19312 Federal Register / Vol. 60, No. 73 / Monday, April 17, 1995 / Notices

6The transition from five day settlement to three

day settlement will occur over a four day period.

Friday, 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.

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

8See Securities Exchange Act Release No. 33023

(October 6, 1993), 58 FR 52891.

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

10 15 U.S.C. 78s(b)(2) (1988).

11 17 CFR 200.30(a)(12) (1994).

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

2Securities Exchange Act Release No. 33023

(October 6, 1993), 58 FR 52891.

3Securities Exchange Act Release No. 34952

(November 9, 1994), 59 FR 59137.

change will amend Chapter XXVIII,

subparagraph (4) to shorten by two days

the time frames in which customers

must provide their agent instructions for

delivery versus payment and receipt

versus payment instructions.

BSE has requested that the proposed

rule change become effective on the

same date as Rule 15c6–1. Rule 15c6–

1 will become effective on June 7,

1995.6

II. Discussion

The Commission believes the

proposal is consistent with the

requirements of Section 6 of the Act.7

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 BSE rules

and other self-regulatory organizations’

rules currently establish the standard

time frame for settlement of securities

transactions. The proposal will conform

those rules to the new settlement time

frames mandated by Rule 15c6–1.

The Commission also 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 risks to clearing

corporations, their members, and public

investors which are 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 of deteriorate.8

III. Conclusion

For the reasons stated above, the

Commission finds that BSE’s proposal is

consistent with Section 6 of the Act.9

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,10 that the

proposed rule change (File No. SR–

BSE–95–05) be and hereby is approved

and will become effective on June 7,

1995.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–9396 Filed 4–14–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35580; File No. SR–CSE–

95–04]

Self-Regulatory Organizations;

Cincinnati Stock Exchange, Inc.;

Notice of Filing of Proposed Rule

Change Relating to Implementation of

a Three-Day Settlement Standard

April 7, 1995.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

April 4, 1995, the Cincinnati Stock

Exchange Incorporated (‘‘CSE’’) filed

with the Securities and Exchange

Commission (‘‘Commission’’) a

proposed rule change as described in

Items I, II, and III below, which items

have been prepared primarily by CSE.

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

CSE proposes to modify its rules to

implement a three business day

settlement standard for securities

transactions.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change.

In its filing wit the Commission, CSE

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 IV below. CSE 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

On October 6, 1993, the Commission

adopted Rule 15c6–1 under the Act

which 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.2 The rule will

become effective June 7, 1995.3

Accordingly, in order to implement

the new settlement standard established

by Rule 15c6–1, the CSE proposes to

amend the following rules. Currently,

Rule 3.8(b)(1)(iii) provides that members

receive reasonable assurance from the

customer that a security will be

delivered within five business days of

the execution of the order. The CSE is

proposing to replace the term ‘‘five’’

with the term ‘‘three’’. CSE also

proposes to amend Rule 3.8(b)(2) which

provides that members note on order

tickets that the customer has the ability

to deliver stock within five business

days. The CSE is proposing to replace

the term ‘‘five’’ with the term ‘‘three’’.

Rule 11.4 provides that transactions

in stocks (other than those made for

‘‘cash’’) shall be ‘‘ex-dividend’’ or ‘‘exrights’’ on the fourth business day

preceding the record date fixed by the

company or the date of the closing of

transfer books, except when the Board

of Trustees of CSE otherwise. The CSE

is proposing to replace the term

‘‘fourth’’ in this provision with the term

‘‘second’’. The rule also provides that

should such record date or such closing

of transfer books occur upon a day other

than a business day this rule shall apply

for the fifth preceding business day. The

CSE is proposing to replace the term

‘‘fifth’’ with the term ‘‘third’’.

The CSE’s implementation of this

proposed rule change will be consistent

with the ‘‘T+3’’ conversion schedule

which the National Securities Clearing

Corporation has proposed for industry

use. The schedule is as follows:

Trade date Settlement

cycle

Settlement

date

June 2 Friday 5 day ............ June 9 Friday.

June 5 Monday.4 day ............ June 9 Friday.

June 6 Tuesday.4 day ............ June 12 Monday.

June 7

Wednesday.

3 day ............ June 12 Monday.

If the Commission determines to alter

the exemptions currently provided in

Rule 15c6–1, CSE may need to

undertake additional rule amendments.

It is intended that the proposed rule

change will become effective on the

same date as Commission Rule 15c6–1.
Federal Register / Vol. 60, No. 73 / Monday, April 17, 1995 / Notices 19313

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

2 17 CFR 240.19b–4 (1994).

3A MOC order is a market order to be executed

in its entirety at the closing price on the Exchange.

See NYSE Rule 13.

4Letter from Daniel Parker Odell, Assistant

Secretary, NYSE, to Glen Barrentine, Senior

Counsel, Division of Market Regulation, SEC, dated

March 31, 1995. Amendment No. 1 is further

described at note 10, infra.

5The term ‘‘expiration days’’ refers to both (1) the

trading day, usually the third Friday of the month,

when some stock index options, stock index futures

and options on stock index futures expire or settle

concurrently (‘‘Expiration Fridays’’) and (2) the

trading day on which end of calendar quarter index

options expire (‘‘QIX Expiration Days’’).

6See Securities and Exchange Act Release No.

34916 (October 31, 1994), 59 FR 55507 (November

7, 1994) (File No. SR–NYSE–94–32) (‘‘1994 Pilot

Approval Order’’).

7The Expiration Friday pilot stocks consist of the

50 most highly capitalized Standard & Poors

(‘‘S&P’’) 500 stocks and any component stocks of

the Major Market Index (‘‘MMI’’) not included

therein. The QIX Expiration Day pilot stocks consist

of the 50 most highly capitalized S&P 500 stocks,

any component stocks of the MMI not included

therein and the 10 highest weighted S&P Midcap

400 stocks.

8See Securities Exchange Act Release No. 31291

(October 6, 1992), 57 FR 47149 (October 14, 1992)

(File No. SR–NYSE–92–12).

9An Information Memo describing the

amendments to the NYSE’s auxiliary closing

procedures will be issued before each expiration

day. An Information Memo describing the

amendments to the closing procedures for nonexpiration days also will be issued upon approval

of this proposal.

The proposed rule change is

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

Act in that it is designed to promote just

and equitable principles of trade, to

foster cooperation and coordination

with persons engaged in regulating,

clearing, processing information with

respect to, and facilitating transactions

in securities.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

CSE 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.

No written comments were either

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within thirty-five days of the date of

publication of this notice in the Federal

Register or within such longer period (i)

as the Commission may designate up to

ninety days of such date if it finds such

longer period to be appropriate and

publishes its reasons for so finding or

(ii) as to which CSE consents, the

Commission will:

(A) By order approve such 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, 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 in

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of CSE. All submissions should

refer to File No. SR–CSE–95–04 and

should be submitted by May 8, 1995.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–9397 Filed 4–14–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35589; File No. SR–NYSE–

94–44]

Self-Regulatory Organizations; New

York Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change and Notice of Filing and Order

Granting Accelerated Approval to

Amendment No. 1 to Proposed Rule

Change Relating to Amendments to

Market-at-the-Close Order Handling

Requirements for Expiration and NonExpiration Days

April 10, 1995.

I. Introduction

On December 5, 1994, the New York

Stock Exchange, Inc. (‘‘NYSE’’ 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 its market-at-the close (‘‘MOC’’)

order 3 handling requirements for

expiration days and non-expiration

days.

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 35210

(January 10, 1995), 60 FR 3690 (January

18, 1995). On April 3, 1995, the

Exchange submitted to the Commission

Amendment No. 1 to the proposed rule

change.4 No comments were received on

the proposal. This order approves the

proposed rule change, including

Amendment No. 1 on an accelerated

basis.

II. Overview of Proposal

A. Background

The NYSE currently utilizes two sets

of procedures for handling MOC orders,

one for expirations days 5 and one for all

other trading days. The Exchange’s

auxiliary closing procedures for

expiration days have been approved on

a pilot basis until October 31, 1995.6

The pilot procedures establish a 3:40

p.m. deadline for (1) the entry of MOC

orders related to a trading strategy

involving an expiring index derivative

product (i.e., stock index options, stock

index futures and options on stock

index futures) and (2) the cancellation

or reduction of any MOC order.

Moreover, in the pilot stocks,7 the

specialist must, as soon as practicable

after 3:40 p.m., disseminate any MOC

order imbalance of 50,000 shares or

more. Thereafter, MOC orders in the

pilot stocks may be entered only to

offset published imbalances; if there is

no imbalance publication in a given

pilot stock, no MOC orders may be

entered in that stock.

The Exchange’s closing procedures for

non-expiration days have been

approved on a permanent basis.8 On

those trading days, the specialist must,

as soon as practicable after 3:45 p.m.,

disseminate any MOC order imbalance

of 50,000 shares or more in (1) the pilot

stocks and (2) any stock being added to

or dropped from certain stock indexes

(or, with Floor Official approval, from

other stock indexes). A published

imbalance (or the lack thereof) does not

preclude the entry or cancellation of any

MOC order on either side of the market.

B. Proposed Amendments

The Exchange proposes to amend its

MOC order handling requirements for

both expiration days and non-expiration

days.9 Under the NYSE proposal, on