32872 Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Notices

1See Letter from David T. Rusoff, Foley &

Lardner, to Elisa Metzger, SEC dated March 14,

1996 (‘‘Amendment No. 1’’).

2See Letter from Charles R. Haywood, Foley &

Lardner, to Elisa Metzger, SEC dated April 4, 1996

(’’Amendment No. 2’’).

3See Letter from David Rusoff, Foley & Lardner,

to Elisa Mezger, SEC dated May 31, 1996

(‘‘Amendment No. 3’’).

4The Exchange will use the Series 7A

Examination that was approved in Securities

Exchange Act Release No. 32698 (July 29, 1993), 58

FR 41539 (File No. SR–NYSE–93–10). The

Exchange will use the Series 7B Examination that

was approved in Securities Exchange Act Release

No. 34334 (July 8, 1994) 59 FR 35964 (File No. SR–

NYSE–94–13). The Series 7A and 7B Examinations

for CHX members will be administered by the

National Association of Securities Dealers, Inc.

(‘‘NASD’’).

(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

Room. Copies of such filing will also be

available for inspection and copying at

the principle office of the Exchange. All

submissions should refer to File No.

SR–CHX–96–15 and should be

submitted by July 16, 1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–16165 Filed 6–24–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37324 File No. SR–CHX–

96–11]

Self-Regulatory Organizations; Notice

of Filing of Amendment No. 3 to

Proposed Rule Change by the Chicago

Stock Exchange, Inc. Relating to

Examinations

June 18, 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 March 6, 1996, the

Chicago Stock Exchange, Inc. (‘‘CHX’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) the proposed

rule change, on March 18, 1996, filed

Amendment No. 1 to the proposed rule

change,1 and on April 4, 1996, filed

Amendment No. 2 to the proposed rule

change.2 The original filing, as amended

by Amendment No. 1 and Amendment

No. 2, was published for comment in

Securities Exchange Act Release No.

37067 (April 4, 1996), 61 FR 16274

(April 12, 1996). On June 3, 1996, the

Exchange submitted to the Commission

Amendment No. 3 to the proposed rule

change.3 The proposed rule change, as

amended, is described in Items I, II and

III below, which Items have been

prepared by the self-regulatory

organization. The Commission is

publishing this notice to solicit

comments on the proposed rule change,

as amended, from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

In the original filing as amended by

Amendments Nos. 1 and 2, the

Exchange proposed to amend Rules 2

and 3 of Article VI (and the

interpretations and policies thereunder)

to clarify existing rules, adopt a new

Floor Membership Exam, adopt a new

Market Maker Exam, adopt a new CoSpecialist Exam, and adopt

examinations applicable to persons

conducting a customer business from

the CHX trading floor. The Exchange

also proposed to adopt the Content

Outline for the Examination Module for

Floor Members Engaged in a Public

Business with Professional Customers

and the Content Outline for the

Examination Module for Floor Clerks of

Members engaged in a Public Business

with Professional Customers

(collectively, the ‘‘Content Outline’’).4

Finally, the Exchange proposed

technical changes to Rule 2 of Article

VI, Registration and Approval of

Member and Member Organization

Personnel, including a definition of

‘‘control person.’’ Amendment No. 3

clarifies the proposed amendments to

Rule 2 of Article VI.

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

self-regulatory organization 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 self-regulatory organization has

prepared summaries, set forth in Section

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

1. Purpose

As amended, the proposed rule

change clarifies current Exchange

requirements for registering personnel

and makes technical changes to the

registration procedure. The proposed

rule change adds a definition of ‘‘control

person’’ to Article VI, Rule 2 and

specifies that all such persons at

members and member organizations

must be acceptable to the Exchange. A

‘‘control person’’ is defined as:

[A] person with the power, directly or

indirectly, to direct the management or

policies of a company whether through

ownership of securities, by contract or

otherwise, and at a minimum, means all

directors, general partners or officers

exercising executive responsibility (or having

similar status or functions), all persons

directly or indirectly having the right to

having the power to sell or direct the sale of

5% or more of a class of voting securities, or

in the case of a partnership, having the right

to received upon dissolution, as having

contributed, 5% or more of the capital.

In the original filing, the proposed

amendment required that all control

persons and certain shareholders be

acceptable to the Exchange. Amendment

No. 3 deleted the reference to ‘‘certain

shareholders’’ and amended the

definition of ‘‘control person’’ to

include those persons who directly or

indirectly have the right to vote or sell

5% or more of a class of voting security,

as opposed to 10% or more of a class of

voting security. Amendment No. 3 also

clarified that in the case of a

partnership, a ‘‘control person’’ would

include those persons who have the

right to receive upon dissolution, as

having contributed 5%, as opposed to

10%, or more of the capital.

Rule 2 of Article VI States that

‘‘[e]very other employee of a member or

member organization must also be
Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Notices 32873

5See Letters from C. Philip Curley, Attorney,

Robinson Curley & Clayton, P.C., to Jonathan G.

Katz, Secretary, SEC, dated May 2, 1996 (‘‘Comment

Letters’’).

6The SEC notes that Amendment No. 3 was

submitted in response to the Comment Letter. The

comment letter received by the SEC regarding the

CHX’s proposal and Amendment No. 3 are available

in the SEC’s public reference room in File No. SR–

CHX–96–11. 1 15 U.S.C. § 78s(b)(1) (1988).

acceptable to the Exchange.’’

Amendment No. 3 explains the

application of the standard ‘‘acceptable

to the Exchange’’ to control persons. In

the proposed rule change, the Exchange

will apply the ‘‘acceptable to the

Exchange’’ standard to control persons

in the same manner as it has applied

that standard to employees of members

or member organizations in the past

since the rule was first adopted. While

the Exchange has not had to exercise

this standard in recent years, the

Exchange might apply it if, for example,

a prospective employee or control

person is subject to a statutory

disqualification or if the person, while

not subject to a statutory

disqualification, is barred from the

banking industry because he or she stole

from customers.

In the original filing, the proposed

amendments to Rule 2 of Article VI

stated that upon notice to a member or

member organization that the President

of the Exchange has withheld or

withdrawn approval of the employment

of any other person, the relationship

between the member or member

organization and such person shall be

terminated. Amendment No. 3 deletes

the reference to ‘‘the employment of’’

any such other person.

Rule 2 of Article VI requires members

or member organizations that know or

in the exercise of reasonable care should

know that any prospective employee is

subject to one or more statutory

disqualifications to submit details on

such prospective employee to the

Exchange and receive Exchange

approval before such person becomes

associated with the member or member

organization. Rule 2 also requires that

each member or member organization

take reasonable care to determine the

existence of a statutory disqualification

prior to employing any prospective

employee. Further, if any person already

employed by a member or member

organization thereafter becomes subject

to a statutory disqualification, notice

must be sent to the Exchange promptly.

Amendment No. 3 clarifies that these

provisions are applicable to control

persons as well as employees of

members or member organizations.

2. Statutory Basis

The proposed rule change is

consistent with section 6 of the Act in

general, and in particular, with Section

6(b)(5), in that it is designed to promote

just a equitable principles of trade,

remove impediments to and perfect the

mechanism of a free and open market

and a national market system, as well as

to protect investors and the public

interest.

The proposed rule change is also

consistent with Section 6(c)(3)(B) of the

Act, which provides that a national

securities exchange may examine and

verify the qualifications of an applicant

to become a person associated with a

member in accordance with procedures

established by the rules of the exchange,

and require any person associated with

a member, or any class of such persons,

to be registered with the exchange in

accordance with procedures so

established.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange 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

The Exchange understands that the

Commission has received comments on

SR–CHX–96–11 and Amendments Nos.

1 and 2 thereto.5 The Exchange believes

that issues raised by the commenter are

addressed herein, and in Amendment

No. 3.6

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 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. 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 will also be available for

inspection and copying at the principal

office of the CHX. All submissions

should refer to File No. SR–CHX–96–11

and should be submitted by July 16,

1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–16167 Filed 6–24–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37318; File No. SR–OCC–

96–03]

Self-Regulatory Organizations; The

Options Clearing Corporation; Notice

of Filing of a Proposed Rule Change

Relating to the Clearance and

Settlement of Flexibly Structured

Equity Options

June 18, 1996.

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

Securities Exchange Act of 1934

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

April 30, 1996, The Options Clearing

Corporation (‘‘OCC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared primarily by OCC. 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 purpose of the proposed rule

change is to enable OCC to clear and

settle flexibly structured equity options.