16880 Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices

1Rule 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.

1The signatories to the Plan, i.e., the National

Association of Securities Dealers, Inc. (‘‘NASD’’),

and the Chicago Stock Exchange, Inc. (‘‘Chx’’)

(previously, the Midwest Stock Exchange, Inc.),

Philadelphia Stock Exchange, Inc. (‘‘Phlx’’), and the

Boston Stock Exchange, Inc. (‘‘BSE’’), are the

‘‘Participants.’’ The BSE, however, joined the Plan

as a ‘‘Limited Participant,’’ and reports quotation

information and transaction reports only in Nasdaq/

NM (previously referred to as ‘‘Nasdaq/NMS’’)

securities listed on the BSE. Originally, the

American Stock Exchange, Inc. (‘‘Amex’’), was a

Participant to the Plan, and withdrew from

participation in the Plan in August 1994.

2See letter from Robert E. Aber, Vice President

and General Counsel, Nasdaq, to Jonathan G. Katz,

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

April 28, 1997, and should be

accompanied by proof of service on

applicant, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

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

Applicant, 1285 Avenue of the

Americas, New York, NY 10019.

FOR FURTHER INFORMATION CONTACT: Lisa

McCrea, Staff Attorney (202) 942–0562,

or Mercer E. Bullard, Branch Chief,

(202) 942–0564 (Office of Investment

Company Regulation, Division of

Investment Management).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch.

Applicant’s Representation

1. Applicant is an open-end

management investment company,

organized as a Maryland corporation.

On June 6, 1979, applicant filed a

Notification of Registration under the

Act and a Registration Statement under

the Act and Securities Act of 1933,

which became effective on August 17,

1979. Applicant’s initial public offering

of shares commenced thereafter. On

January 30, 1995, applicant’s name was

changed from ‘‘Kidder, Peabody Cash

Reserve Fund, Inc.’’ to its current name.

2. On July 20, 1995, the Board of

Trustees of applicant (‘‘Board’’) adopted

resolutions approving an Agreement

and Plan of Reorganization and

Dissolution (‘‘Plan’’) between applicant

and PaineWebber RMA Money Fund,

Inc. (‘‘PW Corporation’’), on behalf of its

series, PaineWebber RMA Money

Market Portfolio (‘‘PW Fund’’). Pursuant

to rule 17a–8 under the Act,1 applicant’s

Board determined that the proposed

reorganization was in the best interests

of applicant and that the interests of its

securityholders would not be diluted as

a result of the reorganization. The Board

considered the following factors:

compatibility of investment objectives,

policies and restrictions; the effect of

the reorganization on the expense ratio

of PW Fund relative to its and

applicant’s current expense ratios;

possible alternatives to the

reorganization, including continued

operation on a stand-alone basis or

liquidation.

3. Applicant distributed a combined

prospectus and proxy statement to

securityholders of applicant on or about

January 5, 1996, and applicant filed

definitive materials with the SEC on

January 23, 1996. On February 13, 1996,

the securityholders of applicant

approved the Plan.

4. Pursuant to the Plan, PW

Corporation, on behalf of PW Fund,

acquired all right, title and interest in

and to the assets of applicant in

exchange for shares of common stock in

PW Fund (collectively, the ‘‘Closing

Shares’’) and the assumption of the

liabilities of applicant. On February 20,

1996 (the ‘‘Closing Date’’), applicant

distributed to its securityholders the

Closing Shares of PW Fund received by

applicant, in exchange for such

secuityholders’ holdings of applicant’s

shares. Also on the Closing Date,

applicant paid its securityholders a

dividend to distribute its investment

company taxable income for the current

taxable year through the Closing Date.

The number of shares of PW Fund

issued to applicant had an aggregate net

asset value equal to the aggregate value

of applicant’s assets transferred to PW

Fund as of the Closing Date. As of the

Closing Date, there were 881,401,323

shares to applicant outstanding, having

an aggregate net asset value of

$881,308,148 and a per share net asset

value of $1.00. The liquidation and

distribution were accomplished by

opening accounts on the books of PW

Fund in the names of the

securityholders of applicant and

transferring the Closing Shares credited

to the accounts of applicant on the

books of PW Fund. Each such account

so opened was credited with the

securityholder’s respective, pro rata

number of Closing Shares. There are no

securityholders of applicant to whom

distributions in complete liquidation of

their interests have not been made.

5. The expense incurred in

connection with the Plan were

approximately $65,000 for legal

expenses, $100,000 for expenses of

printing and mailing communications to

securityholders, $304,000 for SEC

registration fees, and miscellaneous

accounting and administrative

expenses. These expenses totalled

approximately $475,000, and were

borne by the applicant and PW Fund in

proportion to their respective net assets.

No brokerage commissions were paid in

connection with the reorganization.

6. Applicant has no securityholders,

assets, debts, or liabilities. Applicant is

not a party to any litigation or

administrative proceedings. Applicant

is not now engaged, and does not

propose to engage, in any business

activities other than those necessary for

winding-up of its affairs.

7. Applicant filed Articles of Transfer

(‘‘Articles’’) with the Maryland State

Department of Assessments and

Taxation (‘‘Department’’). The

Department received and approved the

Articles on February 20, 1996.

Applicant intends to file Articles of

Dissolution with the Department.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–8932 Filed 4–7–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38457; File No. S7–24–89]

Joint Industry Plan; Solicitation of

Comments and Order Approving

Request To Extend Temporary

Effectiveness of Reporting Plan for

Nasdaq/National Market Securities

Traded on an Exchange on an Unlisted

or Listed Basis, Submitted by the

National Association of Securities

Dealers, Inc., and the Boston, Chicago

and Philadelphia Stock Exchanges

March 31, 1997.

On March 27, 1997, the National

Association of Securities Dealers, Inc.,

on behalf of itself and the Boston,

Chicago, and Philadelphia Stock

Exchanges (collectively,

‘‘Participants’’) 1 submitted to the

Commission a request 2 to extend the
Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices 16881

Secretary, Commission, dated March 27, 1997

(‘‘1997 Extension Request’’). The 1997 Extension

Request also requests the Commission to continue

to provide exemptive relief, previously granted in

connection with the Plan on a temporary basis,

from Rules 11Ac1–2 and 11Aa3–1 under the

Securities Exchange Act of 1934 (‘‘Act’’). Id.

3Section 12 of the Act generally requires an

exchange to trade only those securities that the

exchange lists, except that Section 12(f) of the Act

permits unlisted trading privileges (‘‘UTP’’) under

certain circumstances. For example, Section 12(f),

among other things, permits exchanges to trade

certain securities that are traded over-the-counter

(‘‘OTC/UTP’’), but only pursuant to a Commission

order or rule. The present order fulfills this Section

12(f) requirement. For a more complete discussion

of this Section 12(f) requirement, see November

1995 Extension Order, infra note 9, at n. 2.

4On March 18, 1996, the Commission solicited

comment on a revenue sharing agreement among

the Participants. See March 18, 1996 Extension

Order, infra note 9. Thereafter, the Participants

submitted certain technical revisions to the revenue

sharing agreement (‘‘revised Amendment No. 9’’).

See letter from Robert E. Aber, Vice President and

General Counsel, Nasdaq, to Jonathan Katz,

Secretary, SEC, dated September 13, 1996. See also

September 16, 1996 Extension Order, Infra note 9

(notice and order recognizing receipt of revised

Amendment No. 9).

5The CHX and PHLX also request that,

commensurate with permanent approval of the

Plan, the number of Nasdaq/NM securities eligible

for trading pursuant to the Plan be expanded to

include all Nasdaq/NM securities. See 1997

Extension request, supra note 2. The NASD states

that, while it recognizes the benefits from such an

expansion in terms of the promotion of competition

and protection of investors, it believes a wholesale

expansion of Nasdaq/UTP-eligible securities to

include all Nasdaq/NM securities is inseparable

from an expansion of Nasdaq’s Intermarket Trading

System (‘‘ITS’’)/Computer Assisted Execution

Service (‘‘CAES’’) linkage to include all exchangelisted securities. Id.

6See Securities Exchange Act Release No. 28146

(June 26, 1990), 55 FR 27917 (‘‘1990 Plan Approval

Order’’).

7See Section 12(f)(2) of the Act, supra note 3.

8See letter from David T. Rusoff, Foley & Lardner,

to Betsy Prout, SEC, dated May 9, 1994.

9See Securities Exchange Act Release No. 34371

(July 13, 1994), 59 FR 37103 (‘‘1994 Extension

Order’’), Securities Exchange Act Release No.

35221, (January 11, 1995), 60 FR 3886 (‘‘January

1995 Extension Order’’), Securities Exchange Act

Release No. 36102 (August 14, 1995), 60 FR 43626

(‘‘August 1995 Extension Order’’), Securities

Exchange Act Release No. 36226 (September 13,

1995), 60 FR 49029 (‘‘September 1995 Extension

Order’’), Securities Exchange Act Release No. 36368

(October 13, 1995), 60 FR 54091 (‘‘October 1995

Extension Order’’), Securities Exchange Act Release

No. 36481 (November 13, 1995), 60 FR 58119

(‘‘November 1995 Extension Order’’), Securities

Exchange Act Release No. 36589 (December 13,

1995), 60 FR 65696 (‘‘December 13, 1995 Extension

Order’’), Securities Exchange Act Release No. 36650

(December 28, 1995), 60 FR 358 (‘‘December 28,

1995 Extension Order’’), Securities Exchange Act

Release No. 36934 (March 6, 1996), 61 FR 10408

(‘‘March 6, 1996 Extension Order’’), Securities

Exchange Act Release No. 36985 (March 18, 1996),

61 FR 12122 (‘‘March 18, 1996 Extension Order’’),

Securities Exchange Act Release No. 37689

(September 16, 1996), 61 FR 50058 (‘‘September 16,

1996 Extension Order’’), and Securities Exchange

Act Release No. 37772 (October 1, 1996), 61 FR

52980 (‘‘October 1, 1996 Extension Order’’).

10The Plan defines ‘‘eligible security’’ as any

Nasdaq/NM security (i) as to which unlisted trading

privileges have been granted to a national securities

exchange pursuant to Section 12(f) of the Act, or (ii)

which is listed on a national securities exchange.

11The full text of the Plan, as well as a ‘‘Concept

Paper’’ describing the requirements of the Plan, are

contained in the original filing which is available

for inspection and copying in the Commission’s

Public Reference Room.

12The Commission recognizes that, currently,

although the size of orders is considered in the

calculation of the BBO, it is only in those limited

instances in which two or more orders have

identical prices and are entered simultaneously.

Telephone conversation between Tom Gira, NASD,

and George A. Villasana, Attorney, SEC, on March

27, 1997. The Commission is particularly interested

in comments as to whether size should take priority

over time for purposes of calculating the BBO.

13See letter from Jack A. Dempsey, Senior Vice

President, Dempsey & Company, to Jonathan Katz,

Secretary, SEC, dated February 21, 1995 (‘‘Dempsey

Letter’’); letter from William A. Lupien, Chairman,

Mitchum, Jones & Templeton, Inc. (‘‘MJT’’), to

Continued

operation of a joint transaction reporting

plan (‘‘Plan’’) for Nasdaq/National

Market (‘‘Nasdaq/NM’’) securities traded

on an exchange on an unlisted or listed

basis.3 The proposal would extend the

effectiveness of the Plan, as amended by

revised Amendment No. 9,4 through

June 30, 1997. The Commission also is

extending certain exemptive relief as

discussed below. The 1997 Extension

Request also requests that the

Commission approve the Plan, as

amended, on a permanent basis on or

before June 30, 1997.5 The Commission

is approving the proposed amendment

to the Plan insofar as the proposal

requests an extension of the

effectiveness of the Plan. During the

three-month extension of the Plan, the

Commission will determine whether to

approve the proposed Plan, as amended,

on a permanent basis.

I. Background

The Commission originally approved

the Plan on June 26, 1990.6 The Plan

governs the collection, consolidation

and dissemination of quotation and

transaction information for Nasdaq/NM

securities listed on an exchange or trade

on an exchange pursuant to a grant of

UTP.7 The Commission approved

trading pursuant to the Plan on a oneyear pilot basis, with the pilot period to

commence when transaction reporting

pursuant to the Plan commenced.

Accordingly, the pilot period

commenced on July 12, 1993, and was

scheduled to expire on July 12, 1994.8

The Plan has since been in operation on

a pilot basis.9

II. Description of the Plan

The Joint Industry Plan provides for

the collection from Plan Participants,

and the consolidation and

dissemination to vendors, subscribers

and others of quotation and transaction

information in ‘‘eligible securities.’’ 10

The Plan contains various provisions

concerning the operation of the Plan,

which include: Implementation of the

Plan; Manner of Collecting, Processing,

Sequencing, Making Available, and

Disseminating Last Sale Information;

Reporting Requirements (including

hours of operation); Standards and

Methods of Ensuring Promptness,

Accuracy, and Completeness of

Transaction Reports; Terms and

Conditions of Access; Description of

Operation of Facility Contemplated by

the Plan; Method and Frequency of

Processor Evaluation; Written

Understandings of Agreements Relating

to Interpretation of, or Participation in,

the Plan; Calculation of the BBO;

Dispute Resolution; Method of

Determination and Imposition, and

Amount of, Fees and Charges.11

III. Exemptive Relief

In conjunction with the Plan, on a

temporary basis scheduled to expire on

March 30, 1997, the Commission

granted an exemption to vendors from

Rule 11Ac1–2 under the Act regarding

the calculation of the Best Bid and Offer

(‘‘BBO’’), and granted the BSE an

exemption from the provision of Rule

11Aa3–1 under the Act that requires

transaction reporting plans to include

market identifiers for transaction reports

and last sale data. In the 1997 Extension

Request, the Participants request that

the Commission grant an extension of

the exemptive relief described above to

vendors until such time as the

calculation methodology for the BBO is

based on a price/size/time algorithm. In

the 1997 Extension Request, the

Participants also request that the

Commission grant an extension of the

exemptive relief described above to the

BSE for so long as the BSE is a Limited

Participant under the Plan.

IV. Summary of Comments

In the January 1995, August 1995,

September 1995, October 1995,

November 1995, December 13, 1995,

December 28, 1995, March 6, 1996,

March 18, 1996, September 16, 1996,

and October 1, 1996 Extension Orders,

the Commission solicited, among other

things, comment on: (1) Whether the

BBO calculation for the relevant

securities should be based on price and

time only (as currently is the case) or if

the calculation should include size of

the quoted bid or offer; 12 and (2)

whether there is a need for an

intermarket linkage for order routing

and execution and an accompanying

trade-through rule. In response, the

Commission has received three

comment letters regarding the issues

noted at (1) and (2) above.13
16882 Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices

Secretary, SEC, dated February 21, 1995 (‘‘MJT

Letter’’); and letter from Robert E. Moore, Managing

Director, Smith Barney Inc., to Jonathan Katz,

Secretary, SEC, dated August 18, 1995 (‘‘Smith

Barney Letter’’).

14See MJT Letter and Dempsey Letter, supra note

13.

15 In the Dempsey Letter, Dempsey states that

when the BBO in a particular security is 12–121⁄4

(500 × 1000), and a market maker, broker, or

investor expresses an interest to buy 2500 shares at

$12.00 per share, that bid will not be displayed in

the quote, such that the BBO will continue to be

12–121⁄4 (500 × 1000). Dempsey states that this is

not a true picture of the current market. Dempsey

states that the BBO calculation should include the

size of the quoted bid and offer, and that size

should have precedence over time.

16See Smith Barney Letter, supra note 13.

17The Commission notes, however, that this letter

was written prior to the effectiveness and phasedin implementation of the Commission’s Order

Execution Rules which, among other things, require

market makers and specialists to display their

customer limit orders, and prior to the

Commission’s related partial approval of the

NASD’s proposed rule changes to provide for the

implementation of the Order Execution Rules. See

Securities Exchange Act Release Nos. 37619A,

(September 6, 1996, 61 FR 48290 (adopting Order

Exec. Rules) and 38156 (January 10, 1997), 62 FR

2415 (partially approving File No. SR–NASD–96–

43). Therefore, when the Smith Barney letter was

submitted to the Commission, market makers

generally displayed the minimum size required by

NASD rules, such as 1000 shares or 500 shares.

Currently, however, for certain stocks that have

been phased-in under the Order Execution Rules

and that are subject to the NASD’s Rules, market

makers may quote for as little as 100 shares.

18See Dempsey Letter and Smith Barney Letter,

supra note 13.

19See 1997 Extension Request, supra note 2.

20 Id. In the event that Nasdaq develops the

technological capability to afford market makers

simultaneous electronic access to all market maker

quotes at the same price level, the Nasdaq Board

believes that the methodology used to determine

the quoted size of the Nasdaq market must be

reconsidered to accommodate reflection of the fully

accessible size displayed and Nasdaq. Id.

21 Id.

22The Commission requests that all comments be

submitted no later than May 30, 1997 so that the

Commission may have adequate time to consider all

comments prior to June 30, 1997, the date on which

the Commission will determine whether to approve

the Plan on a permanent basis.

The Commission has received two

comments in support of a BBO

calculation based on a price/size/time

algorithm.14 These commenters explain

that, without giving size precedence

over time in the BBO calculation, the

BBO does not provide an accurate

representation of the depth of the

market.15

The Commission has received one

comment in support of the current BBO

calculation based on a price/time/size

algorithm.16 In the Smith Barney Letter,

Smith Barney explains that giving size

precedence over time in the BBO

calculation provides Nasdaq market

makers and exchanges making a UTP

market with the incentive to

incrementally increase size rather than

improve prices.17 Smith Barney states

that the application of a price/size/time

methodology for the calculation of BBO

would encourage market makers only to

increase the size of their quotation as it

would enable them to attract order flow.

Smith Barney states that this is because

the price/size/time methodology allows

the market maker quoting the greatest

size at the best price to be identified as

providing the BBO on vendor screens

and to move to the front of the line to

receive unpreferenced SOES and

Computer Assisted Execution Service

orders. Smith Barney states that the

application of a price/time/size

methodology encourages market makers

to improve their prices, and not order

size, in order to attract order flow.

Smith Barney states that this is because

the price/time/size methodology allows

the market maker who quoted the best

price first in time to be identified as

providing the BBO. Smith Barney

believes that the price/time/size

methodology benefits customers as it

encourages market makers to improve

prices.

The Commission has received two

comments in support of an intermarket

linkage for order routing and execution,

and an accompanying trade-through

rule.18 Dempsey states that an

intermarket linkage and trade-through

rule would increase market efficiency,

transparency, and liquidity. Smith

Barney states that an intermarket

linkage would assure fair competition

and best execution of customer orders.

Also in response to the Commission’s

request for comment on the

aforementioned issues, the Board of

Directors of The Nasdaq Stock Market,

Inc. (‘‘Nasdaq’’) approved two

recommendations at its meeting on

March 25, 1997 as set forth below.19

With respect to the BBO calculation

issue, the Nasdaq Board approved a

recommendation to modify the

methodology for calculating the BBO on

Nasdaq to prioritize quotes based on a

price/size/time algorithm instead of the

current price/time/size algorithm,

provided that Nasdaq market makers are

subject to a minimum quote size

requirement of 100 shares for at least

1,000 Nasdaq securities.20 With respect

to the intermarket linkage issue, the

Nasdaq Board approved a

recommendation to provide specialists

on an exchange trading Nasdaq

securities on an UTP basis access to

Nasdaq’s Small Order Execution System

(‘‘SOES’’), or its successor system, to the

same extent that registered Nasdaq

market makers have access to SOES,

provided that (1) Nasdaq market makers

are afforded virtually identical access to

the automated execution system

operated by such UTP exchange, and (2)

the order execution algorithms of the

exchange’s automated execution system

are virtually identical to SOES’s or its

successor system.21

The Commission continues to solicit

comment on (1) whether the BBO

calculation for securities traded

pursuant to the Plan should be based on

a price/time/size methodology or a

price/size/time methodology; (2)

whether there is a need for an

intermarket linkage for order routing an

execution; and (3) whether there is a

need for a trade-through rule.22

V. Solicitation of Comment

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. All submissions should refer to

File No. S7–24–89 and should be

submitted by April 29, 1997.

VI. Discussion

The Commission finds that an

extension of temporary approval of the

operation of the Plan, as amended,

through June 30, 1997, is appropriate

and in furtherance of Section 11A of the

Act as it will provide the Participants

with additional time and make

reasonable proposals concerning the

BBO calculation and whether there is a

need for an intermarket linkage for order

routing and execution and an

accompanying trade through rule. While

the Commission continues to solicit

comment on these matters, the

Commission believes that these matters

should be addressed directly by the

Participants on or before May 30, 1997

so that the Commission may have ample

time to determine whether to approve

the Plan on a permanent basis by June

30, 1997.

The Commission further finds that it

is appropriate to extend the exemptive

relief from Rule 11Ac1–2 under the Act

until the earlier of June 30, 1997 or until
Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices 16883

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

2The Commission notes that the Amex’s Post

Execution Reporting (‘‘PER’’) system provides

member firms with the means to electronically

transmit equity orders, up to volume limits

specified by the Exchange, directly to a specialist’s

post on the trading floor of the Exchange. Securities

Exchange Act Release No. 34869 (Oct. 20, 1994), 59

FR 54016.

3The Commission notes that orders of competing

market makers do qualify for this fee cap.

Telephone conversation between Michael Cavalier,

Associate General Counsel, Amex, and Anthony P.

Pecora, Attorney, Division of Market Regulation,

SEC (Apr. 1, 1997).

4The Commission notes that this definition of

‘‘competing market maker’’ is identical to the

definition used by the New York Stock Exchange.

See Securities Exchange Act Release No. 37273

(June 4, 1996), 61 FR 29438, at n.14 (approving a

similar fee change proposed by the NYSE).

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

6 15 U.S.C. 78f(b)(4).

7 15 U.S.C. 78s(b)(3)(A).

8 17 CFR 240.19b–4.

such time as the calculation

methodology for the BBO is based on a

price/size/time algorithm pursuant to

the 1997 Extension Request or other

mutual agreement among the

Participants approved by the

Commission. The Commission further

finds that it is appropriate to extend the

exemptive relief from Rule 11Aa3–1

under the Act, that requires transaction

reporting plans to include market

identifiers for transaction reports and

last sale data, to the BSE through June

30, 1997. The Commission believes that

the extensions of the exemptive relief

provided to vendors and the BSE,

respectively are consistent with the Act,

the Rules thereunder, and specifically

with the objectives set forth in Sections

12(f) and 11A of the Act and in Rules

11Aa3–1 and 11Aa3–2 thereunder.

VII. Conclusion

It is therefore ordered, pursuant to

Sections 12(f) and 11A of the Act and

(c)(2) of Rule 11Aa3–2 thereunder, that

the Participants’ request to extend the

effectiveness of the Joint Transaction

Reporting Plan, as amended, for

Nasdaq/National Market securities

traded on an exchange on an unlisted or

listed basis through June 30, 1997, and

certain exemptive relief until such time

as the calculation method for the BBO

is based on a price/size/time algorithm,

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority, 17 CFR 200.30–3(a)(29).

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–8873 Filed 4–7–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38460; File No. SR–Amex–

97–16]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

American Stock Exchange, Inc.

Relating to Equity Transaction Fee

Changes

April 1, 1997.

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

Securities Exchange Act of 1934

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

March 25, 1997, the American Stock

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

filed with the Securities 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.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Amex is making certain changes

to its schedule of transaction charges

imposed on trades in equity securities

executed on the Exchange. The text of

the proposed rule change is available at

the Office of the Secretary, the Amex,

and at the Commission.

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

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

The Amex is revising its schedule of

equity transaction charges for PER

orders by expanding the exemption

from share-based and value-based

transaction charges to include PER

orders up to 1,099 shares, increased

from 500 shares.2 In addition, the value

portion of the Amex’s equity transaction

charge (based on the value of shares

traded as opposed to the other portion

of the charge based on the number of

shares traded), will be subject to a

maximum charge of $40 per trade.3

The exemption for PER orders up to

1,099 shares will not apply to orders of

a member or member organization

trading as an agent for the account of a

non-member competing market maker.

A ‘‘competing market maker’’ will be

defined as a specialist or market maker

registered as such on a registered stock

exchange (other than the Amex), or a

market maker bidding and offering overthe-counter in an Amex-traded

security.4 The schedule of Amex sharebased and value-based transaction

charges otherwise remains unchanged.

The Exchange’s schedule of equity

transaction charges, as revised, is

attached as Exhibit A to the filing and

will be implemented by the Exchange

beginning May 30, 1997.

2. Statutory Basis

The Exchange believes the proposed

rule change is consistent with Section

6(b) of the Act 5 in general and furthers

the objectives of Section 6(b)(4) 6 in

particular in that it provides for the

equitable allocation of reasonable dues,

fees, and other charges among the

Exchange’s members and other persons

using its facilities.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes the proposed

rule change does not 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

The Exchange has neither solicited

nor received written comments on the

proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change constitutes

or changes a due, fee, or other charge

imposed by the Exchange and, therefore,

has become effective pursuant to

Section 19(b)(3)(A) of the Act 7 and

subparagraph (e) of Rule 19b–4

thereunder.8

At any time within sixty days of the

filing of such 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,