Federal Register / Vol. 60, No. 26 / Wednesday, February 8, 1995 / Notices 7599

1 15 U.S.C. 78s(b)(1) (1988).

2 17 CFR 240.19b–4 (1991).

the requirement of paragraph (a)(2) of

Interpretation and Policy.01 under

Exchange Rule 5.3 (number of

shareholders must be at least 2,000),

that requirement would be deemed to be

satisfied. Finally, if at least 40 million

shares of a New Security will be

outstanding in a restructuring, the

Exchange may assume that the New

Security will satisfy the listing criteria

of both paragraphs (a)(1) (sufficient

public float) and (a)(2) of Interpretation

and Policy .01 under Exchange Rule 5.3.

Before relying on either of the

assumptions described above, the

Exchange must make a reasonable

investigation as to the number of

shareholders and public float of the

New Security and must not have

determined that the requirements of

paragraphs (a)(1) and (a)(2) will, in fact,

not be satisfied.

The proposed rule change also would

revise one of the Exchange’s guidelines

relating to the withdrawal of approval of

underlying securities. Currently, under

Exchange Rule 5.4, Interpretation and

Policy .01(c) and .01(d), an underlying

security will not be deemed to satisfy

the Exchange’s listing criteria if the

trading volume of the underlying

security in all markets was less than

1,800,000 shares in the preceding

twelve months (the ‘‘Maintenance

Volume Test’’) or if the market price of

the underlying security closed below $5

on a majority of business days during

the preceding six months (the ‘‘Market

Price Test’’). Because New Securities

have limited trading history, they may

be unable to satisfy the Maintenance

Volume Test or the Market Price Test at

the time options on such securities are

first listed for trading on the Exchange.

Accordingly, the proposed rule change

would add a new Interpretation and

Policy .01(g) to Exchange Rule 5.4 to

provide that the Exchange may

determine whether a New Security

satisfies the Maintenance Volume and

Market Price Test set forth in paragraphs

(c) and (d) of that Interpretation, as well

as the comparable tests set forth in

Interpretation and Policy .04 of

Exchange Rule 5.4, by reference to the

trading volume and price history of the

Original Security prior to

commencement of trading in the New

Security, including ‘‘when issued’’

trading.

2. Statutory Basis

The proposed rule change is

consistent with Section 6(b) of the Act,

in general, and furthers the objectives of

Section 6(b)(5) in particular, by

removing impediments to a free and

open market in options covering

securities issued by companies engaged

in corporate restructuring transactions.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The CBOE does not believe that the

proposed rule change will impose any

burden on competition.

B. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No written comments were solicited

or received with respect to the proposed

rule change.

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 other 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, 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 at

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the CBOE. All submissions

should refer to File No. SR–CBOE–95–

11 and should be submitted by March

1, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–3109 Filed 2–7–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35324; International Series

Release No. 781 File No. SR–CBOE–95–12]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Chicago Board Options Exchange,

Inc. Relating to Currency Warrants

Based on the Value of the U.S. Dollar

in Relation to the Mexican Peso

February 2, 1995.

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 January

27, 1995, the Chicago Board Options

Exchange, Inc. (‘‘CBOE’’ 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 Exchange.

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 CBOE proposes to list and trade

warrants based upon the value of the

U.S. dollar in relation to the Mexican

peso (‘‘Mexican Peso Warrants’’). the

text of the proposed rule change is

available at the Office of the Secretary,

CBOE, 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 the 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

CBOE has prepared summaries, set forth

in Sections (A), (B), and (C) below, of

the most significant aspects of such

statements.
7600 Federal Register / Vol. 60, No. 26 / Wednesday, February 8, 1995 / Notices

3See Securities Exchange Act Release No. 35178

(December 29, 1994), 60 FR 2409 (January 9, 1994)

(notice of File No. SR–CBOE–94–34).

4 15 U.S.C. 78f(b)(5) (1988). 5 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

The Exchange represents that it is

permitted to list and trade currency

warrants under CBOE Rule 31.5(E). The

Exchange is now proposing to list and

trade currency warrants based upon the

value of the U.S. dollar in relation to the

Mexican peso. The Exchange further

represents that the listing and trading of

Mexican Peso Warrants will comply in

all respects with CBOE Rule 31.5(E), as

discussed below.

Currency Warrant Trading

Mexican Peso Warrants will be

unsecured obligations of their issuers

and will be cash-settled in U.S. dollars.

Mexican Peso Warrants will be

exercisable either throughout their life

(i.e., American-style) or only

immediately prior to their expiration

date (i.e., European-style). Upon

exercise, the holder of a Mexican Peso

Warrant structured as a ‘‘put’’ will

receive payment in U.S. dollars to the

extent that the value of the Mexican

peso has declined in relation to the U.S.

dollar below a pre-stated base level.

Conversely, upon exercise, holders of a

Mexican Peso Warrant structured as a

‘‘call’’ will receive payment in U.S.

dollars to the extent that the value of the

Mexican peso has increased in relation

to the U.S. dollar above a pre-stated

level. Mexican Peso Warrants that are

‘‘out-of-the-money’’ at the time of

expiration will expire worthless.

Warrant Listing Standards and

Customer Safeguards

CBOE Rule 31.5(E) sets forth the

criteria applicable to listing currency

warrants. Any issue of Mexican Peso

Warrants will conform to the listing

guidelines under Rule 31.5(E) which

provide that: (1) The issuer will have

assets in excess of $100,000,000 and

otherwise substantially exceed the size

and earnings requirements in Rule

31.5(A); (2) the term of the warrants

shall be for a period ranging from one

to five years from date of issuance; and

(3) the minimum public distribution of

such issues shall be one million

warrants, together with a minimum of

400 public holders, and have an

aggregate market value of at least $4

million.

On September 28, 1994, the Exchange

submitted for Commission approval,

proposed rules governing customer

protection and margin requirements for

stock index warrants, currency index

warrants, and currency warrants.3 If the

Commission approves these proposed

rules, the Exchange represents that the

listing and trading of the proposed

Mexican Peso Warrants will be subject

to these rules.

The CBOE will also require that

Mexican Peso Warrants be sold only to

customers whose accounts have been

approved for options trading pursuant

to Exchange Rule 9.7. The Exchange

also notes that the suitability standards

of Exchange Rule 9.9 shall apply to

recommendations in Mexican Peso

Warrants. Further, the Exchange

represents that the standards of Rule

9.10(a), regarding discretionary orders,

will be applied to Mexican Peso

Warrants. Additionally, the Exchange

will require that customer positions in

Mexican Peso Warrants be subject to the

margin requirements applicable to

foreign currency options.

Prior to the commencement of trading

of Mexican Peso Warrants, the Exchange

will distribute a circular to its

membership calling attention to certain

compliance responsibilities when

handling transactions in Index warrants.

The Exchange will submit a draft of the

circular to the Commission staff for

approval prior to distribution to

members.

The Exchange believes that the

proposed rule change is consistent with

Section 6 of the Act, in general, and

furthers the objectives of Section 6(b)(5)

of the Act,4 in particular, in that it is

designed to facilitate transactions in

securities and to remove impediments

to and perfect the mechanism of a free

and open market by providing investors

with a low-cost means of participating

in the performance of the Mexican

economy or hedging against the risk of

investing in that economy.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any inappropriate burden on

competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

Written comments on the proposed

rule change 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 Exchange 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

Section, 450 Fifth Street, N.W.,

Washington, D.C. Copies of such filing

will also be available for inspection and

copying at the principal office of the

CBOE. All submissions should refer to

File No. SR–CBOE–95–12 and should be

submitted by March 1, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–3108 Filed 2–7–95; 8:45 am]

BILLING CODE 8010–01–M