Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Notices 1479

1The Arch Tax-Exempt Money Market Portfolio

Class B was liquidated through redemeption of all

publicly held Class B shares of beneficial interest

during the period June 30 through July 13, 1989.

2The Arch Kansas Tax-Exempt Bond Portfolio

never commenced operations and there was no

public offering of its shares.

3Rule 17a–8 provides an exemption from section

17(a) of the Act for certain reorganizations among

registered investment companies that may be

affiliated persons, or affiliated persons of an

affiliated person, solely by reason of having a

common investment adviser, common directors,

and/or common officers.

the adviser. Investors need this

information to determine whether to

retain or continue to employ the

investment adviser.

There are 22,500 investment advisers

subject to this rule. It is estimated that

the burden resulting from the rule is

551,250 total annual hours.

Rule 6a–3 requires a registered or

exempted exchange to file with the

Commission (i) notification of any

action that renders its application or

annual amendment inaccurate, (ii)

material it issues or makes available to

members, and (iii) a monthly report

concerning the activities on the

exchange.

There are 8 registered exchanges and

1 exempted exchange that must comply

with Rule 6a–3. Each of these 9

respondents file supplemental

information under Rule 6a–3

approximately 25 times each year, for a

total of 225 annual responses. Each

response requires no more than one-half

hour. Thus, the total compliance burden

for registered and exempted exchanges

per year is 112.5 hours.

General comments regarding the

estimated burden hours should be

directed to the Desk Officer for the

Securities and Exchange Commission at

the address below. Any comments

concerning the accuracy of the

estimated average burden hours for

compliance with Commission rules and

forms should be directed to Michael E.

Bartell, Associate Executive Director,

Office of Information Technology,

Securities and Exchange Commission,

450 Fifth Street, N.W., Washington, D.C.

20549 and Desk Officer for the

Securities and Exchange Commission,

Office of Information and Regulatory

Affairs, Office of Management and

Budget, Room 3208, New Executive

Office Building, Washington, D.C.

20503.

Dated: December 30, 1996.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–617 Filed 1–9–97; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Release No.

22440; 811–4638]

The Arch Tax-Exempt Trust

January 3, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

deregistration under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: The Arch Tax-Exempt Trust.

RELEVANT ACT SECTION: Order requested

under section 8(f) of the Act.

SUMMARY OF APPLICATION: Applicant

requests an order declaring that if has

ceased to be an investment company.

FILLING DATE: The application was filed

on September 18, 1996 and amended on

December 27, 1996.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicant with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

January 28, 1997, and should be

accompanied by proof of service on the

applicant, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state that

nature of the writer’s interest, the reason

for the request, and the issues contested.

Persons may request notification of a

hearing by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, N.W., Washington, D.C. 20549.

Applicant, 3435 Stelzer Road,

Columbus, Ohio 43219–3035.

FOR FURTHER INFORMATION CONTACT:

Kathleen L. Knisely, Staff Attorney, at

(202) 942–0517, or Alison E. Baur,

Branch Chief, at (202) 942–0564

(Division of Investment Management,

Office of Investment Company

Regulation).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee from the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Applicant is an open-end nondiversified management investment

company organized as a Massachusetts

business trust and consisting of four

portfolios: Arch Tax-Exempt Money

Market Portfolio, Arch Tax-Exempt

Money Market Portfolio Class B,1 Arch

Missouri Tax-Exempt Bond Portfolio,

and Arch Kansas Tax-Exempt Bond

Portfolio.2

2. On April 16, 1986, applicant filed

a Notification of Registration on Form

N–8A pursuant to section 8(a) under the

Act and a registration statement on

Form N–1A under the Securities Act of

1933. The registration statement became

effective on June 30, 1986 and the initial

public offerings commenced thereafter.

3. On June 27, 1995, applicant’s board

of directors approved an Agreement and

Plan of Reorganization (the ‘‘Plan’’)

whereby applicant would exchange its

net assets shares of The Arch Fund, Inc.,

a Maryland corporation registered under

the Act as an open-end management

investment company, in exchange for

common shares of The Arch Fund, Inc.

Pursuant to rule 17a–8 under the Act,3

applicant’s board of directors

determined that the proposed

reorganization was in the best interest of

applicant and that the interests of the

existing shareholders would not be

diluted as a result of the proposed

reorganization.

4. In approving the Plan, the directors

considered the impact of the proposed

reorganization on applicant’s

shareholders, including the elimination

of duplicative professional and other

costs, the potential for increased

operational and administrative

efficiencies, and the reduction of certain

fixed costs on a per share basis.

5. On August 21, 1995, applicant filed

definitive proxy materials with the SEC

that were mailed to its shareholders on

August 22, 1995. Applicant’s

shareholders approved the Plan at a

special meeting held on September 26,

1995.

6. Pursuant to the Plan, on October 2,

1995, applicant transferred all of the

assets and liabilities of The Tax-Exempt

Money Market and The Missouri TaxExempt Bond Portfolio (the ‘‘Transferor

Portfolios’’) to ‘‘shell’’ portfolios of The

Arch Fund, Inc. (‘‘New Portfolios’’) in

exchange for shares of the New

Portfolios. Each shareholder of the

Transferor Portfolios received a like

number and type of full and fractional

shares of the corresponding New

Portfolio having an aggregate net asset

value equal to the aggregate net asset

value of such shareholder’s interest in

the respective Transferor Portfolio

immediately prior to the reorganization.

No brokerage commissions were paid in

connection with the transfer.

7. Expenses incurred in connection

with the reorganization totaled

$38,569.88 and included legal expenses,

filing fees, and proxy solicitation and

shareholder meeting expenses. These

expenses were assumed by the

corresponding portfolios of The Arch
1480 Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Notices

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

2 17 CFR 240.19b–4.

3The term ‘‘Designated Dealer’’ is defined by the

Exchange as a member who maintains a minimum

net capital amount and who has been approved by

the CSE’s Securities Committee to perform market

making functions by entering bids and offers into

the Exchange’s trading systems. See CSE Rule

11.9(a)(3). During Exchange trading hours, a

Designated Dealer is required to provide continuous

bids and offers for round lots of issues for which

the member is registered as a Designated Dealer. See

CSE Rule 11.9(c)(iii).

A ‘‘Contributing Dealer’’ is defined as a member

who maintains a minimum net capital amount and

during Exchange trading hours provides regular

bids and offers for round lots of issues for which

the member is registered. See CSE Rule 11.9(a)(4).

Currently, no CSE member is registered with the

Exchange as a Contributing Dealer. Telephone

Conversation between Adam Gurwitz, Director of

Legal Affairs, CSE, and Jon Kroeper, Attorney, SEC,

dated January 2, 1997.

A ‘‘Qualified Dealer’’ is defined as a member who

has been approved by the CSE’s Securities

Committee to provide to all members during

Exchange trading hours a continuous two-sided

market in odd-lots of issues for which the member

is designated a Qualified Dealer. See CSE Rule 11.8.

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

5See supra note 3.

Fund, Inc. upon consummation of the

reorganization.

8. As of the date of the application,

applicant had no shareholders,

securities, debts or other liabilities.

Applicant is not a party to any litigation

or administrative proceeding. Applicant

is neither engaged, nor proposes to

engage, in any business activities other

than those necessary for the winding up

of its affairs.

9. Applicant intends to file the

necessary documentation with the

Commonwealth of Massachusetts to

effect its termination as a Massachusetts

business trust.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–618 Filed 1–9–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38117; File No. SR–CSE–

96–08]

Self-Regulatory Organizations;

Cincinnati Stock Exchange; Order

Granting Approval to Proposed Rule

Change Relating to Continuous or

Regular Quotation Obligations

January 3, 1997.

I. Introduction

On October 3, 1996, the Cincinnati

Stock Exchange (‘‘CSE’’ or ‘‘Exchange’’)

submitted to the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

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

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

issue a reiteration and clarification of its

rules concerning dealer obligations to

provide continuous or regular two-sided

quotations.

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 37811

(October 11, 1996), 61 FR 54472

(October 18, 1996). No comments were

received on the proposal.

II. Description

The purpose of the proposed rule

change is to clarify the obligations of

CSE Designated Dealers, Qualified

Dealers, and Contributing Dealers

(collectively, ‘‘CSE Dealers’’) to provide

continuous or regular two-sided

quotations, as the case may be, during

the trading day.3 Currently, CSE Rules

11.8 and 11.9 set forth the requirements

for CSE Dealers’ quotations obligations.

To clarify these requirements, the CSE

is proposing to adopt a Regulatory

Circular (‘‘Circular’’), which sets forth

the obligations of a CSE Dealer to

comply with CSE Rule 11.8 and 11.9 in

providing quotes. Upon Commission

approval of the Circular, the CSE will be

disseminating the Circular to CSE

Dealers and the requirements in the

Circular will be fully enforceable as a

rule of the Exchange. The Circular will

provide guidance concerning quotation

obligations at the opening and intra-day,

during computer systems problems, and

in unusual market conditions. In

addition, the Circular will delineate

enforcement standards for noncompliance with CSE rules pertaining to

quotation obligations.

Specifically, the Circular will reiterate

the obligations of a Designated Dealer or

Qualified Dealer to display a two-sided

quotation for a security immediately

following the opening of the security on

the primary market, and immediately to

reestablish a quotation if that quotation

is taken out during the day as a result

of a transaction. The Exchange will thus

reemphasize the need for Designated

Dealers and Qualified Dealers to

maintain continuous, two-sided

quotations throughout the trading day.

Moreover, the Circular will specify

the notification procedures to be

followed in the event of a computer

system problem that prevents a CSE

Dealer from providing continuous or

regular two-sided quotations. Frequent

systems problems may result in the CSE

Dealer’s deregistration in certain issues

by the Exchange’s Market Performance

Committee (‘‘MPC’’), or may be

considered by the MPC as a factor in a

request to become a dealer in additional

securities. In addition, the Circular

states that the existence of unusual

market conditions will not exempt a

CSE Dealer from its continuous or

regular quotation obligations.

Finally, the Circular will place CSE

members on notice that they will be

informed of their compliance status at

least quarterly, and will set forth

possible sanctions resulting from noncompliance. In this regard, the Circular

states that initial non-compliance may

lead to a warning letter or a fine, while

further non-compliance may lead to the

imposition of sanctions, which may

include a fine and deregistration in one

or more issues. The Circular also states,

however, that the MPC may impose

sterner or swifter action, including

sanctions, as it may find appropriate.

III. Discussion

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange, and, in particular, with the

requirements of Section 6(b).4 In

particular, the Commission believes the

proposal is consistent with the Section

6(b)(5) requirements that the rules of an

exchange be designed to promote just

and equitable principles of trade, to

prevent fraudulent and manipulative

acts, and, in general, to protect investors

and the public.

The Commission finds that the

Circular sets forth an adequate

reiteration of CSE Dealers’ existing

obligations under Exchange rules to

provide continuous or regular two-sided

quotations, as the case may be,5 during

Exchange trading hours. As was noted

above, the Circular states that a

Designated Dealer or Qualified Dealer

shall immediately display a two-sided

quotation as soon as the security opens

on the primary market and that the

dealer must immediately reestablish a

bid or offer if its quote has been taken

out as the result of a transaction.

In addition, the Commission believes

that the Circular will provide CSE

Dealers with appropriate clarification as

to their continuous or regular quotation

obligations under Exchange rules during

the occurrence of unusual market

conditions and in the event of systems

problems at the Exchange or a member

firm. The Circular clearly states that a

CSE Dealer is not exempted from its

obligation to provide continuous or

regular two-sided quotations during the

occurrence of unusual market

conditions. Moreover, the Circular

references the procedures, adopted in a