17376 Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Notices

available to CHX specialists as an addition or an

alternative to SuperMAX. The Exchange also has

stated that a specialist will be permitted to switch

from one set of parameters to another once a month.

Telephone conversation with David Rusoff, Foley &

Lardner and Jennifer Choi, SEC, on March 20, 1995.

3The Exchange has indicated that the ‘‘terms and

conditions’’ provision will provide the Exchange

with veto power over a specialists’s particular

request. Telephone conversation with Craig Long

and David Rusoff, Foley & Lardner, and Julio

Mojica, Susan Lee, and Jennifer Choi, SEC, on

March 10, 1995.

4The Dual Trading System of the Exchange

allows the execution of both round-lot and odd-lot

orders in certain issues assigned to specialists on

the Exchange and listed on either the New York

Stock Exchange or the American Stock Exchange.

5The term national best bid or best offer is

defined under SEC Rule 11Ac1–2 as the highest bid

or lowest offer for a reported security made

available by any reporting market center pursuant

to Rule 11Ac1–1 or the highest bid or lowest offer

for a security other than a reported security

disseminated by an over-the-counter market maker

in Level 2 or 3 of NASDAQ.

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

2 17 CFR 240.19b–4 (1991).

3Amendments No. 1 and No. 2 made nonsubstantive, clarifying changes to the proposal. See

Letters from Jay O. Wright, Esq., Foley & Lardner,

to Elisa Metzger, Senior Counsel, SEC, dated

February 14, 1995 and March 30, 1995.

The automatic execution of these orders

sent over the MAX System would only

occur if a specialist requests it, and

then, only on those terms and

conditions set forth by the Exchange.3

The BEST Rule requires specialists to

execute agency market orders of 2099

shares or less in Dual Trading System

issues 4 or NASDAQ/NMS Securities at

the national best bid or best offer

(‘‘NBBO’’) 5 if certain conditions are

satisfied. Orders greater than 2099

shares, however, are not subject to the

rule. Under this proposed rule change,

a specialist could, for example, increase

the size of the guarantee, be more

flexible in providing partial executions,

or obligate itself to provide price

improvement under certain

circumstances.

Although nothing in the proposed

rule change requires a specialist to give

more favorable guarantees, if such

guarantees are provided through the

MAX System, the specialist must honor

the more favorable guarantee. Failure of

a specialist to honor the more favorable

guarantee will be deemed to be a

violation of Exchange Rules.

2. Statutory Basis

The proposed rule change is

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

Act in that it is designed to prevent

fraudulent and manipulative acts and

practices and to perfect the mechanism

of a free and open market.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any inappropriate 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 either

solicited or received.

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 find 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 Exchange. All submissions

should refer to File No. SR–CHX–95–08

and should be submitted by April 26,

1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–8260 Filed 4–4–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35550; File No. SR–CHX–

95–03]

Self-Regulatory Organizations;

Chicago Stock Exchange, Inc.; Order

Granting Approval to Proposal Rule

Change and Notice of Filing and Order

Granting Accelerated Approval of

Amendment No. 2 to a Proposed Rule

Change Relating to Reporting and

Disclosure Requirements

March 30, 1995.

On February 6, 1995, the Chicago

Stock Exchange, Inc. (‘‘CHX’’ 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 various Exchange Rules

regarding reporting and disclosure

requirements. Specifically, the rule

change proposed 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 the Exchange; (2) amend Article XI,

Rule 4 to provide the Exchange with the

authority to require any member or

member organization to 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. On

February 14, 1995 and March 30, 1995,

the Exchange submitted to the

Commission Amendments No. 1 and

No. 2, respectively, to the proposed rule

change.3

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 35394

(February 17, 1995), 60 FR 10620

(February 27, 1995). No comments were

received on the proposal. This order

approves the proposed rule changes.

I. Proposal

Currently, Article VI, Rule 5(c)

requires each member organization that

does business with the public to

establish procedures, and a system for

applying such procedures, to assure that

its registered representatives and other
Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Notices 17377

4Article XI, Rule 4 excepts out of the rule,

member organizations that are self-clearing and

member organizations that do a securities business

only with other members of a national securities

exchange. 5 15 U.S.C. 78f(b) (1988). 6 15 U.S.C. 78s(b)(2) (1988).

employees are adequately and closely

supervised. Rule 5(c) further states that

a system will be deemed adequate only

if it is reasonably designed to prevent

and detect violations of the applicable

securities laws, the rules and

regulations thereunder, and the CHX

Constitution and Rules. The CHX is

proposing to amend Article VI, Rule 5

and add an interpretation thereto to

require that such procedures and

systems be in writing. The CHX believes

that requiring written procedures allows

the CHX to more easily verify the

existence of such procedures and that

such a requirement facilitates the CHX’s

verification of the content of the

procedures. The CHX also believes that

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 CHX’s rules, thus

enhancing compliance.

The CHX is also proposing

amendments to Article XI, Rule 4.

Article XI, Rule 4 requires certain

member organizations to have an audit

as required by SEC Rule 17a–5 and any

other additional audits that the

Exchange may require for good cause.4

The additional audits must be made by

an independent public accountant,

acceptable to the CHX and be conducted

in accordance with the requirements of

SEC Rule 17a–5. The CHX is amending

the rule to provide the Exchange with

the authority to require any member or

member organization to have an

accounting firm audit its books and

have the member or member

organization file a statement with the

Exchange to the effect that such

additional audits have been made. In

addition, the CHX’s purpose for

amending Article XI, Rule 4(c) 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.

Finally, the CHX proposes to add a

new rule, Article XI, Rule 9, which

would require floor brokers who do not

clear their own trades to procure a letter

of guarantee prior to trading. 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.

II. Discussion

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, with the

requirements of Section 6(b).5 In

particular, the Commission believes the

proposal is consistent with the Section

6(b)(1) requirement that the exchange

have the capacity to enforce compliance

by its members and persons associated

with its members, of the federal

securities laws, rules and regulations

thereunder and the rules of the

exchange. The CHX proposal will

permit the CHX to verify the existence

and content of procedures and systems

that require compliance with the federal

securities laws, rules and regulations

thereunder and the CHX rules. In

addition, the Exchange’s proposed

amendments to Article XI, Rule 4,

clarify that all members and member

organizations are required to comply

with the disclosure requirements of SEC

Rule 17a–5.

The Commission believes the

proposal is consistent with the Section

6(b)(5) requirements that the rules of an

exchange be designed to prevent

fraudulent and manipulative acts, to

remove impediments to and perfect the

mechanism of a free and open market

and a national market system, and, in

general, to protect investors and the

public. Specifically, the proposed

amendments to Article VI, Rule 5 which

require written procedures that ensure

compliance with applicable rules and

laws, will prevent fraudulent acts and

practices and protect investors and the

public by enforcing compliance with the

federal securities laws, SEC rules and

CHX rules. Similarly, the Commission

believes that the proposal to provide the

Exchange with the authority to require

any member or member organization to

have an accounting firm audit its books

and to clarify that all members and

member organizations must comply

with SEC Rule 17a–5, is consistent with

the Section 6(b)(5) requirements. These

proposals will enable the CHX to

investigate any concerns it has with

respect to potential financial problems

of its members or member organizations.

Accordingly, the Exchange’s awareness

of any financial problems in advance

could limit the impact of that member’s

financial condition on the market.

The Commission also believes that the

proposal to 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 is consistent

with the Section 6(b)(5) requirements.

The Commission agrees with the

Exchange that the proposed rule will

ensure the safety and soundness of the

clearing system by ensuring that floor

brokers have sufficient financial

resources to stand behind their trades.

The proposed rule will improve the

reliability of the clearing system because

fewer disruptions due to the financial

distress of a floor broker are likely to

occur.

The Commission finds good cause for

approving Amendment No. 2 prior to

the thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register. Specifically,

Amendment No. 2 makes nonsubstantive, technical changes to the

proposal. The Commission believes that

these technical changes are not material

changes that raise regulatory concerns

not already addressed by the proposal.

Accordingly, the Commission believes it

is consistent with Sections 6(b)(5) and

19(b)(2) of the Act to approve

Amendment No. 2 to the proposal on an

accelerated basis.

III. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

2. 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 at

the Commission’s Public Reference

Section, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the CHX. All submissions

should refer to File No. SR–CHX–95–03

and should be submitted by April 26,

1995.

IV. Conclusion

It Is Therefore Ordered, pursuant to

section 19(b)(2) of the Act 6 that the
17378 Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Notices

7 17 CFR 200.30–3(a)(12) (1991).

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

2Securities Exchange Act Release No. 35313

(February 1, 1994), 59 FR 5644 [File No. SR–PCC–

94–01].

3 15 U.S.C. 78q–1 (1988).

4 15 U.S.C. 78q–1(b)(3) (A) and (F) (1988).

5 15 U.S.C. 78s(b)(2) (1988).

6 17 CFR 200.30–3(a)(12) (1994).

proposed rule change (SR–CHX–95–03),

as amended is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–8340 Filed 4–4–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35549; File No. SR–PCC–

94–01]

Self-Regulatory Organizations; Pacific

Clearing Corporation; Order Approving

a Proposed Rule Change Making

Corrections and Clarifications to

Certain Provisions of the PCC’s Rules,

Participant Agreement, and Clearing

Fund Agreement

March 30, 1995.

On November 28, 1994, the Pacific

Clearing Corporation (‘‘PCC’’) filed with

the Securities and Exchange

Commission (‘‘Commission’’) a

proposed rule change under Section

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

of 1934 (‘‘Act’’) to correct certain

typographical errors in PCC’s rules and

to clarify certain provisions regarding

specialist post capital in PCC’s

participant agreement and clearing fund

agreement.1 Notice of the proposal was

published in the Federal Register on

February 7, 1995.2 For the reasons

discussed below, the Commission is

approving the proposed rule change.

I. Description

The proposed rule change will correct

typographical errors in certain

provisions of PCC’s rules and will

clarify certain provisions of PCC’s

standard participant agreement and

clearing fund agreement relating to

specialist post capital. Specifically, PCC

corrects typographical errors to the

Table of Contents; PCC Rule 1.2(f),

defining the term ‘‘long position’’; PCC

Rules 2.1(c) and 2.1(d), addressing

membership qualifications and

approval; and PCC Rule 9.3(c)(iii)

addressing specialist post termination

procedures. In addition, PCC is

amending PCC Rule 5.2 to clarify that

any reductions to excess post capital or

a member’s clearing fund deposit cannot

be made for amounts that would reduce

the member’s post capital or clearing

fund deposit below the minimum

requirement.

The proposal also amends certain

paragraphs of PCC’s participant

agreement that relate to post capital.

Paragraph 3.1(e)(iii) is amended to

clarify that it refers to the monitoring of

post capital rather than net capital.

Paragraph 4.5 of the participant

agreement is amended to distinguish

post capital from net capital. Net

capital, which is specified by PSE Rule

2.1 and Rule 15c3–1 of the Act, remains

constant for a firm regardless of the

number of specialist posts it operates. In

contrast, post capital varies because it

represents the amount of capital

required to be maintained by a firm

based on the number of specialist posts

it operates. Paragraph 4.9 of the

participant agreement is modified to

clarify that reductions to excess post

capital and to the clearing fund deposit

cannot be made in amounts that would

reduce these sums below their

respective minimum requirements.

Paragraph 4.9 of the participant

agreement also is amended to clarify

that losses on a trial balance are due on

the fifteenth day of the month following

the month for which the trial balance

was issued.

Similarly, the clearing fund agreement

is clarified such that the minimum

contribution, as defined in paragraph 5

of the clearing fund agreement, made by

a member firm backing a specialist post

will be applied towards meeting the

post capital requirement. Prior to this

clarification, the clearing fund

agreement stated that contributions

were to be credited towards the net

capital requirement.

II. Discussion

The Commission believes that the

PCC’s proposed rule change is

consistent with the requirements of

Section 17A of the Act 3 and in

particular with Sections 17A(b)(3) (A)

and (F) of the Act.4 Sections 17A(b)(3)

(A) and (F) require, among other things,

that the rules of a clearing agency be

designed to promote the prompt and

accurate clearance and settlement of

securities transactions and to assure the

safeguarding of securities and funds

within its possession or control or for

which it is responsible. The

clarifications regarding specialist post

capital and net capital will assist PCC in

safeguarding the securities and funds

which are in PCC’s custody or control

or for which PCC is responsible.

Furthermore, the technical corrections

to PCC’s rules will clarify these rules

and thereby advance the prompt and

accurate clearance and settlement of

securities transactions.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposed

rule change is consistent with the

requirements of the Act and in

particular with the requirements of

Section 17A of the Act and the rules and

regulations thereunder.

It is therefore ordered, pursuant to

section 19(b)(2) of the Act,5 that the

proposed rule change (File No. SR–

PCC–94–01), be, and hereby is,

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–8339 Filed 4–4–95; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF TRANSPORTATION

Coast Guard

[CGD 95–030]

Chemical Transportation Advisory

Committee, Subcommittee on Marine

Vapor Control Systems

AGENCY: Coast Guard, DOT.

ACTION: Notice of meeting.

SUMMARY: The Subcommittee on Marine

Vapor Control Systems of the Chemical

Transportation Advisory Committee

will meet to continue reviewing tank

vessel cleaning facility operations and

evaluate proposed recommendations for

safety standards for use of a vapor

control system at these facilities. The

meeting will be open to the public.

DATES: The meeting will be held on

Tuesday, May 9, 1995, from 9 a.m. to 5

p.m. Written material should be

submitted no later than May 2, 1995.

ADDRESSES: The meeting will be held at

the Wyndham Hotel, 12400 Greenspoint

Drive, Houston, TX 77060. Personnel

attending the meeting should report to

the main floor reception area for

direction to the conference room.

Written material should be submitted to

Lieutenant Commander Robert F.

Corbin, Commandant (G–MTH–1), U.S.

Coast Guard Headquarters, 2100 Second

Street, SW., Washington, DC 20593–

0001.

FOR FURTHER INFORMATION CONTACT:

Lieutenant Commander Robert F.

Corbin, Commandant (G–MTH–1), U.S.