18160 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Notices

6See Federal Reserve System Release, Docket No.

R–0840 (October 18, 1994), 59 FR 53565.

7 15 U.S.C. 78f(b)(5) (1988).

8See supra note 7.

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

corporation or by a major market participant or enduser could trigger additional failures, resulting in

risk to the national clearance and settlement

system.’’ Id.

10 17 CFR 200.30–3(a)(12) (1994).

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

2 17 CFR 240.19b–4 (1994).

3See Exchange Act Release No. 35287 (January

27, 1995), 60 FR 6743 (February 3, 1995).

and 30.51(a) currently require that

initial margin deposits be made within

seven full business days after the date

on which a transaction giving rise to a

margin requirement is effected. Rule

21.25(a) also requires that all long

options must be paid in full within

seven business days after the purchase

date. Rule 21.25(e) provides that no

margin is required in respect of

government security options carried in

a short position if the customer provides

a custodial or Treasury security escrow

receipt or letter of guarantee within

seven business days. Regulation T was

recently amended to revise the time

limit within which a customer margin

call must be satisfied to ‘‘the number of

business days in the standard settlement

cycle in the United States * * * plus

two business days.’’ 6 Accordingly, all

the time frames discussed above will be

shortened to five business days.

II. Discussion

The Commission believes the

proposed rule change is consistent with

Section 6 of the Act and, therefore, is

approving the proposal. Specifically, the

Commission believes the proposal is

consistent with Section 6(b)(5) 7 of the

Act which requires that the rules of an

exchange be designed to foster

cooperation and coordination with

persons engaged in regulating, clearing,

settling, processing information with

respect to, and facilitating transactions

in securities, 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 interest.

Currently, the rules of CBOE and

other self-regulatory organizations

control the 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,

CBOE’s current rules establishing a T+5

settlement cycle will be inconsistent

with Commission rules. This proposal

will amend CBOE’s rules to harmonize

them with a T+3 settlement cycle.

The Commission believes that the

benefits of a three day settlement cycle,

as outlined in the release adopting Rule

15c6–1, apply equally to CBOE’s

proposed rule change.8 With a T+3

settlement cycle, 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 By

reducing risk to the system, the

proposed rule change furthers

protection of investors and the public

interest. CBOE’s rules will assist the

transition to a T+3 cycle by providing

guidelines for related matters such as

ex-dates. Thus, the proposed rule

change is consistent with fostering

cooperation and coordination with

persons engaged in regulating, clearing,

and settling transactions in securities

and of perfecting the mechanism of a

free and open market.

III. Conclusion

For the reasons stated above, the

Commission finds that the proposed

rule change is consistent with Section 6

of the Act.

It is therefore ordered, pursuant to

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

proposed rule change (File No. SR–

CBOE–94–40) be and hereby is

approved, effective June 7, 1995.

For the Commission by the Division of

Market Regulation pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–8665 Filed 4–7–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35551; File No. SR–PSE–

95–08]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Pacific Stock

Exchange, Inc., Relating to Its Rules on

Short Interest Reporting

March 30, 1995.

Section 19(b)(1) of the Securities

Exchange Act of 1934 (‘‘Act’’), 1 and

Rule 19b–4 thereunder, 2 notice is

hereby given that on February 22, 1995,

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

or ‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I and II

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 Exchange is proposing to make a

technical amendment to its rules on

short interest reporting to allow

members and member organizations for

which the Exchange is the designated

examining authority (‘‘DEA’’) to report

their ‘‘short’’ positions to self-regulatory

organizations other than the Exchange.

The text of the proposed rule change is

as follows, wherein additions are

italicized:

Rule 2.6(f)—No change.

Commentary

.01 No Change.

.02 Members and member

organizations for which the Exchange is

the DEA need not report ‘‘short’’

positions to the Exchange as provided in

Commentary .01 if such member or

member organization has made

arrangements, satisfactory to the

Exchange, to report such positions to

another self-regulatory organization.

The Exchange requests the

Commission to find good cause,

pursuant to Section 19(b)(2) of the Act,

for approving the proposed rule change

prior to the thirtieth day after

publication in the Federal Register.

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 places specified in Item III 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

On January 27, 1995, the Commission

approved a rule change proposal of the

Exchange that requires members and

member organizations for which the

Exchange is the DEA to report certain

‘‘short’’ positions to the Exchange. 3 The

Exchange is proposing an amendment to
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Notices 18161

4 15 U.S.C. 78f(b)(5) (1988).

5Conversation between David Semak & Michael

Pierson, PSE, and Amy Bilbija, Commission, on

March 24, 1995. The Exchange also indicated that,

currently, there is only one member firm that will

fall under the purview of the proposed amendment.

The Exchange anticipates that only in rare

occasions other members will need to make the

arrangements provided for in the proposed rule

change.

6See Securities Exchange Act Release No. 35146

(December 23, 1994), 60 FR 518 (January 4, 1995).

7 15 U.S.C. 78s(b)(2) (1988).

8 17 CFR 200.30–3(a)(12) (1994).

115 U.S.C. § 78s(b) (1988).

2Securities Exchange Act Release No. 35197

(January 6, 1995), 60 FR 3007.

3Letter from P. Howard Edelstein, President

Electronic Settlements Group, Thomson Trading

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

Commission (January 30, 1995).

4Securities Exchange Act Release Nos. 33023

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

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

59137 (changing the effective date from June 1,

1995, to June 7, 1995).

that rule change to allow such members

and member organizations to report

their ‘‘short’’ positions to self-regulatory

organizations other than the Exchange.

Specifically, the Exchange is

proposing to add a new Commentary .02

to Rule 2.6(f) to provide that members

and member organizations for which the

Exchange is the DEA need not report

short positions to the Exchange as

provided in Rule 2.6(f), Commentary

.01, if such member or member

organization has made arrangements,

satisfactory to the Exchange, to report

such positions to another self-regulatory

organization.

2. Statutory Basis

The Exchange believes the proposal is

consistent with Section 6(b) of the Act,

in general, and Section 6(b)(5), in

particular, in that it is designed to

protect investors and the public interest,

to prevent fraudulent and manipulative

acts and practices, and to promote just

and equitable principles of trade.

B. Self-Regulatory Organization’s

Statement of 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.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments on the proposed

rule change were neither solicited nor

received.

III. 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, N.W.,

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, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the PSE. All submissions

should refer to File No. SR–PSE–95–08

and should be submitted by May 1,

1995.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission finds that the PSE’s

proposal to adopt an interpretation to its

short interest position reporting rules

permitting a member to report such

positions to another self-regulatory

organization, pursuant to an

arrangement satisfactory to the

Exchange, is consistent with the

requirements of the Act and the rules

and regulations thereunder applicable to

a national securities exchange.

Specifically, the Commission finds that

the proposed rule change is consistent

with Section 6(b)(5) of the Act.4 Section

6(b)(5) requires, among other things,

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. Further, the Commission notes

that the Exchange has represented that,

as the Designated Examining Authority

(‘‘DEA’’), the Exchange will review

compliance with its short interest rules

during each oversight examination.

Such examinations are conducted on a

regular basis pursuant to the Exchange’s

status as DEA. Finally, the Exchange’s

financial compliance office will modify

its examination module to ensure that

the examiner checks for compliance

with the short interest reporting rules.5

The Commission believes that the PSE

proposal to adopt Commentary .02 as

outlined above furthers the objectives of

Section 6(b)(5) of the Act in that it

should facilitate the efficient reporting

of short interest positions without

imposing an undue burden upon brokerdealers.

The Commission finds good cause for

approving the proposed rule change

prior the thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register. The Commission

believes that accelerated approval of the

proposal is appropriate in order to allow

the PSE to ensure compliance with the

short position reporting rules

implemented as of March 1, 1995.

Further, the new short position

reporting procedure was noticed

previously in the Federal Register for

the full statutory period and the

Commission did not receive any

comments on it.6

It is therefore ordered, pursuant to

Section 19(b)(2) 7 that the proposed rule

change is hereby approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

[FR Doc. 95–8666 Filed 4–7–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35553; File No. SR–Amex–

94–57]

Self-Regulatory Organizations;

American Stock Exchange, Inc.; Order

Approving Proposed Rule Change

Relating to Implementation of a ThreeDay Settlement Standard

March 31, 1995.

On December 23, 1994, the American

Stock Exchange, Inc. (‘‘Amex’’) filed a

proposed rule change (File No. SR–

Amex–94–57) with the Securities and

Exchange Commission (‘‘Commission’’)

pursuant to Section 19(b) of the

Securities Exchange Act of 1934

(‘‘Act’’).1 Notice of the proposal was

published in the Federal Register on

January 12, 1995, to solicit comments

from interested persons.2 The

Commission received one written

comment.3 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,

1995.4 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 Amex’s rules are

interrelated with the T+5 settlement

time frame. The purpose of the

proposed rule change is to amend

Amex’s rules consistent with a T+3