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
Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Notices 1481

6See CSE Regulatory Circular 96–07.

7 15 U.S.C. 78f(b)(1).

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

9 17 CFR 200.30–3(a)(12).

previous Regulatory Circular,6 that are

to be followed in the event that systems

problems at a member firm or the

Exchange temporarily prevent a CSE

Dealer from providing continuous or

regular quotations.

Furthermore, the Commission

believes that the Circular is consistent

with Section 6(b)(1) of the Act 7 in that

it provides a means of notifying CSE

Dealers of their compliance with the

Exchange’s rules regarding quotation

obligations and delineates enforcement

standards that will be applied by the

Exchange as a result of member noncompliance with such obligations. The

Circular states that members will be

notified of their compliance status at

least quarterly. In the event of noncompliance, the Circular provides 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.

The Commission would particularly

expect the CSE to impose sterner

sanctions for egregious or continued

violations. Accordingly, given the

flexibility inherent in the Circular’s

enforcement standards, the Commission

believes that such standards should

provide the Exchange with an

appropriate framework to address

instances of CSE Dealer non-compliance

with the Exchange’s rules regarding

quotation obligations.

IV. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,8 that the

proposed rule change (SR–CSE–96–08)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–619 Filed 1–9–97; 8:45 am]

BILLING CODE 8010–01–M

SOCIAL SECURITY ADMINISTRATION

Statement of Organization, Functions

and Delegations of Authority

This statement amends part S of the

Statement of the Organization,

Functions and Delegations of Authority

which covers the Social Security

Administration (SSA). Chapter S4

covers the Deputy Commissioner for

Systems. Notice is given that

Subchapter S4L, the Office of

Telecommunications (OTC), is being

deleted. Subchapter S4E, the Office of

Systems Operations (OSO), is being

retitled to the Office of

Telecommunications and Systems

Operations (OTSO), and amended to

reflect the transfer of functions from

OTC to OSO. The changes are as

follows:

Section S4.10 The Office of the

Deputy Commissioner, Systems—

(Organization):

Delete:

I. The Office of Telecommunications

(S4L).

Retitle:

D. ‘‘The Office of Systems

Operations’’ (S4E) to ‘‘The Office of

Telecommunications and Systems

Operations’’ (S4E).

Section S4.20 The Office of the

Deputy Commissioner, Systems—

(Functions):

Delete in its entirety:

I. The Office of Telecommunications

(S4L).

Retitle:

D. ‘‘The Office of Systems

Operations’’ (S4E) to ‘‘The Office of

Telecommunications and Systems

Operations’’ (S4E).

Amend to read as follows:

D. The Office of Telecommunications

and Systems Operations (OTSO) (S4E)

directs, manages and coordinates the

planning, acquisition, implementation,

security, operation and maintenance of

SSA’s computer systems operations, and

plans, implements and evaluates SSA’s

communications technology and

systems. It directs and coordinates the

transition, implementation and

operation of current/ongoing operating

systems support software, including

diagnostic software. It is responsible for

evaluating current and emerging

communications technologies and for

designing, acquiring, implementing,

operating and maintaining new

integrated telecommunications systems

combining voice, data, video, facsimile

and other SSA communications

requirements. OTSO directs, manages

and coordinates the planning, analysis,

design, acquisition, implementation,

operation and maintenance of SSA’s

existing telecommunications systems. It

manages the telecommunications

operations complexes located at the

Central Office, Regional Offices and

field sites. It is responsible for SSA’s

comprehensive voice communication

management program. OTSO interfaces

with other systems components in the

transition and implementation of

redesigned programmatic and

administrative systems to progressively

replace existing application systems. It

manages the computer operations

complex which processes SSA’s

programmatic support, administrative,

management information and statistical

application systems. OTSO conducts

continuing assessments and engineering

analyses of the computer operations, as

well as equipment performance analyses

and coordinates the implementation of

necessary improvements to existing

resources. It directs and coordinates the

activities associated with the planning,

management, acquisition, procurement

and renewal of ADP equipment,

software and technical services for SSA

to maintain operational systems and to

prevent progressive deterioration. OTSO

develops, controls and implements

operational plans which include the

preparing of technical specifications,

evaluation criteria, acceptance test

criteria, facilities engineering plans and

budget estimates to maintain

operational systems. It advises the

Deputy Commissioner, SSA Executive

Staff and external monitoring

authorities such as the General Services

Administration, the General Accounting

Office, the Office of Management and

Budget and Congress on SSA’s

computer systems operations.

Delete: Existing Subchapter S4L, the

Office of Telecommunications.

Retitle: Existing Subchapter S4E,

‘‘The Office of Systems Operations’’

(S4E) to ‘‘The Office of

Telecommunications and Systems

Operations’’ (S4E).

Change all references to the ‘‘Office of

Systems Operations’’ to the ‘‘Office of

Telecommunications and Systems

Operations’’ and all references to

‘‘OSO’’ to ‘‘OTSO’’ throughout all

Subchapters of Chapter 4.

Section S4E.00 The Office of

Telecommunications and Systems

Operations—(Mission):

Amend to read as follows:

The Office of Telecommunications

and Systems Operations (OTSO) (S4E)

directs, manages and coordinates the

planning, acquisition, implementation,

security, operation and maintenance of

SSA’s computer systems operations and

the telecommunications systems. It

directs and coordinates the transition,

implementation and operation of

current/ongoing operating systems

support software, including diagnostic

software. It is responsible for evaluating

current and emerging communications

technologies and for designing,

acquiring, implementing, operating and

maintaining new integrated

telecommunications systems combining