14176 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Notices

1Letter dated March 15, 1994 from Brandon

Becker, Director, Division of Market Regulation

addressed to Ms. Mary L. Bender (CBOE) and Mr.

Timothy Hinkas (OCC).

1 15 U.S.C. § 78s(b)(1) (1988).

2 17 CFR 240.19b–4 (1991).

definition of ‘‘good faith’’ margin

requirements.

A new provision has been added

(Section (f)(2)(L)) to incorporate the

provisions currently contained in

Regulation T regarding ‘‘exclusive

designation’’ that allow a customer to

designate which security position in an

account is to be utilized to cover the

required margin at the time an option

order is entered; provided the member

organization offers such a service.

Further, Section (f)(2)(M) has been

added to incorporate those cash account

transactions currently permitted under

Regulation T and the debit put spread

currently allowed pursuant to the

Commission’s no-action letter on

‘‘theoretical pricing.’’1

(2) Statutory Basis

The proposed rule change is

consistent with the requirements of

Section (6)(b)(5) of the Securities

Exchange Act of 1934 (the ‘‘Act‘‘) which

provides that the rules of the Exchange

be designed to promote just and

equitable principles of trade and to

protect the investing public. The

proposed rule change is also consistent

with the rules and regulations of the

Board of Governors of the Federal

Reserve System for the purpose of

preventing the excessive use of credit

for the purchase or carrying of

securities, pursuant to Section 7(a) of

the Act.

(B) Self-Regulatory Organization’s

Statement of Burden on Competition

The Exchange believes that the

proposed rule change will 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

Comments were neither solicited nor

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 reason for so finding or (ii)

as to which the self-regulatory

organization consents, the Commission

will:

(A) By order approve such proposed

rule change, or

(B) Institute proceedings to determine

whether the proposed rule change be

disapproved.

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

submissions, 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 the principal

office of the above-mentioned selfregulatory organization. All submissions

should refer to the File No. SR–NYSE–

97–01 and should be submitted by April

15, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority

Jonathan G. Katz,

Secretary.

[FR Doc. 97–7393 Filed 3–24–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38416; File No. SR–PHLX–

97–10]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.

Relating to a Clarification of the

Exemptions From the Exchange

Examination Fee

March 18, 1997.

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 February

28, 1997, the Philadelphia Stock

Exchange, Inc. (‘‘PHLX’’ 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 PHLX. 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 PHLX, pursuant to Rule 19b–4 of

the Act, proposes to amend one of the

exemptions to its existing examination

fee in order to clarify to which firms the

fee is applicable. The text of the

amendment to the fee schedule language

is as follows (new text is italicized):

* * * * *

Examination Fee—$1,000 monthly

This fee is applicable to member/

participant organizations for which the

PHLX is the DEA. The following

organizations are exempt: (1) inactive

organizations; (2) organizations

operating from the PHLX trading floor

which have demonstrated that at least

25% of their income as reflected on the

most recently submitted FOCUS Report

was derived from floor activities; (3)

organizations for any month where they

incur transaction or clearing fees

charged directly by the Exchange or by

its registered clearing subsidiary,

provided that the fees exceed the

examination fee for that month; and (4)

organizations affiliated with an

organization exempt from this fee due to

the second or third category. Affiliation

includes an organization that is a

wholly owned subsidiary of, or

controlled by or under common control

with, an ‘‘exempt’’ member or

participant organization. An inactive

organization is one which has no

securities transaction revenue, as

determined by semi-annual FOCUS

reports, as long as the organization

continues to have no such revenue each

month.

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

PHLX 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 PHLX has

prepared summaries, set forth in

sections A, B and C below, of the most

significant aspects of such statements.
Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Notices 14177

3See Securities Exchange Act Release No. 35091

(Dec. 12, 1994), 59 FR 65558 (Dec. 20, 1994).

4 In the filing submitted by the Exchange to adopt

this fee, the Exchange noted that many of these

firms are located in other geographic regions, thus

requiring increased staff time and travel expenses

to conduct examinations. It was further noted, that

many of these firms trade products not available on

the PHLX, thus requiring additional time and

money to train and prepare the examiners who

conduct the exams. Securities Exchange Act Release

No. 35091 (Dec. 12, 1994), 59 FR 65558 (Dec. 20,

1994).

5Currently 13 firms are subject to the

examination fee out of approximately 140 firms for

which the Exchange is the DEA. Seven of the 13

firms made colorable arguments that they were not

subject to the examination fee under the previous

interpretation and the Exchange took note of their

argument. Therefore, during the time prior to filing

this proposed rule change, those firms were not

charged the examination fee. Accordingly, this is a

new fee to that class of firms that are now subject

to the fee by reason of the 25% revenue test. Letter

from Michele R. Weisbaum, Vice President and

General Counsel, PHLX to Karl Varner, Office of

Market Supervision, Division of Market Regulation,

SEC, dated March 13, 1997; Letter from Michele R.

Weisbaum, Vice President and General Counsel,

PHLX to Karl Varner, Office of Market Supervision,

Division of Market Regulation, SEC, dated March

17, 1997.

6 15 U.S.C. § 78s(b)(3)(A).

7 17 CFR 240.19b–4(e).

8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

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 the second

exemption to the Exchange’s $1,000 per

month examination fee.3 This fee was

initially adopted to recoup the costs of

examining firms, for which the

Exchange is the Designated Examining

Authority (‘‘DEA’’), which contribute

little if any revenue to the Exchange to

offset the expense of conducting such

examinations.4 Because this fee was

intended to pertain to a specific group

of members and participants, a number

of exemptions were carved out for firms

which do generate enough revenue to

the Exchange to offset examining costs

or which are inactive. One of the

exemptions, organizations operating

from the PHLX trading floor, has proved

to be too vague. The Exchange has

found that a number of member or

participant organizations which operate

primarily or exclusively from off the

floor, have entered into arrangements

whereby they argue that they meet this

exemption.5 Specifically, a floorbroker

or Registered Options Trader from

another firm which does conduct

business on the floor becomes dually

affiliated with the off-floor member or

participant organization and may or

may not ever do any business for that

firm on the floor. These firms have

argued that this dual affiliation would

qualify them as an organization

operating from the PHLX trading floor

since they now have an affiliated person

on the trading floor. Under this

arrangement, these off-floor firms may

still not generate revenue to offset the

costs of examining them. The Exchange

believes, however, that the description

of the fee’s exemption for firms

operating from the trading floor may

have been unintentionally vague enough

to permit this interpretation and thus

determined to add an objective

measurement.

Under this new test, any organization

which can demonstrate that it has

derived at least 25% of its revenues in

a calendar quarter from floor trading

activity, will be deemed to have covered

the cost of examining the firm and will

then be exempt from the $1,000 per

month fee.

The proposed rule change is

consistent with Section 6 of the Act in

general, and in particular, with Section

6(b)(4), in that it provides for the

equitable allocation of reasonable dues,

fees and other charges among its

members and other persons using its

facilities in that it clarifies which firms

are deemed to have paid their share of

the cost of an examination by setting an

objective income test.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The PHLX 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

The foregoing rule change has become

effective on February 28, 1997, pursuant

to Section 19(b)(3)(A) of the Act 6 and

subparagraph (e)(2) of Rule 19b–4

thereunder,7 because it establishes or

changes a due, fee, or other charge. At

any time within 60 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,

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, NW,

Washington, DC 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

Room. Copies of such filing will also be

available for inspection and copying at

the principal office at the PHLX. All

submissions should refer to File No.

SR–PHLX–97–10 and should be

submitted by April 15, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.8

Jonathan G. Katz,

Secretary.

[FR Doc. 97–7391 Filed 3–24–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38415; File No. SR–Phlx–

97–05]

Self-Regulatory Organizations; Order

Approving a Proposed Rule Change

and Notice of Filing and Order

Granting Accelerated Approval to

Amendment No. 1 Thereto by the

Philadelphia Stock Exchange, Inc.

Relating to Reducing the Value of the

Super Cap Index

March 18, 1997.

On January 9, 1997, the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b) of the Securities Exchange Act of

1934 (‘‘Act’’),1 and Rule 19b–4

thereunder,2 a proposed rule change to

reduce the value of its Super Cap Index

(‘‘Index’’) option (‘‘HFX’’) to one-half its

present value by doubling the divisor

used in calculating the Index. The Index

is comprised of the top five optionseligible common stocks of U.S.

companies traded on the New York

Stock Exchange (’’NYSE’’), as measured

by capitalization. The other contract