65700 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Notices

24Securities Exchange Act Release No. 16900

(June 17, 1980) 45 FR 41920 (order approving

standards for clearing agency registration).

25Securities Exchange Act Release No. 20221

(September 23, 1983), 48 FR 45167 (omnibus order

granting full registration as clearing agencies to The

Depository Trust Company, Midwest Clearing

Corporation, Midwest Securities Trust Company,

National Securities Clearance Corporation, The

Options Clearing Corporation, Pacific Securities

Depository, Philadelphia Depository Trust

Company, and Stock Clearing Corporation of

Philadelphia).

26 Division of Market Regulation, The October

1987 Market Break (February 1988), Chap. 10

(‘‘Clearance and Settlement’’), esp. pp. 10–48 to 10–

56; Division of Market Regulation, Market Analysis

of October 13 and October 16, 1989, pp. 118–173

(December 1990).

27 15 U.S.C. 78q–1(a)(2) (1988).

28 15 U.S.C. 78q–1(b)(3)(I) (1988).

29 In Bradford National Clearing Corporation v.

Securities and Exchange Commission, 950 F.2d

1085, 1105 (D.C. Cir. 1978), the court said:

[T]o the extent the legislative history provides

any guidance to the Commission in taking

competitive concerns into consideration in its

deliberations on the national clearing system, it

merely requires the [Commission] to ‘‘balance’’

those concerns against all others that are relevant

under the statute. 30 17 CFR 200.30–3(a)(16) (1994).

registration,24 and it has exercised

significant continuing oversight over all

aspects of clearing agency operations

and functions.25 The market break of

October 1989 and the market break of

October 1991 demonstrated the central

role of clearing agencies in the U.S.

securities markets in reducing risk,

improving efficiency, and fostering

investor confidence in the markets.26 In

light of the foregoing, the Commission

believes that any applicant that requests

an exemption from clearing agency

registration should meet standards that

are substantially similar to those

standards required of registered clearing

agencies in order to assure that the

fundamental goals of Section 17A of the

Exchange Act (i.e., safe and sound

clearance and settlement) will be

achieved. Therefore, commentators are

invited to address whether granting the

proposed exemption to ProTrade (1)

would further the development of a

national clearance and settlement

system, (2) would promote linked and

coordinated clearing facilities (among

options, futures, and other financial

instruments), and (3) would promote the

maintenance of fair competition.

Specifically, ProTrade’s application

raises the question of whether the

establishment of multiple unlinked

securities clearing agencies is consistent

with Section 17A of the Act. One of the

benefits of a single clearing agency is

centralized default administration.

Conversely, the introduction of multiple

options clearing agencies, including

options clearing operations that may

seem de minimis relative to the overall

market may have a fragmentation effect

that could increase the risks entailed in

liquidating defaulting customers.

Commentators should discuss

applicable law as well as the costs and

benefits of single versus multiple

clearing facilities for option securities,

including whether the risk exposure to

individual clearing organizations would

be increased by the fragmentation of the

clearing function. Commentators also

should discuss the effects that stress to

the marketplace (e.g., high volume and

high volatility) possibly could have on

such a multiple clearing agency system.

B. Fair Competition

Section 17A of the Exchange Act

requires the Commission, in exercising

its authority under that section, to have

due regard for the maintenance of fair

competition among clearing agencies.27

In addition, no clearing agency may be

registered or granted an exemption from

registration, if its rules ‘‘impose any

burden on competition not necessary or

appropriate in furtherance of the

purposes’’ of the federal securities

laws.28 Therefore, the Commission must

consider an applicant’s likely effect on

competition in its review of any

application for registration as a clearing

agency or for an exemption from such

registration and must balance any

benefits or hindrances to competition

against any effects on the other statutory

goals.29

The Commission invites

commentators to address whether an

exemption from registration as a

clearing agency for ProTrade would

result in increased competition among

option broker-dealers and among

options clearing agencies and whether

such competition would, for example,

result in the development of improved

systems capabilities, the offering of new

services, and the lowering of prices to

customers. The Commission also invites

commentators to address whether the

proposal would impose any burden on

competition that is inappropriate under

the Exchange Act.

V. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing

application by February 16, 1995. Such

written data, view, and arguments will

be considered by the Commission in

deciding whether to grant ProTrade’s

request for an exemption from

registration as a clearing agency.

Persons desiring to make written

submissions should file six copies

thereof with the Secretary, Securities

and Exchange Commission, 450 Fifth

Street, NW., Washington, DC 20549.

Reference should be made to File No.

600–28. Copies of the application and

all written comments will be made

available for inspection and copying at

the Commission’s Public Reference

Room, 450 Fifth Street, NW.,

Washington, DC 20549.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.30

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–30907 Filed 12–19–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36578; File No. SR–Amex–

95–48]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the American Stock Exchange, Inc.

Relating to Revised Listing Standards

for Equity-Linked Notes

December 13, 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 December 5, 1995,

the American Stock Exchange, Inc.

(‘‘Amex’’ or ‘‘Exchange’’) 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

by the self-regulatory 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 Amex proposes to amend Section

107B of the Amex Company Guide to

provide greater flexibility for the listing

of Equity-Linked Notes (‘‘ELNs’’).

The text of the proposed rule change

is available at the Office of the

Secretary, Amex 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

Amex 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 Amex has

prepared summaries, set forth in

Sections A, B, and C below of the most

significant aspects of such statements.
Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Notices 65701

1See Securities Exchange Act Release Nos. 32345

(May 20, 1993) and 33328 (Dec. 13, 1993). 2 17 CFR 200.30–3(a)(12)(1994).

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

On May 20, 1993 and December 13,

1993, the SEC approved amendments to

Section 107 of the Amex Company

Guide (‘‘Section 107’’) to provide for the

listing and trading of ELNs.1 ELNs are

intermediate term, nonconvertible,

hybrid debt instruments, the value of

which is linked to the performance of a

highly capitalized, actively traded U.S.

common stock (‘‘linked security’’). In

order to list an ELNs product, Section

107B currently requires the linked

security to meet one of the following

criteria:

Market capitalizationAnnual trading

volume

$3 billion .............. and 2.5 million shares.

$1.5 billion ........... and 20 million shares.

$500 million ......... and 80 million shares.

Amex now proposes to amend Section

107(B) to provide for greater flexibility

in the listing criteria for ELNs. The

proposed rule change will lower the

trading volume requirements criteria

such that ELNs may be listed where the

linked security meets one of these

revised criteria:

Market

capitalization

Annual trading

volume

$3 billion .............. and 2.5 million shares.

$1.5 billion ........... and 10 million shares.

$500 million ......... and 15 million shares.

The Exchange believes this revision

strikes an appropriate balance between

the Exchange’s responsiveness to

innovations in the securities markets

and its need to ensure the protection of

investors and the maintenance of fair

and orderly markets. Moreover, the

Exchange believes that these changes

will not have an adverse impact on the

markets for the underlying linked

security in view of the requirements that

the linked security have a large

minimum market capitalization and a

fairly large trading volume over the

preceding twelve months. The Exchange

will continue to require that the issuer

have a minimum tangible net worth of

$150 million and that the total issue

price of the ELNs combined with all of

the issuers’s other listed ELNs shall not

be greater than 25% of the issuer’s

tangible net worth at the time of

issuance. The rule change will also

delete the current provision of the rule

that allows the Exchange to list ELNs

that do not meet these criteria if the

Division of Market Regulation of the

SEC concurs.

2. Statutory Basis

The basis under the Act for this

proposed rule change is the requirement

under Section 6(b)(5) that an exchange

have rules that are designed to prevent

fraudulent and manipulative acts and

practices, 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.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes the proposed

rule change will impose no 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 not solicited, and

does not intend to solicit, comments on

this proposed rule change. The

Exchange has not received any

unsolicited written comments from

members or other interested parties.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the 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 the 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 at

the Commission’s Public Reference

Section, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the Amex. All submissions

should refer to File No. SR–Amex–95–

48 and should be submitted by January

10, 1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.2

Jonathan G. Katz,

Secretary.

[FR Doc. 95–30911 Filed 12–19–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36585; File No. SR–Amex–

95–49]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

American Stock Exchange, Inc.

Relating to the Exchange’s Gratuity

Fund

December 13, 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 December 7, 1995,

the American Stock Exchange, Inc.

(‘‘Amex’’ or ‘‘Exchange’’) 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 by the self-regulatory

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 is proposing to amend

the Admission of Members and Member

Organizations section of its rules to

require that all persons who are entitled

to make an election to either ‘‘opt-in’’ or

‘‘opt-out’’ of participation in the