Federal Register / Vol. 63, No. 106 /Wednesday, June 3, 1998 / Notices 30279

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 39903

(April 22, 1998), 63 FR 23324.

4 In Amendment No. 1, the Exchange corrected

typographical errors in the proposed rule change.

See Letter from James E. Buck, Senior Vice

President and Secretary, Exchange, to Michael

Walinskas, Deputy Associate Director, Division of

Market Regulation, Commission, dated April 29,

1998 (‘‘Amendment No. 1’’).

5On March 13, 1998, the Exchange submitted a

proposed rule change, which became effective

immediately upon filing pursuant to Section

19(b)(3)(A) of the Act, that interpreted Exchange

Rule 85 to make convertible bonds eligible for

trading in the ABS. See Securities Exchange Act

Release No. 39808 (March 26, 1998), 63 FR 15908

(April 1, 1998).

6New Rule 86 specifies that these bond trading

procedures apply only to bonds ‘‘traded through

ABS.’’ The Exchange trades certain bonds, such as

equity-linked securities, on its stock floor. These

securities are traded pursuant to NYSE equitytrading procedures and are not subject to Rule 86.

See Securities Exchange Act Release No. 32650

(July 16, 1993), 58 FR 39586 (July 23, 1993).

7See Amendment No. 1.

8 15 U.S.C. 78f(b)(5). 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).

9See supra Note 5.

10See Letter from Fred Siesel, Director, Fixed

Income Markets, Exchange, to Kenneth M. Rosen,

Attorney, Division of Market Regulation,

Commission, dated May 21, 1998.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–14675 Filed 6–2–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40036; File No. SR–NYSE–

98–13]

Self-Regulatory Organizations; Order

Granting Approval of Proposed Rule

Change and Notice of Filing and Order

Granting Accelerated Approval to

Amendment No. 1 to Proposed Rule

Change by the New York Stock

Exchange, Inc., Relating to the Trading

of Bonds

May 28, 1998.

I. Introduction

On April 15, 1998, the New York

Stock Exchange, Inc. (‘‘NYSE’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’)1 and Rule 19b–4

thereunder,2 a proposed rule change to

amend its rules and procedures

governing the trading of bonds. The

proposed rule change was published for

comment in the Federal Register on

April 28, 1998.3 No comments were

received regarding the proposal. On

April 30, 1998, the NYSE filed

Amendment No. 1 to the proposed rule

change.4 This order approves the

proposed rule change. In addition, the

Commission is publishing this notice to

solicit comments on Amendment No. 1

to the proposed rule change and is

simultaneously approving Amendment

No. 1 on an accelerated basis.

II. Description of the Proposal

The NYSE proposes to amend its rules

and procedures governing the trading of

bonds. The Exchange seeks to delete

obsolete provisions of its bond trading

rules, to streamline those rules, and to

consolidate the bond trading rules in a

new Exchange Rule 86. In addition, the

proposal would amend Exchange Rule

13, Exchange Rule 61, Exchange Rule

70, Exchange Rule 72, Exchange Rule

76, Exchange Rule 79A, and Exchange

Rule 85.

The Exchange currently trades nonconvertible bonds in its Automated

Bond System (‘‘ABS’’) and convertible

bonds on its bond floor. Later this year,

the Exchange intends to move all bond

trading into the ABS.5 Currently,

various Exchange rules govern the

trading of bonds, particularly Rule 85,

governing the trading of ‘‘cabinet’’

securities. The proposed rule change

provides for uniform bond trading

procedures and consolidates those

procedures in new Rule 86.6 The rule

change: (i) incorporates into new Rule

86 the same price/time priority

matching procedures as Rule 85; (ii)

establishes appropriate cross references

to new Rule 86 in other NYSE rules; and

(iii) eliminates the rules governing

trading on the bond floor, which will no

longer be necessary.

The proposed rule change also alters

the procedure for the crossing of bonds.

Currently, Rule 85 requires that a

member hold a proposed cross for a

‘‘reasonable’’ period of time before

effecting the cross, and that the member

announce the intention to effect the

cross on the bond floor. For the

purposes of the ABS, the Exchange has

interpreted this as requiring a member

to display a proposed cross in the ABS

for two minutes prior to effecting the

trade. Based on its experience, the

Exchange represents that these crossing

procedures are no longer necessary.

Another change to the bond trading

rules moves the rules governing

transactions at wide variations from

Rule 79A.40 to new Rule 86(g). For nonconvertible bonds, the Exchange would

retain the requirement that a Floor

Official approve all sales made two

points away from the last sale or more

than 30 days after the last transaction.

The Exchange would not apply this

requirement in all instances to

convertible bonds, noting such bonds

generally are priced in relation to the

underlying equity security. However,

new Rule 86(g) allows a Floor Governor

to impose the same requirement on the

trading of convertible bonds if market

conditions warrant.

Finally, Amendment No. 1 to the

proposed rule change corrects

typographical errors in the original

submission.7

III. Discussion

After careful review, the Commission

finds that the proposed rule change is

consistent with the requirement of

Section 6 of the Act. In particular, the

Commission believes the proposal is

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

Act.8 Section 6(b)(5) requires, among

other things, that the rules of the

Exchange ‘‘foster cooperation and

coordination with persons engaged in

regulating, clearing, settling, processing

information with respect to, and

facilitating transactions in securities’’

and ‘‘protect investors and the public

interest.’’

The proposed rule change is part of a

large effort to move bond trading from

the bond floor, where trading activity

has declined, to the ABS which should

allow for the more economic and

efficient trading of bonds.9 Moreover, by

consolidating bond trading procedures

in a new Rule 86 and more clearly

defining aspects of the ABS in that rule,

bond trading at the Exchange should

become more transparent for investors

and market participants.

As for the proposed changes to the

crossing procedures under the ABS, the

Commission is satisfied that safeguards

will prevent crosses from occurring in

the ABS, under new Rule 86, at quotes

outside of the spread reflecting the best

bid and best offer in the ABS. The ABS

will not allow for trading below and

above the highest bid and lowest offer

prices in the ABS without first

completing orders at better prices.10

And although new Rule 86 will no

longer require that a member hold a

proposed bond cross for a ‘‘reasonable’’

period of time before effecting that

cross, the Commission accepts that the

infrequency and small size of crosses for

bonds,—a distinct type of security

traded at the Exchange,—makes this

permissible. The Commission also notes

the character of bond crosses on the

Exchange, with most crosses involving

bond brokers receiving matching buy

and sell orders from two different
30280 Federal Register / Vol. 63, No. 106 /Wednesday, June 3, 1998 / Notices

11 15 U.S.C. 78s(b)(2). 12 17 CFR 200.30–3(a)(12).

correspondent firms within two minutes

of each other. Of course, should the

nature of crosses on the ABS change, so

that crosses become more significant in

size and frequency, the Commission

would expect the Exchange to consider

modifying ABS crossing procedures to

reflect such changes.

Finally, because convertible bonds

generally are priced in relation to an

underlying equity security, it is

acceptable that the new Rule 86 would

not require the same approval process as

that for non-convertible bonds for all

sales made two points away from the

last sale or more than 30 days after the

last transaction. The Commission is

satisfied that the provision allowing a

Floor Governor to impose a more

rigorous approval process when market

conditions warrant should adequately

protect investors.

The Commission finds good cause for

approving proposed Amendment No. 1

prior to the thirtieth day after the date

of publication of notice of filing thereof

in the Federal Register. The

Amendment merely corrects

typographical errors in the original

proposal which received no adverse

comments following its publication.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

1, including whether the proposed

Amendment 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

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the NYSE. All

submissions should refer to the File No.

SR–NYSE–83–13 and should be

submitted by June 24, 1998.

V. Conclusion

It is therefore ordered, pursuant to

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

proposed rule change (SR–NYSE–98–

13), 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. 98–14674 Filed 6–2–98; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

Reports, Forms and Recordkeeping

Requirements; Agency Information

Collection Activity Under OMB Review

AGENCY: Office of the Secretary, DOT.

ACTION: Notice.

SUMMARY: In accordance with the

Paperwork Reduction Act of 1995 (44

U.S.C. Chapter 3501, et seq.) the

Department of Transportation has

submitted the following Information

Collection Request (ICR) abstracted

below to the Office of Management and

Budget (OMB) for review and clearance.

The ICR describes the nature of the

information collection and its expected

burden. The Federal Register Notice

requesting an emergency approval on

the following collection of information

was published on March 6, 1998 [FR 61,

page 11326].

FOR FURTHER INFORMATION CONTACT:

Charles McGuire, 202/366–1037, and

refer to the OMB Control Number.

DATES: Comments on this notice must be

received on or before July 6, 1998.

SUPPLEMENTARY INFORMATION:

Office of the Secretary

Title: Report of DBE Awards and

Commitments.

OMB Control Number: 2105–0510.

Type of Request: Extension of a

currently approved collection.

Form(s): DOT F 4630.

Affected Public: DOT financiallyassisted state and local transportation

agencies.

Abstract: 49 CFR Part 23 establishes

requirements for the Department of

Transportation (DOT) so as to comply

with the mandates of the Intermodal

Surface Transportation and Efficiency

Act (ISTEA) of 1991 (Public Law 102–

240, December 18, 1991). 49 CFR Part

23.49(a) requires that DOT and its

Operating Administrations develop a

recordkeeping system to monitor, assess

and identify contract awards and

progress in achieving DBE subcontract

goals. In addition, PL 102–240 section

1003(b) requires that each state annually

survey and compile a list of small

business concerns and the location of

such concerns, and notify the Secretary

of Transportation of the percentage of

such concerns controlled by women and

by socially and economically

disadvantaged individuals other than

women. If these reporting requirements

were not available, firms controlled by

minorities would not achieve the fullest

possible participation in DOT programs,

and the Department would not be able

to identify its recipients and evaluate

the extent to which financial assistance

recipients have been awarded a

reasonable amount.

In order to minimize the burden on

DOT recipients the Department has

limited its informational request and

reporting frequency to that necessary to

meet its program and administrative

monitoring requirements. The

informational request consists of 17 data

items on one page and one attachment,

to be completed on an annual, semiannual or quarterly basis. It is the

overall long range objective of DOT to

permit all DOT recipients to report on

a yearly basis depending upon their past

experience in meeting their goals.

Estimated Annual Burden Hours:

20,824 hours.

Send comments to the Office of

Information and Regulatory Affairs,

Office of Management and Budget, 725–

17th Street, NW., Washington, DC

20503, Attention OST Desk Officer.

Comments are invited on: whether the

proposed collection of information is

necessary for the proper performance of

the functions of the Department,

including whether the information will

have practical utility; the accuracy of

the Department’s estimate of the burden

of the proposed information collection;

ways to enhance the quality, utility and

clarity of the information to be

collected; and ways to minimize the

burden of the collection of information

on respondents, including the use of

automated collection techniques or

other forms of information technology.

Comments to OMB are best assured of

having their full effect if OMB receives

them within 30 days of publication.

Issued in Washington, DC, on May 26,

1998.

Vanester M. Williams,

Clearance Officer, United States Department

of Transportation.

[FR Doc. 98–14709 Filed 6–2–98; 8:45 am]

BILLING CODE 4910–62–P