Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Notices 65697

1ProTrade, located in Mercer Island, Washington,

was incorporated under the laws of the State of

Washington in January, 1986. Joseph A. Zajac, the

company’s President, owns 100% of ProTrade’s

stock.

2 15 U.S.C. 78q–1 (1988).

3 17 CFR 240.17Ab2–1 (1995).

4For the definitions of ‘‘broker’’ and ‘‘dealer’’

under the Exchange Act, see Sections 3(a) (4) and

(5), 15 U.S.C. 78c(a) (4) and (5) (1988). See also,

Section 15 of the Exchange Act, 15 U.S.C. 78o

(1988), for broker-dealer registration requirements.

5 15 U.S.C. 77b(1) (1988). ProTrade’s options are

‘‘securities’’ as that term is defined in Section 2(1)

of the Securities Act, 15 U.S.C. 77b(1) (1988). As

securities, they must be registered pursuant to

Sections 5 and 6 of the Securities Act, 15 U.S.C. 77e

and 77f (1988), before they may be traded in

interstate commerce.

The issuer of the options for purposes of the

Securities Act will be ProTrade itself. For the

definition of ‘‘issuer,’’ see Section 2(4) of the

Securities Act, 15 U.S.C. 77b(4) (1988).

6For definition of ‘‘exchange,’’ see Section 3(a)(1)

of the Exchange Act, 15 U.S.C. 78c(a)(1) (1988). See

also, Section 6 of the Exchange Act, 15 U.S.C. 78f

(1988), for exchange registration requirements.

7ProTrade expects to have a net capital of

$250,000, the amount that ProTrade states it will

need to comply with Commission’s uniform net

capital rule, Rule 15c3–1, 17 CFR 240.15c3–1

(1995), as a broker-dealer that holds customers’

funds (i.e., a clearing broker-dealer). The

Commission has taken no position on ProTrade’s

interpretation of its requirements under the uniform

net capital rule.

III. Comments on the Operation of the

Plan

In the January 1995 Extension Order,

the August 1995 Extension Order, the

September 1995 Extension Order, the

October 1995 Extension Order, and the

November 1995 Extension Order, the

Commission solicited, among other

things, comment on: (1) whether the

BBO calculation for the relevant

securities should be based on price and

time only (as currently is the case) or if

the calculation should include size of

the quoted bid or offer; and (2) whether

there is a need for an intermarket

linkage for order routing and execution

and an accompanying trade-through

rule. The Commission continues to

solicit comment on these matters.

IV. Solicitation of Comment

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

Room. All submissions should refer to

File No. S7–24–89 and should be

submitted by January 10, 1996.

V. Conclusion

The Commission finds that proposed

Amendment No. 6 to the Plan to extend

the operation of the Plan and the

financial negotiation period through

December 29, 1995, is appropriate and

in furtherance of Section 11A of the Act.

The Commission finds further that

extension of the exemptive relief

through December 29, 1995, as

described above, also is consistent with

the Act and the Rules thereunder.

Specifically, the Commission believes

that these extensions should serve to

provide the Participants with more time

to conclude their financial negotiations

and to submit the necessary filings to

the Commission. This, in turn, should

further the objects of the Act in general,

and specifically those set forth in

Section 12(f) and 11A of the Act and in

Rules 11Aa3–1 and 11Aa3–2

thereunder.

It is therefore ordered, pursuant to

Sections 12(f) and 11A of the Act and

(c)(2) of Rule 11Aa3–2 thereunder, that

Amendment No. 6 to the Joint

Transaction Reporting Plan for Nasdaq/

National Market securities traded on an

exchange on an unlisted or listed basis

is hereby approved and trading

pursuant to the Plan is hereby approved

on a temporary basis through December

29, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority, 17 CFR 200.30–3(a)(29).

Jonathan G. Katz,

Secretary.

[FR Doc. 95–30913 Filed 12–19–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36587; File No. 600–28]

Self-Regulatory Organizations; ProTrade; Notice of Filing of Application

for Exemption From Registration as a

Clearing Agency

December 13, 1995.

On September 22, 1994, ProTrade 1

filed with the Securities and Exchange

Commission (‘‘Commission’’) a Form

CA–1 requesting exemption from

registration as a clearing agency

pursuant to section 17A of the

Securities Exchange Act of 1934

(‘‘Exchange Act’’) 2 and Rule 17Ab2–1

thereunder.3 Since the original filing,

ProTrade has supplemented the

information provided in its Form CA–1

filing with letters dated October 27,

1994, April 18, 1995, September 26,

1995, and October 2, 1995. The

Commission is publishing this notice to

solicit comments on the proposal from

interested persons.

I. Introduction

ProTrade proposes to introduce an

automated proprietary trading system

(‘‘System’’) for over-the-counter option

securities. ProTrade’s customers, the

users of the System, will be authorized

to enter bids and offers for these options

into the System. The System will

electronically match the bids and offers

and provide execution. Instantaneously

with each execution, the proceeds of the

transaction will be calculated, and the

accounts of the trading parties will be

debited and credited in settlement.

Accordingly, the System will combine

into a single electronic format several

functions that usually involve the

collective efforts of: (1) An option

broker-dealer, (2) an options exchange,

and (3) an options clearing agency.

ProTrade asserts that this unity of

functions will bring new efficiencies to

the options marketplace.

ProTrade has represented that its

System will not commence operations

before ProTrade: (1) has registered as a

broker-dealer pursuant to the Exchange

Act and has become a member of the

National Association of Securities

Dealers, Inc. (‘‘NASD’’),4 (2) has

registered the option securities that are

to be traded in the System pursuant to

the Securities Act of 1933 (‘‘Securities

Act’’),5 and (3) has received a no-action

letter from the Division stating that the

Division will not recommend

enforcement action if ProTrade does not

register as a securities exchange

pursuant to the Exchange Act.6

ProTrade believes that its proposed

operations would involve few, if any,

clearing agency activities within the

meaning of the Exchange Act. ProTrade

also believes that its proposed

registration as a broker-dealer, coupled

with the proposed registration of its

options under the Securities Act, will

satisfy the regulatory scheme of the

Exchange Act. ProTrade has stated that

such registrations under both the

Exchange Act and the Securities Act

would provide the necessary and

appropriate safeguards to protect

investors and the public interest.7

Accordingly, it is ProTrade’s belief that

an exemption from registration as a
65698 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Notices

8ProTrade has stated that it ‘‘will derive most of

its revenues from typical ‘discount’ broker

activities, i.e., accepting orders for listed securities

on behalf of customers.’’ Letter from Joseph M.

Zajac, President, ProTrade, to Eugene Lopez,

Assistant Director, Division, Commission, at page 2

(October 15, 1993).

9As European-style options, no positions may be

exercised before the expiration date.

10ProTrade has chosen the term ‘‘customers’’ for

the users of its System, as distinct from

participants, subscribers, members, or other similar

terms.

11At this time, ProTrade has no written standards

or criteria for acceptance of customers.

12Technically, this described form of post-trade

processing is known as ‘‘trade-for-trade’’ clearing,

the simplest form of clearing, which involves

accounting for each trade on a contract by contract

basis without netting or at least without the usual

types of netting. This form of clearing contrasts

with the more sophisticated forms of clearing such

as ‘‘daily balance order’’ or ‘‘continuous net

settlement’’ where clearing agencies net each of

their participant’s trades and each participant’s

money credits and debits in each security on a daily

basis.

13At this time, ProTrade has no financial and

operational standards for customers authorized to

use its System.

14 15 U.S.C. 78g (1988).

15 12 CFR 220 et seq. (1995). See, esp., § 19(f)(2)

of Regulation T, 12 CFR 220.19(f)(2), which in

general refers a broker-dealer’s option margin

requirements to the maintenance rules of the

broker-dealer’s self-regulatory organization

(‘‘SRO’’). In ProTrade’s case, the SRO would be the

NASD.

clearing agency under the Exchange Act

is warranted.

II. Description of Proposal

A. The System

1. Background

ProTrade reports that it has designed

and developed the System as a ‘‘standalong’’ electronic operation that

integrates order-entry, trade-matching,

and execution functions with the back

office functions of accounting and

settlement. ProTrade states that it will

interpose itself between the trading

parties of each trade and that it will

guarantee performance to each

contraparty. The System will be made

available to a list of qualified customers.

As the operator of the System, ProTrade

will derive revenues from customer fees

on all transactions effected in the

System.8

2. Options Securities

The System is designed to process

over-the-counter options on equities,

equity indexes, foreign currencies, and

interest rates. ProTrade plans to have

two classes, Class A and Class B, of such

options. Class A options will be

uncertificated, European-style put and

call options that will be cash settled and

that will expire on the last trading day

of the chosen month of expiration.9

Class B options will be uncertificated

put and call options that will have no

standard terms and that will be

individually negotiated by the trading

parties.

3. Customers

As discussed below under

Participation Standards, ProTrade will

screen its prospective customers to

determine whether they meet certain

financial and operational standards.10

Applicants who fail to meet ProTrade’s

standards will be denied customer

status and therefore will be denied

access to the System.11 In general,

ProTrade expects to have a

sophisticated customer base including

professional investors and financial

institutions. Each customer will be

provided with the System’s proprietary

software, which the customer may use

on a personal computer for the purpose

of entering orders and for performing

other tasks within the System. ProTrade

expects that customers will be able to

connect with the System either by: (1)

a dial-up telephone line using a modem

or (2) a leased line. ProTrade will

provide each customer with a unique

identification number and a password

that will allow access to the System.

4. Operations

The System will keep a file of its

customers’ outstanding bids and offers

sorted by price and time of receipt. The

bids and offers will be displayed in a

montage or array, and customers will be

able to cancel or modify their orders at

any time prior to execution. Bids and

offers at the same price will be

anonymously matched by the System

and will be executed on a first-in, firstout basis. The System will accept

market orders, limit orders, stop orders,

and market if touched orders.

The System will be designed to

calculate balances and to settle accounts

immediately (or within a few seconds)

after every execution. ProTrade states

that each order will be individually

processed by the System without

netting.12 Settlement will consist of

book-entry debits or credits to the

customer’s account with the customer’s

account being part of ProTrade’s

segregated broker-dealer bank account.

As a means of protection, the System is

designed to reject any order unless the

account of the customer that is entering

the order has sufficient equity to satisfy

the order’s premium payment or has the

required collateral.

B. System Safeguards

1. Participation Standards

Customers authorized by ProTrade to

use the System will be required to meet

initial and continuing financial and

operational standards, as may be

determined by the ProTrade Board of

Directors and administered by

ProTrade’s management.13 Under these

standards, customers will be screened

for margin purposes to determine their

creditworthiness. Determining factors

will be the customers’ financial

positions and their knowledge and

experience in trading options and other

derivative products.

ProTrade will require each applicant

to disclose, at a minimum, the following

information: (1) Trading experience

with options and other derivatives, (2)

annual income and net worth, (3)

history of any account defaults or

failures, (4) experience with computers,

and (5) existing accounts with other

brokers. ProTrade, when it deems it

necessary, will obtain credit reports on

an applicant. Based on its subjective

review of the above criteria, ProTrade

may grant or deny customer privileges.

Customers also must agree in writing to

comply with applicable law and with all

of ProTrade’s rules. ProTrade will

reserve the right to deny access to the

System to any person that, among other

things, is the subject of a civil

injunction or criminal conviction for

breach of the laws governing securities

or commodities futures.

2. The System’s Data Backup

ProTrade reports that it will backup

its data daily and that the System itself

will have the ability to regenerate

electronically all transactions since the

previous backup. The System also will

be supported by backup hardware that

can be put on-line in a matter of

seconds.

While customers will be provided

with ProTrade’s software, the customers

will be responsible for their own

electronic equipment or hardware.

However, if a customer’s equipment

should break down, the customer could

submit orders by telephone to ProTrade

where a ProTrade employee will enter

the orders.

3. Margin Payment/Collection

Once ProTrade has completed its

broker-dealer registration, ProTrade will

be subject to Section 7(c) of the

Exchange Act, which governs brokerdealer margin requirements.14 As a

consequence of Section 7(c), ProTrade

also will be subject to Regulation T of

the Board of Governors of the Federal

Reserve System (‘‘Federal Reserve

System’’), which governs credit

extended by broker-dealers,15 and it will

be subject to the NASD’s rules

governing minimum maintenance
Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Notices 65699

16ProTrade will be subject to NASD margin

requirements on its customers’ accounts and

specifically the margin requirements for options

that are not issued by a registered clearing agency.

These requirements are set forth in the NASD

Manual, Rules of Fair Practice, Art. III,

§ 30(f)(2)(D)(iii).

17As a general rule, the Commission has

recommended that a clearing agency have a clearing

fund which: (1) Is composed of user contributions

based on a formula applicable to all users; (2) is

held in cash or highly liquid securities; and (3) is

limited in purpose to protecting participants and

the clearing agency from participant defaults and

from unusual, significant clearing agency losses.

Securities Exchange Act Release No. 16900 (June

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

for clearing agency registration).

However, on one occasion the Commission

permitted a clearing agency, Delta Government

Options Corp. (‘‘Delta’’) to register and to operate

as a clearing agency without a clearing fund. In

Delta’s case, the clearing agency’s risk management

system was deemed adequate, despite the lack of a

clearing fund, because Delta had the financial

backing of an affiliated corporation and had a

substantial credit facility. Securities Exchange Act

Release No. 26450 (January 12, 1989), 54 FR 2010

(order approving Delta’s registration as a clearing

agency).

18A transactional insurance fee differs from

margin in several ways. In brief, margin is collateral

deposited by a customer with a broker in

connection with the specific purchase of specific

securities, and margin requirements are governed

by the Exchange Act and the rules and regulations

thereunder as well as certain rules of the Federal

Reserve Board and the appropriate self-regulatory

organization. Under ProTrade’s contemplated

transactional insurance fee program, ProTrade

would debit a customer’s account a certain amount

in connection with each transaction and later credit

that amount back to the customer’s account upon

normal settlement of the transaction. Currently,

ProTrade is considering a debit in the vicinity of

5% of the value of each transaction. As stated

above, ProTrade has not yet decided if it will

implement such a program.

19 15 U.S.C. 78q–1 (1988).

20For the legislative history of Section 17A of the

Exchange Act, refer to Report of Senate Committee

on Banking, Housing and Urban Affairs. Securities

Acts Amendments of 1975, Report to Accompany

S. 249, S. Rep. NO. 75, 94th Cong., 1st Sess. 4–6

(1975).

21Market Reform Act of 1990, § 5, amending

§ 17A(a)(2) of the Exchange Act, 15 U.S.C. 78q–

1(a)(2) (1995 Supp.).

22 15 U.S.C. 78q–1(b)(1) (1988).

23See, e.g., order approving the temporary

registration of Government Securities Clearing

Corporation (‘‘GSCC’’) as a clearing agency where

the Commission temporarily exempted GSCC from

compliance with the Section 17A(b)(3)(C)

requirement of the Exchange Act. Securities

Exchange Act Release No. 25740 (May 24, 1988), 53

FR 19839.

margin for option securities held in

customers’ accounts.16

ProTrade states that it will treat all of

its customers as margin customers and

will require margin collateral for all

short positions. ProTrade indicates that

its in-house initial margin requirements

will be higher than the NASD’s

maintenance margin requirements to

insure that customers have sufficient

funds to cover immediate price moves

after they open positions. ProTrade

further states that it may reject customer

applicants and that it may suspend

active customers if they are found not to

meet margin standards. ProTrade

reports that it has programmed its

System to reject any order that would

open an option position if the subject

account does not have the necessary

funds or margin and if an existing

account were to become undermargined.

ProTrade also states that it may choose

to vary customer trading limits, margin

requirements, and position limits

according to the qualifications of each

customer.

ProTrade represents that its System is

designed to calculate intraday the

margin requirements for each account

based upon changes in any bid or asked

prices that affect an account. The

System reportedly will provide

ProTrade with real-time reports of

under-margined accounts that will

allow prompt margin calls and an

enhanced ability to prevent account

defaults.

4. Default

In the event that a customer’s default

becomes imminent, ProTrade states that

at its discretion it may choose to prevent

the default by assuming the customer’s

positions itself and by creating a hedged

position in the cash market. However,

ProTrade does not guarantee that it

would undertake such bail-out

procedures in the face of an imminent

default and states that any such efforts

would depend upon the circumstances.

In the event of the actual occurrence

of a customer default, ProTrade states

that it will guarantee full performance to

the contraparties. ProTrade does not

plan to create a clearing fund in support

of this guarantee.17 ProTrade reports

that it is contemplating the formation of

the other risk management facilities

such as: (1) A blanket surety bond to be

purchased by ProTrade from an

insurance company or (2) a

transactional insurance fee in the form

of a refundable deposit that would be

included in the cost of each trade.18

III. Public Interest Statement

ProTrade believes that exemption

from clearing agency registration is

critical to its entering the option

securities business. ProTrade maintains

that its business plan will provide

investors with increased access to overthe-counter options through an

integrated electronic transaction and

margin system, which ProTrade claims

will lower trading costs, create

processing efficiencies, ensure more

fairness and price transparency, and

provide a complete audit trail.

ProTrade asserts that these

efficiencies will eliminate the need for

paperwork, will reduce the time

required for order entry and for posttrade processing, and will shorten

settlement cycles. Thus, ProTrade

believes that its System will improve

the option marketplace.

IV. Specific Request for Comments

A. Statutory Standards

Section 17A of the Exchange Act

directs the Commission to develop a

national clearance and settlement

system through, among other things, the

registration and regulation of clearing

agencies.19 This statutory scheme

contemplates that (1) Clearing agencies

will provide clearance and settlement

functions consistent with statutory goals

and (2) as self-regulatory organizations,

clearing agencies will exercise certain

regulatory functions in furtherance of

other statutory goals.

In fostering the development of a

national clearance and settlement

system generally and in overseeing

clearing agencies in particular, Section

17A authorizes and directs the

Commission to promote and facilitate

certain goals with due regard for the

public interest, the protection of

investors, the safeguarding of securities

and funds, and the maintenance of fair

competition among brokers, dealers,

clearing agencies, and transfer agents.20

Furthermore, Section 17A, as amended

by the Market Reform Act of 1990,

directs the Commission to use its

authority to facilitate the establishment

of linked or coordinated facilities for

clearance and settlement of transactions

in securities, securities options,

contracts of sale for future delivery and

options thereon, and commodity

options.21

Section 17A(b)(1) of the Exchange

Act 22 authorizes the Commission to

exempt applicants from some or all of

the requirements of Section 17A if it

finds such exemptions are consistent

with the public interest, the protection

of investors, and the purposes of Section

17A including the prompt and accurate

clearance and settlement of securities

transactions and the safeguarding of

securities and funds. Historically, the

Commission has granted newly

registered clearing agencies temporary

exemptions from specific statutory

requirements imposed by Section 17A

in a manner that achieves statutory

goals.23

The Commission recognizes that

clearing agencies pose some safety and

soundness concerns to the marketplace.

Accordingly, the Division has published

standards for clearing agency
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.