Federal Register / Vol. 60, No. 99 / Tuesday, May 23, 1995 / Notices 27353

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

2 17 CFR 240.19b–4.

petitioner is aware and on which the

petitioner intends to rely to establish

those facts or expert opinion. Petitioner

must provide sufficient information to

show that a genuine dispute exists with

the applicant on a material issue of law

or fact. Contentions shall be limited to

matters within the scope of the

amendment under consideration. The

contention must be one which, if

proven, would entitle the petitioner to

relief. A petitioner who fails to file such

a supplement which satisfies these

requirements with respect to at lest one

contention will not be permitted to

participate as a party.

Those permitted to intervene become

parties to the proceeding, subject to any

limitations in the order granting leave to

intervene, and have the opportunity to

participate fully in the conduct of the

hearing, including the opportunity to

present evidence and cross-examine

witnesses. Since the Commission has

made a final determination that the

amendment involves no significant

hazards consideration, if a hearing is

requested, it will not stay the

effectiveness of the amendment. Any

hearing held would take place while the

amendment is in effect.

A request for a hearing or a petition

for leave to intervene must be filed with

the Secretary of the Commission, U.S.

Nuclear Regulatory Commission,

Washington, DC 20555, Attention:

Docketing and Services Branch, or may

be delivered to the Commission’s Public

Document Room, the Gelman Building,

2120 L Street, NW., Washington, DC, by

the above date. Where petitions are filed

during the last 10 days of the notice

period, it is requested that the petitioner

promptly so inform the Commission by

a toll-free telephone call to Western

Union 1–(800) 248–5100 (in Missouri 1–

(800) 342–6700). The Western Union

operator should be given Datagram

Identification Number N1023 and the

following message addressed to (Project

Director): petitioner’s name and

telephone number, date petition was

mailed, plant name, and publication

date and page number of this Federal

Register notice. A copy of the petition

should also be sent to the Office of the

General Counsel, U.S. Nuclear

Regulatory Commission, Washington,

DC 20555, and to the attorney for the

licensee.

Nontimely filings of petitions for

leave to intervene, amended petitions,

supplemental petitions and/or requests

for a hearing will not be entertained

absent a determination by the

Commission, the presiding officer or the

Atomic Safety and Licensing Board that

the petition and/or request should be

granted based upon a balancing of the

factors specified in 10 CFR

2.714(a)(1)(i)–(v) and 2.714(d).

Commonwealth Edison Company,

Docket Nos. 50–295 and 50–304, Zion

Nuclear Power Station, Units 1 and 2

Date of application for amendments:

April 24, 1995.

Brief description of amendments: the

amendments change the Technical

Specifications by modifying the

surveillance testing periodicity

requirements of the automatic actuation

logic of engineered safeguards

equipment.

Date of issuance: May 5, 1995.

Effective date: May 5, 1995.

Amendment Nos.: 162 and 150.

Facility Operating Licenses Nos. DPR–

39 and DPR–48. The amendments

revised the Technical Specifications.

Public comments requested as to

proposed no significant hazards

consideration: No.

The Commission’s related evaluation

of the amendments, finding of

emergency circumstances, and final

determination of no significant hazards

consideration are contained in a Safety

Evaluation dated May 5, 1995.

Attorney for licensee: Michael I.

Miller, Esquire; Sidley and Austin, One

First National Plaza, Chicago, Illinois

60690.

Local Public Document Room

location: Waukegan Public Library, 128

N. County Street, Waukegan, Illinois

60085.

NRC Project Director: Robert A. Capra.

Baltimore Gas and Electric Company,

Docket No. 50–317, Calvert Cliffs

Nuclear Power Pant, Unit No. 1, Calvert

County, Maryland

Date of application for amendment:

April 28, 1995.

Brief description of amendment: The

amendment revises the control room

emergency ventilation system TS

3.7.6.1, Limiting Condition For

Operation. The revision extends the

one-time increase in the allowed outage

time for loss of emergency power only,

from the 30 days previously approved,

to 45 days. This extension is necessary

to allow time to repair the Number 21

emergency diesel generator which failed

its operability tests subsequent to

modifications which have been recently

completed.

Date of issuance: May 2, 1995.

Effective date: As of the date of

issuance to be implemented upon

receipt.

Amendment No.: 205.

Facility Operating License No. DPR–

53: Amendment revised the Technical

Specifications.

Public comments requested as to

proposed no significant hazards

consideration: No.

The Commission’s related evaluation

of the amendment, consultation with

the State, and final determination of no

significant hazards consideration are

continued in a Safety Evaluation dated

May 2, 1995.

Local Public Document Room

location: Calvert County Library, Prince

Frederick, Maryland 20678.

Attorney for licensee: Jay E. Silbert,

Esquire, Shaw, Pittman, Potts and

Trowbridge, 2300 N. Street, NW.,

Washington, DC 20037.

NRC Project Director: Ledyard B.

Marsh.

Dated at Rockville, MD, this 17th day of

May, 1995.

For the Nuclear Regulatory Commission,

Elinor G. Adensam,

Acting Director, Division of Reactor Projects—

III/IV, Office of Nuclear Reactor Regulation.

[FR Doc. 95–12538 Filed 5–22–95; 8:45 am]

BILLING CODE 7590–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–35723; File No. SR–Amex–

95–08]

Self-Regulatory Organizations;

American Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change Relating to Membership

Structure and Requirements and the

Exchange’s Gratuity Fund

May 16, 1995.

I. Introduction

On February 17, 1995, the American

Stock Exchange, Inc. (‘‘Amex’’ or

‘‘Exchange’’) filed with 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 Construction, Rules and

Membership Lease Plan to allow

organizations, including certain pension

plans, to own memberships legally as

well as beneficially and to allow

individuals and organizations to own

multiple memberships. The Exchange

also is proposing to revise its Gratuity

Fund to reflect the above changes, to

increase the death benefit paid

thereunder, and to allow options

principal members to participate

therein.

The proposed rule change was

published for comment in Securities
27354 Federal Register / Vol. 60, No. 99 / Tuesday, May 23, 1995 / Notices

3Letter from Sam G. Marx on behalf of S.G. Marx

& Associates Inc., a member of the Amex, to

Brandon Becker, Director, Division of Market

Regulation, DEC, dated May 15, 1995 (‘‘Marx

Letter’’).

4Both regular members and options principal

member are exchange members as defined in

Section 3(a)(3) of the Act. A regular member may

effect transactions in both equities and derivatives

on the floor of the Exchange. In contrast, an options

principal member is limited to trading as principal

in options and other derivative products. Currently,

the Amex has 661 regular and 203 options principal

memberships outstanding.

5An a-b-c agreement is an arrangement between

the individual who nominally owns a seat and the

member organization with which such individual is

associated and which is the beneficial owner of the

membership. Upon termination of the a-b-c

agreement, the individual must either (1) retain the

membership and pay the member organization the

amount necessary to purchase another membership;

(2) sell the membership with the proceeds paid over

to the member organization; or (3) transfer the

membership to a person designated by the member

organization.

6The a-b-c agreement would be replaced with

another document to authorize the nominee to act

on the member organization’s behalf in all

Exchange matters and to provide that the member

organization is responsible for all the nominee’s

Exchange-related obligations. Member

organizations, however, would be permitted to

continue to utilize their existing a-b-c agreements

for so long as the respective individual members

remain in their seats.

7As discussed below, the owner would retain the

right to vote seats held by nominees and certain

lessees.

8The Exchange has been advised that the

prohibited transaction provisions of the Employee

Retirement Income Security Act and the Internal

Revenue Code would preclude a member from

being the nominee or lessee of the seat owned by

his or her own pension trust.

9 ‘‘Active’’ is defined as meeting all Exchange

requirements to be active on the Floor, including

passing any necessary examinations and being

registered as, or associated with, a broker-dealer.

See Para. 9176 of the Amex Guide (‘‘Membership

Requirements and Admissions Procedures’’).

10See Art. I, Sec. 3(g) of the Amex Construction

for a definition of the term ‘‘Approved Person.’’

11This includes nominal transfers, i.e., a transfer

of membership within an organization.

12Except for the above described changes in

initiation fees and, as hereafter described, changes

in the Exchange’s Gratuity Fund assessment, the

proposal would not effect any change to annual

dues, floor facility fees, or other fees.

Exchange Act Release No. 35411 (Feb.

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

One comment was received on the

proposal.3 This order approves the

proposed rule change.

II. Overview of Proposal

A. Changes to Amex Membership

Structures

At present, the Exchange’s

Constitution and Rules require that each

member 4 be a natural person who must

either own a membership (i.e., a seat on

the Exchange) outright, lease a seat from

its owner, or hold the seat under a socalled a-b-c agreement.5 Further, a

membership must also be held in the

name of a natural person and no

individual is permitted to hold more

than one seat. A member organization

may own beneficially one or more

memberships in which case the member

organization would be required to

designate an individual (typically an

officer, general partner, or employee of

the member organization) nominally to

own the seat on the member

organization’s behalf.

The Exchange proposes to eliminate

the requirements that memberships be

individually owned and instead permit

both individuals and organizations to

own multiple memberships.

Organizations that own memberships

could either lease their seats directly to

lessees or designate individuals as

nominees to ‘‘operate’’ their seat.6

Similarly, individuals who own

memberships, but who do not ‘‘operate’’

their seats, would also be able to lease

their seats or designate nominees to

operate the seats as their employees. As

a general matter, such nominees and

lessees would be deemed to be member

of the Exchange and would be subject to

all of the obligations and privileges of

membership under the Exchange

Constitution and Rules except that they

would not participate in any

distribution of Exchange assets or funds

upon liquidation, dissolution, or

winding up of the affairs of the

Exchange and ultimate control of the

membership would rest with its owner.7

The proposal also would permit

certain pension plans (generally

comprised of trusts or custodian

accounts, including Keoghs and

Individual Retirement Accounts) to

acquire ownership of one or more seats

for investment purposes and either to

lease their seats or to designate

nominees to operate them.8 This option

would only be available to a pension

plan where the sponsor of the plan is a

member organization and at least fifty

percent (50%) of the pension trust

beneficiaries are active members and/or

floor employees of the member

organization or the sponsor is an

‘‘active’’ member.9 The trust itself

would be the owner of the membership

and the trustee would have to become

an approved person.10

The proposal would make a number

of additional changes to the Exchange’s

Rules and Constitutions to effectuate the

foregoing changes. These changes are

described below.

Subordination of Membership to

Trading Losses and Debts

Currently, in the case of a leased seat,

the lessor’s liability to the Exchange for

his or her lessee’s trading losses and

other debts incurred in connection with

membership is limited to the value of

the leased seat. In the case of a seat held

pursuant to an a-b-c agreement,

however, a member organization is

responsible for all such losses and debts

incurred by the a-b-c seatholder, even if

such obligations exceed the value of the

seat used by the a-b-c- seatholder. These

requirements would remain the same

under the proposal with nominees being

treated in the same manner as a-b-c

seatholders currently are.

Claims Procedures

Under the current rules, all transfers

of Exchange memberships must be

posted on the Exchange Bulletin Board

and published in the Exchange’s Weekly

Bulletin for at least seven days.11 During

this time, other members and member

organizations must file their claims

against the seat with the Exchange.

These transfer and claims procedures

would continue to be utilized under the

new membership structure. In addition,

the designation of a nominee by a seat

owner would be deemed to be a transfer

to which the posting and claims

procedures would apply.

Fees

Currently, the Exchange imposes an

initiation fee of $2,500 for both a regular

and options principal membership

when a seat is sold. The initiation fee on

a nominal transfer (i.e., within a firm

pursuant to an a-b-c agreement) is

$2,500 for a regular membership but

only $500 for an options principal

membership. When a membership is

transferred to a lessee, the initiation fee

is $1,500 for a regular membership but

again only $500 for an options principal

membership.

The proposal would retain the

initiation fee of $2,500 for both regular

and options principal memberships

when a seat is sold but would impose

an initiation fee of $1,500 on all regular

and options principal memberships for

all nominal transfers and transfers by

lease.12 For the ninety-day period after

these changes become effective, no

initiation fee would be charged for

changes in membership ownership,

except for bona fide sales and bona fide

changes in lessees or nominees. A $250

processing fee, however, would be

imposed on any transfer where no

initiation fee is charged.

Voting

Currently, members subject to an a-bc agreement sign an irrevocable proxy

authorizing their member organizations

to vote on their behalf. The organization

then designates an individual (typically

an employee) who is authorized to vote
Federal Register / Vol. 60, No. 99 / Tuesday, May 23, 1995 / Notices 27355

13See note 9, supra, for a definition of the term

‘‘active.’’

14A person would not have to maintain the same

status for the two-year period. For example, a

person who is a lessee for one and a half years and

who then buys the seat (or another seat) and

remains on it for at least six months would satisfy

the active requirement. In addition, a person may

be off the seat for up to sixty consecutive days

during the two-year period without being

considered to have interrupted that period.

15 June 10, 1993 was the date that the Exchange’s

Board approved these proposals.

16 If that person subsequently buys a different

options principal membership, the decision to ‘‘optout’’ would apply to that seat as well.

17An existing options principal member or lessee

who ‘‘opts-out’’ of the Fund and on some other

basis later becomes eligible, however, would

become subject to the phase-in at that time.

18This schedule is similar to that used by the

New York Stock Exchange (‘‘NYSE’’) regarding

payments from its Gratuity Fund. See Art. XV, Sec.

3 of the NYSE Constitution.

19The Fund currently maintains a reserve of

$200,000, the amount necessary to pay two death

benefits. If the benefit is increased, the reserve

would be increased accordingly. The initial

assessment of $300 on new participants is necessary

to allow the Fund to achieve this goal.

20The only exception to this would be in the case

of an individual who is both the independent

owner of and the user of a particular options

principal membership and who ‘‘opts-out’’ of the

Fund under the transition provisions. For such a

person’s ‘‘opt-out’’ to be able to have any practical

effect, his or her options principal seat would have

to be exempt entirely from the obligation to pay

assessments to the Fund for so long as he or she

remains the owner and user of that seat.

on behalf of the membership. In the case

of leased seats, the vote is negotiable

between the lessor and lessee, provided

that if no specification is made, the

lessee would vote the seat.

Under the new rules, organizations

and individuals would be entitled to

vote all of the memberships that they

own (and do not lease out).

Organizations would have to designate

an individual who is authorized to vote

on their behalf. With respect to leased

seats, the vote would be negotiable

between lessor and lessee.

B. Changes to the Gratuity Fund

Currently, the Exchange Gratuity

Fund (‘‘Fund’’) provides that only

families of regular members may receive

the death benefit of $100,000. To fund

the death benefit, each regular member

contributes $152 to the Fund upon

becoming a participant in the Fund and

is assessed $152 each time a participant

dies (subject to reduction in the first

assessment of the year to reflect income

earned by the Fund in the previous

year). In the case of leased seats, the

lessor, but not the lessee, participates in

the Fund.

The proposal would exclude from

participation in the Fund certain lessors

who currently participate in the Fund

and would include as participants, in

addition to regular members, options

principal members and both options

principal and regular member lessees

and nominees. Under the new rules,

lessors would only participate to the

extent they were previously active 13 on

the Floor for at least two continuous

years 14 commencing on or after June 10,

1993,15 or they were regular members or

regular member lessors prior to such

date. Accordingly, the proposal would

exclude lessors who were not regular

members or regular member lessors as of

June 10, 1993 from participation in the

Fund, notwithstanding that such lessors

currently are participants in the Fund.

An individual who satisfies the above

active requirement but who then ceases

to be a member, lessor, lessee, or

nominee, nevertheless, once again

would become a participant in the Fund

upon becoming a lessor so long as no

more than five years has elapsed since

such individual last participated in the

Fund. To the extent more than five years

has elapsed, however, the individual

then would have to be active for another

two continuous years to participate in

the Fund as a lessor.

Individuals who currently own

options principal memberships would

have a one-time opportunity to ‘‘opt-in’’

or ‘‘opt-out’’ of the Fund. A decision to

‘‘opt-out’’ would be irrevocable for the

rest of the person’s life (unless the

person subsequently buys a regular

membership.16 Options principal

members who ‘‘opt-in’’ would also be

grandfathered for purposes of the active

requirement. Current lessees (both

regular and options principal

membership) would also have the right

to ‘‘opt-out’’ of the Fund, but such

decisions would be effective only for the

duration of their current lease, and new

leases would require lessee

participation in the Fund. Lease

renewals by the same two parties would

not be considered to be new leases. Any

new options principal member seat

owner (other than an individual owner

who previously chose to ‘‘opt-out’’

irrevocably) would be covered by the

new rules.

Further, under the proposal, the death

benefit would be increased to $125,000.

The Exchange, however, would phase-in

the full death benefit over a four-year

period. The proposed ‘‘phase-in’’

schedule would be applied only on a

prospective basis and would not be

applicable to persons who are already

participants or who become participants

by virtue of the proposed amendments

(e.g., options principal members and

lessees) regardless of whether such

persons have been participants or

members for four years or more.17 For

participants subject to the phase-in, the

full death benefit would be based upon

the length of time such person had been

a participant, according to the following

schedule: 18

• Less than one year—$25,000 (20%

‘‘phase-in’’)

• One year or more but less than two

years—$50,000 (40% ‘‘phase-in’’)

• Two years or more but less than

three years—$75,000 (60% ‘‘phase-in’’)

• Three years or more but less than

four years—$100,000 (80% ‘‘phase-in’’)

• Four years or more—$125,000

(100% ‘‘phase-in’’)

If a participant who has not

completed the phase-in period ceases to

be a participant for a continuous period

of less than five years, and thereafter

again becomes a participant, he or she

would be able to aggregate his or her

periods of participation for purposes of

the ‘‘phase-in.’’ For example, if an

individual is a participant for one year

and then ceases to be a participant for

four years, and thereafter again becomes

a participant, such individual would be

credited with the amount of time

previously spent as a participant for

purposes of the ‘‘phase-in’’ schedule. If

a participant ceases to be such for a

period of five years or more, however,

and thereafter becomes a participant, he

or she would not be able to aggregate his

or her prior periods of participation for

purposes of the ‘‘phase-in’’ described

above. That is, the ‘‘phase-in’’ schedule

would be applied to such participant as

if he or she had never been a participant

in the past.

Under the proposal, the amount of

each assessment would fluctuate

because the number of participants in

the Fund would vary based on who is

eligible at the time of a member’s death

and because the extent to which

participants were ‘‘phased-in’’ would

vary. As is currently the case,

participants would have to pay both an

initial assessment upon becoming a

participant and an assessment each time

an eligible individual dies. The first

group of persons to become newly

eligible for the Fund upon the adoption

of these changes would be required to

pay an initial assessment of $300.19

Thereafter, persons who become eligible

would be required to pay an initial

assessment based on the number of

participants in the Fund at that time.

Each membership would pay at least

one assessment.20 In some instances,

there would be one assessment per seat

and on others two (i.e., when both lessor

and lessee are qualified). Fund

assessments would be based in all cases

on the amount of the benefit payable

and would be the same for all
27356 Federal Register / Vol. 60, No. 99 / Tuesday, May 23, 1995 / Notices

21Options principal members, lessees, and

nominees also would be eligible to become trustees

of the Fund. For further discussion of rules

governing trustees of the Fund, see Art. IX of the

Amex Constitution.

22See Marx Letter, supra, note 3.

23 15 U.S.C. 78f(b)(2), (4), (5).

24 15 U.S.C. 78f(c). Section 6(c) of the Act allows

an exchange to deny membership to certain classes

of persons.

25See e.g., Art. I, Sec. 1.1 and Sec. 2.2 of the

Constitution of the Chicago Board Options

Exchange, Inc. and Art. II, Sec. 1 of the Constitution

of the Chicago Stock Exchange, Incorporated. 26See Art. IV., Sec. 2(d) of the Amex Constitution.

memberships assessed, regardless of

whether or to what extent a particular

participant being assessed has already

‘‘phased-in’’ to full eligibility.

No member’s beneficiaries would be

entitled to receive more than one Fund

benefit upon the member’s death by

virtue of the deceased member’s status

as both lessor and lessee, or for any

other reason. The family of a member

who owns multiple memberships would

be able to collect only one benefit. A

member would be eligible on only one

seat, and must designate that seat to the

Exchange. The lessees or nominees of

the other seats, of course, would be

eligible on those seats. The trustees of

the Fund would have the authority to

resolve disputes with respect to a

person’s eligibility to participate in the

Fund.21

III. Comments Received by the

Commission

The Commission received one

comment letter from S.G. Marx &

Associates Inc., a member of the

Exchange.22 The commenter alleged that

the Exchange had delayed 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. Additionally, the

commenter objected to the fact that,

under the proposal, certain of its

memberships would be required to pay

an assessment to the Fund,

notwithstanding that no one connected

with such membership would be a

participant in the Fund.

IV. Discussion

The Commission believes that the

proposed rule changes are consistent

with the requirements of the Act and the

rules and regulations thereunder

applicable to national securities

exchanges and, in particular, the

requirements of Sections 6(b) (2), (4),

and (5) of the Act.23 Section 6(b)(2) of

the Act requires the rules of an

exchange, subject to the provisions of

Section 6(c) of the Act,24 to ensure that

any registered broker or dealer or

natural person associated with a

registered broker or dealer may become

a member of the exchange. Section

6(b)(4) of the Act requires the rules of

an exchange to provide for the equitable

allocation of reasonable dues and fees

among members and persons using

exchange facilities. Section 6(b)(5)

requires, among other things, that the

rules of an exchange be designed to

promote just and equitable principles of

trade, remove impediments to and

perfect the mechanism of a free and

open market and a national market

system, and, in general, protect

investors and the public interest.

A. Changes to Amex Membership

Structure

Currently, the Exchange allows

organizations to own beneficially

multiple memberships. As beneficial

owners, member organizations are able

to vote the memberships that they own

(and do not lease out) and otherwise

enjoy all of the financial advantages of

membership. Because they are only

beneficial holders, however, member

organizations must designate

individuals nominally to own the seat

on their behalf.

The Commission believes that the

amendment of the Exchange’s rules to

permit organizations to own

memberships directly and to permit

individuals and organizations to own

multiple memberships should not result

in any substantive changes in the

operation of the Exchange. Such

changes should have the beneficial

effect of allowing member organizations

to simplify the arrangements that they

have made with regard to their

ownership and operation of Exchange

memberships. Moreover, several other

exchanges permit organizations, as well

as individuals, to own memberships and

the Commission is not aware of any

problems that have resulted from such

membership structure.25

The Commission believes that the

amendments to the Exchange’s rules to

permit certain pension plans to acquire

ownership of one or more seats for

investment purposes and either to lease

their seats or to designate nominees to

operate them reasonably balances the

Exchange’s interest in having the

flexibility to approve entities with new

organizational structures for Exchange

membership with the regulatory

interests in protecting the financial and

structural integrity of the Exchange. In

the event such an entity designated a

nominee to operate its seat, the pension

plan would have to be a broker or dealer

registered with the Commission

pursuant to the Act, because this is a

prerequisite to becoming an Exchange

member organization,26 and would be

subject to all other membership

approval requirements generally

applicable to member organizations. If

the pension plan leased the seat, the

plan would be subject to all approval

requirements generally applicable to

lessors. In either event, the pension

plan’s trustee would have to be

approved as an approved person under

the Constitution and Rules of the

Exchange.

The Commission believes that the

changes to the Exchange’s fees relating

to the transfer of memberships 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. The proposed

amendments would make two changes

to the Exchange’s fee structure. The first

change would equalize the initiation fee

for nominal transfers, (i.e., intra-firm)

and transfers by lease of regular

memberships and options principal

memberships. The Commission believes

that such equalization is proper in view

of the Exchange’s representation that the

administrative expenses attributable to

the two types of membership are

identical. The second change would

impose a substantially reduced

processing fee for changes in

membership during the ninety-day

period following the effective date of

these changes, except for bona fide sales

and bona fide changes in leases or

nominees. The Commission believes

that it is appropriate for the Exchange to

offer a reduced fee for a limited period

of time as a means of encouraging

members to take advantage of the new

alternatives available in structuring

ownership of Amex seats.

B. Gratuity Fund

The Commission is unaware of any

reason why the Exchange’s proposal to

expand participation in the Gratuity

Fund to all active Exchange members

and to increase the death benefit

provided thereunder should not be

approved. The Exchange’s proposal,

however, also limits participation in the

Fund. Specifically, the proposal

excludes inactive members from

participation in the Fund, except for

such members who have been active on

the Exchange for at least two years or

who were participants in the Fund (or

options principal members) as of the

date the Exchange’s Board approved

such proposal. As a result, the proposal

would exclude lessors who are currently

participants in the Fund but who were
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