Federal Register / Vol. 60, No. 66 / Thursday, April 6, 1995 / Notices 17595

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

2 17 CFR 240.19b–4 (1994).

3See letters from David Rusoff, Foley & Lardner,

to Amy Bilbija, SEC, dated December 29, 1994; and

to Glen Barrentine, SEC, dated January 5, 1995.

Amendment Nos. 1 and 2 made non-substantive

changes to the proposal.

4See letter from David Rusoff, Foley & Lardner,

to Glen Barrentine, SEC, dated March 28, 1995. See

infra note 6 for a description of Amendment No. 3.

5See Chicago Stock Exchange Guide, Article

XXX, Rule 9, (CCH) ¶ 1929.

OFFICE OF THE UNITED STATES

TRADE REPRESENTATIVE

Country Allocation of the Tariff-Rate

Quota for Certain Imported Sugars,

Syrups, and Molasses

AGENCY: Office of the United States

Trade Representative.

ACTION: Notice.

SUMMARY: The Office of the United

States Trade Representative (USTR) is

providing notice of the country-bycountry allocations of the tariff-rate

quota for certain imported sugars,

syrups, and molasses established for the

period January 1, 1995, through

September 30, 1995. The new

allocations replace the allocations

previously made for the period of

August 1, 1994, through September 30,

1995.

EFFECTIVE DATE: January 1, 1995.

ADDRESSES: Inquiries may be mailed or

delivered to Tom Hushek, Senior

Economist, Office of Agricultural Affairs

(Room 421), or to Daniel Brinza, Senior

Advisor and Special Counsel for Natural

Resources, Office of the General Counsel

(Room 223); Office of the United States

Trade Representative, 600 Seventeenth

Street, Washington, DC 20506.

FOR FURTHER INFORMATION CONTACT: Tom

Hushek, Office of Agricultural Affairs,

202–395–6127, or Daniel Brinza, Office

of the General Counsel, 202–395–7305.

SUPPLEMENTARY INFORMATION:

Presidential Proclamation No. 6763 of

December 23, 1994 established a tariffrate quota for certain sugars, syrups, and

molasses effective January 1, 1995, to

implement the Uruguay Round

Agreements approved by the Congress

in the Uruguay Round Agreements Act

(URAA) (P.L. 103–465). This tariff-rate

quota replaced the tariff-rate quota that

had been in effect previously.

Presidential Proclamation No. 6763 also

provided an additional amount under

the tariff-rate quota for the period

January 1 through September 30, 1995,

of 8,000 metric tons, raw value, of

refined sugars originating in Canada.

Presidential Proclamation No. 6763

also delegated to the United States

Trade Representative (USTR) the

President’s authority under section

404(d)(3) of the URAA (19 U.S.C. 3601)

to allocate the in-quota quantity of a

tariff-rate quota for any agricultural

product among supplying countries or

customs areas and to modify any

allocation as the President determines

appropriate.

Since the tariff-rate quota established

by Presidential Proclamation No. 6763

replaced the previous tariff-rate quota,

USTR is providing notice of the

allocation of the new tariff-rate quota for

the quota period January 1, 1995,

through September 30, 1995.

Notice

The in-quota quantity of the tariff-rate

quota for sugars, syrups and molasses

entered under subheading 1701.11.10,

1701.12.10, 1701.91.10, 1701.99.10,

1702.90.10 and 2106.90.44 for the

period of January 1 through September

30, 1995, is allocated to each of the

following countries and customs areas

in an amount equal to the remaining

quantity available, if any, from the

allocation for that country or area for the

quota period that began October 1, 1992,

plus the remaining quantity available, if

any, from its allocation for the quota

period which began on August 1, 1994:

Argentina, Australia, Barbados,

Belize, Bolivia, Brazil, Columbia, Congo,

Costa Rica, Cote d’Ivoire, Dominican

Republic, Ecuador, El Salvador, Fiji,

Gabon, Guatemala, Guyana, Haiti,

Honduras, India, Jamaica, Madagascar,

Malawi, Mauritius, Mexico,

Mozambique, Nicaragua, Panama, Papua

New Guinea, Paraguay, Peru,

Philippines, St. Kitts and Nevis, South

Africa, Swaziland, Taiwan, Thailand,

Trinidad and Tobago, Uruguay, and

Zimbabwe.

The allocations for the quota period

that began October 1, 1992, were

announced by USTR on August 27,

1992, and adjusted by USTR as

announced on July 1, 1993. The

allocations for the quota period which

began on August 1, 1994, were

announced by USTR on August 11,

1994.

Signed at Washington, DC, on March 24,

1995.

Michael Kantor,

United States Trade Representative.

[FR Doc. 95–8476 Filed 4–5–95; 8:45 am]

BILLING CODE 3190–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–35556; File No. SR–CHX–

94–22]

Self-Regulatory Organizations;

Chicago Stock Exchange,

Incorporated; Order Granting Approval

to Proposed Rule Change and Notice

of Filing and Order Granting

Accelerated Approval to Amendment

No. 3 to Proposed Rule Change

Relating to Exclusive Issues

March 31, 1995.

I. Introduction

On November 10, 1994, the Chicago

Stock Exchange, Incorporated (‘‘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 impose additional

requirements and prohibitions on

specialists, and others associated with

specialists units, registered in exclusive

issues. On January 4, and 9, 1995, the

Exchange submitted, respectively,

Amendments Nos. 1 and 2 to the

proposed rule change.3

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 35233 (Jan.

18, 1995), 60 FR 4651 (Jan. 24, 1995). No

comments were received on the

proposal. On March 29, 1995, the

Exchange submitted to the Commission

Amendment No. 3 to the proposed rule

change.4 This order approves the

proposed rule change, including

Amendment No. 3, on an accelerated

basis.

II. Description of the Proposal

Currently, the Exchange Rules impose

only a general prohibition on

specialists, who are prohibited from

effecting purchases or sales of any

security in which the specialist is

registered, unless such dealings are

reasonably necessary to permit such

specialist to maintain a fair and orderly

market.5 The Exchange proposes a new

rule, Article XXX, Rule 23, to impose

additional requirements and
17596 Federal Register / Vol. 60, No. 66 / Thursday, April 6, 1995 / Notices

6An ‘‘exclusive issue’’ is defined in the proposed

rule as the stock of any company traded on the

Exchange not otherwise traded on the New York or

American Stock Exchanges or Nasdaq/MNS, and,

where there exists another market for such issue the

Exchange has executed 15% or more of the volume

in the issue during the three previous months.

Amendment No. 3 amended the definition of

‘‘exclusive issue,’’ to include issues where the

Exchange has executed 15% or more of the volume

in the issue during the three previous months rather

than 25% or more of the transactions in the issue.

In Amendment No. 3, the Exchange noted that,

currently, 14 issues that are not traded on the New

York or American Stock Exchanges or Nasdaq/NMS

are traded on the Exchange and assigned to

specialists. Of these 14 issues, the Exchange trades

more than 25% of the volume of 7 issues and less

than 4% in 7 issues. See letter from David Rusoff,

Foley & Lardner, to Glen Barrentine, SEC, dated

March 28, 1995.

7The term ‘‘business transaction’’ is intended to

be interpreted broadly to include: loans, purchase

of assets from the issuer, and acquisition of any

beneficial ownership of shares of such issuer.

8 17 CFR 240.10a–1(e)(5). Rule 10a–1 generally

prohibits persons from effecting a short sale or a

registered security (a) below the price of the last

sale, or (b) at such price if it is lower than the last

sale at a different price. The exception provided for

in paragraph (e)(5) permits registered specialists or

registered exchange market maker (or a third market

maker for its own account over-the-counter) to

effect, for their own account, a sale (a) at a price

equal to or above the last sale, or (b) at a price equal

to the most recent offer communicated for the

security by such registered person if such offer,

when communicated, was equal to or above the last

sale. In addition, the Rule expressly provides that

an exchange may prohibit its registered specialists

and market makers from availing themselves of the

exemption if the exchange determines that such

action is necessary or appropriate in its market, in

the public interest, or for the protection of

investors.

9 15 U.S.C. 78f(b) (1988).

10The Commission’s review of the rules of the

regional exchanges indicates that only the Boston

Stock Exchange, Inc. (‘‘BSE’’) has a similar business

transaction prohibition on equity specialists. See

Boston Stock Exchange Guide, Chapter XV, Section

11, (CCH) ¶ 2149. The Rules of the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’) prohibit only option

specialists from conducting business transactions

with an issuer of a security underlying an option

in which the specialist is registered. See

Philadelphia Stock Exchange Guide, rule 1023(a),

(CCH) ¶ 3023.

11The Commission, however, does not dismiss

the possibility that there may arise a situation in the

future where it would be appropriate to extend the

prohibition of the proposed rule to all specialists

regardless of the issues in which they are registered.

Although the 15% threshold provides a benchmark

for determining when the Exchange is a primary

market for a security, it may become appropriate at

some point to impose the prohibition on all

specialists because of the difficulties with

monitoring exclusive issues through the use of

historical data and the potential manipulating the

volume of trading to avoid the prohibition.

12See Securities Exchange Act Release No. 35233

(Jan. 18, 1995), 60 FR 4651 (Jan. 24, 1995).

prohibitions on specialists, and certain

others, where specialists are registered

in exclusive issues.6 Specifically, the

proposed rule prohibits specialists, cospecialists, or other associated persons,

officer, directors, partners, or employees

of specialist units registered in an

exclusive issue from engaging in any

business transaction with the issuer of

the exclusive issue.7

The proposed rule also prohibits

certain specific dealings by specialists

in exclusive issues without the prior

approval of the floor officials. For

example, a purchase at a price above the

last sale in the same session or a

proposed transaction involving a price

movement of 1⁄2 point or more are not

to be effected except with the prior

approval of two floor officials.

Moreover, the proposed rules makes the

‘‘equalizing’’ exemption in paragraph

(e)(5) of SEC Rule 10a–1 unavailable for

specialists and market makers when

selling short an exclusive issue.8

Finally, the Exchange will provide

specialists who are registered in issues

that are not traded on the New York or

American Stock Exchanges or Nasdaq/

NMS with a statistical report on a

monthly basis containing data for trade

and share volume of each issue. The

specialists, therefore, will be able to

determine whether additional

requirements and prohibitions of Rule

23 have been triggered.

III. Discussion

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and rules

and regulations thereunder applicable to

a national securities exchange, and, in

particular, with the requirements of

Section 6(b).9 The Commission believes

the proposal is consistent with the

Section 6(b)(5) requirements 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.

The Commission believes that the rule

change will benefit investors by

eliminating a potential conflict of

interest between specialists registered in

exclusive issues and issuers of such

securities. Because business

transactions between specialists and

issuers may exert an improper influence

over specialists, the proposed rule

explicitly prohibits these types of

transactions as to specialists registered

in exclusive issues. The Commission

believes that the proposed rule would

be in the interest of the investing public

because it sets a standard higher than

the Exchange Rules currently provide

for specialists, and others associated

with specialist units, registered in

exclusive issues.10

At the present time, the Commission

believes that the limitation of the

proposed rule’s prohibition to exclusive

issues is appropriate. Exclusive issues,

as defined by the proposed rule, would

exclude only those issues that are traded

on the New York Stock Exchange, Inc.

(‘‘NYSE’’), the American Stock

Exchange, Inc. (‘‘Amex’’), or Nasdaq/

NMS, or where the Exchange is making

a de minimis market for the security.

Where the Exchange is the primary

market for an issue, the Exchange

specialists would have more of an

opportunity to manipulate the market

for the security and abuse the specialist

position. Such a situation is less likely

to occur in an issue that is also trading

on the NYSE, Amex, or Nasdaq/NMS, or

where the Exchange specialist is making

a de minimis market for a security.11

Moreover, the Commission finds good

cause for approving Amendment No. 3

to the proposed rule change prior to the

thirtieth day after the date of

publication of notice of filing thereof.

The Exchange’s original proposal was

published in the Federal Register for

the full statutory period and no

comments were received.12 Amendment

No. 3 alters the definition of an

exclusive issue. Under the amended

definition, the Exchange must have

executed 15% or more of the volume in

a particular issue during the three

previous months for a security to qualify

as an exclusive issue rather than 25% or

more of the transactions as originally

proposed. The Commission believes that

a threshold based upon the volume of

shares executed rather than upon the

number of transactions is unlikely to

alter the number of specialists affected

by the proposed rule. Moreover, to the

extent a threshold based upon volume

would have such an effect, the

Commission believes that the lower

numerical percentage is likely to

provide a sufficient cushion to offset

any decrease in the number of

specialists that otherwise would be

affected by the proposed rule.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment No.

3. 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
Federal Register / Vol. 60, No. 66 / Thursday, April 6, 1995 / Notices 17597

13 15 U.S.C. 78s(b)(2) (1988).

14 17 CFR 200.30–3(a)(12) (1994).

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

2Letter From David Rusoff, Foley & Lardner, to

Christine Sibille, Senior Attorney, Office of

Securities Processing, Division of Market

Regulation, Commission (December 16, 1994).

3Securities Exchange Act Release No. 35155

(December 27, 1994), 60 FR 517.

4Letter from P. Howard Edelstein, President,

Electronic Settlements Group, Thomson Trading

Services, Inc., to Jonathan G. Katz, Secretary,

Commission (January 25, 1995).

5Securities Exchange Act Release Nos. 33023

(October 6, 1993), 58 FR 52891 (adopting Rule

15c6–1) and 34952 (November 9, 1994), 59 FR

59137 (changing effective date from June 1, 1995,

to June 7, 1995).

6Friday, June 2, will be the last trading day with

five business day settlement. Monday, June 5, and

Tuesday, June 6, will be trading days with four

business day settlement. Wednesday, June 7, will be

the first trading day with three business day

settlement. As a result, trades from June 2 and June

5 will settle on Friday, June 9. Trades from June 6

and June 7 will settle on Monday, June 12.

7Letter from P. Howard Edelstein, President,

Electronic Settlements Group, Thomson Trading

Services, Inc., to Jonathan G. Katz, Secretary,

Commission (January 25, 1995).

8 15 U.S.C. 78f (1988).

9The adopting release stated, ‘‘the value of

securities positions can change suddenly causing a

market participant to default on unsettled positions.

Because the markets are interwoven through

common members, default at one clearing

Continued

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 Exchange. All submissions

should refer to File No. SR–CHX–94–22

and should be submitted by April 27,

1995.

Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,13 that the

proposed rule change (SR–CHX–94–22)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.14

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–8491 Filed 4–5–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35554; File No. SR–CHX–

94–26]

Self-Regulatory Organizations; The

Chicago Stock Exchange,

Incorporated; Order Approving

Proposed Rule Change Relating to

Implementation of a Three-Day

Settlement Standard

March 31, 1995.

On November 30, 1994, the Chicago

Stock Exchange, Incorporated (‘‘CHX’’)

filed a proposed rule change (File No.

SR–CHX–94–26) with the Securities and

Exchange Commission (‘‘Commission’’)

pursuant to Section 19(b) of the

Securities Exchange Act of 1934

(‘‘Act’’).1 On December 14, 1994, CHX

filed an amendment to the proposed

rule change.2 Notice of the proposal was

published in the Federal Register on

January 4, 1995, to solicit comments

from interested persons.3 The

Commission received one written

comment.4 As discussed below, this

order approves the proposed rule

change.

I. Description

In October 1993, the Commission

adopted Rule 15c6–1 under the Act

which will become effective June 7,

1995.5 The rule establishes three

business days after the trade date

(‘‘T+3’’), instead of five business days

(‘‘T+5’’), as the standard settlement

cycle for most securities transactions.

Several of the CHX’s rules are

interrelated with settlement timeframes.

The purpose of the proposed rule

change is to amend CHX’s rules

consistent with a T+3 settlement

standard for securities transactions.

Article XX, Rule 9 will define regular

way transactions as requiring delivery

on the third business day after the trade

date. Seller’s option trades will settle

not less than four business days nor

more than sixty days following the day

of the contract. Trades made for ‘‘next

day’’ may include delivery on the first

or second business day following the

day of the contract. The proposed rule

change also will eliminate references to

the fourth and fifth full business day

preceding the final day for subscription

contained in Rule 9.

Article XXVII, Rule 1 will provide

that stock transactions shall be exdividend or ex-rights two business days

preceding the record date. With respect

to record dates on other than a business

day, stock transactions will be exdividend or ex-rights three business

days preceding the record date.

Article XXVII, Rule 2 will require

stock transactions to be ex-warrant on

the second business day preceding the

date of expiration of the warrants. When

warrant expiration occurs on other than

a business day, the ex-warrant period

will begin on the third business day

preceding the expiration date.

Article XXX, Rule 15 will require all

claims involving erroneous comparisons

to be made within two business days of

the original trade date. Claims which

concern the omission of a report will

need to be made within two business

days of the date the order should have

been executed. Claims relative to a lack

of comparison of a reported transaction

will need to be made within two

business days of the original trade.

CHX has requested that the proposed

rule change become effective on the

same date as Rule 15c6–1. Rule 15c6–

1 is scheduled to become effective on

June 7, 1995. The transition from T+5

settlement to T+3 settlement will occur

over a four day period.6

II. Written Comment

The Commission received one

comment letter from Thomson Trading

Services, Inc. (‘‘Thomson’’) suggesting

that additional regulatory changes may

be necessary to implement T+3

settlement.7 Thomson believes that the

CHX should amend Article XV, Rule 5

which requires the use of the facilities

of a securities depository for

confirmation and acknowledgement of

all depository-eligible transactions.

III. Discussion

The Commission believes the

proposal is consistent with the

requirements of Section 6 of the Act.8

Specifically, Section 6(b)(5) states that

the rules of the exchange must be

designed to foster cooperation and

coordination with persons engaged in

regulating, clearing, settling, and

processing information. The CHX rules

and other self-regulatory organizations’

rules currently establish the standard

time frame for settlement of securities

transactions. On June 7, 1995, the new

settlement cycle of T+3 will be

established, as mandated by the

Commission’s Rule 15c6–1. As a result,

the CHX’s current rule establishing a

T+5 settlement cycle will be

inconsistent with the Commission rules.

This proposal will amend the CHX’s

rules to harmonize them with a T+3

settlement cycle.

In addition, the Commission believes

that the proposed rule change is

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

Act in that it protects investors and the

public interest by reducing the risk to

clearing corporations, their members,

and public investors which is inherent

in settling securities transactions. The

reduction of the time period for

settlement of most securities

transactions will correspondingly

decrease the number of unsettled trades

in the clearance and settlement system

at any given time. Thus fewer unsettled

trades will be subject to credit and

market risk, and there will be less time

between trade execution and settlement

for the value of those trades to

deteriorate.9