Federal Register / Vol. 62, No. 69 / Thursday, April 10, 1997 / Notices 17659

37 15 U.S.C. 80b–1 et seq.

38 15 U.S.C. 80a–1 et seq.

39 Investment Advisers Act Release No. 1601

(December 20, 1996) [61 FR 68480].

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 38383

(March 11, 1997); 62 FR 13203.

4Letter from Nandita Yagnik, Attorney, New

Product Development, Phlx to Marianne H. Khawly,

Staff Attorney, Division of Market Regulation

(‘‘Division’’), Commission, dated April 2, 1997.

5Securities Exchange Act Release No. 34345 (July

11, 1994), 59 FR 36245 (approval for index options

on the Phone Index).

(3) Investment Management Issues

Title III of the 1996 Act (the

‘‘Investment Advisers Supervision

Coordination Act’’ (‘‘Coordination

Act’’)) made several amendments to the

Investment Advisers Act of 1940, 37 the

most significant of which reallocates

federal and state responsibilities over

investment advisers. Under the new

scheme larger advisers will principally

be regulated by the Commission, while

smaller advisers the businesses of which

tend to be more local will be primarily

regulated by the states.

Upon the effective date of the

Coordination Act, an investment adviser

that is regulated or required to be

regulated as an investment adviser in a

state in which it maintains its principal

office and place of business is

prohibited from registering with the

Commission unless the adviser (i) has

assets under management of not less

than $25 million (or such higher amount

as the Commission may, by rule, deem

appropriate), or (ii) is an adviser to an

investment company registered under

the Investment Company Act of 1940. 38

The Commission is authorized to deny

registration to any applicant that does

not meet the criteria for Commission

registration and is directed to cancel the

registration of any adviser that no longer

meets the criteria for registration.

The Coordination Act preempts state

investment adviser statutes as they

apply to investment advisers registered

with the Commission. The Coordination

Act preserves, however, the ability of

state regulators to: (i) Investigate and

bring enforcement actions against

Commission-registered advisers with

respect to fraud and deceit, (ii) require

Commission-registered advisers to file

notice documents with the state, and

(iii) require Commission-registered

advisers to pay state registration and

other fees. State law is also preempted

as to certain ‘‘supervised persons’’ of

Commission-registered advisers, except

that a state retains the authority to

register an investment adviser

representative that has a place of

business in the state.

On December 20, 1996 the

Commission proposed rules designed to

implement the provisions of the

Coordination Act.39 The proposed rules:

(i) Address the procedures by which

advisers not eligible to register will

identify themselves to the Commission

and withdraw from registration, (ii)

exempt certain advisers that do not meet

the criteria from Commission

registration from the new prohibition,

and (iii) define certain terms used in the

statute. The comment period on the

proposed rules closed on February 10,

1997.

The conferees will discuss the

Commission’s rules as they affect the

allocation of regulatory responsibilities

between the states and the Commission.

In addition, the conferees will discuss

mutual concerns regarding the

implementation of the Coordination

Act, including the transition to the new

regulatory scheme, the sharing of

information regarding the status of

registrants, and arrangements for the

provision of technical assistance by the

Commission including training,

conducting joint exams and sharing of

information with respect to investment

advisers. In addition, state and federal

regulators will discuss the coordination

of regulatory, examination and

enforcement activities subsequent to the

effective date of the Coordination Act.

The conferees will also discuss progress

with regards to the development of a

one-stop electronic filing system for

investment advisers, and the

development of a system for investors to

obtain information regarding the

disciplinary history of investment

advisers.

(4) Enforcement Issues

In addition to the above-stated topics,

the state and federal regulators will

discuss various enforcement-related

issues which are of mutual interest.

(5) Investor Education

The Commission is pursuing a

number of programs for investors on

how to invest wisely and to protect

themselves from fraud and abuse. The

states and NASAA have a longstanding

commitment to investor education and

the Commission is intent on

coordinating and complementing those

efforts to the greatest extent possible.

The participants at the conference will

discuss investor education and potential

joint projects in some of the working

group sessions.

(6) General

There are a number of matters which

are applicable to all, or a number, of the

areas noted above. These include

EDGAR, the Commission’s electronic

disclosure system, rulemaking

procedures, training and education of

staff examiners and analysts and sharing

of information.

The Commission and NASAA request

specific public comments and

recommendations on the abovementioned topics. Commenters should

focus on the agenda but may also

discuss or comment on other proposals

which would enhance uniformity in the

existing scheme of state and federal

regulation, while helping to maintain

high standards of investor protection.

Dated: April 4, 1997.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–9204 Filed 4–9–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38479; File No. SR–Phlx–

97–12]

Self-Regulatory Organizations; Order

Granting Accelerated Approval of

Proposed Rule Change and Notice of

Filing and Order Granting Accelerated

Approval of Amendment No. 1 Thereto

by the Philadelphia Stock Exchange,

Inc. Relating to the Maintenance

Criteria for the Phlx Phone Index

April 3, 1997.

On March 5, 1997, the Philadelphia

Stock Exchange Inc. (‘‘Phlx’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission

(‘‘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

amend the maintenance standards

applicable to the Phlx Phone Index

(‘‘Index’’) to allow the number of stocks

in the Index to decline to six without

having to delist the Index. Notice of the

proposed rule change appeared in the

Federal Register on March 19, 1997.3

No comments were received on the

proposal. On April 2, 1997, the Phlx

filed Amendment No. 1 to the proposal

to address issues related to Index

concentration and to request accelerated

approval of its proposal.4 This order

approves the proposal, as amended, on

an accelerated basis.

I. Description of the Proposal

On July 11, 1994, the Commission

approved a proposal by the Phlx to list

and trade options on the Index.5 The

Index is a capitalization-weighted index

composed of eight widely held U.S.
17660 Federal Register / Vol. 62, No. 69 / Thursday, April 10, 1997 / Notices

6 Id. The components of the Index are as follows:

Ameritech; AT&T; Bell Atlantic; BellSouth; Nynex

Corporation (‘‘Nynex’’); Pacific Telesis (‘‘PacTel’’);

SBC Communications, Inc. (‘‘SBC’’); and US West.

7See Phlx Rule 1009A for options eligibility

standards.

8Amendment No. 1 and telephone conversation

between Michele. R. Weisbaum, Associate General

Counsel, Phlx and John Ayanian, Special Counsel,

Division, Commission, on April 1, 1997.

9Currently, the largest component of the revised

Index is AT&T representing 23.02% of the Index

weight. See note 13, infra.

10 15 U.S.C. 78f(b).

11 15 U.S.C. 78f(b)(5).

12 In approving this rule, the Commission has

considered the proposed rules’ impact on

efficiency, competition, and capital formation. 15

U.S.C. § 78c(f).

13The total shares outstanding, market

capitalization and index weight of the seven

component securities as of April 3, 1997 are as

follows: Ameritech, 549,391,000 shares,

$32,620,090,625, 13.68% weight; AT&T,

1,620,284,000 shares, $54,887,120,500, 23.02%

weight; Bell Atlantic, 437,769,000 shares,

$26,101,976,625, 10.95% weight; BellSouth,

991,206,000 shares, $41,382,850,500, 17.35%

weight; Nynex, 439,989,000 shares,

$19,799,505,000, 8.30% weight; SBC, 916,956,000

shares, $47,796,331,500, 20.04% weight; and US

West, 479,325,000 shares, $15,877,640,625, 6.66%

weight.

14The Commission notes that if the Phlx should

propose to list and trade options overlying a

narrow-based, single-sector index with fewer

stocks, it would be difficult for the Commission to

allow the options to be traded as an index product

pursuant to the Phlx’s option rules.

companies created as a result of the

divestiture of American Telephone and

Telegraph Co. (‘‘AT&T’’) in 1983. The

Index includes seven regional telephone

companies spun off from AT&T and

AT&T itself.6 Currently, the

maintenance standards for the Index

require that at least 90% of the

component stocks in the Index by

weight, and 80% by number, are eligible

for options trading 7 and the number of

stocks in the Index not decrease to less

than eight or increase to more than ten.

If the Index were not to meet these

maintenance criteria, the Exchange is

required to wind down trading in

options overlying the Index by

restricting trading to closing only

transactions and to not open any new

series of options on the Index unless a

new Rule 19b–4 filing is submitted to

the Commission and approved.

On April 1, 1997, two components of

the Index, PacTel and SBC

consummated a merger in which SBC

acquired all of the assets and liabilities

of PacTel. After the close of trading on

April 1, 1997, the surviving company,

SBC, issued to former PacTel

shareholders 0.73145 shares of SBC

common stock for each outstanding

PacTel share as of close of trading on

March 31, 1997. The actual number of

new SBC shares issued in the merger,

however, was not verified until after the

close of trading on April 2, 1997.

Because trading in PacTel was halted on

the New York Stock Exchange (‘‘NYSE’’)

at the close of trading on March 31,

1997 as a result of the merger, the Phlx

calculated the PacTel capitalization for

purposes of determining the Index value

on April 1, 1997 and April 2, 1997 by

using the March 31, 1997 PacTel closing

market value on the NYSE as well as the

number of PacTel shares as of that date.

In addition, because SBC was the

surviving company in the merger and

has continued to trade on the NYSE, the

Phlx calculated SBC’s market

capitalization for April 1, 1997 and

April 2, 1997 by multiplying the realtime price of SBC by the outstanding

shares of SBC before the merger. This

approach, according to the Phlx, was

consistent with that used for other

indices containing these components.

On April 3, 1997 and thereafter, the

Phlx will calculate the Index value

using the market capitalization for SBC

by multiplying the real-time price of

SBC by the total outstanding shares of

SBC after the merger. PacTel price and

share information was dropped from the

Index after the close of trading on April

2, 1997.8 Thus, beginning on April 3,

1997, the Phlx will calculate the Index

using only seven component stocks.

In addition, the Exchange expects that

in the near future, another merger

involving two other Index components

may occur. NYNEX and Bell Atlantic

are proposing a merger with Bell

Atlantic as the surviving company. If

this merger is consummated, the Index

would have only six component stocks.

The Exchange proposes to amend the

maintenance standards to allow the

number of component stocks in the

Index to decrease to six without having

to wind down trading in options

overlying the Index by restricting

trading to closing only transactions and

to not open any new series of options

on the Index unless a new Rule 19b–4

filing is submitted to the Commission

and approved. In addition, in

Amendment No. 1, the Phlx proposes

that no one single stock may comprise

more than 30% of the Index weight.9

The maintenance standards requiring

the number of components not to

exceed ten stocks and 90% of the

component stocks in the Index by

weight, and 80% by number, to be

eligible for options trading will still

apply. In the event that the Index fails

to meet the Index maintenance

standards, the Exchange immediately

would contact the Commission’s

Division of Market Regulation and

restrict trading in the Index options to

closing only transactions and would not

open any new series of options on the

Index unless such failure is determined

by the Exchange not to be significant

and the Commission concurs in that

determination or unless the continued

listing of that class of Index options has

been approved by the Commission

under Section 19(b)(2) of the Act.

II. Commission Findings and

Conclusions

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).10

Specifically, the Commission believes

the proposal is consistent with the

Section 6(b)(5) 11 requirements that the

rules of an exchange be designed to

promote just and equitable principles of

trade, to prevent fraudulent and

manipulative acts and practices, in

general, and to remove impediments to

and perfect the mechanism of a free and

open market and a national market

system, as well as to protect investors

and the public interest.12

Although the proposed maintenance

standards for the Index allow six

component stocks to comprise the

Index, the Commission believes that,

based on the liquidity, large

capitalizations and relative weightings

of the component securities, the options

on the Index can continue to be traded

on the Exchange.13 In addition, the

Commission is satisfied that by limiting

the most highly capitalized stock in the

Index to no more than 30% of the Index

weight, the Exchange has proposed

maintenance criteria to prevent the

Index from being dominated by any one

stock. The Commission believes that

these maintenance standards help to

ensure that the Index is not used as a

surrogate to trade equity options on a

single component.

The Commission reiterates that

should the Index fail to meet the

maintenance criteria, the Exchange

immediately will contact the Division

and restrict trading in the Index options

to closing only transactions and would

not open any new series of options on

the Index unless such failure is

determined by the Exchange not to be

significant and the Commission concurs

in that determination or unless the

continued listing of that class of Index

options has been approved by the

Commission under Section 19(b)(2) of

the Act.14

The Commission finds good cause for

approving the proposed rule change,
Federal Register / Vol. 62, No. 69 / Thursday, April 10, 1997 / Notices 17661

15Securities Exchange Act Release No. 36369

(October 13, 1995), 60 FR 54274.

16 15 U.S.C. 78s(b)(2).

17 17 CFR 200.30–3(a)(12).

and Amendment No. 1 thereto, prior to

the thirtieth day after the date of

publication of the notices of filing

thereof in the Federal Register. First,

the Commission believes that it is in the

public interest to allow the Exchange to

continue listing series of options

overlying the adjusted Index in a timely,

efficient and consistent manner.

Second, the Commission notes that it

previously has approved a proposal to

trade options overlying the Phlx Super

Cap Index that consists of five highlycapitalized, actively-traded component

stocks with no single security

dominating the index weight.15 Finally,

the proposal has been subject to a

substantial portion of the 21-day notice

and comment period and no comments

have been received. Therefore, the

Commission believes it is consistent

with Sections 6(b)(5) and 19(b)(2) of the

Act to approve the proposed rule, and

Amendment No. 1 thereto, on an

accelerated basis.

III. 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 at

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 Phlx. All submissions

should refer to File No. SR–Phlx–97–12,

and should be submitted by May 1,

1997.

It therefore is ordered, pursuant to

Section 19(b)(2) of the Act 16 that the

proposed rule change (SR–Phlx–97–12)

is approved, as amended, on an

accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.17

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–9203 Filed 4–9–97; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

Environmental Impact Statement;

Spencer and Dubois Counties; Indiana

AGENCY: Federal Highway

Administration (FHWA), DOT.

ACTION: Notice of intent.

SUMMARY: The FHWA is issuing this

notice to advise the public that an

Environmental Impact Statement (EIS)

will be prepared for a proposed 36

kilometer (22 mile) realignment of US

231.

FOR FURTHER INFORMATION CONTACT:

Mr. Douglas N. Head, Program

Operations Engineer, Federal Highway

Administration, 575 N. Pennsylvania

Street, Room 254, Indianapolis, Indiana

46204, Telephone: (317) 226–7487, Fax:

226–7341.

SUPPLEMENTARY INFORMATION: The

FHWA, in cooperation with the Indiana

Department of Transportation will

prepare an EIS for the proposed

reconstruction and upgrading of US 231

on new alignment in Spencer and

Dubois counties, Indiana. This 36

kilometer (22 mile) corridor would

connect the new bridge over the Ohio

river near Rockport, being built by the

Kentucky Transportation Cabinet, with

I–64. Construction of this project is

considered necessary to provide a link

between the new Ohio River bridge and

the interstate system in Indiana to

support the National Highway System,

of which US 231 is a part.

Alternatives under consideration

include (1) taking no action; (2)

applying low-cost Transportation

System Management (TSM) techniques,

(3) making isolated improvements to

improve traffic flow on US 231, and (4)

constructing a four-lane divided

roadway on new alignment. TSM

techniques include changes in

signalization, minor lane additions and

geometric improvements, and other

relatively low cost changes that

facilitate the flow of traffic. TSM

techniques emphasize maximum use of

existing facilities. More extensive

capital improvements can also be made

that expand roadway capacity, such as

adding lanes to change the typical

section of a road, eliminating driveway

entrances by use of frontage roads,

bringing shoulder widths up to current

standards and similar measures.

Letters describing the proposed action

and soliciting comments will be sent to

appropriate Federal, State, and local

agencies, and to private organizations

and citizens who have expressed

interest in this project. No additional

formal scoping is planned.

Informational public meetings were

held May 30, 1993 and June 22, 1993.

A public hearing will be held. Public

notice will be given of the time and

place of the hearing. The Draft EIS will

be made available for public and agency

review and comment.

To ensure that the full range of issues

related to the proposed action are

addressed and all significant issues

identified, comments and suggestions

are invited from all interested parties.

Comments or questions concerning this

proposed action and the EIS should be

directed to the FHWA at the address

provided above.

(Catalog of Federal Domestic Assistance

Program No. 20.205, Highway Research,

Planning and Construction. The regulations

implementing Executive Order 12372

regarding inter-governmental consultation on

Federal programs and activities apply to this

program)

Mr. Douglas N. Head,

Program Operations Engineer, Indianapolis,

Indiana.

[FR Doc. 97–9214 Filed 4–9–97; 8:45 am]

BILLING CODE 4910–22–M

DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

[FRA Docket No. RSGM–96–3]

Petition for Waiver of Compliance

In accordance with Part 211 of Title

49 Code of Federal Regulations (CFR),

notice is hereby given that the Federal

Railroad Administration (FRA) received

a request for a waiver of compliance

with certain requirements of its safety

standards. The individual petition is

described below, including the party

seeking relief, the regulatory provisions

involved, the nature of the relief being

requested, and the petitioner’s

arguments in favor of relief.

SMS Rail Service Incorporated

SMS Rail Service Incorporated seeks

a permanent waiver of compliance from

certain sections of 49 CFR Part 223.11

(a), (b), and (c), Safety Glazing

Standards, for three locomotives, SLRS

1293, SLRS 1494, and SLRS 300.

Locomotive SLRS 300 has broken

glazing in several locations.

Interested parties are invited to

participate in these proceedings by

submitting written views, data, or