Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Notices 21227

2The NASD also has been advised that

enhancements to the National Securities Clearing

Corporation’s Fixed Income Transaction System to

facilitate the corporate bond comparison process

became effective October 21, 1994. This facility

enhancement accelerates the comparison cycle to

trade date which allows members to view their

compared corporate bond trades on T+1. This

acceleration of the comparison cycle will aid the

industry’s transition to T+3 settlement.

3For example, the NASD considered mandating

the use of the facilities of a registered clearing

agency for other types of securities such as unit

investment trusts, private label collateralized

mortgage obligations, synthetic stripped coupons,

and government securities but concluded that it

would be inadvisable to adopt such a mandate until

the special pricing and processing requirements for

these securities is fully understood and resolved.

Similarly, if the NASD is asked to exempt certain

issues or transactions in certain issues of corporate

debt because of problems associated with clearing

transactions in such issues through the facilities of

a registered clearing agency, the exemptive power

provided in the proposed rule change will permit

the NASD to resolve such problems. 4 15 U.S.C. 78o–3(b)(6).

5 17 CFR 200.30–(a)(12) (1994).

1 15 U.S.C. 78s(b)(1) (1988).

2 17 CFR 240.19b–4 (1994).

3See letter from Michael D. Pierson, Senior

Attorney, PSE, to Jennifer S. Choi, Attorney,

Division of Market Regulation, SEC, dated March 2,

1995. Amendment No. 1 added .02 of the

Commentary to the proposed rule change.

increasing the number of trade fails and

the potential financial exposure to

members.

The NASD is concerned that the

problems associated with broker-tobroker clearance of corporate bond

trades is creating avoidable risks and

inefficiencies, as described above, in the

clearance and settlement system. The

NASD also is concerned that the

implementation of T+3 settlement of

securities transactions scheduled to

occur on June 7, 1995, will exacerbate

the risks and inefficiencies inherent in

clearing corporate bond transactions

broker-to-broker. Accordingly, in order

to reduce or eliminate these risks and

inefficiencies, the NASD is proposing to

amend the UPC to adopt a new section

72 to require a member of its agent that

participates in a registered clearing

agency to use the facilities of a clearing

agency to clear eligible transactions in

corporate debt securities.2

Finally, the proposed rule change

provides that the NASD may exempt

any transaction or class of transactions

in corporate debt securities from the

provisions of the rule as may be

necessary to accommodate special

circumstances related to the clearance of

such transactions or class of

transactions. The NASD anticipates that

this provision will be used only in the

event special pricing and processing

problems related to particular corporate

debt securities make using the facilities

of a registered clearing agency difficult

or impossible and outweighed the

benefits of using the facilities of a

registered clearing agency.3

Because the proposed rule change

may facilitate the implementation of the

industry’s transaction to a T+3

settlement scheduled to occur on June 7,

1995, the NASD will make the proposed

rule change effective as soon after the

Commission approval as it is possible to

publish a Notice to Members

announcing approval. The proposed

rule change will be effective two weeks

following publication of the Notice to

Members announcing Commission

approval.

The NASD believes that the proposed

rule change is consistent with the

provisions of section 15A(b)(6) of the

Act 4 in that requiring such transactions

to be cleared through the facilities of a

registered clearing agency will reduce

the number of trade fails and reduce or

eliminate risks and inefficiencies caused

by broker-to-broker clearance of such

transactions, thereby enhancing the

functioning of the clearance and

settlement system for the benefit of all

securities market participants.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD 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

Written comments were neither

solicited nor received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within thirty-five 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

ninety 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 NASD 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.

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 NASD.

All submissions should refer to the

file No. SR–NASD–95–11 and should be

submitted by May 22, 1995.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–10607 Filed 4–28–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35646; File No. SR–PSE–

95–02]

Self-Regulatory Organizations; Pacific

Stock Exchange Inc.; Order Granting

Approval to Proposed Rule Change

Relating to Obligations for Regulatory

Cooperation

April 25, 1995.

On February 8, 1995, the Pacific Stock

Exchange Incorporated (‘‘PSE’’ 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 to require regulatory

cooperation by members, member

organizations, and others over whom

the Exchange has jurisdiction with

certain investigations and proceedings

that are initiated by another selfregulatory organization (‘‘SRO’’)

pursuant to a regulatory agreement. On

March 3, 1995, the Exchange submitted

to the Commission Amendment No. 1 to

the proposed rule change.3

The proposed rule change, including

Amendment No. 1, was published for

comment in Securities Exchange Act

Release No. 35497 (Mar. 15, 1995), 60

FR 14991 (Mar. 21, 1995). No comments

were received on the proposal.

The Exchange is proposing to amend

Rule 10.2, relating to Exchange
21228 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Notices

4Rule 14.1 provides that the Exchange may enter

into agreements with domestic and foreign selfregulatory organizations providing for the exchange

of information and other forms of mutual assistance

for market surveillance, investigative, enforcement,

and other regulatory purposes.

5 15 U.S.C. 78f(b) (1988 & Supp. v. 1993).

6See Securities Exchange Act Release No. 35403

(Feb. 22, 1995), 60 FR 10884 (Feb. 28, 1995)

(approving File No. SR–CBOE–94–39).

7The members of ISG are the American Stock

Exchange, Inc., the Boston Stock Exchange, Inc., the

Chicago Board Options Exchange, Inc., the Chicago

Stock Exchange, Incorporated, the Cincinnati Stock

Exchange, Inc., the National Association of

Securities Dealers, Inc., the New York Stock

Exchange, Inc., the Pacific Stock Exchange

Incorporated, and the Philadelphia Stock Exchange,

Inc.

8 15 U.S.C. 78s(b)(2) (1988).

9 17 CFR 200.30–3(a)(12) (1994).

1 15 U.S.C. 78s(b)(1) (1988).

2Securities Exchange Act Release No. 34017 (May

5, 1994), 59 FR 24495 (File No. SR–PTC–92–16)

(order approving through April 30, 1995, PTC’s

CMO margin and pricing methodology).

investigations to add new subsection (d)

and .01 and .02 of the Commentary to

require members, member

organizations, persons associated with a

member or member organization, and

other persons or entities over whom the

Exchange has jurisdiction pursuant to

Rule 10.1(b) to testify before another

SRO and to furnish information in

connection with a regulatory inquiry,

investigation, examination, or

disciplinary proceeding resulting from

an agreement entered into by the

Exchange pursuant to Rule 14.1.4 The

proposed rule change would further

require these persons and entities not to

impede such a proceeding. Moreover,

the proposal provides that the rule

would apply regardless of whether the

Exchange initiated an investigation

pursuant to Rule 10.2(a) or a

disciplinary proceeding pursuant to

Rule 10.3.

Under the proposed rule change, the

Exchange also makes explicit that

persons or entities, required to furnish

information or testimony pursuant to a

regulatory agreement, will be afforded

the same rights and procedural

protections that such persons or entities

would have if the Exchange had

initiated the request for information or

testimony.

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, and, in particular, with the

requirements of section 6(b).5 The

Commission believes the proposal is

consistent with the section 6(b)(5)

requirements that the rules of an

exchange be designed to promote just

and equitable principles of trade, to

prevent fraudulent and manipulative

acts, and, in general, to protect investors

and the public interest.

This proposal, which is similar to a

proposal by the Chicago Board Options

Exchange, Inc. that was recently

approved by the Commission,6 grew out

of a meeting of the Intermarket

Surveillance Group (‘‘ISG’’) to

coordinate more effectively surveillance

and investigative information sharing

arrangements in the stock and options

markets.7 The Commission believes that

the proposed rule change achieves a

reasonable balance between the need for

regulatory cooperation and protection of

the procedural rights of Exchange

members and others from whom

information or testimony is requested.

The rule would provide the Exchange

with the authority to seek cooperation

by certain persons with respect to

inquiries and investigations resulting

from regulatory agreements between the

Exchange and another SRO while

explicitly providing any person or entity

required to furnish information or

testimony pursuant to the rule with the

same procedural rights that they would

have if the request was pursuant to an

Exchange initiated inquiry or

investigation. In furtherance of the

policy to protect procedural rights, the

Exchange provides in Commentary .02

to Rule 10.2 that the Exchange will

always act as an intermediary between

another SRO and the exchange member,

member organization, or other

designated person from whom

information or testimony is being sought

for any inquiry made pursuant to an

agreement under Rule 14.1.

The Commission believes that it the

proposed rule change will further the

interest of the public and provide for the

protection of investors by allowing the

Exchange to assist other SROs conduct

prompt inquiries into possible trading

violations and other possible

misconduct. As the marketplaces

become more global and interlinked, the

Commission believes that is important

that the SROs coordinate their

investigatory activities to prevent

fraudulent and manipulative acts and

practices in all marketplaces.

It is therefore ordered, pursuant to

section 19(b)(2) of the Act,8 that the

proposed rule change (SR–PSE–95–02)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–10605 Filed 4–28–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35641; File No. SR–PTC–

95–03]

Self-Regulatory Organizations;

Participants Trust Co.; Notice of Filing

and Order Granting Accelerated

Approval of Proposed Rule Change

Extending Temporary Approval of

Current Margin and Pricing

Methodology for Collateralized

Mortgage Obligations

April 24, 1995.

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

Securities Exchange Act of 1934

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

March 28, 1995, the Participants Trust

Company (‘‘PTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change (File No. SR–PTC–95–03) as

described in Items I and II below, which

Items have been prepared primarily by

PTC. The Commission is publishing this

notice and order to solicit comments

from interested persons and to grant

accelerated approval of the proposed

rule change through April 30, 1996.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change extends

through April 30, 1996, the temporary

approval of the current margin and

pricing methodology utilized by PTC for

collateralized mortgage obligations

(‘‘CMO’’) that are eligible for deposit or

that may become eligible for deposit at

PTC.2

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, PTC

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. Summaries of the

most significant aspects of such

statements are set forth in sections A, B,

and C below.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and the

Statutory Basis for, the Proposed Rule

Change

Margin Under PTC’s Rules

Under PTC’s rules, a certain

percentage (‘‘applicable percentage’’) of