this is most

likely because customers do not expect

or receive an execution where market

conditions do not so warrant and that

because of this the elimination of the

MATS requirement from the execution

guarantee will have no impact.

The proposed rule change moves rule

text covering the obligation for filling

limit orders from the Interpretations and

Policies section to the body of the

Execution Guarantee Rule and labels it

as paragraph (c). The proposed rule

change also renumbers and clarifies the

remaining Interpretations and Policies

to the Execution Guarantee Rule. The

proposed rule change clarifies proposed

Interpretation and Policy .03 of the

Execution Guarantee Rule regarding

simultaneous orders to limit a

specialist’s obligation to the

accumulated displayed national best bid

and offer (‘‘NBBO’’) size, where

multiple orders are received in a short

period of time, particularly in illiquid

stocks. The Exchange notes that the

original language was adopted prior to

electronic order routing and did not

anticipate the high volume of today’s

electronic trading environment.

The proposed rule change limits the

scope of proposed Interpretation and

Policy .04, which says that size will be

governed by the size displayed on the

Consolidated Quote System (‘‘CQS’’), to

limit order executions. The Exchange

states that proposed Interpretation and

Policy .04 is restricted to limit orders

because market orders are already

addressed in proposed paragraphs (a)

and (b) of the Execution Guarantee

Rule.2 The Exchange proposes two
Federal Register / Vol. 62, No. 41 / Monday, March 3, 1997 / Notices 9471

marketable limit orders from 100 up to and

including 1,299 shares. Proposed paragraph (b)

states that, subject to requirements of the short sale

rule, all agency market orders must be filled on the

basis of the CQS best bid or better on a sell order,

or the CQS best offer or better on a buy order.

3The Commission notes that the proposed

Interpretation and Policy .06 also amends the rule

to state that the specialist can now seek relief from

the remainder of the entire Execution Guarantee

Rule, rather than from just the Interpretations and

Policies. 4 15 U.S.C. 78f(b)(5).

additional changes to the Execution

Guarantee Rule. Proposed Interpretation

and Policy .05, regarding adjustments in

execution price, has been clarified to

include all situations where a market

center is experiencing system problems

that result in invalid quotations in CQS,

not just those quotations that can be

demonstrated to be in error. Finally,

under proposed Interpretation and

Policy .06, specialists can obtain relief

from the requirements of the remainder

of the Execution Guarantee Rule 3 upon

approval from three Floor Officials,

rather than the current standard of

requiring the approval of two floor

members of the Board of Governors or

the Market Performance committee. The

Exchange notes that Floor Officials

include floor members of the Board of

Governors. The Exchange states that this

change will provide a larger field from

which to seek such relief, particularly

where absence from the floor and

conflict of interest are issues.

BEACON Rule 5 was adopted to

specifically address the function of the

BEACON System on the trading floor.

The automatic execution function in

BEACON is designed to aid specialists

in the execution of customer orders. The

system performs a price check and will

automatically execute certain qualifying

orders without the intervention of a

specialist, except for potential price

improvement. The 1,299 share

automatic execution parameter in the

current BEACON Rule 5 was selected

based on the size of the execution

guarantee contained in the Execution

Guarantee Rule, although higher (2,500

shares) and lower (599 shares)

parameters are available in certain

situations.

Current BEACON Rule 5 contains

three automatic execution parameters

(2,500; 1,299; 599), referred to as Tiers

I, II, and III. However, the Exchange

states that practice has been to only

utilize the 1,299 automatic execution

parameter of BEACON Rule 5 for

automatic execution and the Execution

Guarantee Rule to address price and size

of execution, manual or automatic. As a

result, the proposed rule change to

paragraph (a) of BEACON Rule 5

eliminates all references to Tier I, II and

III stocks, thus subjecting all the stocks

covered by BEACON Rule 5 to the 1,299

automatic execution parameter unless

they are specifically exempted under

paragraph (b). The proposed rule change

to paragraph (b) of BEACON Rule 5 still

allows the specialist to request a 599

automatic execution parameter under

certain circumstances and takes out all

references to Tier I and Tier II stocks. In

addition, paragraph (a) still allows

specialists to provide automatic

execution parameters larger than the

1,299 minimum requirement.

The Exchange has also proposed

certain technical changes to BEACON

Rule 5. The automatic execution

parameters will be published in the

BEACON System, but not in hard copy

anymore. All references to the word

‘‘guarantee’’ will be replaced with

‘‘automatic execution parameters’’ or

‘‘parameters’’ because hindsight has

shown that the use of the word

‘‘guarantee’’ in regard to the required

automatic execution parameter in

BEACON Rule 5 has been confusing.

The proposed rule change also amends

paragraphs (c) and (d) of BEACON Rule

5 to eliminate all references to the

‘‘BEACON quotation’’, which is more

closely associated with the specialist’s

displayed quotation, and replaces them

with ‘‘BEACON reference price.’’

The proposed rule change, in

clarifying current paragraph (c) of

BEACON Rule 5, changes the BEACON

reference price from the primary market

best bid or offer price to the

consolidated best bid or offer (‘‘BBO’’)

price. All market and marketable limit

orders will be filled in their entirety, up

to the current BEACON Rule 5

automatic execution parameter,

regardless of the displayed size of the

consolidated BBO. In addition, the

proposed rule change to paragraph (c) of

BEACON Rule 5 eliminates the last

sentence of paragraph (c), which refers

to bids and offers superior in price to

the BEACON reference price, to reflect

the incorporation of these quotations

into the BEACON reference price, by

changing the reference price from the

primary market best bid or offer to the

consolidated market best bid or offer.

The Exchange is amending paragraph

(d) of BEACON Rule 5 to give specialists

discretion to stop orders, which better

expresses the intent of the rule. The

proposed rule change accomplishes this

amendment by replacing ‘‘will be

‘stopped’ ’’ with ‘‘should be ‘stopped’.’’

The proposed rule change eliminates

both paragraphs (e) (requiring that

‘‘stopped’’ order must be executed by

the close of trading) and (f) (stating that

principal orders will not be subject to

the execution guarantee as defined in

this section) of BEACON Rule 5 because

the requirements are addressed in

separate rules. BEACON Rule 1(a) states

that only agency orders will be eligible

for automatic execution in the BEACON

System.

The Exchange states that this rule

change will have no impact on the

members or customers of the Exchange,

other than to eliminate confusing,

conflicting and unnecessary provisions

of the Execution Guarantee Rule and

BEACON Rule 5. The BEACON System

automatic execution parameters and the

Execution guarantee Rule execution

guarantee will remain unchanged.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

Section 6(b)(5) of the Act 4 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 national market system, and in

general, to protect investors and the

public interest, and is not designed to

permit unfair discrimination between

customers, issuers, brokers, or dealers.

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
9472 Federal Register / Vol. 62, No. 41 / Monday, March 3, 1997 / Notices

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

2The Commission has modified parts of these

statements.

3There are no other charges for bank fees,.

comparison, federal pass through or money

movements.

4 15 U.S.C. 78q–1(b)(3)(D).

5 15 U.S.C. 78q–1(b)(3)(A).

6 17 CFR 240.19b–4(e)(2).

7 17 CFR 200.30–3 (a)(12).

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 my 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–BSE–96–10 and should be

submitted by March 24, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–5083 Filed 2–28–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38334; File No. SR–DCC–

97–01]

Self-Regulatory Organizations; Delta

Clearing Corp.; Notice of Filing and

Immediate Effectiveness of a Proposed

Rule Change Relating to the

Amendment of Fees Charges for

Repurchase Agreements

February 24, 1997.

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

Securities Exchange Act of 1934

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

February 5, 1997, Delta Clearing Corp.

(‘‘DCC’’) 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 primarily by DCC.

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 purpose of the proposed rule

change is to amend DCC’s fee schedule

for trades of repurchase and reverse

repurchase agreement (‘‘repos’’)

involving U.S. Government Treasury

Securities cleared through DCC.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

DCC included statements concerning

the purpose of and statutory basis for

the proposed rule change. The text of

these statements may be examined at

the places specified in Item IV below.

DCC has prepared summaries, set forth

in sections (A), (B), and (C) below, of the

most significant aspects of such

statements.2

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The purpose of the proposed rule

change is to amend DCC’s fee schedule

for the clearance of repos on U.S.

Treasury Securities. The new fees will

be the greater of either:

A minimum charge per ticket of $9.00

per round turn 3; or

Term of the trade Fee

Overnight up to fourteen days in length.One-half (.50) basis

point per million per

day on all trades.

Fifteen to thirty-five

days in length.

One-third (.33) basis

point per million per

day on all trades.

Greater than thirtyfive days in length.One-fifth (.20) basis

point per million per

day on all trades.

The proposed rule change complies

with Section 17A(b)(3)(D) of the Act 4

which requires that the rules of a

registered clearing agency provide for

equitable allocation of reasonable dues,

fees, and other charges for services

which it provides to its participants.

DCC believes the proposed rule change

will result in increased utilization of its

clearing services thereby resulting in

more securities transactions being

cleared and settled through a registered

clearing agency environment.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

DCC does not believe that the

proposed rule change will impose any

burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Comments were neither solicited nor

received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the foregoing rule change

establishes or changes a due, fee, or

other charge imposed by DCC, it has

become effective pursuant to Section

19(b)(3)(A)(ii) of the Act 5 and Rule 19b–

4(e)(2) thereunder.6 At any time within

sixty days of the filing of the 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

filing will also be available for

inspection and copying at DCC. All

submissions should refer to the File No.

SR–DCC–97–01 and should be

submitted by March 24, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–5082 Filed 2–28–97; 8:45 am]

BILLING CODE 8010–01–M