12996 Federal Register / Vol. 60, No. 46 / Thursday, March 9, 1995 / Notices

7 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4 (1994).

3The tick restrictions provide that acquisitions

may only be made at prices below the last different

price—on ‘‘minus’’ or ‘‘zero minus’’ ticks, and

liquidations may only be made at prices above the

last different price—on ‘‘plus’’ or ‘‘zero plus’’ ticks.

See NYSE Rule 104.13(b).

4NYSE Rule 98 and its Guidelines provide

exemptions from various NYSE rules affecting

approved persons affiliated with specialist,

including Rule 104.13. The exemptions are

predicated on the existence of procedures to

achieve a functional separation between the

specialist organization and the approved person.

The rule change amends the reference to Rule

104.13 in Rule 98 so that it reflects the changes to

Rule 104.13 being approved herein.

5Currently, the restriction states that specialists

should not originate orders in specialty stocks for

any accounts over which they may have discretion.

6 15 U.S.C. 78k(a)(1988).

7 15 U.S.C. 78f(b)(1988).

8The Commission approved the Rule 104.13(d)

restriction against specialists originating orders in

specialty stocks for any account over which they

may have investment discretion in Securities

Exchange Act Release No. 34231 (June 17, 1994), 59

FR 32722 (June 24, 1994).

9 15 U.S.C. 78s(b)(2) (1988).

10 17 CFR 200.30–3(A)(12) (1994).

trade and protect investors and the

public interest since the issuance and

sale of the Contracts on an open-ended

basis does not raise the kinds of

underwriting issues with which the

Corporate Financing Rule is primarily

and traditionally concerned; the

structures of the instrument are that of

insurance products which traditionally

have been regulated under state

insurance law; the terms of the

Corporate Financing Rule were not

developed to address such products.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act, that the

proposed rule change SR–NASD–94–61

be, and hereby is, approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–5705 Filed 3–8–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35439; File No. SR–NYSE–

94–38]

Self-Regulatory Organizations; New

York Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change Relating to Amendment to

Exchange Rule 104.13

March 2, 1995.

On October 26, 1994, the New York

Stock Exchange, Inc. (‘‘NYSE’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

amend NYSE Rule 104.13 regarding

investment account transactions of

specialists and related parties.

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 35019

(November 29, 1994), 59 FR 62762

(December 5,6, 1994). No comments

were received on the proposal.

Rule 104 provides that a specialist

may not effect any purchase or sale of

a security in which the specialist is

registered (‘‘specialty stocks’’) for the

account of an approved person

associated with the specialist’s

organization, unless such transaction is

reasonably necessary to permit the

specialist to maintain fair and orderly

markets. Currently, NYSE Rule 104.13

requires that transactions in specialty

stocks for the accounts of specified

persons affiliated with or related to a

specialist must be for investment

purposes and executed in accordance

with certain restrictions relating to the

price at which transactions may take

place (‘‘tick’’ restrictions).3 The rule

applies to the accounts of employees or

parties active in the business of a

specialist or persons active in the

specialist business, and any approved

person (individual or entity in a control

relationship) of the specialist, other than

an approved person entitled to an

exemption under NYSE Rule 98.4

The Rule change expands the

restrictions contained in NYSE Rule

104.13 to transactions in specialty

stocks effected ‘‘for the benefit of’’ the

specified parties. This rule change will

apply the Rule 104.13 restrictions to

transactions that, although not effected

directly for the ‘‘account’’ of a specified

party, are effected for an account in

which a specified party has a beneficial

interest.

The rule change also extends to

affiliated persons the Rule 104.13

restriction against specialists’

originating orders in speciality stocks

for any accounts over which they

exercise investment discretion.5 In

addition, the rule change specifies that

the restrictions in Rule 104.13 apply to

transactions effected for trust accounts

that benefit the specialist or affiliated

persons.

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange. The Commission believes that

the rule change is consistent with

Section 11(a) of the Act 6 which

generally makes it unlawful, with

certain exceptions, for any member of a

national securities exchange to effect a

transaction on such exchange for his

own account, the account of an

associated person, or an account with

respect to which it or an associated

person thereof exercises investment

discretion. The Commission also

believes that the rule change is

consistent with Section 6(b)(5) of the

Act 7 which requires that the rules of an

exchange be designed to promote just

and equitable principles of trade to

prevent fraudulent and manipulative

acts, and, in general, to protect investors

and the public interest.

Specifically, the Commission believes

that extending the restrictions on

transactions in specialty stocks to those

effected ‘‘for the benefit of’’ affiliated

parties in appropriate and consistent

with prohibiting or restricting certain

interested transaction that may involve

potential conflicts of interest. The rule

change is designed to ensure that

affiliated persons will not be permitted

to effect transactions in specialty stocks,

whether or not they use accounts in

their own names, outside of the

restrictions contained in NYSE Rule

104.13. The Commission believes that

the rule change will further the purpose

of the NYSE Rule and will prevent

affiliated persons from avoiding the

Rule 104.13 restrictions.

The Commission further believes that

the rule change to extend to affiliated

persons the Rule 104.13 restrictions

against specialists’ originating orders in

specialty stocks for any accounts over

which they exercise investment

discretion is consistent with Sections 6

and 11(a) of the Act.8 The Commission

believes that the rule change is an

appropriate limitation on specialists’

and affiliated persons’ trading and is

designed to prevent fraudulent and

manipulative actions. In addition, the

Commission believes that it is

appropriate to specify in the rule that

the restrictions in Rule 104.13 apply to

transactions effected for trust accounts

that benefit the specialist or affiliated

persons.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,9 that the

proposed rule change (SR–NYSE–94–

38) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–5703 Filed 3–8–95; 8:45 am]

BILLING CODE 8010–01–M