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
19314 Federal Register / Vol. 60, No. 73 / Monday, April 17, 1995 / Notices

10Amendment No. 1 amended the NYSE’s

proposal to provide for the publications of

imbalances of 50,000 shares or more to be made in

any stock upon the request of a specialist and the

approval of a Floor Official.

11This proposal will not have a material effect on

the NYSE’s limit-at-the-close (‘‘LOC’’) order pilot. A

LOC order is a limited price order entered for

execution at the closing price if the closing price

is within the limit specified. The Commission has

approved LOC order entry on a pilot basis until July

15, 1995. See Securities Exchange Act Release No.

33706 (March 3, 1994), 59 FR 11093 (March 9,

1994) (File No. SR–NYSE–92–37). Under that pilot

program, LOC orders may be entered only to offset

a published imbalance of MOC orders (which, as

proposed herein, will take place at 3:40 p.m. on

expiration days and 3:50 p.m. on other trading

days). The deadline for LOC order entry is 3:55 p.m.

LOC orders are irrevocable on expiration days; on

non-expiration days, cancellation of LOC orders is

prohibited after 3:55 p.m. Currently, the NYSE

permits LOC order entry in five of the pilot stocks.

The NYSE has recently filed a proposed rule change

with the SEC to amend its LOC pilot program and

to extend the program for an additional year. See

File No. SR–NYSE–95–09.

12 15 U.S.C. 78f(b) (1988 and Supp. V 1993).

13The NYSE has submitted to the Commission

several monitoring reports describing its experience

with the auxiliary closing procedures. For further

discussion of the NYSE’s results, see 1994 Pilot

Approval Order, supra, note 6.

14See, e.g., Securities Exchange Act Release No.

33639 (February 17, 1994), 59 FR 9295 (February

25, 1994) (File No. SR–BSE–93–04) (approving BSE

proposal to adopt MOC procedures substantially

similar to the NYSE’s current pilot program).

15See 1994 Pilot Approval Order, supra, note 6.

expiration days, all MOC orders,

including orders not related to a trading

strategy involving an expiring index

derivative product, must be entered by

3:40 p.m. The proposed rule change will

not affect either (1) the deadline for

cancellation or reduction of MOC orders

or (2) the imbalance dissemination

procedures. After 3:40 p.m., however,

MOC order entry will be permitted only

to offset published imbalances in the

pilot stocks.

The Exchange also proposes to adopt

requirements for handling MOC orders

on non-expiration days that are

substantially similar to those in place

for expiration days. As proposed,

imbalance disseminations on nonexpiration days will no longer be solely

for information purposes. Specifically,

the proposed rule change will establish

a 3:50 p.m. deadline for the entry of all

MOC orders and for the cancellation or

reduction of such orders. In the pilot

stocks, stocks being added to or dropped

from an index and, upon the request of

a specialists, any other stock with the

approval of a Floor Official, the

specialist will, as soon as practicable

after 3:50 p.m., disseminate MOC order

imbalances of 50,000 shares or more.10

Thereafter, MOC orders may be entered

only to offset published imbalances in

the above stocks.11

III. 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).12 In

particular, 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.

In recent years, the self-regulatory

organizations have instituted certain

safeguards to minimize excess market

volatility that may arise from the

liquidation of stock positions related to

trading strategies involving index

derivative products. For instance, since

1986, the NYSE has utilized auxiliary

closing procedures on expiration days.

These procedures allow NYSE

specialists to obtain an indication of the

buying and selling interest in MOC

orders at expiration and, if there is a

substantial imbalance on one side of the

market, to provide the investing public

with timely and reliable notice thereof

and with an opportunity to make

appropriate investment decisions in

response. Based on the NYSE’s

experience,13 the Commission believes

that the MOC order handling

requirements work relatively well and

may result in more orderly markets at

the close on expiration days.

The Commission acknowledges the

NYSE’s concern that a last-minute

influx or disappearance of MOC orders,

whether related to a trading strategy

involving index derivative products or

otherwise, potentially could add to

volatility at the close. Due to the influx

of orders at the close on expiration days,

even MOC orders that are not

derivatives-related could cause

temporary liquidity strains. Thus, for

the reasons set forth below, the

Commission has concluded that the

proposed rule change should help NYSE

specialists to effectuate an orderly

closing in stocks that are not covered by

the existing pilot program.

In this regard, the Commission notes

that the proposed rule change will

standardize the Exchange’s closing

procedures on expiration days and

apply them to all NYSE-listed stocks.

Specifically, on expiration days, the

NYSE proposal will impose a 3:40 p.m.

deadline for entry of all MOC orders. In

conjunction with the prohibition on

cancellation or reduction of any MOC

order after 3:40 p.m., this requirement

should allow the specialist to make a

timely and reliable assessment, for every

NYSE-listed stock, or MOC order flow

and its potential impact on the closing

price. While the Commission recognizes

that 3:40 p.m. is relatively near the

close, the Commission previously has

determined that such a deadline strikes

a reasonable balance between the need

to effectuate an orderly closing and the

need to avoid unduly infringing upon

legitimate trading strategies.14

The amended procedures for

expiration days will continue to require

that, as soon as practicable after 3:40

p.m., NYSE specialists disseminate

substantial imbalances in the pilot

stocks. Thereafter, no MOC orders may

be entered except to offset a published

imbalance in a pilot stock. In this

regard, the NYSE pilot program

combines early submission of MOC

orders with prompt dissemination of

imbalances that reflect actual investor

interest. As noted in prior Commission

orders approving these procedures,15

the NYSE should have sufficient

opportunity to attract any contra-side

interest necessary to alleviate

substantial MOC order imbalances in

the pilot stocks and to dampen their

effect on the closing price.

Finally, under the proposed rule

change, the NYSE will adopt MOC order

handling requirements for nonexpiration days that are substantially

similar to those in place for expiration

days. This will allow members and

member organizations to follow

comparable procedures at the close on

all trading days.

Although there is less likelihood of an

influx of MOC orders at the close on

non-expiration days, certain trading and

asset allocation strategies use NYSE

closing prices and, accordingly, could

employ MOC orders. The 3:50 p.m.

deadline for MOC order entry and

cancellation on non-expiration days

should help the specialist make a timely

and reliable assessment of MOC order

flow and its potential impact on the

closing price and also should ensure

that any imbalance publications reflect

actual investor interest. In the

Commission’s opinion, a 3:50 p.m.

deadline strikes a more appropriate

balance for non-expiration days (as

opposed to the 3:40 p.m. deadline for

expiration days) given the reduced

likelihood of substantial MOC order

imbalances due to derivatives-related

trading strategies.

In the event of unusual market

conditions, the Commission believes

that the amended procedures for nonexpiration days will offer benefits in

terms of assessing volatility at the close

of trading in the same manner as the
Federal Register / Vol. 60, No. 73 / Monday, April 17, 1995 / Notices 19315

16The Commission encourages the NYSE to

propose a corresponding provision for expiration

days that would provide for the dissemination of

substantial MOC order imbalances on expiration

days in stock other than pilot stocks.

17 15 U.S.C. 78s(b)(2) (1988).

18 17 CFR 200.30–3(a)(12) (1994).

1The Government recently offered shares in

applicant representing 11% of applicant’s

outstanding share capital to applicant’s employees,

pension funds, cooperatives, unemployment funds

and other institutions. As a result of such offering,

0.28% of the Bank’s outstanding share capital were

purchased by such employees and institutions. The

shares that were not subscribed for in such offering

will eventually be offered by the Government to the

public in Colombia. The Government does not

intend to offer such shares in the United States.

Even after such sale, the Government would

continue to control applicant’s operations within

the meaning of section 2(a)(9) of the Act.

NYSE’s procedures for expiration days.

Additionally, the Commission notes

that, by permitting a Floor Official to

authorize the publication of substantial

MOC order imbalances on nonexpiration days in any stock, the

proposal should increase the

information available to market

participants and provide NYSE

specialists with a mechanism, if

necessary, to attract contra-side interest

in any NYSE-listed stock.16

The Commission is approving the

amendments to the NYSE’s auxiliary

closing procedures for expiration days

as part of the existing pilot program that

lasts until October 31, 1995. The

Commission is approving the

amendments to the NYSE’s closing

procedures for non-expiration days on a

permanent basis.

The Commission finds good cause for

approving Amendment No. 1 prior to

the thirtieth day after the date of

publication of notice of filing thereof.

Amendment No. 1 merely clarifies the

scope of the original filing. Finally, the

commission did not receive any

comments on the original proposal,

which was published in the Federal

Register for the full comment period.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

1 to the proposed rule change. 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

rules change that are filed with the

Commission, and all written

communications relating to Amendment

No. 1 between the Commission and any

persons, 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 will also be available at the

principal office of the NYSE. All

submissions should refer to File No.

SR–NYSE–94–44 and should be

submitted by May 8, 1995.

V. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,17 that the

proposed rule change (SR–NYSE–94–

44) is approved, including Amendment

No. 1 on an accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.18

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–9398 Filed 4–14–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. IC–20992; International Series

Release No. 801; 812–9414]

Banco de Comercio Exterior de

Colombia S.A.; Notice of Application

April 11, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: Banco de Comercio Exterior

de Colombia S.A.

RELEVANT ACT SECTION: Order requested

under section 6(c) for an exemption

from all provisions of the Act.

SUMMARY OF THE APPLICATION: Applicant

seeks an exemption under section 6(c)

from all provisions of the Act. Applicant

is a commercial bank owned and

controlled by the Republic of Colombia.

Applicant provides long- and short-term

financing and specialized financial

products to financial intermediaries.

Applicant discounts loans that such

financial intermediaries have made to

finance Colombian exports and foreign

trade-related activities. Applicant is in

the process of establishing a global

program for the issuance of debt

securities.

FILING DATES: The application was filed

on January 5, 1995 and amended on

March 15, 1995 and April 11, 1995.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicant with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

May 4, 1995, and should be

accompanied by proof of service on

applicant, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request and the issues contested.

Persons who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street NW., Washington, D.C. 20549;

Applicant, c/o Thomas A. Curtis,

Cleary, Gottlieb, Steen & Hamilton, One

Liberty Plaza, New York, NY 10006.

FOR FURTHER INFORMATION CONTACT:

Marc Duffy, Senior Attorney, (202) 942–

0565, or Barry D. Miller, Senior Special

Counsel, (202) 942–0564 (Division of

Investment Management, Office of

Investment Company Regulation).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Applicant is a commercial bank

owned and controlled by the Republic

of Colombia (‘‘Colombia,’’ or the

‘‘Republic’’). Applicant provides longand short-term financing and

specialized financial products to

support Colombian exports and foreign

trade-related activities. Applicant was

incorporated as the successor to the

Export Promotion Fund, a fund formed

in 1967 by the government of Colombia

(the ‘‘Government’’) to promote

Colombian exports.

2. The Republic owns 99.7% of

applicant’s share capital and controls

the applicant within the meaning of

section 2(a)(9) of the Act.1 Applicant’s

Board of Directors consists of

Government representatives, a

representative of the private sector

appointed by the President of the

Republic, and a representative of the

private sector appointed by the

exporters’ associations registered with

the Ministry of Foreign Trade.

3. Applicant is authorized to operate

under the same legal regime as a private

commercial bank, without any

limitation on the type of commercial

banking activities in which it may

engage. Applicant’s activities, like those

of other Colombian banks, are subject to

extensive regulation by the principal