Federal Register / Vol. 60, No. 40 / Wednesday, March 1, 1995 / Notices 11153

1This filing withdraws and replaces File No. SR–

Amex–94–23, which was noticed for comment in

Securities Exchange Act Release No. 34968

(November 10, 1994), 59 FR 59804 (November 18,

1994). The prior Amex proposal and the comments

received in response thereto are available at the

Commission.

first prehearing conference scheduled in

the proceeding, but such an amended

petition must satisfy the specificity

requirements described above.

Not later than fifteen (15) days prior

to the first prehearing conference

scheduled in the proceeding, a

petitioner shall file a supplement to the

petition to intervene which must

include a list of the contentions which

are sought to be litigated in the matter.

Each contention must consist of a

specific statement of the issue of law or

fact to be raised or controverted. In

addition, the petitioner shall provide a

brief explanation of the bases of the

contention and a concise statement of

the alleged facts or expert opinion

which support the contention and on

which the petitioner intends to rely in

proving the contention at the hearing.

The petitioner must also provide

references to those specific sources and

documents of which the petitioner is

aware and on which the petitioner

intends to rely to establish those facts or

expert opinion. Petitioner must provide

sufficient information to show that a

genuine dispute exists with the

applicant on a material issue of law or

fact. Contentions shall be limited to

matters within the scope of the

amendment under consideration. The

contention must be one which, if

proven, would entitle the petitioner to

relief. A petitioner who fails to file such

a supplement which satisfies these

requirements with respect to at least one

contention will not be permitted to

participate as a party.

Those permitted to intervene become

parties to the proceeding, subject to any

limitations in the order granting leave to

intervene, and have the opportunity to

participate fully in the conduct of the

hearing, including the opportunity to

present evidence and cross-examine

witnesses.

If a hearing is requested, the

Commission will make a final

determination on the issue of no

significant hazards consideration. The

final determination will serve to decide

when the hearing is held.

If the final determination is that the

amendment request involves no

significant hazards consideration, the

Commission may issue the amendment

and make it effective, notwithstanding

the request for a hearing. Any hearing

held would take place after issuance of

the amendment.

If the final determination is that the

amendment request involves a

significant hazards consideration, any

hearing held would take place before

the issuance of any amendment.

Normally, the Commission will not

issue the amendment until the

expiration of the 30-day notice period.

However, should circumstances change

during the notice period such that

failure to act in a timely way would

result, for example, in derating or

shutdown of the facility, the

Commission may issue the license

amendment before the expiration of the

30-day notice period, provided that its

final determination is that the

amendment involves no significant

hazards consideration. The final

determination will consider all public

and State comments received. Should

the Commission take this action, it will

publish a notice of issuance and provide

for opportunity for a hearing after

issuance. The Commission expects that

the need to take this action will occur

very infrequently.

A request for a hearing or a petition

for leave to intervene must be filed with

the Secretary of the Commission, U.S.

Nuclear Regulatory Commission,

Washington, D.C. 20555, Attention:

Docketing and Service Branch, or may

be delivered to the Commission’s Public

Document Room, the Gelman Building,

2120 L Street, N.W., Washington, D.C.

20555, by the above date. Where

petitions are filed during the last ten

(10) days of the notice period, it is

requested that the petitioner promptly

so inform the Commission by a toll-free

telephone call to Western Union at 1

(800) 248–5100 (in Missouri 1 (800)

342–6700). The Western Union operator

should be given Datagram Identification

Number 3737 and the following message

addressed to Leif J. Norrholm:

petitioner’s name and telephone

number; date petition was mailed; plant

name; and publication date and page

number of this Federal Register notice.

A copy of the petition should also be

sent to the Office of the General

Counsel, U.S. Nuclear Regulatory

Commission, Washington, D.C. 20555,

and to Gerald Charnoff, Esq., Thomas A.

Baxter, Esq., Shaw, Pittman, Potts &

Trowbridge, 2300 N. Street, N.W.,

Washington, D.C. 20037, attorney for the

licensee.

Nontimely filings of petitions for

leave to intervene, amended petitions,

supplemental petitions and/or requests

for hearing will not be entertained

absent a determination by the

Commission, the presiding officer, or

the Atomic Safety and Licensing Board

that the petition and/or request, should

be granted based upon a balancing of

the factors specified in 10 CFR

2.714(a)(1)(i)–(v) and 2.714(d).

For further details with respect to this

action, see the application for

amendment dated September 8, 1994,

which is available for public inspection

at the Commission’s Public Document

Room, the Gelman Building, 2120 L

Street, N.W. Washington, D.C. 20555,

and at the local public document room

located at Callaway County Public

Library, 710 Court Street, Fulton,

Missouri 65251.

Dated at Rockville, Maryland, this 24th day

of February 1995.

For the Nuclear Regulatory Commission.

L. Raynard Wharton,

Project Manager, Project Directorate III–3,

Division of Reactor Projects—III/IV, Office of

Nuclear Reactor Regulation.

[FR Doc. 95–5134 Filed 2–28–95; 8:45 am]

BILLING CODE 7590–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–35411; File No. SR–Amex–

95–08]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

American Stock Exchange, Inc.

Relating to Membership Structure and

Requirements

February 22, 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 February 17, 1995,

the American Stock Exchange, Inc.

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

organization.1 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 certain

revisions to its Constitution, Rules and

Membership Lease Plan regarding

membership structure and

requirements. The text of the proposed

rule change is available at the Office of

the Secretary, the Amex, and at the

Commission.
11154 Federal Register / Vol. 60, No. 40 / Wednesday, March 1, 1995 / Notices

2Both regular members and options principal

members are exchange members as defined in

Section 3(a)(3) of the Act. A regular member may

execute transactions in both equities and

derivatives. In contrast, an options principal

member is limited to trading as principal in options

and other derivative products. For further

discussion of types of memberships, see Art. IV.

Sec. 1 of the Amex Constitution.

3As noted below, the lease must be executed by

the nominal seat owner, rather than the member

organization with which such individual is

associated and which is the beneficial owner of the

membership.

4An a-b-c agreement is an arrangement between

the individual who nominally owns a seat and the

member organization with which such individual is

associated and which is the beneficial owner of the

membership. Upon termination of the a-b-c

agreement, the individual must either (1) retain the

membership and pay the member organization the

amount necessary to purchase another membership;

(2) sell the membership with the proceeds paid over

to the member organization; or (3) transfer the

membership to a person designated by the member

organization.

5As discussed below, see infra note 9 and

accompanying text, the owner would retain the

right to vote seats held by nominees and certain

lessees.

6A member organization is responsible even if its

a-b-c seatholder’s obligations exceed the value of

the seat.

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

self-regulatory organization 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 self-regulatory organization has

prepared summaries, set forth in Section

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

Background

The Exchange Member Ownership

Issues Committee was established in

June of 1992 to examine the need for

changes and revisions in the Exchange’s

membership structure and

requirements. Following an extensive

review, the Committee recommended

certain changes in order to update the

membership structure and respond to

the expressed needs of the membership.

These changes, which have been

approved by the Exchange’s Board of

Governors and membership, are

described below.

Seat Ownership

Currently, each of the 661 regular

memberships and 203 options principal

memberships are held in the name of an

individual member.2 Member firms and

member corporations may beneficially

own these memberships by designating

an individual (typically a general

partner or employee of a member firm

or an officer or employee of a member

corporation) nominally to own the seat

in their behalf. This is accomplished by

either using a lease 3 or an a-b-c

agreement.4 In the case of a lease, a

member organization must also place

the lease in the name of an individual

nominee as lessor.

Individuals are not permitted to own

more than one seat. Member

organizations, on the other hand, may

own multiple seats beneficially, but

each seat must be nominally owned by

an individual member.

The Exchange proposes to eliminate

the requirement that seats be

individually owned. The Amex believes

that this requirement is outdated and

not responsive to the needs of the

member community. Several other

exchanges permit organizations, as well

as individuals, to own memberships

(e.g., the Chicago Board Options

Exchange (‘‘CBOE’’), the New York

Futures Exchange and the Pacific Stock

Exchange (‘‘PSE’’)).

Under the proposal, an organization

would be able to be both legal and

beneficial owner of one or more

memberships. The organization would

be able to lease a seat to a lessee or to

designate an individual as nominee to

‘‘operate’’ the seat. As a general matter,

nominees (like lessees) would be

deemed to be members of the Exchange

and would be subject to all of the

obligations and enjoy all the privileges

of membership under the Exchange

Constitution and Rules, except (1) for

purposes of participating in any

distribution of Exchange assets or funds

upon liquidation, dissolution or

winding up of the affairs of the

Exchange and (2) ultimate control of the

membership would rest with the

organization owner.5 The a-b-c

agreement would no longer be required.

It would be replaced with another

document to authorize the nominee to

act on the member organization’s behalf

in all Exchange matters and to provide

that the member organization is

responsible for all the nominee’s

Exchange-related obligations.

The proposal also would permit both

individuals and organizations to own

multiple memberships. Individuals

would be able to lease their additional

seats, or to designate nominees to

‘‘operate’’ the seats and act as their

employees.

A number of members have indicated

that they would be interested in

acquiring more than one membership.

The Exchange finds no compelling

reason to continue to prohibit multiple

memberships. In this regard, it should

be noted that the CBOE, the PSE, the

Philadelphia Stock Exchange (‘‘Phlx’’)

and virtually all commodities exchanges

permit multiple ownership.

Leasing

Currently, both the lessor and the

lessee of a leased seat must be

individuals. Because, under the

proposal, organizations would be

permitted to own seats directly, as well

as beneficially, the member organization

may be the lessor. Such member

organization would not be required to

designate a nominee as the lessor on the

seat.

Claims Procedure

Under the current rules, no member

may sell or transfer his membership

unless he does so pursuant to

established Exchange procedures. All

transfers must be posted on the

Exchange Bulletin Board and published

in the Weekly Bulletin for at least seven

days. During this time, other members

and member organizations must file

their claims against the seat with the

Exchange. The same procedures are

used for intrafirm transfers. Before the

seat can be transferred to another

employee in the firm, the firm is

required to satisfy any outstanding

claims.

Basically, the same transfer and

claims procedures would be utilized

under the new membership structure. In

addition, the designation of a nominee

by a seat owner would be deemed to be

a transfer, and the posting and claims

procedures would apply.

Subordination of Membership to

Trading Losses and Debts

Currently, all memberships are

subordinated to (i.e., ‘‘stand behind’’)

the trades of the member in whose name

the seat is held. In the case of a leased

seat, the lessor’s seat is at risk for his

lessee’s’s trading losses and other debts

incurred in connection with

membership. In the case of seats held

pursuant to a-b-c agreements, member

organizations are responsible for

obligations that their a-b-c seatholders

incur.6

The above requirements would

remain the same under the proposal. If

an individual or organization owns

multiple memberships that are held

subject to one or more leases, only the
Federal Register / Vol. 60, No. 40 / Wednesday, March 1, 1995 / Notices 11155

7See supra, note 4 and accompanying text.

8This proposal would not affect any change to

annual dues or other fees.

9 If no specification is made, the lessee would

vote the seat.

10See supra, note 2.

11For further discussion of the ‘‘phase-in’’

schedule for Gratuity Fund Participants, see infra

note 18 and accompanying text.

12The Gratuity Fund currently maintains a

reserve of $200,000, the amount necessary to pay

two death benefits. If the benefit is increased, the

reserve would be increased accordingly. The initial

assessment of $300 on new Participants would

allow the Fund to achieve this goal, and would

place new Participants on a par with existing

Participants who, of course, paid an initial

assessment when they first became eligible to

participate in the Fund.

13Options principal members, lessees and

nominees would also be eligible to become trustees

of the Gratuity Fund.

14Lessors (and owners of seats as to which

nominees have been designated) could be included

in the Gratuity Fund pursuant to the transition

arrangements, see infra notes 24–28 and

accompanying text, or based on their prior active

status, see infra notes 15–17 and accompanying

text.

15As noted below, see infra note 28 and

accompanying text, June 10, 1993 would be the cutoff date for eligibility for the transition

arrangements.

16See Para. 9176 of the Amex Guide

(‘‘Membership Requirements and Admissions

Procedures’’).

seat used by a given lessee’s would

stand behind that lessee trades. If,

however, an individual or organization

owns multiple memberships as to which

nominees have been designated, all of

the owner’s seats would stand behind

the trades of any nominee.

Fees

Currently, when a seat is sold, the

initiation fee is $2,500 for both a regular

and options principal membership. The

initiation fee on a nominal transfer (i.e.,

within a firm pursuant to an a-b-c

agreement) 7 is $2,500 for a regular

membership and $500 for an options

principal membership. When a

membership is transferred to a lessee,

the initiation fee is $1,500 for a regular

membership and $500 for an options

principal membership. Dues for all

members are $750 per year. Floor

facilities fees are $1,400 per year for

active members.

The Exchange is proposing to change

the fee structure in order to equalize

fees between regular and options

principal memberships.8 The initiation

fee of $2,500 when a seat is sold would

be retained for both regular and options

principal memberships. However, all

nominal transfers (i.e., intra-firm) and

leases would be subject to a $1,500

initiation fee. Changes in nominees

would be deemed to be nominal

transfers. According to the Exchange, it

does not appear to be necessary or

appropriate to retain the disparity in

initiation fees for nominal and lease

transfers of regular and options

principal memberships in view of the

fact that the administrative expenses

(i.e., staff time and paperwork)

attributable to the two types of

membership are identical.

The Exchange, however, does not

believe that it would be appropriate for

the initiation fee requirement to deter

members from taking advantage of the

new alternatives that would be available

in structuring ownership of Amex seats.

Accordingly, for the ninety-day period,

after these changes become effective, no

initiation fee would be charged for

changes in membership ownership,

except for bona fide sales and bona fide

changes in leases or nominees. A $250

processing fee would be imposed on

transfers where no initiation fee is

charged.

Voting

Currently, members subject to an a–b–

c agreement sign an irrevocable proxy

giving their votes to their member

organizations. The organization then

designates an individual (typically an

employee) who is authorized to vote on

behalf of the membership. In the case of

leased seats, the vote is negotiable

between the lessor and lessee.

Under the new rules, organizations

would be entitled to vote all of the

memberships that they own (and do not

lease out) and would have to designate

an individual who is authorized to vote

on their behalf. Individuals who own

more than one seat would be able to

vote on behalf of the seat that they are

actively using, as well as the seats of

their nominees. With respect to leased

seats, the vote would still be negotiable

between lessor and lessee. There would

be a specific box on the lease itself on

which the parties would indicate who is

authorized to vote.9

Gratuity Fund

Currently, the Exchange Gratuity

Fund (‘‘Fund’’) provides that only

families of regular members 10 receive

the Gratuity Fund death benefit of

$100,000. To fund the death benefit,

each regular member contributes $152

to the Fund upon becoming a member

and is assessed $152 each time a fellow

regular member dies (subject to

reduction in the first assessment of the

year to reflect income earned by the

Fund in the previous year). In the case

of leased seats, the lessor is considered

the member for purposes of the Gratuity

Fund.

A number of changes to the Gratuity

Fund are proposed. These changes are

intended to achieve two goals: To

provide increased benefits and to close

‘‘loopholes’’ which could enable

persons to become Participants in the

Gratuity Fund under circumstances

which would be inappropriate.

Under the proposal, the benefit would

be increased to $125,000. The amount of

each assessment would fluctuate since,

as discussed below, the number of

Participants in the Fund would vary

based on who is eligible at the time of

a member’s death and since the extent

to which Participants were ‘‘phased-in’’

would vary.11 As is currently the case,

Participants would have to pay both an

initial assessment upon becoming a

Participant and an assessment each time

an eligible individual dies. The first

group of persons to become newly

eligible for the Gratuity Fund upon the

adoption of these changes would be

required to pay an initial assessment of

$300.12 Thereafter, persons who become

eligible would be required to pay an

initial assessment based on the number

of Participants in the Fund at that time.

Under the proposal, options principal

members and both options principal

and regular member lessees (and

nominees) would be included in the

Gratuity Fund,13 in additional to regular

members and some lessors.14 In order

for a lessor’s beneficiaries to be eligible

to receive a Gratuity Fund benefit, the

lessor must have been ‘‘active’’ on the

Floor for at least two continuous years

during this career (but after June 10,

1993).15 ‘‘Active’’ is defined as meeting

all Exchange requirements to be active

on the Floor,16 including passing any

necessary examinations and being

registered as, or associated with, a

broker-dealer. ‘‘Two continuous years’’

is defined as two calendar years,

meaning a period from one date through

the preceding date two years hence (e.g.,

from May 1, 1995 through April 30,

1997). Lessees and nominees would

have to be currently active for their

beneficiaries to receive a benefit.

Individuals who own seats either would

have to be currently active on the Floor

or would have to have been active for

at least two continuous years during

their career (but after June 10, 1993) in

order for their beneficiaries to receive a

Gratuity Fund benefit.

It should be noted that a person

would not have to maintain the same

status for the two-year period. For

example, a person who is a lessee for

one and a half years and who then buys

the seat (or another seat) and remains on

it for at least six months would satisfy

the active requirement. In addition, a

person may be off the seat for up to sixty

consecutive days during the two-year

period without being considered to have
11156 Federal Register / Vol. 60, No. 40 / Wednesday, March 1, 1995 / Notices

17This provision would apply to a person who

had satisfied the active requirement and thus was

eligible for the Gratuity Fund based on prior status

and who thereafter disposed of his membership. If,

within five years of leaving the Exchange, such

person becomes a lessor or other inactive seat

owner, he would retain his right to participate in

the Gratuity Fund. If, however, more than five years

pass, such person would lose his prior active status

and would have to requalify for the Gratuity Fund.

A person who leaves the Exchange would not be

eligible for the Gratuity Fund benefit during any

period when he is not a lessor, lessee, nominee or

seat owner.

18This schedule is similar to that used by the

New York Stock Exchange (‘‘NYSE’’) regarding

payments from its Gratuity Fund. See Art. XV, Sec.

3 of the NYSE Constitution.

The Amex’s proposed ‘‘phase-in’’ schedule would

be applied only on a prospective basis and would

not be applicable to persons who are already

Gratuity Fund Participants or who become Gratuity

Fund Participants by virtue of the proposed

amendments (e.g., options, principal members and

lessees) regardless of whether such persons have

been Participants or members for four years or

more. However, an existing options principal

member or lessee who ‘‘opts out’’ of the Gratuity

Fund and on some other basis later becomes eligible

would at that time be subject to the ‘‘phase-in.’’ See

infra notes 26–27 and accompanying text.

19The only exception to this would be in the case

of an individual who is both the independent

owner of and the user of a particular options

principal membership and who ‘‘opts-out’’ of the

Gratuity Fund under the transition provisions

discussed below. For such a person’s ‘‘opt-out’’ to

be able to have any practical effect, his options

principal seat would have to be exempt entirely

from the obligation to pay assessments to the

Gratuity Fund for so long as he remains the owner

and user of that seat.

20For further discussion of rules governing

trustees of the Gratuity Fund, see Art. IX of the

Amex Constitution.

21Both the Phlx and the Chicago Mercantile

Exchange permit pension trusts to own seats.

22The Exchange has been advised that the

prohibited transaction provisions of the Employee

Retirement Income Security Act and the Internal

Revenue Code would preclude a member from

being the nominee or lessee of the seat owned by

his own pension trust.

23See Art. I, Sec. 3(g) of the Amex Constitution.

24For further discussion of the cut-off date for

eligibility for the transition arrangements, see infra

note 28 and accompanying text.

interrupted that period. Individuals

would lose their right to participate in

the Gratuity Fund based on prior active

status if there should be any five-year

period in which the person is not a

lessor, lessee, nominee or seat owner.17

Lessors who lose their prior active

status would have to be active for

another two continuous years in order

to requalify for the Gratuity Fund.

Members and nominees would either

have to be currently active or active for

another two continuous years in order

to be eligible for the Gratuity Fund

again.

Further, under the proposal, the

Exchange would implement, for new

Gratuity Fund Participants, a four year

‘‘phase-in’’ schedule based upon the

length of time the individual in question

had been a Participant.18 The ‘‘phasein’’ would operate as follows:

Upon the death of a Participant, a

payment would be made based upon the

length of time such person had been a

Participant, according to the following

schedule:

• Less than one year—$25,000 (20%

‘‘phase-in’’).

• One year or more but less than two

years—$50,000 (40% ‘‘phase-in’’).

• Two years or more but less than

three years—$75,000 (60% ‘‘phase-in’’).

• Three years or more but less than

four years—$100,000 (80% ‘‘phase-in’’).

• Four years or more—$125,000

(100% ‘‘phase-in’’).

If a participant who was ‘‘phasing-in’’

ceases to be a Participant for a period of

less than five years, and such individual

thereafter again becomes a Participant,

he would be able to aggregate his

periods of participation for purposes of

the ‘‘phase-in.’’ For example, if an

individual is a Participant for one year

and then ceases to be a Participant for

four years, and if he were again to

become a Participant, he would be

credited with the amount of time he

previously spent as a Participant for

purposes of the ‘‘phase-in’’ schedule.

If an individual who was a Participant

ceases to be a Participant for a period of

five years or more, and such individual

thereafter again becomes a Participant,

he would not be able to aggregate his

periods of participation for purposes of

the ‘‘phase-in’’ described above (i.e.,

regardless of the length of time he had

previously been a Participant, the

‘‘phase-in’’ schedule would be applied

as if he had never been a Participant in

the past).

Each membership would pay at least

one assessment, regardless of whether

the owner or a lessee or nominee

qualifies for the Gratuity Fund.19 In

some instances, there would be one

assessment per seat and on others two

(i.e., when both lessor and lessee are

qualified). Gratuity Fund assessments

would be based in all cases on the

amount of the benefit payable and

would be the same for all memberships

assessed, regardless of whether or to

what extent a particular Participant

being assessed has already ‘‘phased-in’’

to full eligibility.

No member’s beneficiaries would be

entitled to receive more than one

Gratuity Fund benefit upon the

member’s death by virtue of the

deceased member’s status as both lessor

and lessee, or for any other reason. The

family of a member who owns multiple

memberships would be able to collect

only one benefit. The member would be

eligible on only one seat, and must

designate that seat to the Exchange. The

lessees or nominees of the other seats,

of course, would be eligible on those

seats.

The individuals who are nomineelessors on behalf of member

organizations would no longer be

qualified for the Gratuity Fund under

the proposed system (although, as

discussed below, there would be a

grandfather clause). This is because the

member organization itself would be the

lessor. Under the proposal, however, the

individual who would have been named

as lessor most likely would not qualify

for the Gratuity Fund anyway, since

member organizations typically named

an upstairs executive as lessor and such

person would not be ‘‘active’’ and may

not have been ‘‘active’’ in the past, at

least within the last five years.

The trustees of the Gratuity Fund

would have the authority to resolve

disputes with respect to a person’s

eligibility to participate in the Fund.20

Pension Trusts

Currently, the Exchange does not

permit ownership of seats by trusts.21

The proposal would permit pension

plans (generally comprised of trusts or

custodial accounts, including Keoghs

and Individual Retirement Accounts) of

‘‘active’’ members (as defined above) to

acquire ownership of one or more seats

for investment purposes, and either to

lease the seat or to designate a nominee

to operate it.22 The intent is to make this

available only to pension trusts where

the trust sponsor is an active member,

or where the sponsor is a member

organization and at least fifty percent

(50%) of the pension trust beneficiaries

are active members and/or Floor

employees of the member organization.

The trust itself would be the owner of

the membership, and the trustee would

have to become an approved person.23

Only the nominee or lessee would be

eligible for the Gratuity Fund, provided

he or she is not already eligible for the

Gratuity Fund with respect to another

seat (e.g., as the owner of that seat). As

is the case for other member

organizations, the trust would be

entitled to vote all of the seats that it

owns (and does not lease out) and may

designate who may vote on its behalf. If

the seat is leased, the vote would be

negotiable between the trust and the

lessee.

Transition Arrangements

The proposal includes a

grandfathering provision for the

Gratuity Fund revisions.24 All regular

members ad existing regular member

lessors would be grandfathered with

respect to the ‘‘active’’ requirement, that
Federal Register / Vol. 60, No. 40 / Wednesday, March 1, 1995 / Notices 11157

25See supra, note 17 and accompanying text.

26 If that person subsequently buys a different

options principal membership, the decision to ‘‘optout’’ would apply to that seat as well.

27See supra, note 26.

28However, in the event that such an individual

dies during the period after June 10, 1993 but before

the effective date of the changes, his beneficiaries

would receive a Gratuity Fund benefit under

existing requirements.

is, they would be deemed to have met

it, even if they never were active for a

two-year period. The grandfathering

provision would include those lessors

who are nominee-lessors on seats

beneficially owned by an organization.

A person grandfathered could lose his

right to participate in the Gratuity Fund

based on prior active status if there

should be any five-year period in which

he is not a lessor, lessee, nominee or

seat owner.25 As discussed above, for all

non-grandfathered individuals, the

‘‘active’’ requirement must be satisfied

after June 10, 1993.

Individuals who currently own

options principal memberships would

have a one-time opportunity to ‘‘opt-in’’

or ‘‘opt-out’’ of the Gratuity Fund. A

decision to ‘‘opt-out’’ would be

irrevocable for the rest of the person’s

life (unless the person subsequently

buys a regular membership).26 Options

principal members who ‘‘opt-in’’ would

be grandfathered with respect to the

‘‘active’’ requirement. Current lessees

(both regular and options principal

membership) would also have the right

to ‘‘opt-out’’ of the Gratuity Fund, but

such decisions would be effective only

for the duration of their current lease,

and new leases would require lessee

participation in the Gratuity Fund.

Lease renewals by the same two parties

would not be considered to be new

leases. Any new options principal

member seat owner (other than an

individual owner who previously chose

to ‘‘opt-out’’ irrevocably as discussed

above) 27 would be covered by the new

rules.

With respect to the ‘‘phase-in’’

requirement, all those who are

Participants in the Gratuity Fund on the

date these proposals become effective,

and all those who become Participants

by virtue of these amendments (e.g.,

lessees and options principal members),

would be deemed to be fully ‘‘phasedin,’’ regardless of how long such persons

have been Participants or Exchange

members. All who become Participants

thereafter would be subject to the

‘‘phase-in’’ requirements. If a lessee or

options principal member ‘‘opted out’’

of the Gratuity Fund, as described

above, and on some other basis later

becomes a Participant, he would at that

time be subject to the ‘‘phase-in.’’

While the foregoing grandfather

provisions are appropriate in most

cases, there was a concern that some

people might attempt to rush through

the ‘‘loopholes’’ referred to earlier by

becoming lessors prior to the date these

proposals finally become effective.

Accordingly, notwithstanding the above

provisions, an individual who was not

a regular member or a regular member

lessor as of the date of the Board

meeting at which these proposals were

approved by the Exchange Board of

Governors (June 10, 1993), and

subsequently became a regular member

lessor after June 10, 1993, would not be

grandfathered with respect to the twoyear active requirement.28 Similarly, an

individual who was not a regular or

options principal member or a regular or

options principal lessor as of June 10,

1993, and subsequently became an

options principal lessor after June 10,

1993, would not be allowed to ‘‘opt-in’’

to the Gratuity Fund. Such individuals

would be covered by the new rules.

Most of the above described changes

in membership structure would expand

the choices available to persons and

organizations in structuring their

relationships. However, the proposed

changes would eliminate the existing ab-c agreement, and certain individuals

and organizations may find that

disruptive. Accordingly, a member

organization would be permitted to

continue to utilize its existing a-b-c

agreements for so long as the respective

individual members remain on their

seats.

2. Statutory Basis

The proposed rule change is

consistent with Section 6(b) of the Act

in general and furthers the objectives of

Sections 6(b)(3), 6(b)(4) and 6(b)(5) in

particular in that it assures a fair

representation of Exchange members in

the administration of its affairs,

provides for the equitable allocation of

reasonable dues, fees and other charges

among members, and is designed to

prevent fraudulent and manipulative

acts and practices.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The proposed rule change will impose

no 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 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, NW.,

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, NW.,

Washington, D.C. 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–

08 and should be submitted by March

22, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–4994 Filed 2–28–95; 8:45 am]

BILLING CODE 8010–01–M