Federal Register / Vol. 63, No. 96 /Tuesday, May 19, 1998 / Notices 27609

4 15 U.S.C. 78o–3.

5 17 CFR 200.30–3(a)(12).

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

reports as that term is defined in NYSE

Rule 472, by the signature or initial of

a supervisory analyst approved

pursuant to NYSE Rule 344. Any other

material requiring supervisory approval

would continue to require approval by

an NASD registered principal.

2. Statutory Basis

NASD believes that the proposed rule

change is consistent with the provisions

of Section 15A(b)(6) 4 of the Act, which

require that the rules of the Association

be designed to promote just and

equitable principles of trade, and, in

general, to protect investors and the

public interest, in that the proposed rule

change, by permitting approval of

research reports by a supervisory

analyst to satisfy NASD principal

approval requirements of such reports

according to standards comparable to

the NASD requirements, preserves the

investor protection goals of the NASD

rules and eliminates duplicative

regulatory requirements.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

NASD Regulation does not believe

that the proposed rule change will result

in any burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act, as amended.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

NASD Regulation has neither

solicited nor received comments on the

proposed rule change.

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 such proposed

rule change, or

B. Institute proceedings to determine

whether the proposed rule change

should be disapproved.

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 a 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 persons, 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 the filing will also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to File No.

SR–NASD–98–28 and should be

submitted by June 9, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–13183 Filed 5–18–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39981; File No. SR–NYSE–

98–11]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the New York Stock Exchange, Inc. To

Amend Rule 97, ‘‘Limitation on

Members’ Trading Because of Block

Positioning,’’ To Except Transactions

That Facilitate Certain Customer Stock

Transactions, and To Except Certain

Transactions Made To Rebalance an

Index Portfolio

May 11, 1998.

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

Securities Exchange Act of 1934

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

March 30, 1998, the New York Stock

Exchange, Inc. (‘‘Exchange’’ or ‘‘NYSE’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule changes as described in

Item I, II, and III below, which Items

have been prepared by the Exchange.

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 would

amend Exchange Rule 97, ‘‘Limitation

on Members’ Trading Because of Block

Positioning,’’ to except transactions that

facilitate certain customer transactions

in: (i) basket of stock; (ii) blocks of

stock; (iii) specific stocks within a

basket of stocks; and (iv) index

component stocks. The proposal would

also would except certain transactions

made to rebalance an index portfolio.

The following is the text of Exchange

Rule 97 marked to reflect the proposed

rule change. Additions to the current

text appear in italics while deletions

appear in brackets.

Limitation on Members’ Trading

Because of Block Positioning

Rule 97 (a) When a member

organization holds any part of a long

position in a stock in its trading account

resulting from a block transaction it

effected with a customer, such member

organization may not effect the

following transactions for any account

in which it has a direct or indirect

interest for the remainder of the trading

day on which it acquired such position:

(i) a purchase on a ‘‘plus’’ tick if such

purchase would result in a new daily

high;

(ii) a purchase on a ‘‘plus’’ tick within

one-half hour of the close;

(iii) a purchase on a ‘‘plus’’ tick at a

price higher than the lowest price at

which any block was acquired in a

previous transaction on that day; or

(iv) a purchase on a ‘‘zero plus’’ tick

of more than 50% of the stock offered

at a price higher than the lowest price

at which any block was acquired in a

previous transaction on that day.

For purposes of the restrictions in

subparagraph (iii) and (iv) above, in the

case where more than one block was

acquired during the day, the lowest

price of any such block will be the

governing price.

(b) The provisions of paragraph (a)

shall not apply to transactions made:

(1) For bona fide arbitrage or to engage

in the purchase and sale, or sale and

purchase of securities of companies

involved in publicly announced merger,

acquisition, consolidation, tender, etc.;

(2) To offset a transaction made in

error;

(3) To facilitate the conversion of

options;

(4) By specialists in the stocks in

which they are registered; [or]

(5) To facilitate the sale of a block of

stock or a basket of stocks by a

customer[.];
27610 Federal Register / Vol. 63, No. 96 /Tuesday, May 19, 1998 / Notices

2See Securities Exchange Act Release No. 35837

(June 12, 1995), 60 FR 31749 (June 16, 1995).

(6) To facilitate an existing customer’s

order for the purchase of a block of

stock, or a specific stock within a basket

of stocks, or a stock which is being

added to or reweighed in an index, at

or after the close of trading on the

Exchange, provided that the facilitating

transactions are recorded as such and

the transactions in the aggregate do not

exceed the number of shares required to

facilitate the customer’s order for such

stock; or

(7) Due to a stock’s addition to an

index or an increase in a stock’s weight

in an index, provided that the

transactions in the aggregate do not

exceed the number of shares required to

rebalance the index portfolio.

Supplementary Material

.10 Definitions. A block positioner is

a member organization which engages,

either regularly or on an intermittent

basis, in a course of business of

acquiring positions to facilitate the

handling of customers; order’s on the

Floor of the Exchange. For the purposes

of this Rule, a block shall mean a

quantity of stock having a market value

of $500,000 or more which is acquired

by a number organization on its own

behalf and/or others from one or more

buyers or sellers in a single transaction.

For purposes of this Rule, a ‘‘basket

of stocks’’ shall mean a group of 15 or

more stocks having a total market value

of $1 million or more.

For purposes of this Rule, an ‘‘index’’

shall mean a publicly disseminated

statistical composite measure based on

the price of market value of the

component stocks in a group of stocks.

.20–.50 No change.

II. Self-Regulatory Organizations’;

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change.

In its filing with the Commission, the

Exchange included statements

concerning the purposes 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

Exchange has prepared summaries, set

forth in Sections A, B, and C below, of

the most significant aspects of such

statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

Exchange Rule 97 currently prohibits

a member organization that holds any

part of a long stock position in its

trading account, which position resulted

from a block transaction it effected with

a customer, from purchasing for an

account in which it (i.e., the block

positioning member organization) has a

direct or indirect interest, additional

shares of each stock on a ‘‘plus’’ or

‘‘zero plus’’ tick under certain

conditions for the remainder of the

trading day on which the member

organization acquired the long position.

Under Exchange Rule 97, the term

‘‘block’’ is defined as a quantity of stock

having a market value of $500,000 or

more that was acquired in a single

transaction.

The restrictions in Exchange Rule 97

presently do not apply to transactions

that: (i) involve bona fide arbitrage or

the purchase and sale (or sale and

purchase) of securities of companies

involved in a publicly announced

merger, acquisition, consolidation or

tender offer; (ii) offset transaction made

in error; (iii) facilitate the conversion of

options; (iv) are engaged in by

specialists in their specialty stocks; or

(v) facilitate the sale of a block of stock

by a customer.

Exchange Rule 97 was adopted to

address concerns that a member

organization might engage in

manipulative practices by attempting to

‘‘mark-up’’ the price of a stock to enable

the position acquired in the course of

block positioning to be liquidated at a

profit, or to maintain the market at the

price at which the position was

acquired. The ‘‘tick’’ restrictions of

Exchange Rule 97 are designed to

address these specific concerns. The

current exceptions under Exchange Rule

97 permit certain types of purchases

that are effected for a permitted

purpose, but do not include transactions

solely effected to increase the block

positioner’s position.

The Exchange seeks to amend

Exchange Rule 97 to provide certain

additional exceptions. The proposed

additional exceptions would apply to

purchases by the block positioning

member organization that increase a

position in order to: (i) facilitate the sale

of a basket of stocks by a customer; and

(ii) facilitate an existing customer’s

order for the purchase of a block of

stock, a specific stock within a basket of

stocks, or a stock being added to or

reweighted in an index, at or after the

close of trading on the Exchange. The

proposal requires that these facilitating

transactions be recorded as such and the

transactions in the aggregate may not

exceed the number of shares required to

facilitate the customer’s order for such

stock. Finally, the proposal would add

an exception for transactions made due

to a stock’s addition to an index or an

increase in a stock’s weight in an index

provided that the transactions in the

aggregate do not exceed the number of

shares required to rebalance the index

portfolio.

With respect to revised paragraph

(b)(5), the proposal would extend the

exception, which currently applies to a

subsequent facilitation trade of block

size ,to a facilitation trade of less than

block size provided that the stock was

part of a ‘‘basket’’ of stocks being sold

by a customer. Proposed Supplementary

Material .10, ‘‘Definitions,’’ defines the

term ‘‘basket’’ as a group of 15 or more

stocks having a market value of one

million dollars or more.

As to proposed paragraph (b)(6), the

proposal would permit a block

positioner to purchase stock to increase

its position up to the amount required

to facilitate a customer’s purchase at the

close or after-hours of a block of stock,

a specific stock within a basket of

stocks, or a stock being added to or

reweighted in an index, provided the

firm has an existing customer’s order for

the at-the-close or after-hours purchase.

This provision will permit a member

organization to position stock to effect a

cross with a customer at or after the

close. The proprietary purchase would

be required to be recorded in a manner

which identifies them as transactions

entered into for the purpose of

facilitating the customer buy

transaction. Also, the transactions in the

aggregate could not exceed the number

of shares required to facilitate the

customer’s order.

The block positioner’s purchases

exempted under proposed paragraph

(b)(6) would, however, remain subject to

the limitations on positioning to

facilitate customer orders as discussed

in Exchange Information Memorandum

No. 95–28, ‘‘Positioning to Facilitate

Customer Orders.’’ 2 These limitations

generally preclude a block positioner,

that has committed to sell securities

after the close to a customer at the

closing price, from being in the market

on a proprietary basis after 3:40 p.m.

when it has left a portion of its

positioning to be executed at the close,

and such at-the-close proprietary order

can be reasonably expected to impact

the closing price.

Finally, with regard to proposed

paragraph (b)(7), the proposal would

allow a block positioner to increase its

proprietary portion in a stock where

such stock is being added to an index

or its weight in an index is being

increased. However, purchases in the
Federal Register / Vol. 63, No. 96 /Tuesday, May 19, 1998 / Notices 27611

3 15 U.S.C. 78f(b)(5). 4 17 CFR 200.30–3(a)(12).

aggregate may not exceed the number of

shares required to rebalance an index

portfolio.

The Exchange believes the proposed

exceptions in paragraphs (b)(5) and

(b)(6) to facilitate certain customer

transactions are appropriate because

these types of transactions are effected

to accommodate a customer. The

Exchange further believes the proposed

exception in paragraph (b)(7) for

additions to, or increased weigh in, an

index is appropriate because such

purchases are usually made at the close

of trading to obtain the closing price of

the index and therefore are indifferent

to the price level so long as it represents

the closing valuation.

The proposal also would expand the

Rule’s Supplementary Material, Section

.10, ‘‘Definitions,’’ to provide

definitions for the terms ‘‘basket’’ and

‘‘index,’’ which terms are used in

proposed paragraphs (b)(5), (b)(6), and

(b)(7). The term ‘‘basket’’ would be

defined as a group of 15 or more stocks

having a total market value of $1 million

or more. The Exchange has represented

that this definition is consistent with

the use of ‘‘basket’’ in the definition of

program trading that appears in

Exchange Rule 80A. The proposal

would define ‘‘index’’ as a publicly

disseminated statistical composite

measure based on the price or market

value of the component stocks in a

group of stocks. The Exchange believes

this definition would preclude the

possibility of a firm creating an ‘‘index’’

for the purpose of circumventing the

restrictions of the Rule.

2. Statutory Basis

The Exchange believes the proposed

rule change is consistent with Section

6(b)(5) of the Act 3 in that it is designed

to facilitate transactions in securities,

and remove impediment to and perfect

the mechanism of a free and open

market. The Exchange believes the

proposed rule change would permit

trading by member organizations, when

appropriate, to facilitate customer

trading, and would thereby add depth,

liquidity, and quality to the market for

Exchange-traded securities.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will 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

The Exchange has neither solicited

nor received written comments on the

proposed rule change.

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 Exchange 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

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

submissions, 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 persons, 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 in 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 Exchange. All submissions

should refer to File No. SR–NYSE–98–

11 and should be submitted by June 9,

1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.4

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–13182 Filed 5–18–98; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

Application of Servant Air, Inc. for New

Certificate Authority

AGENCY: Department of Transportation.

ACTION: Notice of order to show cause

(Order 98–5–21) Docket OST–97–3022.

SUMMARY: The Department of

Transportation is directing all interested

persons to show cause why it should

not issue an order (1) finding Servant

Air, Inc., fit, willing, and able, and (2)

awarding it a certificate of public

convenience and necessity to engage in

interstate scheduled air transportation

of persons, property, and mail, using

aircraft with no more than nine

passenger seats.

DATES: Persons wishing to file

objections should do so no later than

June 2, 1998.

ADDRESSES: Objections and answers to

objections should be filed in Docket

OST–97–3022 and addressed to the

Department of Transportation Dockets

SVC–124.1, Room PL–401), U.S.

Department of Transportation, 400

Seventh Street, SW., Washington, DC

20590 and should be served upon the

parties listed in Attachment A to the

order.

FOR FURTHER INFORMATION CONTACT: Mrs.

Kathy Lusby Cooperstein, Air Carrier

Fitness Division (X–56, Room 6401),

U.S. Department of Transportation, 400

Seventh Street, SW., Washington, DC

20590, (202) 366–2337.

Dated: May 13, 1998.

Charles A. Hunnicutt,

Assistant Secretary for Aviation and

International Affairs.

[FR Doc. 98–13181 Filed 5–18–98; 8:45 am]

BILLING CODE 4910–62–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

FAA Approval of Noise Compatibility

Program and Determination on

Revised Noise Exposure Maps

AGENCY: Federal Aviation

Administration.

ACTION: Notice.

SUMMARY: The Federal Aviation

Administration (FAA) announces its

findings on a new noise compatibility

program for Charlotte/Douglas

International Airport submitted by the

City of Charlotte, North Carolina, under

the provisions of Title I of the Aviation

Safety and Noise Abatement act of 1979