63558 Federal Register / Vol. 60, No. 237 / Monday, December 11, 1995 / Notices

6 17 CFR 200.30–3(a)(12) (1994).

1 15 U.S.C. § 78s(b)(1) (1988).

2Letters from Jean M. Cawley, OCC, to Jerry W.

Carpenter, Assistant Director, Division of Market

Regulation, Commission (September 11, 1995, and

October 10, 1995).

3The CFTC’s distributional requirements are set

forth in Appendix B to Part 190 of the CFTC’s

General Regulations. 17 CFR 190. The CFTC’s

distributional framework was adopted in April

1994. 59 FR 17468 (April 13, 1994).

4The Commission has modified the text of the

summaries prepared by OCC.

5Securities Exchange Act Release Nos. 29991

(November 26, 1991), 56 FR 61458 (order approving

OCC/CME non-proprietary XM program); 56 FR

61404 (Comm. F. T. Comm’n 1991) (order

approving OCC/CME non-proprietary XM program);

30041 (December 5, 1991) 56 FR 64824 [File Nos.

SR–OCC–90–04 and SR–ICC 90–03] (order

approving OCC/ICC non-proprietary, market

professional cross-margin program); and 56 FR

61406 (Comm. F. T. Comm’n 1991) (order

approving OCC/ICC non-proprietary cross-margin

program). In August 1993, the Commission

approved expansion of the OCC/KCC XM program

established in February of 1992 to include nonproprietary positions. Securities Exchange Act

Release No. 32708 (August 2, 1993), 58 FR 42586

[File No. SR–OCC–93–13] (order approving OCC/

KCC non-proprietary XM program).

6 7 U.S.C. § 6d(2) (1988) and 17 CFR 1.20 (1991).

7 15 U.S.C. §§ 78aaa–78lll (1988).

8 11 U.S.C. §§ 741–752 (1988).

9 11 U.S.C. §§ 761–766 (1988).

10 17 CFR 190.01–190.10.

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

20549. Copies of such filing also will be

available for inspection and copying at

the principal office of GSCC. All

submissions should refer to the file

number SR–GSCC–95–05 and should be

submitted by January 2, 1996.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–30069 Filed 12–8–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36551; File No. SR–OCC–

95–12]

Self-Regulatory Organizations; The

Options Clearing Corporation; Notice

of Filing of a Proposed Rule Change

Amending the Agreements Governing

Non-Proprietary Cross-Margining

Accounts of Market Professionals in

the Cross-Margining Program Among

The Options Clearing Corporation

(‘‘OCC’’), the Intermarket Clearing

Corporation (‘‘ICC’’), and the Chicago

Mercantile Exchange, in the CrossMargining Program Between OCC and

ICC, and in the Cross-Margining

Program Between OCC and the Kansas

City Board of Trade Clearing

Corporation

December 4, 1995.

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

Securities Exchange Act of 1934

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

August 15, 1995, The Options Clearing

Corporation (‘‘OCC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change (File No. SR–OCC–95–12) as

described in Items I, II, and III below,

which items have been prepared

primarily by OCC. On September 12,

1995, and on October 11, 1995, OCC

filed amendments to the proposed rule

change to include in addition to

proposed changes to the agreements

governing non-proprietary crossmargining (‘‘XM’’) accounts in the XM

program between OCC, The Intermarket

Clearing Corporation (‘‘ICC’’), and the

Chicago Mercantile Exchange (‘‘CME’’),

proposed changes to the agreements

governing non-proprietary XM accounts

in the XM program between OCC and

ICC and in the XM program between

OCC and the Kansas City Board of Trade

Clearing Corporation (‘‘KCC’’),

respectively.2 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 purpose of the proposed rule

change is to amend the agreements

governing non-proprietary XM accounts

of market professionals in the OCC/ICC/

CME XM program, in the OCC/ICC XM

program, and in the OCC/KCC XM

program in order to implement the

revised distributional scheme adopted

by the Commodity Futures Trading

Commission (‘‘CFTC’’) in the new

appendix to the CFTC’s bankruptcy

rules.3 The proposed rule change also

seeks to revise the terms of the

agreements government the proprietary

and non-proprietary XM accounts in the

OCC/KCC XM program to conform the

terms of those agreements to the terms

currently used in the forms of

agreements in the OCC/ICC/CME XM

program and in the OCC/ICC XM

program.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

OCC 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. OCC has prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

aspects of such statements.4

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The proposed rule change seeks to

amend the agreements governing nonproprietary XM accounts of market

professionals to correspond with the

requirements of the distributional

scheme adopted by the CFTC as a new

appendix to its bankruptcy rules. The

proposed rule change also seeks to

conform the terms of the agreements

governing the proprietary and nonproprietary XM accounts in the OCC/

KCC XM program to make the terms of

those agreements substantially identical

to the terms currently used in the forms

of agreements in the OCC/ICC/CME XM

program and the OCC/ICC XM program.

In November 1991, the Commission

and the CFTC approved non-proprietary

cross-margining.5 As part of the CFTC’s

approval, it required each futures

commission merchant (‘‘FCM’’)

participating in cross-margining to agree

that all funds and property in a nonproprietary XM account would be

treated as customer property subject to

the segregation requirements of the

Commodity Exchange Act 6 and to

segregate such fund and property from

that of non-XM customers. In addition,

the CFTC required each market

professional to subordinate its XM

related claims to customer claims based

on non-XM positions.

Pursuant to that subordination

requirement, if a clearing member

became insolvent, all non-XM

customers of the FCM would be paid

their pro-rata share of the combined

segregated funds pool, including funds

of XM market professionals, before the

XM market professionals received any

portion of their claims. The

subordination was intended to insulate

non-XM customers from losses arising

from XM accounts. The subordination

also ensured that the XM accounts of

market professional would not be

treated as accounts of securities

customers subject to liquidation under

the Securities Investors Protection Act

of 1970 7 or the stock broker liquidation

provisions of the Bankruptcy Code.8

Therefore, the accounts could be

liquidated as accounts of commodity

customers under the commodity broker

liquidation provisions of the

Bankruptcy Code 9 and the CFTC’s

bankruptcy rules,10 and both the
Federal Register / Vol. 60, No. 237 / Monday, December 11, 1995 / Notices 63559

11Supra, note 3.

12The conforming changes include terms that

ensure that non-broker-dealer XM market

professional will not be treated as ‘‘customers’’ for

purposes of Rule 15c3–3 under the Act pursuant to

the conditions set forth in the Commission’s noaction letter dated July 31, 1995. Letter from

Michael Macchiaroli, Associate Director, Division

of Market Regulation, Commission, to Jean Cawley,

OCC (July 31, 1995).

13 In addition, pursuant to the amendment filed

on October 11, 1995, OCC proposes to revise the

agreements governing the proprietary XM accounts

in the OCC/KCC XM program to conform the terms

of those agreements to the terms used in the

agreements used in the OCC/ICC/CME and OCC/

ICC XM programs. 14 17 CFR 200.30–3(a)(12) (1994).

Commission’s order and the CFTC’s

order approving non-proprietary XM

provide for such result.

The CFTC has adopted new rules that

provide for a different distributional

framework for funds and property

carried in a non-proprietary XM

account.11 The new revised rules

continue the concept of subordination

for the purpose of ensuring that the

market professionals’ securities

included in a XM account will be

subject to commodity broker liquidation

rules but modify the method for

property distribution in the event of the

liquidation of the firm(s) carrying the

non-propriety XM account. Under the

revised distributional scheme, FCMs

will continue to make separate

calculations for non-XM customers and

XM market professionals, and funds

deposited pursuant to those calculations

will continue to be separately

maintained. However, in the event of

the failure of the firm(s) carrying the

non-proprietary XM accounts, the

respective shortfalls, if any, of the pools

of funds would be determined as a

percentage of the segregation

requirement for each pool.

In the event of (i) No shortfall in

either pool, (ii) an equal percentage of

shortfall in both pools, (iii) a shortfall in

the non-XM pool only, or (iv) a greater

percentage of shortfall in the non-XM

pool than in the XM pool, then the two

pools of segregated funds would be

combined and non-XM customers and

XM market professionals would share

pro rata in the combined pool. In the

event of (i) a shortfall in the XM pool

only or (ii) a greater percentage shortfall

in the XM pool than in the non-XM

pool, then the two pools of segregated

funds would not be combined. Instead,

XM market professionals will share pro

rata in the pool of XM segregated funds

while non-XM customers would share

pro rata in the pool of non-XM

segregated funds.

In order to implement the new

distributional requirements, the clearing

organizations operating non-proprietary

XM programs must submit amended

agreements to the respective regulatory

authorities deleting the subordination

requirement and substituting a reference

to the CFTC’s distribution rules.

Accordingly, OCC is proposing to make

those and other conforming changes 12

to the agreements governing nonproprietary XM accounts for the XM

program among OCC, CME, and ICC, the

XM program between OCC and ICC, and

the XM program between OCC and

KCC.13

OCC believes the proposed rule

change is consistent with the

requirements of Section 17A of the Act

and the rules and regulations

thereunder because the rule proposal

will facilitate the prompt and accurate

clearance and settlement of securities

transactions and will assure the

safeguarding of securities and funds

which are in the custody or control of

the clearing agency or for which it is

responsible.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

OCC does not believe that the

proposed rule change will impact or

impose a burden on competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No written comments relating to the

proposed rule change have been

solicited or received. OCC will notify

the Commission of any written

comments received by OCC.

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 OCC 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, 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

Room, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of OCC. All submissions should

refer to the file number SR–OCC–95–12

and should be submitted by January 2,

1996.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.14

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–30070 Filed 12–8–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21565; File No. 812–9698]

CIGNA Variable Products Group, et al.

December 4, 1995.

AGENCY: Securities and Exchange

Commission (the ‘‘SEC’’ or the

‘‘Commission’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘1940 Act’’).

APPLICANTS: CIGNA Variable products

Group (the ‘‘Trust’’), CIGNA

Investments, Inc. (‘‘CIGNA’’) and certain

life insurance companies and their

separate accounts investing now or in

the future in the Trust.

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) of the 1940

Act from the provisions of Sections 9(a),

13(a), 15(a) and 15(b) of the 1940 Act

and Rules 6e–2(b)(15) and 6e–

3(T)(b)(15) thereunder.

SUMMARY OF APPLICATION: Applicants

seek an order to the extent necessary to

permit shares of the Trust and shares of

any other investment company that is

designed to fund insurance products

and for which CIGNA, or any of its

affiliates, may serve as investment

advisor, administrator, manager,

principal underwriter or sponsor

(collectively, with the Trust, the

‘‘Funds’’) to be sold to and held by: (a)

Variable annuity and variable life

insurance separate accounts of both