Federal Register / Vol. 63, No. 91 /Tuesday, May 12, 1998 / Notices 26235

19 17 CFR 200.30–3(a)(12).

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

execution at the stopped price.

Additionally, pursuant to Article XX,

Rule 28, a stopped order constitutes a

guarantee that the order will be

executed at the stopped price or better.

However, under existing rules, if the

size of the order is greater than the size

of the ITS BBO in existence when the

order is received, there is merely no

automatic execution of the order, the

order does not have to be ‘‘stopped.’’

Moreover, even if the order is ‘‘stopped’’

under Rule 28 only that portion of the

order that is less than or equal to the

size of the ITS BBO is stopped. The

portion of the order that exceeds the ITS

BBO is not stopped. As proposed, the

entire size of the order (up to 599

shares) would be automatically stopped

after the 30 second delay unless an

exception applies.

This better guarantee can be

illustrated by an example. Suppose the

ITS BBO is $20 bid, $201⁄4 offered, 400

shares × 10,000 shares. Suppose further

that a 500 share agency market order to

sell is entered into the MAX System.

Under current CHX rules, the order

would not be automatically executed.

The specialist would be required to

manually execute 400 shares at $20. The

remaining 100 shares would have to be

executed at the next best prevailing

price. If $20 were out of range, there

would also be no automatic execution.

If the customer requested a stop, then a

specialist would stop 400 shares of the

order at $20, i.e., offer 400 shares at

$201⁄16 and guarantee an execution at no

worse than $20. The remaining 100

shares would be guaranteed an

execution (pursuant to the BEST Rule),

but not necessarily an execution at $20.

Under Rule 37(b)(10), as proposed to be

amended, if the specialist did nothing,

after 30 seconds, all 500 shares of the

order would be stopped. Thus, the

customer would be guaranteed an

execution of no worse than $20 for all

500 shares.

The Exchange believes that the 30

second delay between the time the order

is entered and the time that the order is

stopped is appropriate. The 30 seconds

will give the specialist an opportunity to

review the order to determine whether

a stop is appropriate under the

circumstances.

The ‘‘pending auto-stop’’ feature of

the MAX System will operate from 8:45

a.m. until 2:57 p.m. Thus, only orders

entered into the MAX System after 8:45

a.m. but before 2:57 p.m. will be eligible

to be ‘‘pending auto-stop’’ orders.

In addition to adding the new

‘‘pending auto stop’’ order to the MAX

System the CHX is proposing changes to

the MAX System that would permit a

specialist to manually ‘‘stop’’ a

marketable limit order, regardless of

size.

2. Statutory Basis

The proposed rule change is

consistent with Section 6(b)(5) of the

Act in that it is designed to promote just

and equitable principles of trade, to

remove impediments and to perfect the

mechanism of a free and open market

and a national market system, and, in

general, to protect investors and the

public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange 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

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 reasons for so finding or

(ii) as to which the self-regulatory

organization consents, the Commission

will:

A. By order approve the proposed rule

change, or

B. Institute proceedings to determine

whether the proposed rule change

should be disapproved.

IV. Solicitation of Comments

Intersted 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

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 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 Exchange. All

submissions should refer to File No.

SR–CHX–98–01 and should be

submitted by June 2, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.19

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–12558 Filed 5–11–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39946; File No. SR–DTC–

98–03]

Self-Regulatory Organizations; The

Depository Trust Company; Notice of

Filing and Immediate Effectiveness of

Proposed Rule Change Relating to

Fees and Charges

May 4, 1998.

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

Securities Exchange Act of 1934

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

February 20, 1998, The Depository Trust

Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’), as amended on March

6, 1998, 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 form interested persons on

the proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change will adjust

the fees charged by DTC for various

services provided.

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),
26236 Federal Register / Vol. 63, No. 91 /Tuesday, May 12, 1998 / Notices

2The Commission has modified the text of the

summaries prepared by DTC.

3The revised fee schedule is attached to DTC’s

rule filing and is available for copying at the

Commission’s public reference room.

4The last full scale revision of DTC’s fees

occurred in 1995 although several revenue

adjustments were made by DTC in early 1996.

5 15 U.S.C. 78q–1.

6 15 U.S.C. 78s(b)(3)(A)(ii)

7 17 CFR 240.19b–4(e)(2).

8 17 CFR 200.30–3(a)(12).

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

2Securities Exchange Act Release No. 39561

(January 20, 1998), 63 FR 3941.

3 Due to the additional processing and tracking of

corporate bearer coupon deposits, DTC intends to

file a proposed rule change with the Commission

in the future to institute a surcharge for the

handling of these deposits.

4For a complete description of CCS, refer to

Securities Exchange Act Release No. 35750 (January

22, 1996), 61 FR 2852 [File No. SR–DTC–95–18]

(order approving proposed rule change).

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

The purpose of the proposed rule

change is to adjust the fees charged for

various services in order to align them

with DTC’s projected service costs for

1998.3 The adjusted fees are based upon

a review of service costs conducted by

DTC’s Board of Directors. This fee

change will be effective for services

provided on and after April 1, 1998.4

DTC believes the 1998 fee schedule

will yield $5.0 million more in

operating revenue annually than the

present fee schedule would have

yielded. DTC believes that the new fees

will result in an average fee increase of

1.0% for participants based on their

monthly bills from DTC for October,

November, and December of 1997.

DTC believes that the proposed rule

change is consistent with the

requirements of Section 17A of the Act 5

and the rules and regulations

thereunder because it provides for the

equitable allocation of dues, fees, and

other charges among DTC’s participants

and other parties that use DTC’s

services.

(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 that is not

necessary or appropriate in furtherance

of the purpose of the Act.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments from DTC

participants or others have not been

received on the proposed rule change.

Participants and other users of DTC’s

services were informed that DTC’s

annual fees would likely increase by

$5.0 million or approximately 1.5% in

a July 2, 1997, memorandum entitled

‘‘Preliminary Projections for 1997 Yearend General Refund and Anticipated

1998 Service Fees.’’ DTC informed

participants and other users of its

services of the proposed fee revisions by

a memorandum dated February 5, 1998,

entitled ‘‘1998 Revisions of DTC Service

Fees.’’ Because participants have

supported cost based fees in the past

and because the subject fee changes

overall are modest, DTC did not

consider necessary a formal period for

participant comment this year.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become

effective pursuant to Section

19(b)(3)(A)(ii) 6 of the Act and pursuant

to Rule 19b–4(e)(2) 7 promulgated

thereunder because the proposal

establishes or changes a due, fee, or

other charge imposed by DTC. 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,

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 also will be available for

inspection and copying at the principal

office of DTC. All submissions should

refer to File No. SR–DTC–98–03 and

should be submitted by June 2, 1998.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–12457 Filed 5–11–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39960; File No. SR–DTC–

97–17]

Self-Regulatory Organizations; The

Depository Trust Company; Order

Approving a Proposed Rule Change

Relating to a Modification of the

Coupon Collection Service

May 5, 1998.

On August 7, 1997, The Depository

Trust Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) and on December 22,

1997, amended a proposed rule change

(File No. SR–DTC–97–17) pursuant to

Section 19(b)(1) of the Securities

Exchange Act of 1934 (‘‘Act’’).1 Notice

of the proposal was published in the

Federal Register on January 27, 1998.2

No comment letters were received. For

the reasons discussed below, the

Commission is approving the proposed

rule change.

I. Description

DTC currently operates a coupon

collection service (‘‘CCS’’), which

provides DTC participants with a

method for collecting interest payable

on coupons from municipal bearer

bonds. The rule change modifies CCS to

include the collection of interest

payable on coupons from corporate

bearer bonds.3

Currently, participants using CCS are

required to deposit coupons in a

standard sealed envelope or ‘‘shell,’’

each of which may contain no more

than 200 coupons for the same CUSIP

number, series, and payable date. DTC

submits the contents of the shells to the

appropriate issuer or paying agent and

credits the interest to the participant’s

account.4 With certain exceptions, DTC

will process corporate bearer bond

coupons through CCS the same way that

it currently processes municipal bearer

bond coupons.