23310 Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Notices

6 15 U.S.C. 78f(b)(5).

7 In approving this rule, the Commission has

considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

8Securities Exchange Act Release No. 34959

(November 9, 1994), 59 FR 59446 (November 17,

1994).

9Telephone conversation between Stephanie C.

Mullins, Attorney, CBOE and David Sieradzki,

Attorney, SEC on February 18, 1998.

10 15 U.S.C. 78s(b)(2).

11 17 CFR 200.30–3(a)(12).

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

2The Commission has modified parts of these

statements.

3See Securities Exchange Act Release Nos. 24818

(August 19, 1987), 52 FR 31833; 25948 (July 27,

1988), 53 FR 29294; 30625 (April 23, 1992), 57 FR

18534; and 35649 (April 26, 1995), 60 FR 21576.

the proposal is consistent with the

Section 6(b)(5) 6 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

interest.7

The Exchange represents that the

proposal will enable those who solicit

and those who wish to effect

‘‘facilitation’’ crosses to understand and

abide by their disclosure obligations. In

addition, the Exchange represents that

the proposed change will aid in

achieving uniformity with regard to

trading crowd expectations, as well as to

the type and amount of information

disclosed on crossed and solicited

orders. The Commission supports the

Exchange’s efforts to review and clarify

its rules relating to disclosure

obligations of market participants. This

is particularly true where, as here, the

rule being clarified addresses priority

accorded to orders on the floor of the

Exchange. The Commission believes

that the proposed rule change will help

specify what information must be

disclosed on crossed and solicited

orders.

In November, 1994, when the

Exchange adopted Rule 6.9, Solicited

Transactions, the Exchange recognized

the importance of fully disclosing the

orders that comprise a solicited

transaction to the trading crowd. The

Exchange stated that if orders

comprising a solicited transaction were

not suitably exposed to the trading

crowd ‘‘the execution of such orders

would be inconsistent with the open

auction market principles governing the

execution of orders on the CBOE’s

floor.’’ 8 By clarifying disclosure

requirements with respect to solicited

transactions, the current proposal

should improve the ability of the

Exchange to ensure that customer orders

receive full consideration by the trading

crowd.

The Commission finds good cause for

approving Amendment No. 2 to the

proposed rule change prior to the

thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register. Amendment No. 2

adds option class and series to the

definition of ‘‘Terms and Conditions.’’

The Exchange has represented that this

merely codifies the practice on the

options trading floor to disclose an

option’s class and series in effecting a

‘‘facilitation’’ cross or solicited

transaction.9 Further, the Commission

notes that the original proposal was

published for the full 21-day comment

period and no comments were received

by the Commission. Accordingly, the

Commission believes it is appropriate to

approve Amendment No. 2 to the

Exchange’s proposal on an accelerated

basis.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

2 including whether the proposed rule

change is consistent with the Act.

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 provision

of 5 U.S.C. 552, will be available for

inspection and copying at the

Commission’s Public Reference Room.

Copies of such filing will also be

available for inspection and copying at

the principal office of the abovementioned self-regulatory organization.

All submissions should refer to File No.

SR–CBOE–97–40 and should be

submitted by May 19, 1998.

V. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,10 that the

proposed rule change (SR–CBOE–97–

40) is approved as amended.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–11165 Filed 4–27–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39894; File No. SR–DTC–

97–23]

Self-Regulatory Organizations; The

Depository Trust Company; Notice of

Filing and Immediate Effectiveness of

a Proposed Rule Change Modifying

Issue Eligibility Requirements

April 21, 1998.

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

Securities Exchange Act of 1934

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

January 5, 1998, The Depository Trust

Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which items have been

prepared primarily by DTC. 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 proposed rule change modifies

DTC’s existing operational arrangements

necessary for a securities issue to

become eligible for the services of DTC.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

DTC 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. DTC has 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

Change

DTC’s operational arrangements 3

currently incorporate the guidelines for

income, reorganization, and redemption

payments (‘‘principal and income

payments’’) established by the Same

Day Funds Payment Task Force of the

U.S. Working Committee, Group of

Thirty Clearance and Settlement Project
Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Notices 23311

4The U.S. Working Committee of the Group of

Thirty is an organization consisting of

representatives from broker-dealers, banks, and

financial intermediaries charged with analyzing the

existing clearance and settlement systems in the

U.S.

5 DTC included the text of its updated operational

arrangements as an exhibit to its proposed rule

change which is available for inspection and

copying at the Commission’s public reference room

and through DTC.

6 If an issuer or agent continually fails to make

payments and provide the related payment detail in

a timely manner, DTC may decide not to allocate

such payments to participants on the payable date.

7 DTC undertakes to make available to issuers that

execute blanket LORs any future modifications in

the operational arrangements. Upon review, issuers

will have the opportunity to withdraw their blanket

LORs.

8These LORs were chosen to be replaced first

because these securities types account for the

highest volume of repeat requests for DTC eligibility

from issuers.

9 15 U.S.C. 78q–1(b)(3)(F).

10 15 U.S.C. 78s(b)(3)(A)(i).

11 17 CFR 240.19b–4(e)(1).

12 17 CFR 200.30–3(a)(12).

1The Board initially filed this proposal on

December 22, 1997. However, a substantive

amendment was requested to restore rule language

that had been deleted. The Board filed Amendment

No. 1 on March 12, 1998. Pursuant to section 19(b),

Amendment No. 1 is subject to notice and

comment; thus, the proposed rule change is deemed

filed as of the date of the amendment. 15 U.S.C. 78s.

On April 22, 1998, the Board filed Amendment

No. 2 clarifying the underwriter’s obligation if it

prepares the official statement on behalf of issuers.

See letter from Ernesto A. Lanza, Assistant General

Counsel, MSRB, to Katherine A. England, Esq.,

Assistant Director, Division of Market Regulation,

SEC, dated April 22, 1998.

(‘‘P&I Task force’’).4 The purpose of the

proposed rule change is to update DTC’s

issue eligibility requirements.5

DTC’s operational arrangements

include requirements that all payments

to DTC of principal and income be made

in same-day funds on payment date by

2:30 p.m. Eastern Time (‘‘ET’’) and that

CUSIP information be provided in

automated form early enough to allow

the funds received to be matched with

the related issues. In order to help

assure that these requirements are met,

the operational arrangements have been

modified to require issuers to remit

funds for all principal and income

payments to paying agents or

intermediaries by 1:00 p.m. ET or by

such earlier time as required by the

paying agent to guarantee that DTC will

receive payment in same-day funds by

2:30 p.m. ET on payable date.6

In addition, the current operational

arrangements require the submission of

individual letters of representations

(‘‘LORs’’) each time an issuer wants to

distribute securities of a type for which

DTC requires an LOR. DTC uses sixteen

different LORs for various types of

municipal and corporate securities and

money market instruments. The

modified arrangements introduce the

use of a blanket LOR which an issuer

only needs to submit to DTC once for all

issues. A blanket LOR eliminates the

need for the submission of individual

LORs each time the issuer wishes to

distribute certain securities.7

The proposed rule change replaces

only three of the LORs with the blanket

LORs: the book entry only municipal

bond LOR, the book entry only

municipal note LOR, and the book entry

only municipal variable rate demand

obligation LOR.8 As issuers gain

experience with the use of blanket

LORs, DTC will eliminate additional

individual LORs.

DTC believes that the proposed rule

change is consistent with Section

17A(b)(3)(F) 9 in that it should maximize

the number of issues that can be made

depository eligible while ensuring

orderly processing and timely payments

to participants.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DTC does not believe that the

proposed rule change will impose any

burden on competition 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 subject principal and income

guidelines incorporated in the proposed

operational arrangements have been

endorsed by the Corporate Trust

Advisory Board of the American

Bankers Association, the Bank

Depository User Group, the Corporate

Trust Advisory Committee of the

Corporate Fiduciaries Association of

New York City, the New York Clearing

House Securities Committee, The Bond

Market Association, and the Securities

Industry Association.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the foregoing rule change

constitutes an interpretation with

respect to the meaning, administration,

or enforcement of an existing rule of

DTC, it has become effective pursuant to

Section 19(b)(3)(A)(i) of the Act 10 and

Rule 19b–4(e)(1) thereunder.11 At any

time within sixty days of the filing of

the 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,

including whether the proposed rule

change is consistent with the Act.

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 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 DTC. All submissions

should refer to the File No. SR–DTC–

97–23 and should be submitted by May

19, 1998.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–11168 Filed 4–27–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39904; File No. SR–MSRB–

97–14]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Municipal Securities Rulemaking

Board Relating to Rule G–32, on

Disclosures in Connection With New

Issues

April 22, 1998.

On March 12, 1998,1 the Municipal

Securities Rulemaking Board (‘‘Board’’

or ‘‘MSRB’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) a proposed

rule change (File No. SR–MSRB–97–14),

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

Securities Exchange Act of 1934