33162 Federal Register / Vol. 61, No. 124 / Wednesday, June 26, 1996 / Notices

8 17 CFR § 200.30–3(a)(12) (1995).

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

2 17 CFR 240.19b–4.

3 In Amendment No. 1 the Phlx states that the

Index is currently a P.M.-settled index and that it

proposes to apply all of the maintenance criteria of

Phlx Rule 1009(A)(c) except the requirement that

the Index be designated as A.M.-settled. See letter

from Michele R. Weisbaum, Associate General

Counsel, Phlx, to James T. McHale, Attorney, Office

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

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

16, 1996 (‘‘Amendment No. 1’’).

4See Securities Exchange Act Release No. 37123

(April 18, 1996), 61 FR 18454 (April 25, 1996).

5 In Amendment No. 2, the Exchange states that

it has received oral comments that AMAX Gold Inc.

(AU) would not be an appropriate stock to include

in the XAU as it is not actually a gold or silver

mining stock, but more of a ferrous metal company

stock. Accordingly, the Exchange wishes to

withdraw the proposed addition of AU to the Index.

See Letter from Michele R. Weisbaum, Associate

General Counsel, Phlx, to James T. McHale,

Attorney, OMS, Division, Commission, dated May

15, 1996 (‘‘Amendment No. 2’’).

6See Securities Exchange Act Release No. 20437

(December 2, 1983) 48 FR 55229 (December 9, 1983)

(‘‘Index Approval Order’’).

7 Id.

8According to the Exchange, as of May 14, 1996,

the capitalizations of Santa Fe Pacific Gold Corp.

and TVX Gold Inc. were approximately $2 billion

and $1.46 billion respectively.

9The following data is based on prices and shares

outstanding as of May 14, 1996.

10The maintenance criteria set forth in Rule

1009A(c) are principally designed as index

maintenance criteria that are required to be met by

certain narrow-based index option products that

were listed pursuant to Rule 1009A(b). Rule

1009A(c), among other things, requires that for a

capitalization weighted index, the lesser of the five

highest weighted component securities in the index

or the highest weighted component securities in the

index that in the aggregate represent at least 30%

of the total number of stocks in the index each have

an average monthly trading volume of at least

1,000,000 shares over the past six months. Rule

1009A(c) also requires each component security to

have a market capitalization of at least $75 million,

except that for each of the lowest weighted

component securities in the index that in the

aggregate account for no more than 10% of the

weight of the index, the market capitalization is at

least $50 million. See Securities Exchange Act

Release No. 34157 (June 3, 1994), 59 FR 30062 (June

10, 1994).

11See Amendment No. 1, supra note 3. The

settlement value of an A.M.-settled index is based

on the opening prices of the component securities,

in contrast to a P.M.-settled index, which is based

on closing prices. As mentioned above, the XAU is

a P.M.-settled index.

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 self-regulatory organization

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. Solicition 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 PHLX. All submissions

should refer to File No. SR-PHLX–96–20

and should be submitted by July 17,

1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–16228 Filed 6–25–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37334; File No. SR–Phlx–

96–03]

Self-Regulatory Organizations; Order

Approving a Proposed Rule Change

and Notice of Filing and Order

Granting Accelerated Approval of

Amendment No. 2 thereto by the

Philadelphia Stock Exchange, Inc.

Relating to Component Additions to

the Phlx Gold/Silver Index

June 19, 1996.

On April 1, 1996, the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b) of the Securities Exchange Act of

1934 (‘‘Act’’),1 and Rule 19b–4

thereunder,2 a proposed rule change to

revise the composition of the Phlx Gold/

Silver Index (‘‘XAU’’ or ‘‘Index’’) by

adding three underlying stocks and to

adopt procedures to address

replacements, additions and deletions of

component stocks. On April 16, 1996,

the Exchange filed Amendment No. 1 to

the proposal.3 Notice of the proposal

was published for comment and

appeared in the Federal Register on

April 25, 1996.4 No comment letters

were received on the proposal. On June

5, 1996, the Exchange filed Amendment

No. 2 to the proposal.5 This order

approves the Phlx’s proposal as

amended.

I. Description of the Proposal

The XAU is a capitalization weighted

index currently composed of the stocks

of nine widely held U.S. companies in

the gold and silver mining industry.

Options on the Index have an American

style expiration and the settlement

value is based on the closing values of

the component issues on the day

exercised or on the last trading day prior

to expiration (i.e. ‘‘P.M.-settled’’). The

Index was the first narrow-based or

industry index approved for trading on

the Exchange.6 Pursuant to Footnote 10

to the Index Approval Order,7 the

Exchange previously agreed to submit to

the Commission, pursuant to Rule 19b–

4 under the Act, any changes to the

stocks comprising the Index and to

attempt to formulate a rule that would

govern this process. Accordingly,

pursuant to this rule filing, the

Exchange is requesting approval to

change the composition of the XAU by

adding two stocks. The stocks are Santa

Fe Pacific Gold Corp. (GLD) and TVX

Gold Inc. (TVX) and they both currently

trade on the New York Stock Exchange.8

The Exchange believes that the addition

of these two stocks will help ensure an

even more accurate response to overall

market activity in the precious metals

mining industry. The Phlx represents 9

that the proposed change would

increase the total capitalization of the

Index from $28.63 billion to $34.01

billion. The two additional stocks

combined will account for 10.19% of

the revised Index by capitalization

weight. The value of the XAU as of the

close of trading on March 28, 1996 was

143.83.

The Exchange also proposes to adopt

a procedure which will govern future

replacements, additions or deletions of

underlying stocks from the Index. If at

any time a stock is deleted from the

Index due to merger, acquisition or

otherwise, and the Exchange determines

to replace it, the Phlx will take into

account the capitalization, liquidity,

volatility and name recognition of any

proposed replacement stock which fits

the character of the Index. Moreover, the

Phlx will ensure that the Index meets all

of the maintenance criteria in Rule

1009A(c) 10 except the requirement that

the Index be A.M.-settled.11 The Phlx

notes that this maintenance criteria, in

part, requires it to ensure that no fewer

than 90% of the stocks comprising the

Index by weight, nor fewer than 80% of

the total number of stocks in the Index,
Federal Register / Vol. 61, No. 124 / Wednesday, June 26, 1996 / Notices 33163

12The two new stocks proposed to be added

herein both currently have overlying options being

traded.

13 15 U.S.C. 78f(b)(5).

14See note 8 supra.

15The XAU contract, however, will not meet the

requirement that the Index be A.M.-settled. See

Amendment No. 1, supra note 3. The Commission

continues to believe that basing the settlement of

index products on opening, as opposed to closing,

prices helps to alleviate stock market volatility on

Expiration Fridays and the Commission encourages

the Phlx to consider changing the XAU to an A.M.-

settled index. Nevertheless, because options on the

Index have been trading as P.M.-settled since

inception of the Index, and because the Index is

comprised of a small number of securities, the

Commission is not at this time requiring the Phlx

to make such a change. 16See supra note 6.

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

18 17 CFR 200.30–3(a)(12).

qualify as eligible for equity options

trading under Phlx Rule 1009.12 Absent

Commission approval, the Exchange

will not increase to more than 15, nor

decrease to fewer than 9, the number of

stocks in the Index.

II. 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, the

requirements of Section 6(b)(5) 13 in that

it is designed to prevent fraudulent and

manipulative acts and practices, to help

remove impediments to a free and open

securities market and facilitate

transactions in securities, while

protecting investors and the public

interest. Specifically, the Commission

believes that adding to the XAU two

relatively highly capitalized and

actively traded precious metal mining

stocks should result in the Index being

more representative of the gold and

silver mining industries.14 Moreover,

the greater number of securities in the

Index should reduce the potential for

manipulation to the Index, which will

serve to protect investors and the public

interest.

With regard to the Exchange’s

proposed procedure for governing future

replacements, additions or deletions of

underlying stocks from the Index, the

Commission finds that the procedure is

appropriate and consistent with the Act.

More specifically, the Phlx has

undertaken to ensure that the XAU will

satisfy the maintenance criteria set forth

in Exchange Rule 1009A(c),15 governing

certain narrow-based index options. As

noted above, these criteria contain

minimum numerical requirements for,

among other things, trading volume and

capitalization which will help to ensure

that the components of the Index have

sufficient depth and liquidity to

accommodate options trading. Given

that the Index is an industry index with

relatively few components, the

Commission believes that applying

these maintenance criteria is an

appropriate means of ensuring that the

Index continues to reflect a bona fide

narrow-based index. Additionally, the

Commission concludes that the Phlx’s

proposal as a whole satisfies the

Commission’s request in the original

Index Approval Order 16 that the

Exchange formulate a rule to govern

replacements of stocks in the Index.

Based on the above, the Commission

believes this portion of the proposal will

help to facilitate transactions in

securities while protecting investors and

the public interest.

The Commission finds good cause for

approving Amendment No. 2 to the

proposal prior to the thirtieth day after

the date of publication of the notice of

filing thereof in the Federal Register.

Specifically, Amendment No. 2 merely

removes one of the proposed Index

stocks which, according to the

Exchange, was not an accurate

representative of the gold/silver mining

industry. The amendment does not raise

significant issues or otherwise

materially impact the proposal. Indeed,

the overall initial effect of the proposal

is to increase the number of component

stocks in the Index from 9 to 11, which,

given the capitalization and trading

history of the two additional

components, strengthens the Index.

Based on the above, the Commission

finds good cause for approving

Amendment No. 2 to the proposed rule

change on an accelerated basis and

believes that the proposal, as amended,

is consistent with Sections 6(b)(5) and

19(b)(2) of the Act.

III. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment No.

2. 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 will also be available for

inspection and copying at the principal

office of the Phlx. All submissions

should refer to the File No. SR–Phlx–

96–03 and should be submitted by July

17, 1996.

It is therefore ordered, pursuant to

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

proposed rule change (SR–Phlx–96–03),

as amended, is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.18

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–16229 Filed 6–25–96; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF TRANSPORTATION

[Docket 37554]

Notice of Order Adjusting the Standard

Foreign Fare Level Index

Section 41509(e) of Title 49 of the

United States Code requires that the

Department, as successor to the Civil

Aeronautics Board, establish a Standard

Foreign Fare Level (SFFL) by adjusting

the SFFL base periodically by

percentage changes in actual operating

costs per available seat-mile (ASM).

Order 80–2–69 established the first

interim SFFL, and Order 96–3–61

established the currently effective twomonth SFFL applicable through May 31,

1996.

In establishing the SFFL for the twomonth period beginning June 1, 1996,

we have projected non-fuel costs based

on the year ended December 31, 1995

data, and have determined fuel prices

on the basis of the latest available

experienced monthly fuel cost levels as

reported to the Department.

By Order 96–6–41 fares may be

increased by the following adjustment

factors over the October 1979 level:

Atlantic ............................................. 1.4474

Latin America .................................. 1.5312

Pacific ............................................... 1.5214

For Further Information Contact:

Keith A. Shangraw (202) 366–2439.

By the Department of Transportation.

Dated: June 20, 1996.

Patrick V. Murphy,

Deputy Assistant Secretary for Aviation and

International Affairs.

[FR Doc. 96–16328 Filed 6–25–96; 8:45 am]

BILLING CODE 4910–62–P