39918 Federal Register / Vol. 63, No. 142 / Friday, July 24, 1998 / Notices

24 15 U.S.C. 78s(b)(2).

25 In granting partial approval of the proposal, the

Commission has considered the proposal’s impact

on efficiency, competition, and capital formation.

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

26 15 U.S.C. 78f(b)(5).

27 15 U.S.C. 78f(b)(5) and 78s(b)(2).

28 15 U.S.C. 78s(b)(2).

29 17 CFR 200.30–3(a)(12).

promote just and equitable principles of

trade, and is not designed to permit

unfair discrimination between

customers, issuers, brokers or dealers.

B. Self-Regulatory Organizations’

Statement on Burden on Competition

The Exchanges believe that the

proposed rule changes will impose no

burden on competition.

C. Self-Regulatory Organizations’

Statement on Comments on the

Proposed Rule Changes Received From

Members, Participants or Others

No written comments were solicited

or received with respect to the proposed

rule changes.

III. Date of Effectiveness of the

Proposed Rule Changes and Timing for

Commission Action

Within 35 days of the 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.

The Exchanges have also requested

that the Commission find good cause,

pursuant to Section 19(b)(2) of the

Act,24 for approving the extension of the

21⁄2 Point Strike Price Pilot Program for

a six-month period ending on January

15, 1999, or until the Commission

approves the request to expand the

program and approve it permanently,

whichever occurs first, on an

accelerated basis prior to the thirtieth

day after publication in the Federal

Register.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing,

including whether the proposed rule

changes, as amended, are 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 changes that are filed with the

Commission and all written

communications relating to the

proposed rule changes 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, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filings will also be available for

inspection and copying at the principal

offices of the Exchanges. All

submissions should refer to File Nos.

SR–AMEX–98–21, SR–CBOE–98–29,

SR–PCX–98–31, and SR–PHLX–98–26

and should be submitted by August 14,

1998.

V. Commission Findings and Order

Granting Partial Accelerated Approval

of the Proposed Rule Changes

The Commission finds that the

proposed rule changes, as amended,

relating to the extension of the 21⁄2 Point

Strike Price Pilot Program for sixmonths or until the Commission

approves the Exchanges’ proposal to

make the program permanent,

whichever occurs first, is consistent

with the Act and the rules and

regulations thereunder applicable to a

national securities exchange,25 and, in

particular, Section 6(b)(5) of the Act.26

Specifically, the Commission believes

that the proposed six-month extension

of the pilot program providing for the

listing of 21⁄2 point strike price intervals

in selected equity options will continue

to provide investors with more

flexibility in the trading of equity

options with a strike price greater than

$25 but less than $50, while allowing

the Commission adequate time to

consider the Exchanges’ proposal

seeking expansion and permanent

approval of the program.

The Commission finds good cause for

granting the Exchanges’ request for a

six-month extension of the 21⁄2 Point

Strike Price Pilot Program prior to the

thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register. As mentioned

above, the Exchanges submitted

separate reports to the Commission that

include data and written analysis

regarding the operation of the pilot

program as required in the 21⁄2 Strike

Price Extension Order. The Commission

notes that the Exchanges have not

reported any significant problems with

the pilot program since its inception

and that the Exchanges will continue to

monitor the pilot program to ensure that

no problems arise. In particular, the

Exchanges will continue to monitor the

impact of the program on their systems

capacity. The Commission believes

extending the pilot program on an

accelerated basis will provide the

investing public with the added

flexibility provided by 21⁄2 point strike

prices on an uninterrupted basis.

Finally, although the pilot has been in

place since 1995, the Commission has

received no adverse comments

concerning the operation of the pilot

program. Therefore, the Commission

believes good cause exists to approve

the extension of the pilot program until

January 15, 1999, or until the

Commission approves the Exchanges’

proposal seeking to expand the program

and to have it approved permanently,

on an accelerated basis. Accordingly,

the Commission believes that granting

accelerated approval of the requested

extension is appropriate and consistent

with Sections 6(b)(5) and 19(b)(2) of the

Act.27

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,28 that the

extension of the 21⁄2 Point Strike Price

Pilot Program proposed by the

Exchanges (File Nos. SR–AMEX–98–21,

SR–CBOE–98–29, SR–PCX–98–31, and

SR–PHLX–98–26), as amended, is

approved until January 15, 1999, or

until the Commission approves the

proposal seeking to expand the program

and have it approved permanently,

whichever occurs first, on an

accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.29

Jonathan G. Katz,

Secretary.

[FR Doc. 98–19751 Filed 7–23–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40219; File No. SR–DTC–

98–02]

Self-Regulatory Organizations; The

Depository Trust Company; Order

Granting Approval of a Proposed Rule

Change to Implement the HUB Mailbox

Service

July 16, 1998.

On February 10, 1998, The Depository

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

Securities and Exchange Commission

(‘‘Commission’’) a proposed rule change

(File No. SR–DTC–98–02) pursuant to
Federal Register / Vol. 63, No. 142 / Friday, July 24, 1998 / Notices 39919

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

2Securities Exchange Act Release No. 39955 (May

4, 1998), 63 FR 26237.

3For a complete description of the services

provided by the ID system, refer to Securities

Exchange Act Release Nos. 33466 (January 12,

1994), 59 FR 3139 [File No. SR–DTC–93–07] (order

approving proposed rule change relating to the

enhanced ID system); 34166 (June 6, 1994), 59 FR

31660 [File No. SR–DTC–94–01] (order approving

proposed rule change to add a standing instruction

database to the ID system institutional delivery

system); 34199 (June 10, 1994) 59 FR 31660 [File

No. SR–DTC–94–04] (order granting accelerated

approval of a proposed rule change to implement

the interactive capabilities and the electric mail

features of the enhanced institutional delivery

system); 36050 (August 2, 1995), 60 FR 41139 [File

No. SR–DTC–95–10] (order approving proposed

rule change implementing advice of confirm

correction/cancellation feature and modifying the

authorization/exception processing feature of the

institutional delivery system); 39829 (April 6,

1998), 63 FR 17943 [File No. S7–10–98]

(interpretation that a ‘‘matching’’ service that

compares securities trade information from a

broker-dealer’s customer is a clearing agency

function).

4 ISITC (Industry Standardization for Institutional

Trade Communication) is a global working

committee of brokers, investment managers,

custodians, and vendors which was established in

1991 and has developed standard message formats

and operating protocols for transmitting

information concerning security-related

transactions.

5The notice of the proposed rule change, supra

note 2, incorrectly stated that DTC developed the

HUB Mailbox in cooperation with ISITC. It should

have stated that DTC developed the HUB Mailbox

service in cooperation with some ISITC members.

6 15 U.S.C. 78q–1(b)(3)(F).

7 17 CFR 200.30–3(a)(12).

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

2See letter from Robert E. Aber, Senior Vice

President and General Counsel, The Nasdaq Stock

Market, Inc. to Katherine A. England, Assistant

Director, Division of Market Regulation

(‘‘Division’’), SEC, dated June 5, 1998.

3See letter from Robert E. Aber, Senior Vice

President and General Counsel, The Nasdaq Stock

Market, Inc. to Katherine A. England, Assistant

Director, Division, SEC, dated June 29, 1998.

4See letter from Robert E. Aber, Senior Vice

President and General Counsel, The Nasdaq Stock

Market, Inc. to Richard Strasser, Assistant Director,

Division, SEC, dated July 15, 1998.

Section 19(b)(1) of the Securities

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

of the proposal was published in the

Federal Register On May 12, 1998.2 No

comment letters were received. For the

reasons discussed below, the

Commission is approving the proposed

rule change.

I. Description

The rule change implements the HUB

Mailbox service. The HUB Mailbox

service will use the Institutional

Delivery (‘‘ID’’) 3 system’s alreadyexisting telecommunications facilities to

allow investment managers and their

custodians to exchange messages

regarding: (1) securities purchases; (2)

securities sales; (3) reconciliation data

relating to securities positions and cash

movements; and (4) other securityrelated transactions as agreed to by two

or more HUB users. Occasionally, HUB

users may also transmit trade data to

recordkeeping vendors in situations

where the custodial and accounting

functions are performed by two different

parties. All information will be entered

in an ISITC4 approved format initially,

but other formats may be used later if

agreed upon by two or more HUB

users.5

To use the HUB Mailbox, investment

managers and custodians will place

formatted records into bundles for each

addressee with appropriately coded

headers and trailers, and DTC will route

the bundles to addressees’ mailboxes for

retrieval. Addressees will acknowledge

receipt of bundles through their

mailboxes. All mail messages, both

delivered and undelivered, will be

transferred at the end of each business

day between 2:00 AM and 3:00 AM (ET)

to a separate file which can be accessed

directly on the next day. DTC will store

mail messages for up to five days. The

HUB Mailbox service will not do any

processing other than to direct mail to

appropriate mailboxes.

II. Discussion

Section 17A(b)(3)(F) of the Act 6

requires that the rules of a clearing

agency be designed to promote the

prompt and accurate clearance and

settlement of securities transactions. As

discussed below, the Commission

believes that DTC’s proposed rule

change is consistent with this

obligation.

The Commission believes that the

electronic mail features of the HUB

Mailbox service will enable users to

reduce their reliance on facsimile

transmissions when communicating

information such as the details

concerning securities purchases, sales,

reconciliation, and other security

related information. The Commission

believes that transmitting this

information electronically is more

efficient and accurate than the methods

currently used and therefore should

help promote the prompt and accurate

clearance and settlement of securities

transactions.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposed

rule change is consistent with the

requirements of the Act and in

particular with Section 17A of the Act

and the rules and regulations

thereunder.

It is therefore ordered, pursuant to

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

proposed rule change (File No. SR–

DTC–98–02) be and hereby is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Jonathan G. Katz,

Secretary.

[FR Doc. 98–19808 Filed 7–23–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40227; File No. SR–NASD–

98–01]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendments Nos. 1, 2, and 3 by the

National Association of Securities

Dealers, Inc. Relating to the NASD’s

Rules Regarding Electronic

Communications Networks, Locked

and Crossed Markets, and a Member’s

Obligation to Provide Nasdaq With

Certain Information

July 17, 1998.

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

Securities Exchange Act of 1934

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

January 27, 1998, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’), through its wholly owned

subsidiary, The Nasdaq Stock Market,

Inc. (‘‘Nasdaq’’), filed with the

Securities and Exchange Commission

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

rule change. The NASD filed

Amendment No. 1 to the proposal on

June 8, 1998,2 Amendment No. 2 on

June 30, 1998,3 and Amendment No. 3

on July 16, 1998.4 The proposed rule

change, as amended, is described in

Items I, II, and III below, which Items

have been prepared by Nasdaq. 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

Nasdaq is submitting proposed rule

changes to amend NASD Rule 4623,

which will specify the manner in which

orders having a reserved size that are

entered into an electronic

communications network (‘‘ECN’’) must

interact with SelectNet orders.

Additionally, Nasdaq is proposing to

amend NASD Rule 4613(e) by adding a

provision regarding locked and crossed

markets that occur at the open. Nasdaq

also is proposing the adoption of NASD

Rule 4625, which will set out the

obligation of members participating in