Federal Register / Vol. 61, No. 124 / Wednesday, June 26, 1996 / Notices 33153

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

2 17 CFR 240.19b–4 (1995).

3The proposal also included an amendment to

Amex Rules 904, ‘‘Position Limits,’’ and 905,

‘‘Exercise Limits,’’ to require Amex members who

trade non-Amex listed option contracts and who are

not members of the exchange where the options are

traded to comply with the option position and

exercise limits set by the exchange where the

transactions are effected. The Amex amended that

portion of its proposal to indicate that the Exchange

will apply the interpretations and policies of

another exchange when applying that exchange’s

position and exercise limit rules to an Amex

member’s transactions on that exchange. See Letter

from Claire McGrath, Managing Director and

Special Counsel, Derivative Securities, Amex, to

Michael Walinskas, Branch Chief, Derivatives

Regulation, Office of Self-Regulatory Oversight,

Division of Market Regulation (‘‘Division’’),

Commission, dated September 19, 1995

(‘‘Amendment No. 1’’).

4See note 3, supra.

5 In Amendment No. 2, the Amex modified the

text of Amex Rule 900(a) to read as follows: ‘‘The

Rules in this Part V shall be applicable to (i) the

trading on the Exchange of options contracts issued

by the Options Clearing Corporation and the terms

and conditions thereof; and (ii) the exercise and

settlement, the handling of orders, and the conduct

of accounts and other matters relating to option

contracts dealt in by any member or member

organization on any exchange.’’ See Letter from

Claire P. McGrath, Managing Director and Special

Counsel, Derivative Securities, Amex, to Michael

Walinskas, Branch Chief, Derivatives Regulation,

Office of Self-Regulatory Oversight, Division,

Commission, dated March 5, 1996 (‘‘Amendment

No. 2’’).

6See Securities Exchange Act Release No. 36353

(October 10, 1995), 60 FR 54266.

portion of the assets held in a Joint

Account on that day.

5. In order to assure that there will be

no opportunity for any Participant to

use any part of a balance of a Joint

Account credited to another Participant,

no Participant will be allowed to create

a negative balance in any Joint Account

for any reason, although each

Participant would be permitted to draw

down its entire balance at any time.

Each Participant’s decision to invest in

a Joint Account would be solely at its

option, and no Participant will be

obligated to invest in the Joint Account

or to maintain any minimum balance in

the Joint Account. In addition, each

Participant will retain the sole rights of

ownership to any of its assets invested

in the Joint Account, including interest

payable on such assets invested in the

Joint Account.

6. QCMI would administer the

investment of cash balances in and

operation of the Joint Accounts as part

of its general duties under its advisory

agreements with Participants and will

not collect any additional or separate

fees for advising any Joint Account.

7. The administration of the Joint

Accounts would be within the fidelity

bond coverage required by section 17(g)

of the Act and rule 17g–1 thereunder.

8. The Boards of Trustees/Directors of

the Funds (each a ‘‘Board’’ and

collectively the ‘‘Boards’’) will adopt

procedures pursuant to which the Joint

Accounts will operate, which will be

reasonably designed to provide that the

requirements of this application will be

met. Each of the Boards will make and

approve such changes as they deem

necessary to ensure that such

procedures are followed. In addition,

the Boards of each Fund will determine,

no less frequently than annually, that

the Joint Accounts have been operated

in accordance with the proposed

procedures and will only permit a Fund

to continue to participate therein if it

determines that there is a reasonable

likelihood that the Fund and its

shareholders will benefit from the

Fund’s continued participation.

9. Any Short-Term Investments made

through the Joint Accounts will satisfy

the investment criteria of all

Participants in that investment.

10. QCMI and the custodian of each

Participant will maintain records

documenting, for any given day, each

Participant’s aggregate investment in a

Joint Account and each Participant’s pro

rata share of each investment made

through such Joint Account. The records

maintained for each Participant shall be

maintained in conformity with section

31 of the Act and the rules and

regulations thereunder.

11. Every Participant in the Joint

Accounts will not necessarily have its

cash invested in every Short-Term

Investment. However, to the extent that

a Participant’s cash is applied to a

particular Short-Term Investment, the

Participant will participate in and own

its proportionate share of such ShortTerm Investment, and any income

earned or accrued thereon, based upon

the percentage of such investment

purchased with monies contributed by

the Participant.

12. Short-Term Investments held in a

Joint Account generally will not be sold

prior to maturity except if: (a) QCMI

believes the investment no longer

presents minimal credit risks; (b) the

investment no longer satisfies the

investment criteria of all Participants in

the investment because of a

downgrading or otherwise; or (c) in the

case of a repurchase agreement, the

counterparty defaults. QCMI may,

however, sell any Short-Term

Investment (or any fractional portion

thereof) on behalf of some or all

Participants prior to the maturity of the

investment if the cost of such

transactions will be borne solely by the

selling Participants and the transaction

will not adversely affect other

Participants participating in that Joint

Account. In no case would an early

termination by less than all Participants

be permitted if it would reduce the

principal amount or yield received by

other Participants in a particular Joint

Account or otherwise adversely affect

the other Participants. Each Participant

in a Joint Account will be deemed to

have consented to such sale and

partition of the investments in the Joint

Account.

13. Short-Term Investments held

through a Joint Account with a

remaining maturity of more than seven

days, as calculated pursuant to rule 2a–

7 under the Act, will be considered

illiquid and, for any Participant that is

an open-end investment company

registered under the Act, subject to the

restriction that the fund may not invest

more than 15% (or such other

percentage as set forth by the SEC from

time to time) of its net assets in illiquid

securities, if QCMI cannot sell the

instrument, or the Fund’s fractional

interest in such instrument, pursuant to

the preceding condition.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–16290 Filed 6–25–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37328; File No. SR–Amex–

95–35]

Self-Regulatory Organizations; Order

Granting Partial Approval to a

Proposed Rule Change and Notice of

Filing and Order Granting Accelerated

Approval to Amendment No. 2 to the

Proposed Rule Change by the

American Stock Exchange, Inc.,

Relating to the Amex’s Enforcement

Authority Over Members’ Transactions

Effected on Other Options Exchanges

June 19, 1996.

On August 25, 1995, the American

Stock Exchange, Inc. (‘‘Amex’’ 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 Amex Rule 900(a),

‘‘Applicability,’’ to confirm the

Exchange’s enforcement authority over

Amex members’ options transactions

effected on another options exchange.3

the Amex subsequently filed

Amendment Nos. 1 4 and 2 5 to the

proposal.

Notice of the proposed rule change

and Amendment No. 1 were published

for comment and appeared in the

Federal Register on October 20, 1995.6
33154 Federal Register / Vol. 61, No. 124 / Wednesday, June 26, 1996 / Notices

7See Securities Exchange Act Release No. 36567

(December 8, 1995), 60 FR 64463 (December 15,

1995 (‘‘Position and Exercise Limit Order’’).

8See Securities Exchange Act Release No. 34622

(August 31, 1995), 57 SEC Docket 1254 (‘‘August

1994 Order’’).

9See Securities Exchange Act Release No. 35658

(May 2, 1995), 59 SEC Docket 0620 (‘‘Order Denying

Reconsideration’’).

10See Amendment No. 2, supra note 5.

11 15 U.S.C. 78f(b) (5) and (6) (1988 & Supp. V

1993).

12To discipline a member for violations of Amex

rules in connection with over-the-counter

derivatives, the Amex would charge the member

with ‘‘conduct inconsistent with just and equitable

principles of trade’’ under Article V, Section 4(h),

‘‘Violation of Constitution, rules or resolutions—

Inequitable conduct,’’ of the Amex’s Constitution,

or with another generally applicable Amex rule. See

Letter from Stephen L. Lister, Executive Vice

President, Member Firm Regulation, Amex, to

Michael Walinskas, Branch Chief, Derivatives

Regulation, Office of Self-Regulatory Oversight,

Division, Commission, dated May 7, 1996.

13See Position and Exercise Limit Order, supra

note 7. See also Securities Exchange Act Release

Nos. 36242 (September 18, 1995), 60 FR 49305

(September 22, 1995) (order approving File No. SR–

CBOE–95–22); 36257 (September 20, 1995), 60 FR

50228 (September 28, 1995) (order approving File

No. SR–PHLX–95–31); and 36350 (October 6, 1995),

60 FR 53654 (October 16, 1995) (order approving

File No. SR–PSE–95–17).

No comments were received on the

proposal. On December 8, 1995, the

Commission approved the portion of the

proposal (including Amendment No. 1)

amending Amex Rules 904 and 905

regarding position and exercise limits.7

This order approves the portion of the

proposal amending Amex Rule 900(a)

(including Amendment No. 2).

The proposed amendment of Amex

Rule 900(a) reflects a determination by

the Amex that further clarity was

needed in the rule regarding the Amex’s

authority to take appropriate

disciplinary action against Amex

member firms trading on another

exchange. In August 1994, the

Commission set aside an Exchange

disciplinary action taken against a

registered representative of an Amex

member firm who had been found guilty

by an Exchange disciplinary panel of

violating the Exchange’s options

suitability and discretionary trading

rules (Amex Rules 923, ‘‘Suitability,’’

and 924 ‘‘Discretionary Accounts,’’) in

connection with the trading on the

Philadelphia Stock Exchange (‘‘PHLX’’)

of Swiss Franc options listed on the

PHLX.8 In its August 1994 Order, the

Commission stated that Amex Rules 923

and 924, as presently written, apply

only to options transactions effected on

the Amex, not to options transactions

effected on another options exchange.

Subsequently, the Commission

rejected the Exchange’s request for

reconsideration of that decision.9 In its

Order Denying Reconsideration, the

Commission suggested that the

Exchange could amend Amex Rule

900(a) to clarify the Amex’s authority

over a member’s transactions on another

options exchange. Accordingly, the

Amex proposes to amend Amex Rule

900(a) to confirm and clearly specify the

Exchange’s enforcement authority over

options transactions effected by Amex

members on another exchange.

Specifically, Amex Rule 900(a), as

amended, will provide that:

The Rules in this Part V shall be applicable

to (i) the trading on the Exchange of options

contracts issued by the Options Clearing

Corporation and the terms and conditions

thereof; and (ii) the exercise and settlement,

the handling of orders, and the conduct of

accounts and other matters relating to option

contracts dealt in by any member or member

organization on any exchange.10

The Amex believes that 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 is designed to

prevent fraudulent and manipulative

acts and practices, to promote just and

equitable principles of trade, to foster

cooperation and coordination with

persons engaged in facilitating

transactions in securities, and to remove

impediments to and perfect the

mechanism of a free and open market

and a national market system.

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 Sections 6(b)(5) and

6(b)(6) 11 in that it is designed to prevent

fraudulent and manipulative acts and

practices, to protect investors and the

public interest, and to provide that the

Amex’s members are appropriately

disciplined for violations of the

Exchange’s rules, by clarifying the scope

of Part V, ‘‘Rules Principally Applicable

to Trading of Option Contracts,’’ of the

Amex’s rules. Specifically, the proposed

amendment to Amex Rule 900(a) states

that the rules in Part V of the Amex’s

rules apply to (i) the trading on the

Exchange of option contracts issued by

the OCC and the terms and conditions

thereof; and (ii) the exercise and

settlement, the handling of orders, and

the conduct of accounts and other

matters relating to option contracts dealt

in by an Amex or member organization

on any exchange. The Commission

believes that Amex Rule 900(a)(ii)

strengthens the Amex’s rules and

provides for appropriate discipline of

Amex members by indicating clearly

that the Amex’s rules governing the

exercise and settlement, the handling of

orders and the conduct of accounts and

other matters relating to options apply

to an Amex member’s options

transactions on other exchanges as well

as to the member’s options transactions

on the Amex.

By clarifying the Amex’s authority

over a member’s transactions on another

exchange, the proposal will allow the

Amex to discipline its members more

effectively. Accordingly, the proposal

protects investors and the public

interest by extending the prohibitions

and requirements of the options rules

listed in Amex Rule 900(a)(ii) to include

all exchange-traded options transactions

entered into by Amex members,

regardless of the exchange where the

transactions occur. Thus, for example, if

an Amex member violates Amex rules

governing conduct of accounts through

options transactions effected on another

options exchange, Amex Rule 900(a)(ii)

will allow the Amex to discipline that

member for violating the Amex’s rules

governing the conduct of accounts, even

though the member’s options

transactions were executed on another

exchange.12 In addition, the current

proposal is consistent with the Amex’s

proposal to extend its disciplinary

jurisdiction to include members’

violations of the position and exercise

limits of other options exchanges, which

previously was approved by the

Commission.13

The Commission finds good cause for

approving Amendment No. 2 to the

proposal prior to the thirtieth day after

the date of publication of notice of filing

thereof in the Federal Register.

Specifically, Amendment No. 2

strengthens the Exchange’s proposal by

clarifying the text of Amex Rule 900(a).

Accordingly, 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.

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 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
Federal Register / Vol. 61, No. 124 / Wednesday, June 26, 1996 / Notices 33155

14 15 U.S.C. 78s(b)(2) (1988).

15 17 CFR 200.30–3(a)(12) (1995).

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 NW.,

Washington, DC. Copies of such filing

will also be available for inspection and

copying at the principal office of the

above-mentioned self-regulatory

organization. All submissions should

refer to the file number in the caption

above and should be submitted by

[insert date 21 days after the date of this

publication].

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,14 that the

portion of the proposed rule change

(SR–Amex–95–35) relating to Amex

Rule 900(a), as amended, is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.15

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–16230 Filed 6–25–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37342; File No. SR–CBOE–

96–34]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Chicago Board Options Exchange, Inc.

Relating to Pager Fees

June 20, 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 June 3, 1996, the

Chicago Board Options Exchange, Inc.

(‘‘CBOE’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

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

rule change as 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

from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The CBOE hereby gives notice that it

is proposing to amend and/or establish

certain Exchange fees relating to a

replacement pager system.

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

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

1. Purpose

The purpose of this proposed rule

change is to amend and/or establish

various pager fees in light of the

Exchange’s replacement of an existing,

Exchange-owned and -operated pager

system (‘‘existing system’’) with a new

pager system (‘‘new system’’). The

Exchange will also own and operate the

new system equipment. The new system

will require members who desire pagers

to own and use new pager units.

Members may either trade in existing

units and receive new units for a tradein fee of $75.00, which is less than the

cost of new pagers, or buy new pagers

outright at the Exchange’s then-current

cost (the Exchange’s cost currently is

$275.00). There will not be a leasing

option under the new system as there

was under the existing system. The fee

changes are being implemented by the

Exchange pursuant to CBOE Rule 2.22

and will take effect at or about the time

the new system becomes operational,

expected to be later in 1996.

The Exchange will assess an annual

maintenance fee under the new system,

as it did under the old system. The

maintenance fee of $80.00 per year will

cover maintenance of the memberowned pagers as well as new system

maintenance expenses to ensure that the

new system’s head-end equipment

properly delivers signals to the

members’ pagers.

Upon receipt from the Federal

Communications Commission of a

license to use the new system’s desired

frequency, the Exchange will implement

the new system fees by issuing a

regulatory circular to the membership.

2. Statutory Basis

The proposed rule change is

consistent with Section 6(b) of the Act,

in general, and furthers the objectives of

Section 6(b)(4) of the Act in particular,

in that it is designed to provided for the

equitable allocation of reasonable dues,

fees and other charges among CBOE

members.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

CBOE does not believe that the

proposed rule change will impose any

burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Purposed 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

The foregoing rule change establishes

or changes a due, fee, or other charge

imposed by the Exchange and therefore

has become effective pursuant to

Section 19(b)(3)(A) of the Act and

subparagraph (e) of Rule 19b–4

thereunder. At any time within 60 days

of the filing of such proposed rule

change, the Commission may summarily

abrogate such rule change if it appears

to the Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

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 CBOE. All submissions

should refer to File No. SR–CBOE–96–

34 and should be submitted by July 17,

1996.