16898 Federal Register / Vol. 60, No. 63 / Monday, April 3, 1995 / Notices

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

2 17 CFR 240.19b–4 (1994).

3On March 15, 1995, the PHLX amended its

proposal to clarify the delisting standards for

municipal securities. See Letter from Murray L.

Ross, Secretary, PHLX, to Sharon Lawson, Assistant

Director, Division of Market Regulation,

Commission, dated March 14, 1995 (‘‘Amendment

No. 1’’). Specifically, Amendment No. 1 indicates

that PHLX Rule 810(b)(4)(d), as amended, will

apply solely to municipal securities.

4The PHLX intends to require specialist units

applying for appointment and registration in

municipal securities to be in compliance with the

Municipal Securities Rulemaking Board (‘‘MSRB’’)

Rule G–3 regulations regarding municipal securities

principals and representatives. The National

Association of Securities Dealers (‘‘NASD’’) has

authority to enforce MSRB rules for listed

municipal securities. The PHLX enforcement in this

regard will not preempt or limit in any manner the

NASD’s authority to act in this area.

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

the proposed rule change will impose

any burden on competition 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

Written comments were neither

solicited nor received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become

effective upon filing pursuant to Section

19(b)(3)(A)(i) of the Act and

subparagraph (e) of Rule 19b–4

thereunder because the rule change

constitutes a stated policy, practice, or

interpretation with respect to the

meaning, administration, or

enforcement of an existing rule of the

Board.

At any time within 60 days of the

filing of a rule change pursuant to

Section 19(b)(3)(A) of the Act, the

Commission may summarily abrogate

the rule change if it appears to the

Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

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 in

the Commission’s Public Reference

Room. Copies of the filing will also be

available for inspection and copying at

the principal office of the Board. All

submissions should refer to File No.

SR–MSRB–95–02 and should be

submitted by April 24, 1995.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority, 17 CFR 200.30–3(a)(12).

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–8088 Filed 3–31–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35542; File No. SR–PHLX–

94–69]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change and

Notice of Filing and Order Granting

Accelerated Approval to Amendment

No. 1 to the Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.,

Relating to a One Year Pilot Program

for the Trading, Comparison, Clearing,

Settling, Listing, and Delisting of

Municipal Securities

March 28, 1995.

On December 20, 1994, the

Philadelphia Stock Exchange, Inc.

(‘‘PHLX’’ or ‘‘Exchange’’) filed with 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 proposal to

establish a one year pilot program

allowing the Exchange to list and trade

municipal securities.

Notice of the proposal appeared in the

Federal Register in Securities Exchange

Act Release No. 35308 (January 31,

1995), 60 FR 7251 (February 7, 1995).

No comments were received on the

proposed rule change.3

The PHLX proposes to initiate a one

year pilot program for the trading,

comparison, clearance, settlement,

listing and delisting of municipal

securities. Specifically, the PHLX

proposes to (1) Amend PHLX Rules 132,

‘‘Dealing Outside the Exchange in

Securities Dealt in on the Exchange,’’

501, ‘‘Specialist Appointment,’’ 803,

‘‘Criteria for Listing—Tier I,’’ and 810,

‘‘Suspension and Delisting Policies

Based on Exchange Findings;’’ and (2)

add PHLX Rule 309, ‘‘Municipal

Securities,’’ to provide requirements for

trading, comparison, settlement,

clearing and listing and delisting of

municipal securities.

To be eligible for listing on the

Exchange, proposed PHLX Rule

803(c)(5) provides that a municipal debt

security must: (1) Have an aggregate

market value and principal amount

outstanding of at least $20,000,000; (2)

have at least 100 public beneficial

holders of record; and (3) be rated as

investment grade by at least one

nationally recognized rating service.

Proposed PHLX Rule 810(b)(4)(d)

allows the Exchange to delist a

municipal debt security when the issue

is (1) Not rated as investment grade by

at least one nationally recognized rating

service; (2) does not have at least a

market value or principal amount

outstanding of $500,000; or (3) is not

held by at least 50 public beneficial

holders of record.

The Exchange proposes to assign any

municipal security it lists to a

specialist 4 and to trade municipal

securities in accordance with all PHLX

regulations otherwise applicable to the

trading of securities on the equities

trading floor of the Exchange, except

that pursuant to proposed PHLX Rule

132(d)(17) municipal securities shall be

exempt from the provisions of the

Exchange’s off-board trading rule. Under

proposed PHLX Rule 309, municipal

securities will be compared, settled and

cleared in accordance with the

applicable regulations of the MSRB.

The PHLX believes that the proposed

rule change is consistent with the

requirements of section 6(b)(5) under

the Act in that it is designed to promote

the mechanism of a free and open

market and to protect investors and the

public interest.

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 and, in particular, the

requirements of section 6(b)(5),5 in that

it is designed to promote just and

equitable principles of trade, to protect

investors and the public interest, and to

foster cooperation and coordination

with persons engaged in regulating,

clearing, settling and processing

information with respect to, and

facilitating transactions in, securities.

With regard to the listing standards

for municipal securities proposed by the

PHLX, the Commission notes that listing
Federal Register / Vol. 60, No. 63 / Monday, April 3, 1995 / Notices 16899

6See note 4, supra.

7See Securities Exchange Act Release Nos. 33721

(March 7, 1994), 59 FR 11636 (order approving File

No. SR–PSE–94–05) (establishes municipal bond

trading pilot program through July 5, 1994); 34317

(July 5, 1994), 59 FR 35546 (July 12, 1994) (order

approving File No. SR–PSE–94–21) (extends

municipal bond trading pilot program through

November 2, 1994); 34911 (October 27, 1994), 59 FR

55303 (November 4, 1994) (order approving File No.

SR–PSE–94–32) (extends municipal bond trading

pilot program through November 2, 1995).

8 15 U.S.C. 78s(b)(2) (1988).

9 17 CFR 200.30–3(a)(12) (1994).

standards serve as a means for a selfregulatory organization to screen issuers

and to provide listed status only to

issuers with sufficient investor base and

trading interest to maintain fair and

orderly markets. Once a security has

been approved for initial listing,

maintenance criteria allow an exchange

to monitor the status and trading

characteristics of that issue to ensure

that it continues to meet the exchange’s

standards for market depth and

liquidity.

The Commission believes that the

municipal securities listing and

delisting criteria proposed by the PHLX

are designed to protect investors and

ensure the maintenance of fair and

orderly markets in such listed securities.

The PHLX’s proposal provides that only

municipal bond issuers that satisfy the

criteria established in PHLX Rule

803(c)(5) will be considered for listing

on the Exchange. Specifically, under

PHLX Rule 803(c)(5) a municipal debt

security must: (1) Have an aggregate

market value and principal amount

outstanding of at least $20,000,000; (2)

have at least 100 public beneficial

holders of record; and (3) be rated as

investment grade by at least one

nationally recognized rating service.

The Commission believes that these

criteria, along with any other

information relevant to determine

whether the issue is appropriate for

exchange trading, should help to ensure

that only municipal issuers capable of

meeting their financial obligation and

whose bond issues can support a liquid

trading market will be listed on the

Exchange. The criteria will also alert

municipal issuers seeking listing on the

PHLX of the Exchange’s specific listing

standards.

The Commission notes that proposed

PHLX Rule 810(b)(4)(d) allows the

Exchange to delist a municipal debt

security when the issue is (1) Not rated

as investment grade by at least one

nationally recognized rating service; (2)

does not have at least a market value or

principal amount outstanding of

$500,000; or (3) is not held by at least

50 public beneficial holders of record.

The Commission believes that the

delisting standards should allow the

Exchange to identify issuers that may

have insufficient resources to meet their

financial obligations or whose debt

securities may lack sufficient trading

depth and liquidity for a fair and

orderly market.

Under the proposal, municipal

securities will trade in accordance with

all PHLX regulations otherwise

applicable to the trading of securities on

the equities trading floor of the

Exchange, except that municipal

securities will be exempt from the

provisions of the PHLX’s off-board

trading rule. Because municipal

securities will trade under the PHLX’s

existing regulatory regime for equities,

which includes specialist obligations

and margin requirements, the

Commission believes that adequate

safeguards are in place to ensure the

protection of investors in municipal

securities.

Further, the Commission notes that

the regulatory scheme in place for

municipal securities will continue to

apply to PHLX-listed municipal

securities,6 with the additional coverage

of the PHLX surveillance program to the

trading of listed municipal securities.

The Commission believes that this

regulatory framework will provide

sufficient oversight of municipal

securities trading on the Exchange.

The PHLX intends to require

specialist units applying for

appointment and registration in

municipal securities to be in

compliance with MSRB Rule G–3

regarding municipal securities

principals and representatives. The

Commission notes that this requirement

is consistent with the rules of the MSRB

and, in addition, that it is important that

any specialist selected by the PHLX for

a listed municipal security be familiar

with the characteristics of municipal

securities.

Finally, the Commission notes that

the PHLX’s proposal to list and trade

municipal securities is virtually

identical to a proposal submitted by the

Pacific Stock Exchange, Inc. (‘‘PSE’’),

which was approved by the

Commission.7 Therefore, the

Commission finds that the proposed

rules are equally acceptable for the

PHLX.

The Commission finds good cause for

approving Amendment No. 1 to the

proposed rule change prior to the

thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register because

Amendment No. 1 clarifies the proposal

by indicating that the delisting

standards for municipal securities apply

solely to municipal securities and not to

the debt of other non-listed issuers.

Because Amendment No. 1 clarifies the

Exchange’s proposal and raises no new

regulatory issues, the Commission

believes it is consistent with sections

6(b)(5) and 19(b)(2) of the Act to

approve Amendment No. 1 on an

accelerated basis.

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

1 to the proposed rule change. 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 changes 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. Copies of such filing

will also be available for inspection and

copying at the principal office of the

above-mentioned self-regulatory

organization. All submissions should

refer to the file number in the caption

above and should be submitted by April

24, 1995.

It Is Therefore Ordered, pursuant to

section 19(b)(2) of the Act,8 that the

proposed rule change (SR–PHLX–94–

69) relating to the pilot program for

listing and trading municipal securities

is approved until March 28, 1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–8092 Filed 3–31–95; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Rel. No. 20969;

International Series Release No. 798/812–

9354]

The Chase Manhattan Bank, N.A.;

Notice of Application

March 28, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (‘‘Act’’).

APPLICANT: The Chase Manhattan Bank,

N.A., (‘‘Chase’’).