Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Notices 10617

prepare an environmental impact

statement for the proposed action.

For further details with respect to this

action, see the request for exemption

dated February 10, 1995, which is

available for public inspection at the

Commission’s Public Document Room,

The Gelman Building, 2120 L Street,

NW., Washington, DC and at the local

public document room located at the

Van Wylen Library, Hope College,

Holland, MI 49423.

Dated at Rockville, Maryland, this 21st day

of February, 1995.

For the Nuclear Regulatory Commission.

John N. Hannon,

Director, Project Directorate III–1, Division

of Reactor Projects—III/IV, Office of Nuclear

Reactor Regulation.

[FR Doc. 95–4730 Filed 2–24–95; 8:45 am]

BILLING CODE 7590–01–M

[Docket Nos. 50–272 and 50–311]

Public Service Electric and Gas Co.;

Environmental Assessment and

Finding of No Significant Impact

The U.S. Nuclear Regulatory

Commission (the Commission) is

considering issuance of amendments to

Facility Operating License Nos. DPR–70

and DPR–75, issued to Public Service

Electric and Gas Company, et al.

(PSE&G or the licensee) for operation of

Salem Nuclear Generating Station

(SNGS), Units 1 and 2, located in Salem

County, New Jersey.

Environmental Assessment

Identification of the Proposed Action

By letter dated April 16, 1993 (NLR–

N83042), PSE&G requested a license

amendment to reflect changes to the

Updated Final Safety Analysis Report

(USFAR) for Salem, Units 1 and 2. The

proposed UFSAR change would add an

exception to a general statement in the

containment isolation system

description. The general statement is

that automatic containment isolation

valves that receive signals to close, fail

closed on loss of air or power. The

proposed exception would apply to the

outboard isolation valves for the control

air system. These four valves (11, 12, 21,

and 22CA330, collectively identified as

CA–330) fail closed on loss of air but

fail as-is upon loss of the vital 125 VDC

power supply to their solenoid control

valves.

Need for Proposed Action

The revision of the licensing basis is

needed to exempt the CA–330 valves

from the general statement in the

USFAR that automatic containment

isolation valves that receive signals to

close, fail closed on loss of air or power.

The staff has examined the design of the

isolation system for the control air

header piping penetration. With the

exception of the failure position for

valve CA–330 on loss of its 125 VDC

power supply, the design meets all

applicable criteria. Failure of the 125

VDC power supply results in a slight

degradation in containment isolation

reliability. Upon failure of the 125 VDC

power supply, the valve will remain in

the ‘‘as is’’ position. Since the valve is

normally open, this means that the

valve will stay open and will not close

on an isolation signal or loss of air

header pressure. For all other single

failures, the valve will automatically

close upon either loss of air or an

isolation signal.

Environmental Impacts of the Proposed

Action

The staff has evaluated the conditions

for the ‘‘as-is’’ failure and finds that the

reduction in safety margin due to this

condition is acceptably small. First of

all, there is a check valve in series with

the air-operated valve so that

containment integrity is maintained at

all times. Secondly, the probability of

loss of air pressure is quite low since the

normal air supply is backed up with a

safety grade supply which is activated

automatically upon sensing low air

pressure. With an operable air supply,

the penetration is not a containment

leak path since the air pressure is

greater than the peak calculated

containment pressure.

The change will not increase the

probability or consequences of

accidents, no changes are being made in

the types of any effluents that may be

released offsite, and there is no

significant increase in the allowable

individual or cumulative occupational

radiation exposure. Accordingly, the

Commission concludes that there are no

significant radiological environmental

impacts associated with the proposed

action.

With regard to potential

nonradiological impacts, the proposed

action does involve features located

entirely within the restricted area as

defined in 10 CFR Part 20. It does not

affect nonradiological plant effluents

and has no other environmental impact.

Accordingly, the Commission concludes

that there are no significant

nonradiological environmental impacts

associated with the proposed action.

Alternatives to the Proposed Action

Since the Commission has concluded

there is no measurable environmental

impact associated with the proposed

action, any alternatives with equal or

greater environmental impact need not

be evaluated. As an alternative to the

proposed action, the staff considered

denial of the proposed action. Denial of

the application would result in no

change in current environmental

impacts. The environmental impacts of

the proposed action and the alternative

action are similar.

Alternate Use of Resources

This action does not involve the use

of any resources not previously

considered in the Final Environmental

Statement for the Salem Nuclear

Generating Station, Units 1 and 2, dated

April 1973.

Agencies and Person Contacted

In accordance with its stated policy,

the staff consulted with the New Jersey

State official regarding the

environmental impact of the proposed

action. The State official had no

comments.

Finding of No Significant Impact

Based upon the environmental

assessment, the Commission concludes

that the proposed action will not have

a significant effect on the quality of the

human environment. Accordingly, the

Commission has determined not to

prepare an environmental impact

statement for the proposed action.

For further details with respect to the

proposed action, see the application for

license amendments dated April 16,

1993, which is available for public

inspection at the Commission’s Public

Document Room, the Gelman Building,

2120 L Street, NW., Washington, DC,

and the local public document room

located at the Salem Free Public Library,

112 West Broadway, Salem, NJ 08079.

Dated at Rockville, Maryland, this 21st day

of February 1995.

For the Nuclear Regulatory Commission.

John F. Stolz,

Director, Project Directorate I–2, Division of

Reactor Projects—I/II, Office of Nuclear

Reactor Regulation.

[FR Doc. 95–4731 Filed 2–24–95; 8:45 am]

BILLING CODE 7590–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–26233]

Filings Under the Public Utility Holding

Company Act of 1935, As Amended

(‘‘Act’’)

February 17, 1995.

Notice is hereby given that the

following filing(s) has/have been made

with the Commission pursuant to
10618 Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Notices

provisions of the Act and rules

promulgated thereunder. All interested

persons are referred to the application(s)

and/or declaration(s) for complete

statements of the proposed

transaction(s) summarized below. The

application(s) and/or declaration(s) and

any amendments thereto is/are available

for public inspection through the

Commission’s Office of Public

Reference.

Interested persons wishing to

comment or request a hearing on the

application(s) and/or declaration(s)

should submit their views in writing by

March 15, 1995, to the Secretary,

Securities and Exchange Commission,

Washington, D.C. 20549, and serve a

copy on the relevant applicant(s) and/or

declarant(s) at the address(es) specified

below. Proof of service (by affidavit or,

in case of an attorney at law, by

certificate) should be filed with the

request. Any request for hearing shall

identify specifically the issues of fact or

law that are disputed. A person who so

requests will be notified of any hearing,

if ordered, and will receive a copy of

any notice or order issues in the matter.

After said date, the application(s) and/

or declaration(s), as filed or as amended,

may be granted and/or permitted to

become effective.

Eastern Utilities Associates, et al. (70–

8523)

Eastern Utilities Associates (‘‘EUA’’),

P.O. Box 2333, Boston, Massachusetts

02107, a registered holding company,

and its wholly owned subsidiary, EUA

Cogenex Corporation (‘‘Cogenex’’), P.O.

Box 2333, Boston, Massachusetts 02107,

have filed an application-declaration

pursuant to Sections 6(a), 7, 9(a), 10,

12(b) and 12(f) of the Act and Rules

43(a) and 45(a) promulgated thereunder.

Cogenex requests authority to acquire

a non-associate company, Highland

Energy Group, Inc. (‘‘Highland Energy’’),

in a transaction structured as a statutory

merger of Highland Energy with a

subsidiary of EUA to be established for

the acquisition. Highland Energy is a

national energy services company that

has extensive experience in the industry

of energy efficiency. Highland Energy

designs, executes, finances, monitors,

maintains, and guarantees energy

savings programs for public consumers,

such as schools and hospitals, and for

private energy consumers, such as office

buildings and businesses, under multiyear contracts.

To effect the acquisition, EUA would

establish a subsidiary (‘‘Newco’’) which

would acquire the shares of Highland

Energy in exchange for shares of EUA.

The initial authorized capitalization of

would be 200,000 shares of common

stock, $.01 par value, of which 10,000

would be issued to EUA for $100.

Following the establishment of Newco

and its acquisition of the shares of

Highland Energy, Newco would change

its name to EUA Highland Corporation

(‘‘EUA Highland’’) and Cogenex would

acquire all the shares of EUA Highland

from EUA for $100.

The consideration for the acquisition

by Newco of Highland Energy will be in

EUA common shares to be paid at the

time Highland Energy shares are

transferred to Cogenex (‘‘Closing’’) plus

a contingent earn-out amount, to be paid

in EUA common shares at a later time.

Any amounts representing fractional

shares will be paid in cash. The

payment made at the Closing will be

worth an estimated $4.2 million

(‘‘Closing Amount’’), measured by the

average closing market price over a 5-

day period before the Closing.

The earn-out amount to be paid later

in EUA common shares will range from

zero to $3.8 million, measured by the

average closing market price over a 5-

day period before the date the earn-out

amount is due. The amount owed at that

time will be based on the earnings

performance of EUA Highland over the

three year period following the Closing.

Notwithstanding the foregoing, EUA’s

obligation to pay the earn-out amount in

EUA shares is limited to the number of

shares used to pay the Closing Amount.

Any excess of the earn-out amount over

the value, measured as described in this

paragraph, of the number of shares

issued by EUA to pay the earn-out

amount will be payable in cash.

Assuming an EUA common share price

of $22.00 per share, up to 363,636

common share of EUA could be issued

in the acquisition.

Additionally, Cogenex requests

authority through December 31, 1997 to

make investments in EUA Highland in

any combination of capital

contributions or short-term loans not to

exceed a combined aggregate amount of

$10 million. The terms of such shortterm borrowing will be the same terms

as those for funds borrowed by Cogenex

from EUA under its system lines of

credit. Further, Cogenex requests

authorization to guarantee performance

obligations of EUA Highland in

connection with ongoing operations, in

amounts that in aggregate will not

exceed $10 million.

New England Electric System, et al.

(70–8555)

New England Electric System

(‘‘NEES’’), a registered holding

company, and its wholly owned

nonutility subsidiary company, New

England Electric Resources, Inc.

(‘‘NEERI’’), both of 25 Research Drive,

Westborough, Massachusetts 01582,

have filed an application-declaration

under sections 6(a), 7, 9, 10 and 12(b)

of the Act and rule 45 thereunder.

By Commission orders dated

September 4, 1992 (HCAR No. 25621)

and April 1, 1994 (HCAR No. 26017),

NEERI was authorized to provide

electrical related and consulting

services to nonaffiliates and NEES was

authorized to provide financing to

NEERI. By Commission order May 25,

1994 (HCAR No. 26057), NEERI was

authorized to invest in a company

formed to develop, manufacture and

market a low harmonic distortion

uninterruptible power supply and NEES

was authorized to provide additional

financing to NEERI.

NEERI now proposes to engage in

preliminary research and development

activities (‘‘Development Activities’’) in

connection with potential investments

in exempt wholesale generators and

foreign utility companies. NEES

proposes to provide up to $10 million

to NEERI from time-to-time through

December 31, 1997, through capital

contributions and/or non-interest

bearing subordinated loans, for NEERI’s

Development Activities.

Central and South West Corporation, et

al. (70–8557)

Central and South West Corporation

(‘‘CSW’’), a registered holding company,

its service company subsidiary, Central

and South West Services, Inc.

(‘‘Services’’), both located at 1616

Woodall Rodgers Freeway, Dallas, Texas

75202, CSW’s public-utility subsidiary

companies, Central Power and Light

Company (‘‘CPL’’), 539 North

Carancahua Street, Corpus Christi,

Texas 78401–2802, Public Service

Company of Oklahoma (‘‘PSO’’), 212

East Sixth Street, Tulsa, Oklahoma

74119–1212, Southwestern Electric

Power Company (‘‘SWEPCO’’), 428

Travis Street, Shreveport, Louisiana

71156–0001, West Texas Utilities

Company (‘‘WTU’’), 301 Cypress Street,

Abilene, Texas 79601–5820, and a

nonutility subsidiary company,

Transok, Inc. (‘‘Transok’’), 2 West Sixth

Street, Tulsa, Oklahoma 74119

(collectively, ‘‘Subsidiaries’’) have filed

an application-declaration under

Sections 6(a), 7, 9(a), 10, 12(b) and 12(f)

of the Act and Rules 43, 45 and 54

thereunder.

CSW and its Subsidiaries propose to

continue, through March 31, 1997, their

short-term borrowing program, which

includes the sale of commercial paper

by CSW to commercial paper dealers

and financial institutions and the sale of

short-term notes to banks and their trust
Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Notices 10619

departments by CSW and the

Subsidiaries (‘‘External Program’’) and

the CSW System money pool (‘‘Money

Pool’’), as previously authorized by

orders dated March 31, 1993, September

28, 1993, March 18, 1994, June 15, 1994,

and February 1, 1995 (HCAR Nos.

25777, 25897, 26007, 26066 and 26226,

respectively) (‘‘Prior Orders’’). The

External Program would be coordinated

through the use of the Money Pool,

whereby CSW and its Subsidiaries

would make loans to, and the

Subsidiaries would borrow from, the

Money Pool. Loans to the Subsidiaries

through the Money Pool will be made

pursuant to open-account advances or

loans evidenced by notes.

The External Program and the Money

Pool would make funds available to the

Subsidiaries for the interim financing of

their capital expenditure programs and

their other working capital needs, and to

CSW to loan and, when approved by the

Commission, to make capital

contributions to any of the Subsidiaries

and in both instances to repay previous

borrowings incurred for such purposes.

Funds for the Money Pool would be

available from surplus funds from the

treasuries of CSW and the Subsidiaries,

from proceeds from the sale of

commercial paper by CSW and bank

borrowings by CSW and its

Subsidiaries. Funds to be loaned to the

Subsidiaries are obtained in the

following order of priority: (1) Available

surplus funds of the Subsidiaries will be

used to satisfy the borrowing needs of

other Subsidiaries before any funds of

CSW are used; (2) available surplus

funds in CSW’s treasury; and (3)

external borrowings by CSW from the

sale of commercial paper and/or bank

borrowings. External borrowings by

CSW would not be made unless there

were no surplus funds in the treasuries

of the Subsidiaries or CSW sufficient to

meet borrowing needs. However, no

loan will be made by CSW or any

Subsidiary if the borrowing company

could borrow more cheaply directly

from banks or through the sale of its

own commercial paper. When more

than one Subsidiary is borrowing, each

borrowing Subsidiary will borrow pro

rata from each fund source in the same

proportion that the amount of funds

provided by that fund source bears to

the total amount of short-term funds

available to the Money Pool.

The interest rate applicable on any

day to the then outstanding loans

through the Money Pool will be the

composite weighted average daily

effective cost incurred by CSW for shortterm borrowings from external sources.

If there are no borrowings outstanding

then the rate would be the certificate of

deposit yield equivalent of the 30-day

Federal Reserve ‘‘AA’’ Industrial

Commercial Paper Composite Rate

(‘‘Composite’’), or if no composite is

established for that day then the

applicable rate will be the Composite for

the next preceding day for which the

Composite is established.

The aggregate principal amounts of

short-term borrowing outstanding at any

one time requested by CSW and its

Subsidiaries are: (1) CSW—$1.2 billion;

(2) CP&L—$300 million; (3) PSO—$125

million; (4) SWEPCO—$150 million; (5)

WTU—$65 million; (6) Services—$110

million; and (7) Transok—$200 million.

These amounts reflect an increase in

borrowing levels from those authorized

in the Prior Orders for: (1) CSW of $250

million to accommodate additional

investments in CSW International, Inc.,

CSW Energy, Inc., CSW

Communications and new Money Pool

and short-term borrowing requirements;

(2) PSO of $25 million to provide

interim financing for additional capital

expenditures and other temporary

working capital needs; and (3) WTU of

$15 million to provide interim financing

for additional capital expenditures and

other temporary working capital needs.

The aggregate principal amount of

outstanding borrowings for CSW and its

Subsidiaries together will not exceed

$1.2 billion.

To provide funds for the Money Pool,

CSW proposes to issue and sell

commercial paper (‘‘Commercial

Paper’’). The Commercial Paper will

mature in 270 days or less and will be

issued from time-to-time through March

31, 1997 to commercial paper dealers

(‘‘Dealers’’) and certain financial

institutions.

The Commercial Paper issued to

Dealers will be in the form of either

physical or book-entry unsecured

promissory notes. Such notes will be

issued and sold by CSW directly to

Dealers at a rate not to exceed the rate

per annum prevailing at the time of

issuance for commercial paper of

comparable quality and maturity sold by

issuers thereof to Dealers. No

commission or fee will be payable in

connection with the issuance and sale of

the Commercial Paper. The purchasing

dealer, however, will reoffer the notes at

a rate less than the rate to the issuer and,

as principal, will reoffer such notes in

such a manner as not to constitute a

public offering under the Securities Act

of 1933.

Sales of Commercial Paper directly to

financial institutions will be undertaken

only if the resulting cost of money is

equal to or less than that available from

Dealers or banks. Terms for directly

placed notes would be similar to those

of dealer placed notes.

CSW and its Subsidiaries further

propose to borrow money from banks,

from time-to-time through March 31,

1997, to the extent that the surplus

funds of CSW and the Subsidiaries are

insufficient to meet the Subsidiaries’

requests for short-term loans and subject

to the limitations on aggregate principal

amounts, above. Such borrowing will

not be made unless it would produce a

lower cost of money than the issue of

CSW’s Commercial Paper and, in any

event, they will not bear a rate of

interest higher than the effective cost of

money for unsecured prime commercial

bank loans prevailing on the date of

borrowing. The borrowings will be

evidenced by promissory notes

maturing no later than March 31, 1997

and will be subject to prepayment by

the borrower, or under certain

circumstances with consent of the

lending bank, in whole at any time or

in part from time-to-time, without

penalty.

Compensation arrangements under

lines of credit with banks maintained by

CSW and its Subsidiaries are on a

balance or fee basis. In general, fees

range from 1⁄10 to 1⁄5 of 1% per annum

on the average unused portion of the

commitment and balance arrangements

require average balances of 3% of the

amount of the commitment. CSW also

proposes, from time-to-time through

March 31, 1997, to borrow funds

managed by the trust departments of

banks if such borrowings result in a cost

of money equal to or less than that

available from the sale of commercial

paper or other bank borrowings.

Neither CSW nor the Subsidiaries will

use the proceeds from the proposed

borrowings to finance the acquisition of

an ‘‘exempt wholesale generator’’ or

‘‘foreign utility company,’’ as

respectively defined in Sections 32 and

33 of the Act, without further

Commission authorization.

The Southern Company, et al. (70–8567)

The Southern Company (‘‘Southern’’),

64 Perimeter Center East, Atlanta,

Georgia 30346, a registered holding

company, and its wholly owned

subsidiary company, Southern Nuclear

Operating Company, Inc. (‘‘Southern

Nuclear’’), 40 Inverness Center Parkway,

Birmingham, Alabama 35204, have filed

an application-declaration under

Sections 6(a), 7, 9(a), 10 and 12(b) of the

Act and Rules 45 and 54 thereunder.

Southern Nuclear proposes to borrow,

from time to time through March 31,

1998, from Southern or other lenders up

to an aggregate principal amount of $10

million at any time outstanding.
10620 Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Notices

1Amendment No. 1 made non-substantive,

clarifying changes to the proposal. See Letter from

Jay O. Wright, Esq., Foley & Lardner, to Elisa

Metzger, Senior Counsel, SEC, dated February 14,

1995.

Borrowings from Southern will have

maturities not to exceed ten years and

will accrue interest at a rate equal to the

average effective interest cost of

Southern’s outstanding obligations for

borrowed money on the first day of each

month, or if no obligations are

outstanding at the time, at a rate equal

to the weekly average of the thirty-day

certificate of deposit rate (secondary

market) as reported in the Federal

Reserve statistical release H.15 (519) for

the next to the last complete business

week of the preceding calendar month.

However, this rate will not exceed the

prime rate in effect at a nationally

recognized bank to be designated by

Southern. Loans obtained from lenders

other than Southern will have

maturities not to exceed ten years and

will accrue interest at a rate not to

exceed the prime rate plus 2% for

variable rate loans and the prime rate at

the time of borrowing plus 3% for fixed

rate loans. Such loans may be secured

or unsecured and may be guaranteed by

Southern.

Southern proposes through March 31,

1998, to make up to $5 million in open

account advances to Southern Nuclear

from time to time, which, at the option

of Southern, may be converted into

capital contributions or additional

shares of common stock of Southern

Nuclear. To the extent any such

advances are converted to equity, the

borrowing authority sought herein shall

be reduced by the amount of the

advances so converted, so that the total

capitalization of Southern Nuclear does

not exceed $11.6 million (including its

present common equity of $1.6 million).

The rate of return on Southern Nuclear’s

common equity capital will not exceed

the average of the most recent rates of

return allowed by the Alabama Public

Service Commission and the Georgia

Public Service Commission.

Southern Nuclear states that the funds

will be used by Southern Nuclear in

connection with its working capital

needs, including the purchase of

equipment and office furniture,

leasehold improvements and loans to

employees for purposes such as

residential energy programs, purchases

of computers and employee transfer

expenses.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–4650 Filed 2–24–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35394; File No. SR–CHX–

95–03]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 to Proposed Rule

Change by Chicago Stock Exchange,

Incorporated Relating to Reporting and

Disclosure Requirements

February 17, 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 8, 1995,

the Chicago Stock Exchange, Inc.

(‘‘CHX’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) the proposed

rule change, and on February 16, 1995,

filed Amendment No. 1 to the proposed

rule change,1 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 CHX, pursuant to Rule 19b–4 of

the Securities Exchange Act of 1934

(‘‘Act’’), proposes to (1) amend Article

VI, Rule 5 and add an interpretation

thereto to require that members and

member organizations maintain written

procedures to ensure compliance with

the securities laws (and SEC regulations

promulgated thereunder) and the Rules

of Exchange; (2) amend Article XI Rule

4 to provide the Exchange with the

authority to require that a member or

member organization have an

accounting firm audit its books and to

clarify that all members and member

organizations are required to comply

with the disclosure requirements of

Rule 17a–5; and (3) add Article XI, Rule

9 to require that floor brokers who do

not clear their own trades procure a

letter of guarantee prior to trading.

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 placed specified in Item IV below.

The self-regulatory organization has

prepared summaries, set forth in

Sections 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

The CHX has two purposes for

amending Article VI, Rule 5 to require

that members and member organizations

maintain written supervisory

procedures: (1) Requiring written

procedures allows the CHX to more

easily verify the existence of

procedures; and (2) such a requirement

facilitates the CHX’s verification of the

content of the procedures. The visibility

of such written procedures will remind

members and member organizations of

their obligations to comply with the

securities laws, SEC rules, and the

Exchange’s rules, thus enhancing

compliance.

The CHX’s purpose for adding Article

XI, Rule 4(c) thereto is to clarify that all

CHX members and member

organizations are required to file

monthly and quarterly Focus Reports

with the CHX in accordance with SEC

Rule 17a–5 unless the member or

member organization is exempt.

The CHX’s purpose for adding Article

XI, Rule 9 is to enhance the safety and

soundness of the clearing system by

ensuring that Floor Brokers have

sufficient financial resources to stand

behind their trades. As a result, fewer

disruptions due to the financial distress

of a floor broker are likely to occur. The

reliability of the clearing system is thus

augmented.

2. Statutory Basis

The proposed rule changes are

consistent with Sections 6(b)(1) and

6(b)(5) of the Act in that the proposed

rule changes will aid the Exchange in

enforcing compliance by its members

and member organizations with the

securities laws and the Exchange’s rules

as well as aiding in preventing

fraudulent or manipulative acts in the

clearing of trades.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act.