19990 Federal Register / Vol. 63, No. 77 /Wednesday, April 22, 1998 / Notices

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

2 17 CFR 240.19b–4.

3The Series 7 examination is a qualification

examination for persons seeking registration as

general securities representatives.

4See Letter from Joseph M. Klauke, Foley &

Lardner, to Yvonne Fraticelli, Division of Market

Regulation (‘‘Division’’), Commission, dated March

3, 1993 (‘‘Amendment No. 1’’). In Amendment No.

1, the CHX corrected a legal reference in the CHX’s

discussion of the statutory basis for the proposed

rule change. Specifically, Amendment No. 1

replaces a reference to Section 6(c)(3)(8) of the Act

with a reference to Section 6(c)(3)(B) of the Act.

5See Securities Exchange Act Release No. 39721

(March 4, 1998).

6See CHX Article VI, Rule 3, Interpretation and

Policy .01.

7The proposal is limited to associated persons of

members for which the CHX is the DEA because

associated persons of members with a DEA other

than the CHX already are subject to the examination

requirements of the self-regulatory organization

(‘‘SRO’’) which is the DEA for the member firm.

Telephone conversation between Patricia Levy,

General Counsel, CHX, and Yvonne Fraticelli,

Attorney, Office of Market Supervision (‘‘OMS’’),

Division, Commission, on February 25, 1998.

8Associated persons covered by Interpretation

and Policy .02 who fail to register to take the Series

7 examination within 30 days of the CHX’s Notice

to Members must cease doing business. Telephone

conversation between Patricia Levy, General

Counsel, CHX, and Yvonne Fraticelli, Attorney,

OMS, Division, Commission, on April 14, 1998.

Agreement, Augusta Acquisition

Corporation, a wholly owned subsidiary

of AEP, intend to merge with and into

CSW (‘‘Merger’’) on the closing date.

Under the Merger Agreement, among

other things, AEP and CSW have each

agreed to hold meetings of their

shareholders to obtain the shareholder

approvals required to effect the Merger.

AEP proposes to solicit proxies from

its common shareholders to approve

various matters in connection with the

Merger at the annual AEP shareholders

meeting, scheduled in late May 1998.

The AEP shareholders will be asked to

consider and approve a proposed

amendment (‘‘Proposed Amendment’’)

to AEP’s restated certificate of

incorporation to increase the number of

authorized shares of AEP common

stock, provided that the total votes cast

on the proposal represent a majority of

the outstanding shares of AEP common

stock, and the issuance of shares of AEP

common stock. The Proposed

Amendment will be effected, if

approved by AEP’s shareholders,

regardless of whether the Merger is

consummated. AEP states that the

additional authorized shares of AEP

common stock will enable it to respond

to future business needs and

opportunities. Specifically, shares of

AEP common stock would be available

for issuances in connection with

possible investment opportunities,

acquisitions of assets and other

companies, or for other corporate

purposes. Accordingly, AEP requests

that an order authorizing the solicitation

of proxies be issued as soon as

practicable under rule 62(d).

CSW proposes to solicit proxies to

approve the Merger by the affirmative

vote of the holders of a majority of the

outstanding shares of CSW common

stock at the annual CSW shareholders

meeting, scheduled in late May 1998.

Accordingly, CSW requests that an

order authorizing the solicitation of

proxies be issued as soon as practicable

under rule 62(d).

At a later date, AEP and CSW plan to

file an application-declaration with this

Commission requesting authority to

consummate the Merger and related

transactions including, but not limited

to, the issuance of AEP common stock.

It appears to the Commission that

AEP and CSW’s joint declaration

regarding the proposed solicitation of

proxies should be permitted to become

effective immediately.

It is ordered, under rule 62 under the

Act, that the joint declaration regarding

the proposed solicitation of proxies can

become effective immediately, subject to

the terms and conditions contained in

rule 24 under the Act.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–10653 Filed 4–21–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39874; File No. SR–CHX–

98–04]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change by

the Chicago Stock Exchange, Inc.

Relating to Examination Requirements

for Securities Traders

April 14, 1998.

I. Introduction

On February 18, 1998, the Chicago

Stock Exchange, Inc. (‘‘CHX’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’), pursuant to

Section 19(b)(1) of the Securities

Exchange Act of 1934 (‘‘Act’’),1 and

Rule 19b–4 thereunder,2 a proposal to

require certain off-floor CHX members

to successfully complete the Series 7

examination.3 The proposed rule change

and Amendment No. 14 to the proposal

were published for comment in the

Federal Register on March 11, 1998.5

No comments were received regarding

the proposal. This order approves the

proposed rule change, as amended.

II. Description of the Proposal

CHX Rule 3, ‘‘Training and

Examination of Registrants,’’ of Article

VI, ‘‘Restrictions and Requirements,’’

currently authorizes the CHX to

establish examination requirements in

connection with the registration of

partners, officers, options principals,

branch office managers, and registered

representatives of members. Pursuant to

CHX Article VI, Rule 3, the CHX has

adopted examination requirements for

various persons on the CHX floor,

including floor brokers, market makers,

and co-specialists.6 However, the CHX

has no examination requirement for

persons who conduct trading activities

off the CHX floor. The CHX proposes to

add examination requirements for offfloor securities traders and certain other

associated persons of members who are

not covered by the CHX’s current

examination requirements.

Specifically, the CHX proposes to

adopt Interpretation and Policy .02 to

CHX Article VI, Rule 3, which will

require associated persons of members

for which the CHX is the Designated

Examining Authority (‘‘DEA’’) who

execute, make trading decisions with

respect to, or otherwise engage in

proprietary or agency trading of

equities, preferred securities or

convertible debt securities to

successfully complete the Series 7

Examination.7 Interpretation and Policy

.02 will not apply to any associated

person who is subject to the

examination requirements of

Interpretation and Policy .01 because he

or she is physically located on the CHX

floor.

The CHX’s proposal also revises the

text of CHX Article VI, Rule 3, to

provide that the CHX may require that

associated persons of members must

successfully complete a training course

or examination, or both, in connection

with registration.

According to the CHX, the proposal

will bring the CHX’s examination

requirements in line with those of the

major securities exchanges and enhance

the consistency of examination

requirements across the exchanges.

The CHX will phase in the new

examination requirement over a sixmonth period. Specifically, the CHX

will require associated persons who

currently are covered by Interpretation

and Policy .02 to register to take the

Series 7 examination within 30 days of

the Exchange’s publication in a Notice

to Members of the order approving the

effectiveness of the new examination

requirement.8 Persons covered by
Federal Register / Vol. 63, No. 77 /Wednesday, April 22, 1998 / Notices 19991

9 15 U.S.C. 78o(b)(7), 78f(b)(5), and 78f(c)(3)(B)

(1988).

10 15 U.S.C. 78f(b)(5).

11 15 U.S.C. 78s(b)(2).

12 17 CFR 200.30–3(a)(12).

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

2The Commission has modified parts of these

statements.

Interpretation and Policy .02, who must

promptly notify the Exchange that they

have registered to take the Series 7

examination, will have six months from

the date of the CHX’s Notice to Members

to pass the Series 7 examination.

Persons covered by Interpretation and

Policy .02 who become associated with

members after the CHX publishes notice

of the examination requirement in a

Notice to Members must successfully

complete the Series 7 examination

before conducting securities trading

activities for which an examination is

required under the Interpretation and

Policy .02.

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. Specifically, the Commission

finds that the proposal is consistent

with the requirements of Sections

15(b)(7), 6(b)(5), and 6(c)(3)(B) of the

Act.9 Section 15(b)(7) states that a

registered broker or dealer may not

effect any transaction in, or induce the

purchase or sale of, any security unless

the broker or dealer meets certain

standards of operational capability and

all those associated with the broker or

dealer meet certain standards of

training, experience, competence, and

such other qualifications as the

Commission finds necessary or

appropriate in the public interest or for

the protection of investors. Section

6(b)(5) requires, among other things,

that the rules of an exchange be

designed to promote just and equitable

principles of trade, to remove

impediments to and perfect the

mechanism of a free and open market

and a national market system, and, in

general, to protect investors and the

public interest.10 Section 6(c)(3)(B)

provides that a national securities

exchange may examine and verify the

qualifications of an applicant to become

a person associated with a member in

accordance with procedures established

by the rules of the exchange, and require

any person associated with a member,

or any class of such persons, to be

registered with the exchange in

accordance with procedures so

established.

Interpretation and Policy .02 will

require off-floor associated persons of

members for which the CHX is the DEA

who execute, make trading decisions

with respect to, or otherwise engage in

proprietary or agency trading of

equities, preferred securities, or

convertible debt securities to

successfully complete the Series 7

examination. The CHX’s rules currently

contain no examination requirement for

persons covered by Interpretation and

Policy .02. Interpretation and Policy .02

is designed to eliminate this gap in

examination requirements and to make

the CHX’s examination requirements

more consistent with the examination

requirements of the other SROs.

The Commission believes that it is

appropriate for the CHX to establish an

examination requirement for associated

persons covered by Interpretation and

Policy .02. Specifically, the Commission

believes that the CHX’s proposal will

help to ensure that only those associated

persons covered by Interpretation and

Policy .02 who have an understanding

of the Act, will be able to solicit,

purchase or sell securities for the

accounts of customers. The Commission

recognizes the importance to investors

of efforts by the SROs to ensure that

associated persons have appropriate

levels of knowledge and expertise

regarding applicable laws and

regulations. By helping to establish this

level of knowledge, the Commission

believes that the CHX’s proposal will

help associated persons covered by

Interpretation and Policy .02 carry out

their responsibilities under the federal

securities laws.

In addition, the Commission believes

that it is reasonable and consistent with

Section 6(c)(3)(B) of the Act for the CHX

to amend CHX Article VI, Rule 3 to state

that the CHX may establish examination

requirements for members and

associated persons.

IV. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,11 that the

proposed rule change (File No. SR–

CHX–98–04), as amended, is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–10606 Filed 4–21–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39872; File Nos. SR–MCC–

98–01 and SR–MSTC–98–01]

Self-Regulatory Organizations; the

Midwest Clearing Corporation; the

Midwest Securities Trust Company;

Notice of Filing of Proposed Rule

Changes Relating to the Structure and

Composition of the Board of Directors

April 14, 1998.

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

Securities Exchange Act of 1934

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

February 9, 1998, the Midwest Clearing

Corporation (‘‘MCC’’) and the Midwest

Securities Trust Company (MSTC) filed

with the Securities and Exchange

Commission (‘‘Commission’’) and on

February 25, 1998, amended the

proposed rule changes, as described in

Items I, II, and III below, which items

have been prepared primarily by MCC

and MSTC. The Commission is

publishing this notice to solicit

comments on the proposed rule changes

from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Changes

The proposed rule changes will

amend MCC’s and MSTC’s by-laws

relating to the structure and

composition of their board of directors.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Changes

In their filing with the Commission,

MCC and MSTC included statements

concerning the purpose of and basis for

the proposed rule changes and

discussed any comments they received

on the proposed rule changes. The text

of these statements may be examined at

the places specified in Item IV below.

MCC and MSTC have prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

aspects of such statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Changes

The proposed rule changes will

amend MCC’s and MSTC’s by-laws in

order to reflect the cessation of their

securities clearing and depository