Federal Register / Vol. 60, No. 105 / Thursday, June 1, 1995 / Notices 28639

11The Commission notes that prior to listing

longer-term 3D Options the Exchange will be

required to provide written representations that

both the Exchange and the Options Price Reporting

Authority have the necessary systems capacity to

support these new series of options.

12See 3D Approval Order, supra note 6.

13One additional modification herein is with

regard to customer margin. In connection with the

3D Approval Order, the Phlx agreed to collect

margin within two days following the date on

which a customer enters into a cash/spot FCO

position and to maintain customer margin at a level

sufficient to produce at least a 97% confidence

level in the volatility of the Deutsche mark in

relation to the U.S. dollar for all two-day intervals

during the two year period preceding the time of

measurement. These margin provisions will apply

to the longer-term 3D Options only when these

options have two weeks or less to expiration. At all

other times, the Exchange’s customer margin

procedures applicable to the Phlx’s regular

Deutsche mark FCOs will apply. Telephone

conversation between Michele Weisbaum,

Associate General Counsel, Phlx, and Brad Ritter,

Senior Counsel, OMS, Division, Commission, on

May 23, 1995.

14See 3D Approval Order, supra note 6.

15See Amendment No. 2, supra note 5.

16See 3D Approval Order, supra note 6. The

Commission expects the Phlx to continue to notify

the Commission prior to making any change in the

procedures approved in the 3D Approval Order.

16See 3D Approval Order, supra note 6. The

Commission expects the Phlx to continue to notify

the Commission prior to making any change in the

procedures approved in the 3D Approval Order.

17 15 U.S.C. 78s(b)(2) (1988).

18See supra note 11.

19 17 CFR 200.30–3(a)(12) (1994).

this regard, the Commission notes that

the Phlx has stated that the longer-term

3D Options will meet the needs of

investment managers who are seeking to

protect portfolios against foreign

exchange fluctuations but who do not

wish to receive or deliver the

underlying currency to achieve that

goal. Similarly, the Exchange believes

that corporate treasurers seeking balance

sheet protection would also prefer

paying or receiving U.S. dollars rather

than exchanging German marks. Both of

these potential users may have longterm concerns for which the one-week

and two-week expiration 3D Options

would not be an appropriate hedging

vehicle. Finally, the Exchange believes

that retail traders who may have a longterm market perspective will find the

longer-term 3D Options attractive

because they will not have to establish

foreign bank credit lines or have to deal

with the delivery or receipt of the

underlying foreign currency at

settlement.11

Additionally, the Commission notes

that except as modified herein, all of the

representations made by the Exchange

and all of the rules approved by the

Commission in connection with the 3D

Approval Order, including, but not

limited to, aggregation with regular

Deutsche mark FCOs for position and

exercise limit purposes, extended

trading hours on expiration Mondays,

Exchange and bank holidays on which

3D Options will not expire, and

automatic exercise of in-the-money 3D

Options,12 will also apply to the longerterm 3D Options listed pursuant to this

approval.13

As a result, for the reasons stated

above and in the 3D Approval Order,14

the Commission finds that the proposed

rule change is consistent with the Act.

The Commission finds good cause for

approving Amendment No. 2 to the

proposed rule change prior to the

thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register. Specifically,

Amendment No. 2 merely withdraws

the Exchange’s request for spread

margin treatment between the

Exchange’s German mark FCOs and the

3D Options.15 Because the requested

spread margin treatment would have

been a liberalization of the Exchange’s

existing margin rules, withdrawing this

request from the proposal does not raise

any regulatory issues.

The Commission notes that the

termination by the Phlx of its

relationship with one of the vendors

used to calculate the settlement value

for the 3D Options is, in this case, a nonsubstantive change. In this regard, based

on the representations by the Phlx

describing the procedures used for

calculating the settlement value,

including the backup procedures to be

used in the event of a complication, the

Commission believes that the Phlx will

be able to continue to comply with the

procedures specified in the 3D Approval

Order despite this change.16

Accordingly, the Commission believes it

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

Act to approve Amendment No. 2 to the

Phlx’s proposal on an accelerated basis.

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

2. 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

Section, 450 Fifth Street NW.,

Washington, DC. Copies of such filing

will also be available for inspection and

copying at the principal office of the

Phlx.16

All submissions should refer to the

File No. SR–Phlx–95–02 and should be

submitted by June 22, 1995.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,17 that the

proposed rule change (SR–Phlx–95–02),

as amended, is approved contingent

upon the Exchange’s submission to the

Commission of adequate systems

capacity representations.18

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.19

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–13413 Filed 5–31–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35761; File No. SR–NASD–

95–19]

Self-Regulatory Organizations: Notice

of Filing of Proposed Rule change by

National Association of Securities

Dealers, Inc. Relating to Limited

Partnership Rollup Transactions

May 24, 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 May 4, 1995 the

National Association of Securities

Dealers, Inc. (‘‘NASD’’ or ‘‘Association’’)

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the NASD. 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 NASD is herewith filing a

proposed rule change to add new

paragraph 7 to Subsection

(b)(2)(B)(vii)d. of Article III, Section 34

of the Rules of Fair Practice and to add

new paragraph (vii) to Subsection

(14)(D) to Part I of Schedule D to the ByLaws to exclude investment companies

and business development companies

from the definition of ‘‘limited

partnership rollup transaction.’’ The

specific text of the rule change would

apply to ‘‘a transaction involving only
28640 Federal Register / Vol. 60, No. 105 / Thursday, June 1, 1995 / Notices

1See, Securities Exchange Act Release No. 34533

(August 15, 1994); 59 FR 43147 (August 22, 1994).

2See, Securities Act Release No. 7113; Securities

Exchange Act Release No. 35036 (December 2,

1994); 59 JR 63676 (December 8, 1994). 3 15 U.S.C. § 78o–3.

entities registered under the Investment

Company Act of 1940 or any Business

Development Company as defined in

Section 2(a)(48) of that Act.’’

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

NASD 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 NASD has

prepared summaries, set forth in Section

(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

Federal legislation regulating limited

partnership rollups (‘‘Rollup Reform

Act’’) was signed into law on December

17, 1993, and contained a mandate for

the NASD to adopt its own rollup rule.

The NASD’s rule regulating rollups

(‘‘Rollup Rule’’) was approved by the

SEC on August 15, 1994 1 and amended

Article III, Section 34 of the NASD

Rules of Fair Practice to prohibit NASD

members and associated persons from

participating in a ‘‘limited partnership

rollup transaction’’ unless the

transaction includes specified

provisions to protect the rights of

limited partners. The Rollup Rule

further amended Part III of Schedule D

to the By-Laws to prohibit the

authorization for quotation on the

Nasdaq National Market of any security

resulting from a ‘‘limited partnership

rollup transaction’’ unless the

transaction is conducted in accordance

with certain specified procedures

designed to protect the rights of

dissenting limited partners. The NASD

Roll Up Rule was designed to conform

to the federal roll up legislation.

Subsequent to approving the NASA’s

Rollup Rule, the SEC adopted new Rule

3b–11 to exclude from the definition of

‘‘limited partnership rollup

transaction,’’ among other things,

transactions involving entities registered

under the Investment Company Act of

1940 (the ‘‘1940 Act’’) or any Business

Development Company as defined in

Section 2(a)(48) of the 1940 Act.2 In its

adopting release, the SEC stated that it

was adopting the new Rule in order to

define related terms used in the federal

rollup definition ‘‘. . . for purposes of,

among other things, the SRO rules.’’

The SEC has requested that the NASD

amend the Rollup Rule to conform the

NASD’s definition of ‘‘limited

partnership rollup transaction’’ to the

definition adopted by the SEC. The

proposed rule change amends the

Rollup Rule by adding as an exclusion

for investment companies and business

development companies to the

definition of ‘‘limited partnership rollup

transaction’’new paragraph 7 to

Subsection (b)(2)(B)(vii)d. to Article III,

Section 34 of the Rules of Fair Practice

and new paragraph (vii) to Subsection

14(D) to Part I of Schedule D. Thus, if

the proposed rule change is adopted,

investment companies and business

development companies would be

excluded from the purview of the

Rollup Rule. Investment Companies and

Business Development Companies are

already subject to extensive regulation

under the 1940 Act and have not been

perceived as entities connected with the

types of abusive limited partnership

rollup transactions for which investor

protection provisions of the rollup rules

were sought.

The NASD believes that the proposed

rule change is consistent with the

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

Act,3 which require that the rules of the

association be designed to prevent

fraudulent and manipulative acts and

promote just and equitable principles of

trade in that the proposed rule change

provides for regulatory consistency in

the definition of ‘‘limited partnership

rollup transaction’’ and appropriately

excludes investment companies and

business development companies from

unnecessary, and potentially

burdensome, additional regulation.

(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 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

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.

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 in

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

a principal office of the NASD. All

submissions should refer to File No.

SR–NASD–95–19 and should be

submitted by June 22, 1995.

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. 95–13307 Filed 5–31–95; 8:45 am]

BILLLING CODE 8010–01–M

[Rel. No. IC–21095; 811–8442]

Countdown to Retirement Funds;

Notice of Application

May 24, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Deregistration under the Investment

Company Act of 1940 (the ‘‘Act’’).