41312 Federal Register / Vol. 63, No. 148 / Monday, August 3, 1998 / Notices

16 15 U.S.C. 78f(b)(5).

17 In approving this potion of the proposal, the

Commission has considered the proposed rule’s

impact on efficiency, competition, and capital

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

18See March Approval Order, supra note 3.

19As noted above, because exempted borrowers

are exempt from Regulation T, the provision in

NYSE Rule 431(e)(6) requiring adherence to

Regulation T will not apply to the proprietary

accounts of exempted borrowers.

20 15 U.S.C. 78s(b)(2).

20 17 CFR 200.30–3(a)(12).

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

Rule 431 that originally were approved

in the March Approval Order is

consistent with the requirements of the

Act and the rules and regulations

thereunder applicable to a national

securities exchange and, in particular,

this portion of the proposal is consistent

with Section 6(b)(5) of the Act,16 in that

it is designed to remove impediments to

and perfect the mechanism of a free and

open market and a national market

system, and, in general, to protect

investors and the public interest.17

Specifically, the Commission finds, as

it has concluded previously,18 that it is

appropriate for the NYSE to apply the

existing maintenance margin

requirements of NYSE Rule 431(c) to

transactions in the new ‘‘good faith’’

account adopted under Regulation T.

Although non-equity transactions

permitted in the good faith account will

not be subject to the initial margin

requirements and payment and

liquidation time frames of Regulation T,

as the NYSE notes, transactions in the

good faith account may raise the same

safety and soundness concerns with

regard to maintenance margin as do

transactions in cash and margin

accounts. Accordingly, the Commission

believes that it is appropriate for the

NYSE to apply the existing maintenance

margin requirements specified in NYSE

Rule 431(c) to transactions in the good

faith account. The Commission believes

that applying the maintenance margin

requirements of NYSE rule 431(c) to

transactions in the good faith account

will protect investors and the public

interest and help to maintain fair and

orderly markets by ensuring that good

faith accounts contain adequate margin

reserves.

In addition, the Commission believes

that it is appropriate for the NYSE to

revise the definition of ‘‘customer’’ in

NYSE Rule 431(a)(2) to codify the

Exchange’s position that exempt

borrowers will remain exempt from the

requirements of NYSE Rule 431, except

for the proprietary account of a brokerdealer carried by a member pursuant to

NYSE Rule 431(e)(6). The Commission

believes that it is appropriate for the

NYSE to continue to apply the equity

requirements of NYSE Rule 431(e)(6) to

the proprietary accounts of introducing

broker-dealers that qualify as ‘‘exempted

borrowers’’ under Regulation T if these

accounts are carried by another

Exchange member. By continuing to

apply the equity requirements of NYSE

Rule 431(e)(6) to these proprietary

accounts, the Commission believes that

the proposal will help to ensure that

these accounts contain adequate margin,

thereby protecting investors and the

public interest.19

The Commission finds good cause for

approving the portion of the proposed

rule change requesting approval for six

months, until January 27, 1999, of the

changes to NYSE Rule 431 that were

approved in the March Approval Order

prior to the thirtieth day after the date

of publication of notice in the Federal

Register to ensure that the changes to

NYSE Rule 431 that were approved in

the March Approval Order remain in

effect without interruption. The

Commission continues to believe that

the changes to NYSE rule 431 that were

approved in the March Approval Order

should help to ensure appropriate

margin requirements for good faith

accounts and for the proprietary

accounts of introducing broker-dealers

that qualify as exempted borrowers

which accounts are carried by Exchange

members. Accordingly, the Commission

finds that it is consistent with Sections

6(b) and 19(b)(2) of the Act to grant

accelerated approval to the portion of

the NYSE’s proposal that extends for six

months, until January 27, 1999, or until

the Commission approves the proposal

permanently, whichever occurs first, the

changes to NYSE Rule 431 that were

approved in the March Approval Order.

The Commission also finds good

cause for approving Amendment No. 1

to the proposal on an accelerated basis.

In Amendment No. 1, the NYSE

clarified several provisions in its

proposal and requested accelerated

approval of a six-month extension,

through January 27, 1999, of the changes

to NYSE Rule 431 that were approved

in the March Approval Order. The

Commission believes that it is

appropriate to approve Amendment No.

1 on an accelerated basis to permit the

changes to NYSE Rule 431 that were

approved in the March Approval Order

to continue to apply without

interruption. Therefore, the Commission

believes that Amendment No. 1 is

consistent with Sections 6(b) and

19(b)(2) of the Act.

V. 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, NW.,

Washington, DC 20549. Copies of the

submission, all subsequent

amendments, all written statements

with request to the proposed rule

change that are filed with the

Commission, and all written

communications relating to the

proposed rule change between the

Commission any 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 File No.

SR–NYSE–98–16 and should be

submitted by August 24, 1998.

VI. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,20 that the

portion of the NYSE’s proposal (SR–

NYSE–98–16), as amended, to extend

the changes approved by the

Commission in the March Approval

Order on an accelerated basis until

January 27, 1999, or until the

Commission approves the proposal

permanently, whichever occurs first, is

approved.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.21

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–20559 Filed 7–31–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40263; File No. SR–PCX–

98–27]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 Thereto by the

Pacific Exchange, Inc. Relating to the

Automatic Execution of Option Orders

July 24, 1998.

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

Securities Exchange Act of 1934

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

June 12, 1998, the Pacific Exchange, Inc.

(‘‘PCX’’ or ‘‘Exchange’’) filed with the

Securities Exchange Commission

(‘‘Commission’’) the proposed rule
Federal Register / Vol. 63, No. 148 / Monday, August 3, 1998 / Notices 41313

2 In Amendment No. 1 the Exchange altered the

proposed rule language to clarify that exceptions to

the rule would be applied on an option issue by

option issue basis. See Letter from Michael D.

Pierson, Senior Attorney, Regulatory Policy, to Ken

Rosen, Attorney, Division of Market Supervision,

Commission, dated July 13, 1998 (‘‘Amendment No.

1’’).

3See Securities Exchange Act Release No. 27633

(January 18, 1990) 55 FR 2466 (January 24, 1990);

Securities Exchange Act Release No. 39970 (May 7,

1998) 63 FR 26662 (May 13, 1998).

4See PCX Rule 6.87.

5The Exchange notes that the Chicago Board

Options Exchange proposed a similar feature for its

Retail Automatic Execution System (RAES),

designated as the ‘‘RAES Auto-Step-Up.’’ See

Securities Exchange Act Release No. 39992 (May

14, 1998) 63 FR 28019 (May 21, 1998); Securities

Exchange Act Release No. 40096 (June 16, 1998) 63

FR 34209 (June 23, 1998) (approving feature).

6See PCX Rule 6.72, which provides that bids

and offers above $3 must be expressed in eights of

one dollar (e.g., 31⁄8) and bids and offers below $3

must be expressed in sixteenths of one dollar (e.g.,

11⁄16).

change as described in Items I, II, and

III below, which Items have been

prepared by the PCX. On July 14, 1998,

the Exchange submitted to the

Commission Amendment No. 1 to the

proposed rule change.2 The Commission

is publishing this notice to solicit

comments on the proposed rule change,

as amended, from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange is proposing to amend

PCX Rule 6.87 (‘‘Automatic Execution

System’’) to permit automatic

executions of option orders on the

Exchange at prices reflecting the

National Best Bid or Offer (‘‘NBBO’’).

The text of the proposed rule change is

available at the principal office of the

PCX and at the Commission.

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

PCX 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. The PCX 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

Orders entered via the Exchange’s

Member Firm Interface (‘‘MFI’’) are

delivered to one of three destinations:

(a) to the Exchange’s Automatic

Execution System for options trading

(‘‘Auto-Ex’’), where they are

automatically executed at the

disseminated bid or offering price; (b) to

Auto-Book, which maintains nonmarketable limit orders based on limit

price and time of receipt; or (c) to a

Member Firm’s default destination, a

particular firm booth or remote entry

site, if the order fails to meet the

eligibility criteria necessary for using

either Auto-Ex or Auto-Book or if the

Member Firm requests such default for

its orders.3 Only non-broker/dealer

customer orders for up to ten option

contracts (or 20 option contracts,

depending on the option issue) are

eligible to be executed on Auto-Ex.4

The Exchange is now proposing to

adopt new PCX Rule 6.87(d), which

would provide that the Exchange’s

Options Floor Trading Committee

(‘‘OFTC’’) may designate electronic

orders in an option issue to receive

automatic executions at prices reflecting

the NBBO, provided that the OFTC may

designate, for an option issue, that an

order will default for manual

representation by a floor broker in the

trading crowd if (1) the order would be

executed at a price that is more than one

trading increment away from the PCX

disseminated market price; or (2) the

NBBO is crossed or locked.

For example, under the proposal, if

the PCX market in an option series is 6

bid, 61⁄2 asked, and if another market is

disseminating a market in the same

series of 63⁄8 bid, 67⁄8 asked—so that the

NBBO is 63⁄8 bid, 61⁄2 asked, then, in the

absence of the OFTC designating the

orders for manual representation, the

PCX will automatically execute

customer sell orders at 63⁄8 even though

the PCX disseminated bid is only 6, and

will automatically execute customer buy

orders at 61⁄2.

The proposal would also allow the

OFTC to designate, for an option issue,

that an order will default for manual

representation by a floor broker in the

trading crowd if the order would be

executed at a price that is more than one

trading increment away from the PCX

market price.6 Should such a

designation be made, for the example

above, where the PCX bid is 6 and the

competing market’s bid is 63⁄8, a

customer sell order entered on the PCX

would default for manual representation

because 63⁄8 is ore than one trading

increment away from the PCX

disseminated bid price of 6.6 But if the

PCX bid is 6 and the competing market’s

bid is 61⁄8, a customer sell order on the

PCX would be executed at 61⁄8 because

61⁄8 is only one trading increment away

from the PCX disseminated bid of 6.

The proposal would also permit the

OFTC to designate, for an option issue,

that if the NBBO is crossed (e.g., 61⁄8

bid, 6 asked) or locked (e.g., 6 bid, 6

asked), then customer orders to buy or

sell the series would default for manual

representation in the trading crowd.

However, the Exchange is proposing to

maintain the flexibility to provide for

automatic executions on the Exchange

when the NBBO is locked or crossed.

Such action may be appropriate, for

example, when there is a large influx of

electronic orders and a fair and orderly

market would be better served by a

reduction in the number of orders that

default to a firm booth for manual

representation in the trading crowd. In

such situations, public customers would

receive very favorable prices on their

orders.

The Exchange believes that

implementation of the proposal will

provide public investors with better

prices on their orders, thus making the

Exchange a more competitive

marketplace to which order flow

providers may send their option orders

for execution.

2. Statutory Basis

The Exchange believes that the

proposal is consistent with Section 6(b)

of the Act, in general, and Section

6(b)(5), in particular, in that it is

designed to facilitate transactions in

securities; to protect investors and the

public interest; to remove impediments

to and perfect the mechanism of a free

and open market and a national market

system; and to promote just and

equitable principles of trade.

B. Self-Regulatory Organizations’

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

Written comments on the proposed

rule change were neither solicited nor

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
41314 Federal Register / Vol. 63, No. 148 / Monday, August 3, 1998 / Notices

7 17 CFR 200.30–3(a)(12).

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 six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 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 PCX. All

submissions should refer to File No.

SR–PCX–98–27 and should be

submitted by August 24, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–20556 Filed 7–31–98; 8:45 am]

BILLING CODE 8010–01–M

SELECTIVE SERVICE SYSTEM

Form Submitted To The Office of

Management and Budget For

Clearance

The following form has been

submitted to the Office of Management

and Budget (OMB) for extension of

clearance in compliance with the

Paperwork Reduction Act (44 U.S.C.

Chapter 35):

SSS FORM—404

Title: Potential Board Member

Information.

Need and/or use: Is used to identify

individuals willing to serve as members

of local, appeal or review boards in the

Selective Service System.

Respondents: Potential board

members.

Burden: A burden of 15 minutes or

less on the individual respondent.

Copies of the above identified form

can be obtained upon written request to

the Selective Service System, Reports

Clearance Officer, 1515 Wilson

Boulevard, Arlington, Virginia 22209–

2425.

Written comments and

recommendations for the proposed

extension of clearance of the form

should be sent within 30 days of

publication of this notice to the

Selective Service System, Reports

Clearance Officer, 1515 Wilson

Boulevard, Arlington, Virginia 22209–

2425.

A copy of the comments should be

sent to Office of Information and

Regulatory Affairs, Attention: Desk

Officer, Selective Service System, Office

of Management and Budget, New

Executive Office Building, Room 3235,

Washington, D.C. 20503.

Dated: July 24, 1998.

Gil Coronado,

Director.

[FR Doc. 98–20569 Filed 7–31–98; 8:45 am]

BILLING CODE 8015–01–M

SOCIAL SECURITY ADMINISTRATION

Finding Regarding the Social

Insurance System of the Slovak

Republic

AGENCY: Social Security Administration.

ACTION: Notice of Finding Regarding the

Social Insurance System of the Slovak

Republic.

FINDING: Section 202(t)(1) of the Social

Security Act(42 U.S.C. 402(t)(1))

prohibits payment of monthly benefits

to any individual who is not a United

States citizen or national for any month

after he or she has been outside the

United States for 6 consecutive months,

and prior to the first month thereafter

for all of which the individual has been

in the United States. This prohibition

does not apply to such an individual

where one of the exceptions described

in sections 202(t)(2) through 202(t)(5) of

the Social Security Act (42 U.S.C.

402(t)(2) through 402(t)(5)) affects his or

her case.

Section 202(t)(2) of the Social

Security Act provides that, subject to

certain residency requirements of

section 202(t)(11), the prohibition

against payment shall not apply to any

individual who is a citizen of a country

which the Commissioner of Social

Security finds has in effect a social

insurance system which is of general

application in such country and which:

(a) pays periodic benefits, or the

actuarial equivalent thereof, on account

of old age, retirement, or death; and

(b) permits individuals who are

United States citizens but not citizens of

that country and who qualify for such

benefits to receive those benefits, or the

actuarial equivalent thereof, while

outside the foreign country regardless of

the duration of the absence.

The Commissioner of Social Security

has delegated the authority to make

such a finding to the Associate

Commissioner for International

Programs. Under that authority, the

Associate Commissioner for

International Programs has approved a

finding that the Slovak Republic, as of

January 1, 1993, has a social insurance

system of general application which:

(a) pays periodic benefits, or the

actuarial equivalent thereof, on account

of old age, retirement, or death; and

(b) permits United States citizens who

are not citizens of the Slovak Republic

and who qualify for the relevant benefits

to receive those benefits, or their

actuarial equivalent, while outside of

the Slovak Republic regardless of the

duration of the absence of these

individuals from the Slovak Republic.

Accordingly, it is hereby determined

and found that the Slovak Republic has

in effect, as of January 1, 1993, a social

insurance system which meets the

requirements of section 202(t)(2) of the

Social Security Act (42 U.S.C. 402(t)(2)).

This is our first finding under section

202(t) of the Social Security Act for the

Slovak Republic. Before January 1993,

the United States did not recognize the

Slovak Republic as an independent

nation. Czechoslovakia divided into two

separate states, the Czech Republic and

the Slovak Republic, on January 1, 1993.

At that time, the Slovak Republic

adopted the Czechoslovak basic law on

social insurance which continues to

govern the country’s social insurance

system.

Although the Slovak Republic added

several amendments to the old law,

these provisions did not affect the

determination under section 202(t)(2) of

the Social Security Act. In addition, the

Slovak Republic considers itself bound

by the Diplomatic Notes on reciprocity

of payments which were exchanged

between the United States and

Czechoslovakia in 1968. Since all such

agreements are binding on the Slovak

Republic by right of succession, the