Federal Register / Vol. 60, No. 8 / Thursday, January 12, 1995 / Notices 3007

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.

Street, Chicago, Illinois 60611–2092 and

the OMB reviewer, Laura Oliven (202–

395–7316), Office of Management and

Budget, Room 10230, New Executive

Office Building, Washington, D.C.

20503.

Chuck Mierzwa,

Clearance Officer.

[FR Doc. 95–784 Filed 1–11–95; 8:45 am]

BILLING CODE 7905–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–35197; File No. SR-Amex–

94–57]

Self-Regulatory Organizations;

American Stock Exchange,

Incorporated; Notice of Filing of

Proposed Rule Change Relating to

Implementation of a Three-Day

Settlement Standard

January 6, 1995.

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

Securities Exchange Act of 1934

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

American Stock Exchange Inc.

(‘‘Amex’’) filed with the Securities and

Exchange Commission (‘‘Commission’’)

a proposed rule change on December 13,

1994, and filed an amendment thereto

on December 23, 1994, as described in

Items I, II, and III below, which items

have been prepared primarily by Amex.

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

Amex proposes to modify its rules to

implement a three business day

settlement standard.

Self-Regulatory Organization’s

Statement Regarding the Proposed Rule

Change

In its filing with the Commission,

Amex 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. The Amex 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

broker-dealer trades.2 The rule will

become effective June 7, 1995.3 In the

release adopting Rule 15c6–1, the

Commission concluded that a T+3

settlement cycle, as compared to the

current T+5 settlement cycle, will

reduce credit and liquidity risks and

will increase efficiency in broker-dealer

and clearing agency operations.

In order to accommodate the

implementation of the new settlement

standard pursuant to Commission’s Rule

15c6–1, Amex will amend the following

rules. Rule 17, which concerns

transactions in rights and warrants,

refers to five business days in describing

when transactions preceding the final

day of trading must be made only for

‘‘cash’’ settlement. ‘‘Five’’ will be

changed to ‘‘three.’’ Rule 124(c) defines

delivery conditions for ‘‘regular way’’ as

the fifth business day following the

contract. ‘‘Fifth’’ will be changed to

‘‘third.’’ Rule 124(d) requires seller’s

option delivery to be made within the

time specified in the option, which time

shall not be less than six business days

nor more than sixty days. ‘‘Six’’ will be

changed to ‘‘four.’’

Rule 179(a) requires during the five

business days preceding the final day

for trading in an issue of rights, every

order entered on a specialist’s book

shall be for ‘‘next day’’ delivery. ‘‘Fifth’’

will be changed to ‘‘third.’’ Rule 179(b)

dictates during the five final business

days for trading in an issue of warrants,

every order entered on a specialist’s

book shall be for ‘‘cash,’’ and during the

three preceding business days every

such order entered shall be for ‘‘next

day’’ delivery. ‘‘Fifth’’ will be changed

to ‘‘third.’’ Rule 179(c) requires during

the five business days preceding the

final day for trading in an expiring

equity security, every order entered on

the specialist’s book shall be for ‘‘next

day’’ delivery, and on the final day for

trading in such equity security, every

order entered on a specialist’s book

shall be for ‘‘cash.’’ ‘‘Fifth’’ will be

changed to ‘‘third.’’

Rule 205C(2) requires that where an

odd-lot dealer accepts ‘‘seller’s option’’

trades for delivery within not less than

six business days nor more than thirty

days following the day of the contract,

such order shall be filled at a price

below the effective round lot sale or bid

regular way by the amount of any

differential. ‘‘Six’’ will be changed to

‘‘four.’’

Rule 423 refers to fourth and third

business days in discussing agent

instructions with respect to receipt

versus payment (‘‘RVP’’) or delivery

versus payment (‘‘DVP’’) customer

transactions. ‘‘Fourth’’ and ‘‘third’’ will

be changed to ‘‘second’’ and ‘‘first.’’

Rule 830 states that transactions in

stocks shall be ex-dividend or ex-rights

on the fourth business day preceding

the record date. ‘‘Fourth’’ business day

will be changed to ‘‘second’’ business

day. With regard to a record date other

than a business day, the ‘‘fifth’’ will be

changed to the ‘‘third.’’ The proposal

also eliminates the distinction between

New York City transfers and transfers

outside New York City.

Rule 858 directs settlement in

contracts in bonds dealt in ‘‘and

interest.’’ There shall be added to the

contract price interest on the principle

amount at the rate specified in the bond,

which shall be computed up to but not

including the day on which delivery is

due, except that in the case of contracts

made ‘‘seller’s option.’’ Currently

interest is computed only up to but not

including the fifth business day

following the day of the contract. The

proposed rule change would compute

the interest up to the day when delivery

would have been due if the contract had

been made ‘‘regular way.’’

Rule 862 states that the notice for the

return of loans of securities must be

given before 3:45 P.M. on a business day

and such return shall be made on the

‘‘fifth’’ business day following the day

in which notice is given. ‘‘Fifth’’ will be

changed to ‘‘third.’’

Rule 866 requires for loans of

securities to be deliverable on the

‘‘fifth’’ business day following the day

of the loan unless otherwise agreed to

by the parties. ‘‘Fifth’’ will be changed

to ‘‘third.’’ Rule 882 refers to delivery of

securities and due-bills after the record

date or after the ‘‘equivalent New York

record date’’ and requires the seller to

pay or to deliver to the buyer the

distribution made with respect to such

security. With stock or cash dividends

or rights to subscribe, the seller shall

deliver to the buyer either the dividend

or rights or a due-bill for such dividend

or rights within five days after the

record date or the equivalent New York

record date. ‘‘Fifth’’ day will be changed

to ‘‘third.’’ The proposal also eliminates
3008 Federal Register / Vol. 60, No. 8 / Thursday, January 12, 1995 / Notices

4NSCC will use two double-settlement days for

the conversion. The first double-day settlement,

scheduled for Friday, June 9, will incorporate trades

from Friday, June 2 (the last T+5 settlement day)

and from Monday, June 5 (a T+4 settlement day).

The second double-day settlement, scheduled for

Monday, June 12, will include trades from Tuesday,

June 6 (T+4 settlement day) and Wednesday, June

7 (the first T+3 settlement day). With respect to the

two trade days on which ‘‘regular way’’ trades will

settle on T+4, Amex rules will be temporarily

deemed to be amended accordingly.

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

2 17 CFR 240.19b–4 (1991).

3 In Amendment No. 1 to the proposal, the

Exchange proposes to change the fine schedule as

proposed under CBOE Rule 17.50(g) in two ways.

First, as amended, a fine will be assessed whenever

the as-of-add (as defined herein) submissions of an

individual member or a clearing member equals or

exceeds 300% of that member’s maximum nominal

as-of-add rate for two, rather than three, consecutive

months. Second, fines will be imposed with

reference to a rolling 12-month period, rather than

within a calendar year. In Amendment No. 1, the

Exchange also requests accelerated approval of the

proposed rule change. See Letter from Dan

Schneider, Schiff Hardin & Waite, to Sharon

Lawson, Assistant Director, Office of Market

Supervision (‘‘OMS’’), Division of Market

Regulation (‘‘Division’’), Commission, dated

December 21, 1994 (‘‘Amendment No. 1’’).

4Among other things, Rule 6.51 requires that

each transaction be immediately reported to the

Exchange in a form and manner prescribed by the

Exchange. See Rule 6.51(a).

references to the equivalent New York

record date.

Amex has participated in meetings

sponsored by the Commission among

self regulated organizations, clearing

corporations, and other industry

participants and has kept its members

informed of the forthcoming transition

to T+3. As the effective date for

implementation draws near, Amex will

continue to educate its membership and

to ascertain that they are informed and

understand specific timing and cutover

issues. The Amex’s implementation of

these rule changes will be consistent

with the June 1995 conversion schedule

which Amex and the National Securities

Clearing Corporation (‘‘NSCC’’) have

developed for industry use.4 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, the Amex may be required

to file additional rule amendments.

The proposed rule change is

consistent with Section 6(b) of the Act

in general and furthers the objectives of

Section 6(b)(5) in particular 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. This is

accomplished by reducing the time

period for settlement of most securities

transactions which will correspondingly

decrease the number of unsettled trades

in the clearance and settlement system

at any given time.

The proposed change is also

consistent with Commission Rule 15c6–

1 which requires brokers or dealers to

settle most securities transactions no

later than the third business day after

the date of the contract unless otherwise

expressly agreed to by the parties at the

time of the transaction.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

Amex 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 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 the Amex 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 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 in

the Commission’s Public Reference

Section, 450 Fifth Street NW.,

Washington, DC 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of the Amex.

All submissions should refer to File

No. SR–Amex–94–57 and should be

submitted by February 2, 1995.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–815 Filed 1–11–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35190; File No. SR–CBOE–

94–50]

Self-Regulatory Organizations; Notice

of Filing and Order Granting Partial

Accelerated Approval of a Proposed

Rule Change and Amendment No. 1 to

the Proposed Rule Change by the

Chicago Board Options Exchange,

Inc., Relating to As-Of-Add

Submissions

January 3, 1995.

Pursuant to 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 December

1, 1994, the Chicago Board Options

Exchange, Inc. (‘‘CBOE’’ 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 Exchange. The

Exchange subsequently filed

Amendment No. 1 to the proposed rule

change on December 23, 1994.3 The

Commission is publishing this notice to

solicit comments on the proposed rule

change, as amended, from interested

persons. As discussed below, the

Commission has also granted

accelerated approval to a portion of the

proposal.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to: (1) Amend

CBOE Rule 2.26 so as to place a ceiling

on the monthly fees members pay for

submitting trade information under

Exchange Rule 6.51 4 after the trade date

(each an ‘‘as-of-add’’) on more than a

stated maximum percentage of their

monthly trades and to enable the

Exchange to suspend the rule in exigent

circumstances; and (2) amend CBOE

Rule 17.50(g) to include a fine schedule