Federal Register / Vol. 60, No. 99 / Tuesday, May 23, 1995 / Notices 27357

27See Securities Exchange Act Release No. 35411

(Feb. 22, 1995), 60 FR 11153 (March 1, 1995).

28 In approving this provision, the Commission

does not mean to dismiss the comment of S.G. Marx

and Associates Inc. regarding the Exchange’s

alleged delay in the approval of the membership of

one of the company’s nominees until after June 10,

1993 so that, under the proposal, such member

would not be able to participate in the Gratuity

Fund. The Commission believes that such

allegation speaks to whether the Exchange applied

its rules in a fair and impartial manner, rather that

the advisability of the provision in question and on

that basis is approving this order. The Commission

emphasizes that such approval should not be

interpreted as addressing the merits of the above

allegation in any manner.

29As discussed supra at note 17 and the

accompanying text, the phase-in schedule does not

apply to persons who are already participants or

who become participants by virtue of these

amendments.

30The Commission notes that the proposed

change, when combined with the provision that

allows current lessees to ‘‘opt-out’’ of participation

in the Fund, could result in a membership being

required to pay an assessment to the Fund,

notwithstanding that no one connected with such

membership would be a participant in the Fund.

The comment letter of S.G. Marx & Associates Inc.

discussed this situation. See Marx Letter, supra,

note 3.

31See note 20, supra, for a discussion of the

exception regarding certain options principal

memberships.

32 15 U.S.C. 78s(b)(2).

33 17 CFR 200.30–3(a)(12).

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

2The Commission has modified the language in

these sections.

3Securities Exchange Act Release Nos. 33023

(October 6, 1993), 58 FR 52891 (adoption of Rule

15c6–1) and 34952 (November 9, 1994), 59 FR

59137 (change of effective date of Rule 15c6–1 from

June 1, 1995 to June 7, 1995).

4 15 U.S.C. 78q–1 (1988).

not regular members or regular member

lessors as of June 10, 1993 from

participation in the Fund. With regard

to these participants, the Commission

notes that, before they become lessors,

the Exchange gave them written notice

that they would no longer be

participants in the Fund if this proposal

were approved. Further, the

Commission previously published this

rule change for comment and received

no adverse comments regarding this

disparate treatment.27 Additionally, the

Commission believes that it is

reasonable for the Exchange to make a

distinction in treatment between

participants who became inactive

members of the Exchange with the

expectation that they would be

participants in the Fund and members

who had no such expectation.28

Similarly, the Commission is unaware

of any reason why the Exchange’s

proposal to phase-in the full death

benefit over a four year period for all

new members should not be

approved.29

Finally, the Commission believes that

the changes in the Fund assessment are

consistent with Section 6(b)(4) of the

Act, which requires the equitable

allocation of reasonable dues and fees

among members and persons using

exchange facilities.30 The Commission

notes that, with one exception, the

assessment applies equally to all

members31 and that there is always at

least one individual connected to each

membership who has the right to

participate in the Fund.

IV. Conclusion

In summary, the Commission believes

that the changes relating to the

Exchange’s membership structure will

provide the Exchange and its members

with increased flexibility without

causing any substantive changes in the

operation of the Exchange. Further, the

Commission believes that the changes

relating to the Exchange’s Gratuity Fund

should provide enhanced benefits to a

wider range of members.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,32 that the

proposed rule change (SR–Amex–95–

08) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.33

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–12517 Filed 5–22–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35711; File No. SR–CHX–

95–12]

Self-Regulatory Organizations;

Chicago Stock Exchange,

Incorporated; Notice of Filing of

Proposed Rule Change Regarding

Depository Eligibility Requirements

May 12, 1995.

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

Securities Exchange Act of 1934

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

April 26, 1995, the Chicago Stock

Exchange, Incorporated (‘‘CHX’’) 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 primarily by CHX.

The Commission is publishing this

notice to solicit comments from

interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

CHX proposes to amend Rule 7 of

Article XXVIII of its rules relating to the

depository eligibility requirements for

issuers that desire to list their securities

on CHX.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

CHX 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.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

Under the proposed rule change, CHX

will adopt a uniform depository

eligibility rule for issuers that desire to

list their securities on the CHX. The

uniform rule has been developed by the

Legal and Regulatory Subgroup of the

U.S. Working Committee of the Group of

Thirty in coordination with each of the

national securities exchange and the

National Association of Securities

Dealers (‘‘NASD’’). It is anticipated that

each national securities exchange and

the NASD will file rule changes

proposing adoption of depository

eligibility standards substantially

similar to CHX’s proposed rule and will

seek to make such changes effective

contemporaneously with the effective

date of the transition from a five-day

(‘‘T+5’’) to a three-day (‘‘T+3’’)

settlement cycle. The transition is set to

occur June 7, 19995.3

The proposed rule change will require

issuers to ensure that securities to be

listed on CHX have been included in the

file of eligible issues maintained by a

securities depository registered as a

clearing agency under Section 17A of

the Securities Exchange Act of 1934.4

This requirement will not apply to a

security if the terms of such security

cannot be reasonably modified to meet

the criteria for depository eligibility at

all securities depositories.

The proposed rule change sets forth

additional requirements that must be

met before a security will be deemed to

be ‘‘depository eligible,’’ as such term is

used in Article XXII, Rule 37 of the CHX

rules (‘‘Book-Entry Settlement
27358 Federal Register / Vol. 60, No. 99 / Tuesday, May 23, 1995 / Notices

5Pursuant to Article XXII, Rule 37 of the CHX

rules, trades by a member in depository eligible

securities generally must be settled by book-entry

through a securities depository.

6 15 U.S.C. 78f(b)(5) (1988).

7Supra note 3 and accompanying text.

8 17 CFR 200.30–3(a)(12) (1994).

1See letter from Craig Long, Foley & Lardner, to

Glen Barrentine, Senior Counsel, SEC, dated May 4,

1995. In Amendment No. 1, the Exchange requests

that the rule filing be approved on a one-year pilot

basis and makes certain clarifying changes to the

text of Item I.

2A limit order is an order to buy or sell a stated

amount of a security at a specified price or at a

better price.

3 In the Pilot Approval Order, the Commission

described its concerns with the program and

requested that the Exchange submit a report

detailing the use of the pilot. The Exchange,

however, did not submit the report because

specialists on the Exchange made little or no use

of the pilot program. Telephone conversation

between Craig Long, Foley & Lardner, and Jennifer

Choi, SEC, on April 17, 1995.

4 In the original pilot program,the Auto-Ex was to

operate by comparing the size of CHX-entered limit

Requirements’’).5 The proposed rule

specifies different requirements for

depository eligibility depending upon

whether a new issue is distributed by an

underwriting syndicate before or after

the date a securities depository system

is available for monitoring repurchases

of the distributed shares by syndicate

members (‘‘flipping tracking system’’).

Currently, a flipping tracking system

is being developed that will include a

securities depository service that (i) can

be activated upon the request of the

managing underwriter for a period of

time that the managing underwriter

specifies, (ii) in certain circumstances,

will require the delivering participant to

provide to the depository information

sufficient to identify the seller of such

shares as a precondition to the

processing of book-entry delivery

instructions for distributed shares, and

(iii) will report to the managing

underwriter the identity of any other

syndicate member or selling group

member whose customer(s) sold

distributed shares (but will not report to

the managing underwriter the identity

of such customer[s]) and, in certain

circumstances, will report to such

syndicate member or selling group

member the identity of such

customer(s). Prior to the availability of

a flipping tracking system, the managing

underwriter may delay the date a

security is deemed ‘‘depository eligible’’

for up to three months after trading has

commenced in the security. After the

availability of a flipping tracking

system, a new issue will be deemed to

be depository eligible upon

commencement of trading on CHX.

The proposed rule change is

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

Act 6 in that it is designed to promote

just and equitable principals of trade.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

CHX believes that no burden will be

placed on competition as a result of the

proposed rule change.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants or Others

No written comments have been

solicited or received. CHX will notify

the Commission of any written

comments received by CHX.

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 CHX 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.

CHX has requested accelerated

effectiveness of the proposed rule

change in order that the rule can

become effective on June 7, 1995.7

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submission

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

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

Section, 450 5th Street, N.W.,

Washington, D.C. 20549. Copies of such

filings will also be available for

inspection and copying at the principal

office of CHX. All submissions should

refer to the file number SR–CHX–95–12

and should be submitted by June 13,

1995.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–12518 Filed 5–22–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35722; File No. SR–CHX–

95–11]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Chicago Stock Exchange,

Incorporated Relating to the Automatic

Execution of Limit Orders

May 16, 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 March 31, 1995,

the Chicago Stock Exchange,

Incorporated (‘‘CHX’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change and on May 5,

1995, filed Amendment No. 1 to the

proposed rule change,1 as described in

Items I, II, and III below, which Items

have been prepared by the selfregulatory 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 Exchange proposes to reactivate

its system enhancement relating to the

automatic execution of limit orders 2

with one modification. This system

enhancement was originally approved

by the Commission as a one-year pilot

program. See Securities Exchange Act

Release No. 32124 (Apr. 13, 1993), 58

FR 21325 (approving File No. SR–MSE–

92–03) (‘‘Pilot Approval Order’’). The

original one-year pilot program lapsed

on April 15, 1994 without the Exchange

filing for an extension or permanent

approval.3

The proposed automatic execution

feature (‘‘Auto-Ex’’) will operate by

comparing the size of the CHX-entered

limit order against the amount of stock

ahead of that order in the primary

market when the issue is trading in the

primary market at the limit price.4 The