29776 Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices

9 17 CFR 200.30–3(a)(12).

1 15 U.S.C. § 78s(b)(1).

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 37138

(April 23, 1996), 61 FR 18765 (April 29, 1996).

4Proposed Article II, Section 2 provides that the

Board shall elect ‘‘one or more’’ Vice-Chairmen of

the Board. The Amex believes that when read

together with Article II, Section 3(b), it is clear that

there may be only two Vice-Chairmen. Indeed, this

approval order only permits the appointment of a

maximum of two Vice-Chairmen. The Exchange,

however, has represented that it will revise Article

II, Section 2 to clarify that a maximum of two ViceChairmen may be appointed. See Letter from

Claudia Crowley, Special Counsel, Legal &

Regulatory Policy, Amex, to Glen Barrentine,

Division of Market Regulation, Commission, dated

April 26, 1996.

5The term ‘‘non-elected’’ in this context means

not elected by the membership. The Chief

Executive, or Chairman of the Board, is elected by

the Board of Governors. See Amex Constitution,

Article II, Section 2.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No written comments were solicited

or received with respect to the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the publication of

this notice in the Federal Register or

within such longer period (i) as the

Commission may designate up to 90

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 the 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 at

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 the Amex. All submissions

should refer to File No. SR–Amex–96–

19 and should be submitted by July 3,

1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–14811 Filed 6–11–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37281; File No. SR–Amex–

96–14]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change by

the American Stock Exchange, Inc.

Relating to the Exchange Board of

Governors

June 6, 1996.

I. Introduction

On April 18, 1996, the American

Stock Exchange, Inc. (‘‘Amex’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission

(‘‘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 Articles II, III and XII of the

Exchange Constitution relating to the

Board of Governors (‘‘Board’’). The

proposed amendments would permit

the appointment of a second ViceChairman, allow for the inclusion of the

second highest ranking Exchange

executive officer on the Board, and

permit certain Governors to be eligible

for nomination to a third term. Notice of

the proposed rule change appeared in

the Federal Register on April 29, 1996.3

No comment letters were received on

the proposed rule change. This order

approves the Amex’s proposal.

II. Description of Proposal

A. Board Position Amendments

Article II, Section 2 of the Exchange

Constitution currently calls for the

appointment of one Vice-Chairman from

among the Exchange members serving

on the Board, and it has been customary

over the years to alternate between the

trading floor and ‘‘upstairs’’

communities as the source of that ViceChairman. Given the importance of both

these communities to the Exchange, the

Amex believes that it is desirable to be

able to have one Vice-Chairman from

each constituency. Accordingly, the

proposed amendments will permit (but

not require the appointment of two

member Vice-Chairmen, and will

specify that if there are two ViceChairmen, one must come from the

trading floor and one from upstairs.4

The Exchange would also like to

create a new position of Executive ViceChairman, who will be the second

highest ranking officer of the Exchange

and who will serve as a member of the

Board of Governors. The Executive ViceChairman would be appointed by the

Chairman of the Board, subject to

approval by the affirmative vote of a

majority of the entire Board. If the

Executive Vice-Chairman position is not

filled and the Exchange has a President,

then the President will serve on the

Board. If at any time neither of those

offices are filled, then the Chief

Executive would be the only nonelected 5 member of the Board.

B. Third Term Amendment

It has become apparent to the

Exchange that at times the special

limitations in the Constitution relating

to which kind of Governors can serve

third terms at any given time could be

a limitation on having the best possible

slate of public Governor candidates.

Accordingly, it is proposed that the

Exchange increase from two to three the

maximum number of third term

Governors who can be representatives of

the public. There is no change to the

overall limitation that no more than four

third-term Governors may be serving at

one time.

C. Committee Amendments

The Exchange is also proposing to

amend Article XII, Section 2 of the

Exchange Constitution, Composition of

the Emergency Committee. This Section

currently provides that the Emergency

Committee is to be composed of the

Chairman of the Board of Governors, the

Vice-Chairman of the Board, and the

three senior members of the Board who

are regular, options principal, associate

or allied members of the Exchange. The

proposed amendment would change the

composition of the Committee such that

any Executive Vice-Chairman or

President would be on the Committee.

Moreover, if there are two ViceChairmen, both would serve on this

Committee.

Finally, the Exchange is proposing to

amend Article II, Section 4(a) of the

Constitution, Executive Committee, to

ensure that if there are two ViceChairmen, both are included on the

Executive Committee.
Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices 29777

6 15 U.S.C. § 78f(b).

7 15 U.S.C. § 78f(b)(3). Section 6(b)(3) of the Act

also provides that one or more directors be

representative of issuers and investors and not

associated with a member of the exchange or a

broker-dealer. Article II, Section 1(a)(2) of the Amex

Constitution provides that at least 12 Board

members must be representatives of the public. This

rule proposal does not change this requirement in

the Exchange Constitution.

8 15 U.S.C. § 78f(b)(5).

9 15 U.S.C. § 78s(b)(2).

10 17 CFR 200.30–3(a)(12).

1On June 5, 1996, the NASD filed Amendment

No. 1 to the proposed rule change. Amendment No.

1 amends Article VI, Section 5 to clarify that, in a

contested election, the term of office of a candidate

certified by the National Nominating Committee for

inclusion on the ballet for the election of Governors

pursuant to Article VI, Section 7(c) would be

identical to the term of office of a candidate

nominated by the National Nominating Committee

pursuant to Article VI, Section 7(c). Amendment No

1 also amends Article VI, Section 7(a) to clarify that

any person elected to the Board of Governors must

be nominated or certified by the National

Nominating Committee. See Letter from Suzanne E.

Rothwell, Associate General Counsel, NASD to

Katherine A. England, Assistant Director, Division

of Market Regulation, Commission (dated June 4,

1996).

III. Discussion

The Commission finds that the

proposed rule changes are consistent

with the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange and, specifically, with the

requirements of Section 6(b).6 In

particular, the Commission believes that

the proposal is consistent with Sections

6(b)(3) and 6(b)(5) of the Act,

respectively, in that is assures fair

representation of exchange members in

the selection of its directors and

administration of its affairs,7 and is

consistent with the protection of

investors and the public and with the

maintenance of fair and orderly

markets.8

More specifically, the Commission

finds that the Amex’s proposal to permit

the appointment of two member ViceChairmen, one from the trading floor

and one from the upstairs community,

serves to codify the Exchange’s custom

of equal representation between upstairs

members and floor members and is,

therefore, consistent with the fair

representation requirement of Section

6(b)(3).

Regarding the creation of the

Executive Vice-Chairman position, the

Commission believes that this should

permit the Exchange to improve the

administration of its affairs, and is thus

consistent with Section 6(b)(3).

With respect to increasing from two to

three the maximum number of third

term Governors who can be

representatives of the public, the

Commission believes that the proposal

appropriately balances the Exchange’s

competing interests of needing to retain

certain governors with special levels of

expertise on its Board, while at the same

time continuing to promote diversity of

Board representation among the

different categories of member firms

and, more importantly, the public. The

Commission notes that the Exchange

will continue to have a prohibition

against more than four governors

serving a third term and that this should

ensure continued diversity of

viewpoints on the Exchange’s Board,

while giving the Exchange the flexibility

to extend the number of terms of its

public Board members for sound

business reasons.

Finally, the Commission believes that

the changes to the Emergency

Committee and the Executive

Committee are appropriate in light of

the creation of the Executive ViceChairman and additional Vice-Chairman

positions. In this regard, the

Commission believes that these changes

do not substantially alter the

composition of these Committees.

Accordingly, the Commission believes

that the proposal is consistent with the

requirements of Sections 6(b)(3) and

6(b)(5) of the Act.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,9 that the

proposed rule change (SR–Amex–96–

14) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–14906 Filed 6–11–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37282; File No. SR–NASD–

96–20]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

National Association of Securities

Dealers, Inc. Relating to Changes in

the Structure of the NASD Board of

Governors

June 6, 1996.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on May 28, 1996,1 the

National Association of Securities

Dealers, Inc. (‘‘NASD’’ or ‘‘Association’’)

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the NASD. 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 NASD is proposing to amend the

NASD’s By-Laws. The text of the

proposed rule change is available at the

Office of the Secretary, NASD and at the

Commission.

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

NASD 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 NASD 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

Background

In 1995, the NASD Board of

Governors (‘‘Board’’) appointed The

Select Command on Structure and

Governance (‘‘Select Committee’’) to

examine the corporate structure,

governance, and functions of the NASD

and to recommend changes and

improvements to enable the NASD to

meet its regulatory and business

obligations. The Select Committee

reported to the Board at its September

1995 meeting and recommended, among

other things, the establishment of two

distinct subsidiaries; one to perform the

regulatory functions of the NASD and

the other to run The Nasdaq Stock

Market (‘‘Nasdaq’’). The Select

Committee recommended that each

subsidiary have an independent Board

of Directors and that the NASD remain

as parent corporation overseeing the

operations of both subsidiaries.

In January 1996, the NASD created a

new subsidiary, NASD Regulation, Inc.

(‘‘NASD Regulation’’) to provide

regulation and member and constituent

services, with the NASD retaining

responsibility for general oversight over

the effectiveness of the self-regulatory

and business operations of the NASD

and its major subsidiaries, Nasdaq and

NASD Regulations, and final

policymaking authority for the

association as a whole. The NASD also