Federal Register / Vol. 60, No. 92 / Friday, May 12, 1995 / Notices 25751

12 In an interpretive letter dated February 23,

1988, the Pension and Welfare Benefits

Administration of the United States Department of

Labor (‘‘Department’’) set forth its view regarding

proxy voting by fiduciaries of employee retirement

plans subject to ERISA. In the interpretive letter, the

Department stated that the fiduciary act of

managing plan assets which are shares of corporate

stock would include the voting of proxies

appurtenant to those shares of stock. The

Department stated its position that, with respect to

the inquiry set forth in the request for interpretation

(i.e., a proposal to change the state of incorporation

of a corporation in which a plan owned shares, and

a proposal to rescind ‘‘poison pill’’ arrangements,

the decision as to how proxies should be voted are

fiduciary acts of plan asset management. The

Department concluded that, to the extent that the

plan permits a named fiduciary to appoint an

investment manager to manage, acquire and dispose

of plan assets, and the named fiduciary has not

expressly reserved the voting rights to itself, there

would be an ERISA violation if, during the duration

of such delegation, any person other than the

investment manager were to decide how to vote any

proxy with respect to shares owned by the plan. See

Department Letter on Proxy Voting By Plan

Fiduciaries, dated February 23, 1988, BNA Pension

Reporter, February 29, 1988, vol. 15, p. 391.

1 In Information Memo No. 93–12, the Exchange

has previously advised specialists that, pursuant to

NYSE Rule 79A.10, all orders received by

specialists through the SuperDOT system are

deemed to be accompanied by an instruction that

they be quoted at the limit price on the order when

such limit price is better than the current quotation.

2Currently the Exchange is capable of displaying

quotations up to 99,900 shares. The Exchange plans

to expand this capability in the future.

3NYSE Rule 60(e) requires a specialist to

promptly report the highest bid and lowest offer

made in the trading crowd and the associated

quotation size that he wishes to make available to

quotation vendors. The rule also requires a

specialist to promptly report whenever a bid, offer

or quotation size he previously reported is to be

revised and whenever a bid and/or offer he

previously reported is to be cancelled or

withdrawn.

complicated issuer or proxy materials or

to vote proxies. These investors, in

particular, may feel frustrated when

they receive unwanted issuer materials.

Furthermore, the Commission believes

that the proposed rule change will

permit the investment adviser to make

more expedient, informed investment

decisions, thereby facilitating securities

transactions in accordance with the Act.

For these reasons, the Commission

believes that the proposed rule change

appropriately gives investors the

freedom to choose whether to receive

proxy and related issuer materials and

vote the proxies or to designate an

investment adviser to perform these

functions on their behalf.

The Commission also believes that

amending the Interpretation to allow a

member that is the investment manager

for an ERISA Plan to vote proxies on

behalf of the ERISA Plan is consistent

with the policies embodied in Section

15A(b)(6) because the amendment

would conform the Interpretation to

NYSE Rule 450(1) and will permit the

member to vote proxies in accordance

with its ERISA Plan fiduciary

responsibilities. The Commission notes

that in voting proxies as a plan

fiduciary, an investment manager must

consider those factors which would

affect the value of the plan’s investment

and is prohibited from subordinating

the interests of participants and

beneficiaries in their retirement income

to unrelated objectives. In addition, the

Commission believes that the rule

change should prevent potential

conflicts between NASD rules and

ERISA guidelines.12

It is therefore ordered, pursuant to Section

19(b)(2) of the Act, that File No. SR–NASD–

95–06 be, and hereby is, approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority, 17 CFR 200.30–3(a)(12).

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–11772 Filed 5–11–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35687; File No. SR–NYSE–

95–17]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

New York Stock Exchange, Inc.

Relating to Specialists Displaying the

Full Size of Certain Orders

May 8, 1995.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on April 21, 1995, the

New York Stock Exchange, Inc.

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

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I, II and III

below, which Items have been prepared

by the self-regulatory organization. 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

The proposed rule change consists of

an Information Memo which discusses

procedures under Exchange rules with

respect to specialists displaying orders

received through the SuperDOT order

routing system and the full size of

orders received by specialists manually

which are subsequently entered into the

electronic book.

II. Self-Regultory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

self-regulatory organization 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 self-regulatory organization 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

The Exchange is proposing to issue an

Information Memo outlining its policy

with respect to displaying certain orders

received by a specialist.1 The policy

requires specialists to display the full

size 2 of all orders received through the

SuperDOT order routing system and the

full size of all orders received by

specialists manually which are

subsequently entered into the electronic

book. This requirement includes

increasing the size of a quotation for

orders at the same price as the current

bid or offer. The policy also sets forth

the specialist’s responsibility when a

member who gives an order requests

that less than the full size of the order

be shown in the quotation. In that

situation, a specialist is only responsible

to enter in the electronic book and show

the size requested. The portion not

requested to be shown will be handled

manually as a ‘‘held’’ order, but will be

last in terms of time priority to all other

orders on the specialist’s electronic

book at that price. If the specialist is

subsequently requested to show an

additional portion, or the remainder, of

the order, the specialist would enter the

price and size into the electronic book,

with the order so entered having

priority on the book vis-a-vis other

orders as of the time of entry on the

book. The specialist would increase the

quotation size to reflect the additional

amount entered on the book.

The Exchange believes that this policy

is consistent with Exchange Rule 104,

which requires the effective execution

of agency orders received by specialists,

and with NYSE Rule 60(e).3 The

Exchange expects that specialists would

display as soon as practicable any order

which, in relation to current market

conditions in a particular security,
25752 Federal Register / Vol. 60, No. 92 / Friday, May 12, 1995 / Notices

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

2 17 CFR 240.19b–4.

3See Letter from Michael Schwartz, Chairman,

COOP, to Jonathan G. Katz, Secretary, Commission,

dated April 5, 1995.

4The Exchanges amended the original proposals

to extend the pilot program, from six to twelve

months. See Letters from Michael Pierson, Senior

Attorney, PSE, dated March 24, 1995 (‘‘PSE

Amendment No. 1’’), and Timothy Thompson,

represents a material change in the

supply or demand for that security. For

example, if the market in XYZ security

is 20 bid to 201⁄4 offered, 1,000 shares

bid and 1,000 shares offered, and the

specialist receives an order to sell

10,000 shares at 201⁄4, the specialist

would be expected to change the size of

the offer to 11,000 shares as soon as he

or she becomes aware of the order. If the

quotation already reflects significant

supply (demand), and the specialist

receives an order that is relatively de

minimis in relation to such supply

(demand), the specialist may take a

reasonable period of time, which should

not generally exceed two minutes,

before updating the quotation, so as to

avoid constant revisions of quotations

that do not reflect material changes in

supply and demand. For example, if the

market in XYZ security is 20 bid to 201⁄4

offered, 5,000 shares bid and 50,000

shares offered, and the specialist

receives an order to sell 200 shares at

201⁄4, the specialist would be permitted

to wait a reasonable period of time

before changing the size of the offer to

50,200 shares.

Under exceptional circumstances, the

specialist would not necessarily display

the full quotation size. For example, as

noted in Information Memo 94–32,

when a member proposes to effect a

block transaction at a significant

premium or discount from the

prevailing market and the specialist is

aware of interest on the contra side, it

may be more appropriate for the

specialist and Floor Official(s) to gap the

quotation in a security for a brief period,

generally not exceeding five minutes,

with a view toward contacting and/or

attracting contra market interest. In such

case, the bid or asked price should

touch the prior sale price and reflect

size of 100 shares by 100 shares. The

same principles would also apply to a

situation where there is a sudden influx

of market orders on one side of the

market which would be likely to result

in a significant price change.

2. Statutory Basis

The basis under the Act for the

proposed rule change is the requirement

under Section 6(b)(5) that an Exchange

have rules that are designed to promote

just and equitable principles of trade, to

remove impediments to, and perfect the

mechanism of a free and open market

and, in general, to protect investors and

the public interest. The policy with

respect to displaying full size of orders

received by specialists enhances the

purposes of the Act by assuring that

accurate and complete information with

respect to the current market on the

Exchange for any stock is available to

market participants.

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 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

No written comments were either

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the publication of

this notice in the Federal Register or

within such other 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 the 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, 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 at

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 NYSE. All submissions

should refer to File No. SR–NYSE–95–

17 and should be submitted by June 2,

1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–11774 Filed 5–11–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35680; File Nos. SR–Phlx–

95–08, SR–Amex–95–12, SR–PSE–95–07,

SR–CBOE–95–19, SR–NYSE–95–12]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Changes by

the Philadelphia Stock Exchange, Inc.,

the American Stock Exchange, the

Pacific Stock Exchange, Incorporated,

the Chicago Board Options Exchange,

Incorporated, and the New York Stock

Exchange, to Adopt a 21⁄2 Point Strike

Price Pilot Program

May 5, 1995.

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 February

6, March 8, March 15, and March 22,

1995, respectively, the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’), the

American Stock Exchange (‘‘Amex’’),

the Pacific Stock Exchange,

Incorporated (‘‘PSE’’), the Chicago

Board Options Exchange, Incorporated

(‘‘CBOE’’), and the New York Stock

Exchange (‘‘NYSE’’) (collectively the

‘‘Exchanges’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’) the proposed rule

changes as described in Items I, II, and

III below, which Items have been

prepared by the Exchanges.

Additionally, the Committee on Options

Proposals (‘‘COOP’’) filed a letter with

the Commission endorsing the

Exchanges’ proposed rule changes.3 The

Commission is publishing this notice to

solicit comments on the proposed rule

changes from interested persons.

I. Self-Regulatory Organizations’

Statement of the Terms of Substance of

the Proposed Rule Changes

The Exchanges propose to establish a

pilot program, whereby the Exchanges

may select a certain number of their

listed options for inclusion in a twelve

month pilot program for the listing of

strike prices at 21⁄2 point intervals.4