Federal Register / Vol. 63, No. 88 /Thursday, May 7, 1998 / Notices 25249

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

2 17 CFR 240.19b–4.

3See letter from Scott Van Hatten, Legal Counsel,

Derivative Securities, Amex, to Michael Walinskas,

Senior Special Counsel, Division of Market

Regulation, Commission (April 20, 1998)

(‘‘Amendment No. 1’’). Amendment No. 1 specifies

that on April 16, 1998, the Exchange’s Board of

Governors approved the submission of the instant

proposed rule change to the Commission.

4Exchange Act Release No. 23573 (August 28,

1986), 51 FR 31859 (September 5, 1986).

5Consistent with customary Exchange practice, at

least two weeks prior to the implementation of the

proposed change to the Institutional Index value

and the resulting adjustments to the outstanding

Institutional Index options contracts, the Exchange

will issue an information circular to its members

setting forth the Index’s current and new divisors,

the manner in which the Index will be adjusted, the

adjusted contract symbols, amounts and strike

prices for outstanding XII series and the effective

date of the adjustments.

III based on the relative net asset value

per share. Applicant paid approximately

$60,878 in expenses related to the

reorganization.

Filing Dates: The application was

filed on April 23, 1997 and amended on

April 16, 1998.

Applicant’s Address: One Financial

Center, Boston, Massachusetts 02111.

The Brazilian Investment Fund, Inc.

[File No. 811–6248]

Summary: Applicant seeks an order

declaring that it has ceased to be an

investment company. By December 31,

1997, applicant completed a liquidating

distribution to its stockholders as net

asset value. Expenses incurred in

connection with the liquidation totaled

$281,530 and were borne by applicant.

Filing Dates: The application was

filed on January 7, 1998. Applicant has

agreed to file an amendment during the

notice period, the substance of which is

incorporated in this notice.

Applicant’s Address: c/o Morgan

Stanley Asset Management Inc., 1221

Avenue of the Americas, New York,

New York 10020.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 98–12147 Filed 5–6–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39933; File No. SR–AMEX–

98–15]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the American Stock

Exchange, Inc., and Amendment No. 1

Thereto Relating to a Reduction in the

Value of, and Increase in Position and

Exercise Limits for, the Institutional

Index

April 30, 1998.

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

Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on April 7,

1998, the American Stock Exchange,

Inc. (the ‘‘Amex’’ or the ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (the ‘‘Commission’’) the

proposed rule change as described in

Items I and II below, which Items have

been prepared by the Exchange. On

April 20, 1998, the Amex filed an

amendment to the proposal.3 The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons and to

grant accelerated approval for the

proposed rule.

I. Self Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Amex proposes to split the

Institutional Index (the ‘‘Index’’ or

‘‘XII’’) to one-half its current value and

correspondingly amend Exchange Rule

904C to double the position and

exercise limits for XII options.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

Amex included statements concerning

the purpose of and basis for the

proposed rule change. No written

comments were solicited or received

with respect to the proposed rule

change. The text of these statements

may be examined at the places specified

in Item IV below. The Amex 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 the

Statutory Basis for, the Proposed Rule

Change

(1) Purpose

On August 28, 1986, the Commission

granted the Exchange approval to permit

the trading of options on the

Institutional Index, a broad market

index based on the 75 major stocks

currently held in the highest dollar

amounts in institutional portfolios that

have a market value of more than $100

million in investment funds.4 Initially,

the aggregate value of the stocks

contained in the Institutional Index was

reduced by a divisor to establish an

index benchmark value of 250. Since its

creation, and as of the date of this filing,

the level of the Institutional Index has

increased nearly fivefold from 250 to

1218.

As a consequence of the Index’s rising

value, premium levels for the

Institutional Index options have also

risen. These higher premium levels have

been cited as a principal factor that has

discouraged retail investors and some

small market professionals from trading

these Index options. As a result of the

foregoing, the Exchange is proposing to

decrease the Institutional Index to onehalf of its present value. The Exchange

believes that decreasing the Index value

may make the Index options more

attractive to retail investors and other

market professionals and therefore more

competitive with other products in the

marketplace.

To decrease the Index’s value, the

Exchange will double the divisor used

in calculating the Index. The Exchange

suggests that the lower valued Index

will result in a substantial lowering of

the dollar values of options premiums

for the Institutional Index contracts. The

Exchange plans to adjust outstanding

series similar to the manner in which

equity options are adjusted for a 2-for1 stock split.5 On the effective date of

the split ‘‘ex-date,’’ the number of

outstanding Institutional Index option

contracts will be doubled and strike

prices halved. No other changes are

proposed as to the components of the

Index, its method of calculation (other

than the change in the divisor),

expiration style of the options or any

other Index specification.

a. Position and Exercise Limits.

Currently, position and exercise limits

for the Institutional Index equal 100,000

contracts on the same side of the market

of which no more than 25,000 contracts

may be used to realize any differential

in price between the Institutional Index

and the securities underlying the Index.

Although the limitation of up to 25,000

contracts for purposes of realizing any

differential in price between the

Institutional Index and the securities

underlying the Index will remain

unchanged, the Exchange proposes to

double the Index’s position and exercise

limits to 200,000 contracts on the same

side of the market. The change in

position and exercise limits will be

made in conjunction with the

simultaneous reduction of the Index’s

value and the doubling of the number of

contracts. Accordingly, an investor who

is currently at the 100,000 contract limit

will, as a result of doubling the number

of contracts, automatically hold 200,000
25250 Federal Register / Vol. 63, No. 88 /Thursday, May 7, 1998 / Notices

6Exchange Act Release No. 39338 (November 19,

1997), 62 FR 63209 (November 26, 1997).

7U.S.C. 78f(b).

8U.S.C. 78f(b)(5).

9U.S.C. 78s(b)(2). 10See supra note 5.

11See supra note 4.

12 15 U.S.C. 78s(b)(2).

13 15 U.S.C. 78f(b)(5).

14 15 U.S.C. 78s(b)(2).

15 17 CFR 200.30–3(a)(12).

contracts based on the lowered Index

value. Similar to the treatment approved

concerning the recent split of the

Standard & Poor’s 100 Stock Index,6

thus, market participants will be able to

maintain their current level of

investment in XII options following the

split of the Index.

The new limits will be economically

equivalent to the Index’s present limits

in that the dollar value represented by

the contracts at the new position limit

will remain the same as before the split.

In addition, the existing Index

components will remain the same and

maintain their existing respective

weights in the Index. Further, existing

surveillance procedures will continue to

apply to the Index. Therefore, the

Exchange believes that there will be no

additional potential for manipulation of

the Index or the underlying securities

resulting from the doubling of position

limits in conjunction with the halving of

the Index level.

(2) Statutory Basis

The proposed rule change is

consistent with Section 6(b) of the Act,7

in general, and furthers the objectives of

Section 6(b)(5),8 in particular, in that it

is designed to prevent fraudulent and

manipulative acts and practices, to

promote just and equitable principles of

trade, to foster cooperation and

coordination with persons engaged in

facilitating transactions in securities,

and to remove impediments to and

perfect the mechanism of a free and

open market and a national market

system.

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.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No written comments were solicited

or received with respect to the proposed

rule change.

III. Commission’s Findings and Order

Granting Accelerated Approval of the

Proposed Rule Change

The Exchange has requested that the

proposed rule change be given

accelerated effectiveness pursuant to

Section 19(b)(2) of the Act.9

After careful review, 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 believes that reducing the

value of the Index will serve to promote

the public interest and help remove

impediments to a free and open

securities market by providing a broader

range of investors with a means of

hedging exposure to market risk

associated with securities representing

highly capitalized companies. Doubling

the Index divisor should result in the

Index options premiums being more

affordable, enabling more retail

investors and other market professionals

to utilize this trading vehicle, resulting

in a more active and liquid trading

environment.

The Commission also believes that

Amex’s adjustments to its position and

exercise limits are appropriate and

consistent with the Act. In particular the

Commission believes that the position

and exercise limits are reasonable in

light of the fact that the size of the

contract on the Index will be halved.

Doubling the position and exercise

limits, therefore will permit market

participants to maintain, after the split

of the Index, their current level of

investment in XII options.

Furthermore, the Commission

believes that doubling the Index’s

divisor will not have an adverse market

impact or make trading in Index options

susceptible to manipulation. After the

split, the Index will continue to be

comprised of the same stocks with the

Same weightings and will be calculated

in the same manner, except for the

proposed change in the divisor. The

commission notes that the Amex’s

surveillance procedures will also

remain the same.

The Commission also notes that the

Exchange will provide notice of the

proposed changes to the Index and the

XII contracts to its membership through

an information circular.10

The Commission believes that the

Amex information circular will provide

adequate notice to market participants

regarding this change to Index value and

the XII contract prior to its

implementation.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice of filing thereof

in the Federal Register. Accelerating

approval of this proposal will extend

the noted benefits of the proposal as

quickly as possible to market

participants. The Commission further

believes that the proposed change of the

Index’s divisor does not substantially

change the character of the Index

options as approved by the Commission

on August 28, 1986,11 and otherwise

does not raise any new or unique

regulatory issues. Accordingly, the

Commission believes it is consistent

with Sections 19(b)(2)12 and 6(b)(5)13 of

the Act to approve the proposed rule

change on an accelerated basis.

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 Amex. All submissions

should refer to the file number in the

caption above and should be submitted

by May 28, 1998.

V. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,14 that the

proposed rule change (SR-Amex-98-15)

is hereby approved on an accelerated

basis.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.15

Jonathan G. Katz,

Secretary.

[FR Doc. 98–12144 Filed 5–6–98; 8:45]

BILLING CODE 8010–01–M