Federal Register / Vol. 65, No. 74 / Monday, April 17, 2000 / Notices 20497

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 42450

(Feb. 23, 2000), 65 FR 10577 (Feb. 28, 2000) (File

No. SR–NYSE–99–48). The Commission notes that

similar proposals have been filed by the American

Stock Exchange, Securities Exchange Act Release

No. 42460 (February 25, 2000), 65 FR 11618 (March

3, 2000) (File No. SR–Amex+00–05); the Chicago

Stock Exchange, Securities Exchange Act Release

No. 42459 (Feb. 25, 2000), 65 FR 11619 (March 3,

2000) (File No. SR–CHX–99–28); the Philadelphia

Stock Exchange, Securities Exchange Act Release

No. 42458 (Feb. 25, 2000), 65 FR 11628 (March 3,

2000) (File No. SR–Phlx–00–12); and the Pacific

Exchange, SR–PCX–00–11.

4The Commission notes that the NYSE Notice is

available on the Commission’s website at: <http://

www.sec.gov/rules/sros/ny9948n.htm>.

investment to the aggregate of such

Fund’s and the Company Affiliate’s

(including the interest of the Adviser or

Adviser Affiliate) remaining funds

available for investment. The applicable

Fund will participate in such

investment to the extent that the

Required Majority determines that it is

in such Fund’s best interest. The

acquisition of follow-on investments as

permitted by this condition will be

subject to the other conditions set forth

in the application.

6. The Required Majority will be

provided quarterly for its review all

information concerning co-investment

transactions, including investments

made by the Adviser, Adviser Affiliate

and Company Affiliates in which a

Fund declined to participate, so that the

Required Majority may determine

whether all investments made during

the preceding quarter, including those

investments in which the Fund declined

to participate, comply with the

conditions of the order. In addition, the

Required Majority will consider at least

annually the continued appropriateness

of the standards established for coinvestment by a Fund, including

whether the use of the standards

continues to be in the best interest of the

Funds and its shareholders and does not

involve overreaching on the part of any

person concerned.

7. Other than as provided in condition

1(d)(iv), neither the Adviser nor any

Adviser Affiliate nor any director of the

Funds will participate in a coinvestment with the Funds unless a

separate exemptive order with respect to

such co-investment is obtained.

8. None of the Adviser, Adviser

Affiliates, Company Affiliates or the

Funds will be involved in the

sponsorship of any portfolio company.

9. None of the Adviser, Adviser

Affiliates, Company Affiliates or the

Funds will be involved in the

structuring of any portfolio company or

of any security issued by any portfolio

company, except that the Adviser may

take part in the negotiation of the terms

(such as coupon, final maturity, average

life, sinking funds, conversion price,

registration, put rights and call

protection) and appropriate restrictive

covenants governing the securities

purchased in a co-investment

transaction.

10. Each of the Funds will maintain

and preserve all records that are

required by section 31 of the Act and

any other provisions of the Act and the

rules and regulations under the Act

applicable to the Funds. The Funds also

will maintain the records required by

section 57(f)(3) of the Act as if each of

the Funds were a business development

company and the co-investments and

any follow-on investments were

approved under section 57(f).

11. None of the Adviser, Adviser

Affiliates, Company Affiliates or the

Funds will ‘‘make available significant

managerial assistance,’’ within the

meaning of section 2(a)(47) of the Act,

to any portfolio company whose

securities were acquired pursuant to the

requested order.

12. None of the Adviser, Adviser

Affiliates, or Company Affiliates will

receive any transaction fees (including,

without limitation, monitoring,

‘‘topping,’’ breakup, and termination

fees) in connection with any investment

made pursuant to the requested order.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–9449 Filed 4–14–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42661: File No. SR–BSE–

00–02]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Boston Stock Exchange, Inc.

Rescinding Chapter II, Section 23,

Dealings on Other Exchanges, or

Publicly Outside the Exchange

April 10, 2000.

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 March 9,

2000, the Boston Stock Exchange, Inc.

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

Securities and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) the proposed

rule change as described in Items I, II,

and III below, which Items have been

prepared by the Exchange. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

The Exchange’s proposed rule change

raises issues similar to those raised by

the New York Exchange’s (‘‘NYSE’’)

proposal to repeal NYSE Rule 390,

which rule generally prohibits NYSE

members and their affiliates from

effecting transactions in certain NYSElisted securities away from a national

securities exchange. The Commission

recently issued the notice of filing for

the NYSE’s proposal (‘‘NYSE Notice’’)

and solicited comment on a number of

important issues that have broad

implications for the structure of the U.S.

securities markets.3 Specifically, the

Commission requested comment on

market fragmentation—the trading of

orders in multiple locations without

interaction among those orders—and on

several options for addressing market

fragmentation. To promote a

comprehensive discussion of offboarding trading restrictions and related

market fragmentation issues, the

Commission requests that persons

interested in the Exchange’s proposal

refer to the NYSE Notice and submit

comments that respond to the questions

presented in the NYSE Notice.4

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to rescind

Chapter II, Section 23, ‘‘Dealings on

Other Exchanges or Publicly Outside the

Exchange,’’ which will remove the

Exchange’s off-board trading

restrictions. The text of the proposed

rule change is available at the Exchange

and at the Commission.

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

Exchange 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

Exchange 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 proposes to rescind its

restrictions on off-board trading under

20498 Federal Register / Vol. 65, No. 74 / Monday, April 17, 2000 / Notices

5 17 CFR 240.19c–1 and 17 CFR 240.19c–3.

6 15 U.S.C. 78f(b)(5). 7See supra notes 3 and 4.

8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 42352

(January 20, 2000), 65 FR 4455.

4See letter from Jeffrey T. Brown, Vice President

Regulation and General Counsel, CSE, to Heather

Traeger, Attorney, Division of Market Regulation,

SEC, dated April 4, 2000 (‘‘Amendment No. 1’’).

Because of the technical nature of this amendment,

the Commission is not required to solicit comment

on it.

5The Exchange amended the text of the proposed

rule change to replace ‘‘NASDAQ’’ with ‘‘Nasdaq.’’

id.

Chapter II, Section 23, ‘‘Dealings on

Other Exchanges or Publicly Outside the

Exchange.’’ Originally, Chapter II,

Section 23 prohibited Exchange

members from trading over-the-counter

in certain securities. Off-board trading

restrictions in general provided an

additional incentive for members to

purchase regional specialist units which

promoted internalization of order flow

and limited fragmentation.

However, the Commission narrowed

the scope of exchange off-board trading

restrictions by the adoption of Rules

19c–1 and 19c–3 under the Act.5 Rule

19c–1 enabled Exchange members to

execute agency trades with a market

maker who is not an exchange member.

Rule 19c–3 permits Exchange members

to execute proprietary trades in

securities listed after April 26, 1979. On

a practical basis, the purchase of a

regional specialist unit allowed a

member firm to internalize its small

retail order flow without violating an

exchange’s off-board principal trading

restrictions.

The Exchange believes it is

appropriate to rescind its restrictions on

off-board trading at this time. Advances

in the application of technology have

resulted in the creation of new

competitors to the regional exchanges,

such as Alternative Trading Systems. As

such, the Exchange recognizes the need

for exchanges and their members to take

part in the greater level of free market

trading. The NYSE also filed to rescind

NYSE Rule 390. In light of these

developments (as well as the

Commission’s request that the Exchange

review its restrictions on off-board

trading), the Exchange now proposed to

rescind Chapter II, Section 23.

2. Statutory Basis

The Exchange believes that 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

principles of trade, to foster cooperation

and coordination with persons engaged

in regulating, clearing, settling,

processing information with respect to,

and facilitating transactions in

securities, to remove impediments to

and perfect the mechanism of a free and

open market and a national market

system, and, in general, to protect

investors and the public interest; and is

not designed to permit unfair

discrimination between customers,

issuers, brokers, and dealers.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes that the

proposed rule change will not 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

The Exchange has neither solicited

nor received written comments on the

proposed rule change.

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 Exchange consents,

the Commission will:

A. By order approved 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,

including whether the proposed rule

change is consistent with the Act. The

Commission also invites interested

persons to submit written data, views,

and arguments on the market

fragmentation issues presented in the

NYSE Notice.7 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–

0609. 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 persons, 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 at the Exchange. All

submissions should refer to File No.

SR–BSE–00–02 and should be

submitted by May 8, 2000. Comments

responding to the Commission’s request

for comment on market fragmentation

issues should refer to File No. SR–

NYSE–99–48 and should be submitted

by April 28, 2000.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–9486 Filed 4–14–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42657; File No. SR–CSE–

99–05]

Self-Regulatory Organizations; Order

Approving the Proposed Rule Change

and Amendment No. 1 to the Proposed

Rule Change by the Cincinnati Stock

Exchange Enabling Members To Trade

Nasdaq/NM Securities

April 10, 2000.

I. Introduction

On December 10, 1999, the Cincinnati

Stock Exchange (‘‘CSE’’ 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

enable its members to trade Nasdaq/NM

securities.

The proposed rule change was

published for comment in the Federal

Register on January 27, 2000.3 No

comments were received on the

proposal. On April 7, 2000, the

Exchange submitted Amendment No. 1,

making several technical changes to the

proposed rule text.4 This order approves

the proposed rule change, as amended.

II. Description of the Proposal

The proposed rule change would

amend the CSE Rules to permit

members to trade Nasdaq/NM 5

securities traded on The Nasdaq Stock