[Federal Register Volume 59, Number 37 (Thursday, February 24, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4142]


[[Page Unknown]]

[Federal Register: February 24, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20079; 812-8678]

 

First Prairie Cash Management et al.; Notice of Application

February 16, 1994.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for exemption under the Investment 
Company Act of 1940 (the ``Act'').

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APPLICANTS: First Prairie Cash Management (``Cash Management''), First 
Prairie Money Market Fund (``Money Market''), First Prairie U.S. 
Treasury Securities Cash Management (``Treasury Cash Management'') and 
such other registered investment companies that in the future (i) are 
advised by FNBC or any entity under common control with or controlled 
by FNBC, (ii) are taxable money market funds, (iii) are permitted to 
invest in repurchase agreements, and (iv) effect purchase and sales 
through FNBC's ``sweep'' program (the ``Funds''), and The First 
National Bank of Chicago (``FNBC'').

RELEVANT ACT SECTIONS: Exemption requested pursuant to sections 6(c) 
and 17(b) from section 17(a).

SUMMARY OF APPLICATION: Applicants seek an amendment to a prior order 
that permits Money Market to enter into repurchase agreements with 
FNBC. The prior order limits the collateral for the repurchase 
agreements to U.S. Treasury Bills, Notes, or Bonds, with remaining 
maturities of one year or less, and valued at least equal to 102% of 
the maximum amount of a Fund's net assets that could be invested in 
such repurchase agreements. The order will not limit the maturity of 
the collateral and, with respect to the amount of the collateral, will 
provide only that the repurchase agreements must be fully 
collateralized within the meaning of rule 2a-7.

FILING DATE: The application was filed November 12, 1993 and amended on 
January 19, 1994 and February 7, 1994.

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 
applicants with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on March 14, 1994 
and should be accompanied by proof of service on the applicants, 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 
Secretary.

ADDRESSES: Secretary, SEC, 450 5th Street NW., Washington, DC 20549. 
Applicants: First Prairie Funds, 144 Glenn Curtiss Boulevard, 
Uniondale, New York 11556-0144; The First National Bank of Chicago, One 
First National Plaza, Chicago, Illinois 60670-0120.

FOR FURTHER INFORMATION CONTACT: Marilyn Mann, Special Counsel, at 
(202) 504-2259, or Barry Miller, Senior Special Counsel, at (202) 272-
3018 (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.

Applicants' Representations

    1. The Funds are open-end, diversified management investment 
companies. Each Fund is a money market fund that maintains a net asset 
value of $1.00 per share for purchases and redemptions and, pursuant to 
rule 2a-7 under the Act, uses the amortized cost method of valuing its 
securities.
    2. FNBC is the investment adviser for each of the Funds. FNBC, a 
wholly-owned subsidiary of First Chicago Corporation, a registered bank 
holding company, is a commercial bank offering a range of banking and 
investment services. The Bank of New York acts as the custodian for 
each of the Funds.
    3. Cash Management invests in short-term money market obligations, 
including repurchase agreements with respect to such securities with 
registered or unregistered securities dealers or banks that have total 
assets in excess of $1 billion. Money Market is divided into two 
separate portfolios, the Money Market Series and the Government Series 
(each of which is referred to as a ``Fund''). The Money Market Series 
invests in short-term money market obligations, including repurchase 
agreements with banks or primary government securities dealers 
reporting to the Federal Reserve Bank of New York. The Government 
Series invests only in short-term securities issued or guaranteed as to 
principal and interest by the U.S. Government, and repurchase 
agreements with respect to such securities with selected registered or 
unregistered securities dealers or banks that have total assets in 
excess of $1 billion. Treasury Cash Management invests at least 65% of 
the value of its net assets in U.S. Treasury securities and repurchase 
agreements in respect thereof and the remainder of its net assets in 
other securities guaranteed as to principal and interest by the U.S. 
Government and repurchase agreements in respect thereof with registered 
or unregistered securities dealers or banks that have total assets in 
excess of $1 billion.
    4. Each Fund's shares are purchased primarily by clients of FNBC 
and its affiliates, including qualified custody, agency, and trust 
accounts, through their accounts with FNBC and its affiliates. Each 
Fund's shares may be purchased through automatic investment 
transactions. In these transactions, FNBC, as agent, follows the 
standing instructions of such clients and automatically invests excess 
cash balances in the clients' accounts in shares of one or more of the 
Funds.\1\ Currently, these ``sweep'' transactions are effected 
automatically by computer each Fund business day as the next determined 
net asset value. The machine processing required to tabulate the day's 
transactions in such clients' accounts and other shareholder accounts, 
however, is completed later in the day (normally no earlier than 11 
p.m., New York time) when the daily processing for FNBC's accounting 
system is completed (the ``Completion Time''). Therefore, total assets 
to be invested in each Fund through the ``sweep'' program each day are 
not known until that evening and are invested in each Fund at the 
respective net asset values determined on the following day.
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    \1\In accordance with the standing instructions of FNBC's 
clients, the computer program also provides for the automatic 
redemption of Fund shares held in an account as of the next 
determined net asset value if the cash balance in the account is 
less than the minimum balance specified by the client.
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    5. The current operation of the ``sweep'' program makes the Funds 
materially less attractive to FNBC's clients because they lose a day's 
income on funds invested through the program and, for ``sweeps'' 
accomplished on a Friday, lose a weekend's income.
    6. To correct this problem, Money Market and FNBC (the ``original 
Applicants'') applied for and received an order (the ``Order'') of the 
SEC under section 6(c) and 17(b) of the Act on January 26, 1993, 
exempting them from section 17(a) of the Act to permit Money Market to 
enter into repurchase agreements with FNBC or an affiliate subject to 
certain conditions.\2\ To date, however, Money Market has not entered 
into repurchase agreements with FNBC and therefore is not relying on 
the Order. The application seeks to amend the Order to: (1) Add 
additional Funds with investment policies and procedures similar to 
those of Money Market as applicants; and (2) amend condition seven to 
the Order.\3\
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    \2\Investment Company Act Release Nos. 19185 (Dec. 29, 1992) 
(notice) and 19240 (Jan. 26, 1993) (order).
    \3\The application restates the prior application in its 
entirety except for changes relating to the requested amendments and 
minor wording changes.
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    7. Condition seven to the Order provides that, during the operation 
of the ``sweep'' program, collateral maintained in a subcustodian 
account in the name of each Fund shall be ``comprised only of U.S. 
Treasury Bills, Notes or Bonds, with remaining maturities of one year 
or less, and valued at least equal to 102% of the Maximum Purchase 
Amount'' (emphasis added). The ``Maximum Purchase Amount'' is the 
amount of a Fund's net assets that may be invested pursuant to the 
Order. This amount is based on a percentage that may change from time 
to time, subject to the agreement of the applicants, but may not exceed 
15% of a Fund's net assets.
    8. Applicants propose to amend condition seven to eliminate the 
requirement that the securities comprising the collateral have 
``remaining maturities of one year or less.'' Applicants believe that 
the provisions of rule 2a-7 relating to remaining maturity are not 
applicable to securities underlying fully collateralized repurchase 
agreements.\4\ FNBC's experience is that the Funds will be able to 
obtain a higher yield on repurchase agreements using collateral with 
remaining maturities of greater than one year than otherwise would be 
the case.
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    \4\See Investment Company Act Release No. 18005 n.32 (Feb. 20, 
1991).
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    9. Applicants also propose to amend condition seven to eliminate 
the requirement that the securities comprising the collateral be valued 
at least equal to ``102% of the Maximum Purchase Amount.'' Applicants 
believe that neither rule 2a-7 nor relevant regulatory pronouncements 
require the collateral for the repurchase agreements to be valued at 
102% of the Maximum Purchase Amount. Applicants propose to substitute 
the requirement that the collateral be at least equal to the amount 
(the ``Required Collateral Amount'') necessary to collateralize fully 
(within the meaning of rule 2a-7) a repurchase agreement in an amount 
equal to the Maximum Purchase Amount. Applicants believe that 
maintaining additional collateral beyond that necessary to 
collateralize fully a repurchase agreement reduces the relevant Fund's 
yield on the repurchase agreement to the detriment of the Fund's 
shareholders.
    10. To permit FNBC, as each Fund's investment adviser, to invest 
anticipated net assets attributable to the ``sweep'' program on the 
same day that they are available for investment (despite the fact that 
the exact amount thereof will not be known until after the time for 
investment that day), FNBC or an affiliate proposes to enter into 
overnight repurchase agreements with each Fund. Such assets would be 
invested in shares of a Fund as of the time the Fund determined its net 
asset value (the ``Pricing Time'') on the same day the sweep occurs.
    11. Each Fund proposes to enter into a master repurchase agreement 
with FNBC or one of its affiliates, which is substantially the same as 
the industry standard master repurchase agreement promulgated by the 
Public Securities Association, covering all repurchase agreement 
transactions (the ``Master Repurchase Agreement'').
    12. To facilitate the repurchase transaction where the exact amount 
of the overnight repurchase agreement and, consequently, the required 
collateral is not known until the following day, FNBC, at no cost to 
the Funds, will maintain at all times in a segregated sub-custodian 
account in the name of each Fund the Required Collateral Amount. Each 
Fund will promptly notify FNBC of any increase or decrease in its net 
asset value and FNBC will adjust the amount of collateral maintained in 
the segregated account daily so that it at least equals the Required 
Collateral Amount for each Fund. The relevant Fund will have a 
perfected security interest in the repurchase agreement collateral held 
in such account.
    13. If the cash balances swept into a Fund equalled the Maximum 
Purchase Amount, the required amount of collateral already would be 
held in the Fund's segregated sub-custodian account with FNBC's Trust 
Department and the Fund would have a perfected security interest in all 
such collateral notwithstanding the fact that the actual amount of the 
repurchase transaction would not be known until the computer records 
were received the next morning. If such cash balances were less than 
the Maximum Purchase Amount, the repurchase transaction would be over-
collateralized. If such cash balances swept exceeded the Maximum 
Purchase Amount, the excess amount would remain uninvested. FNBC, 
however, believes that its experience in operating the ``sweep'' 
program and its daily consultations with other departments should limit 
the amount of funds being swept and thus potentially held uninvested.
    14. FNBC's Trust Department will act as each Fund's sub-custodian 
pursuant to a sub-custodian agreement approved by each Fund's Board of 
Trustees, including a majority of the Trustees who are not '`interested 
persons,'' as defined in the Act, of either FNBC or the Fund.\5\ Each 
Fund's assets held by FNBC's Trust Department will be maintained in a 
segregated custodial account established on its behalf in accordance 
with the rules and standards of the Comptroller of the Currency and the 
Act. FNBC's Trust Department would receive the eligible securities 
transferred to it in its capacity as sub-custodian for each Fund and 
hold them in a manner complying with the requirements of section 17(f) 
of the Act. After the Completion Time that evening, for a particular 
fund, the records maintained by FNBC for its clients' accounts and by 
FNBC's Trust Department in its capacity as the Fund's sub-custodian 
would show:
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    \5\The sub-custodian account may be maintained with FNBC's Trust 
Department or a nominee qualified to act as a custodian pursuant to 
section 17(f) of the Act and references herein to FNBC's Trust 
Department shall mean either entity.
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    (i) For FNBC's client accounts, a cash entry for the amount of Fund 
shares purchased or redeemed and a corresponding entry to the client 
accounts for the number of Fund shares purchased or redeemed as of the 
Pricing Time through operation of the computer ``sweep'' program; and
    (ii) For the Fund's sub-custodian account, all purchase and sale 
transactions and the net cash proceeds, if any, received by the Fund 
through the operation of the ``sweep'' (or, conversely, the net 
redemption proceeds paid or payable by the Fund if there were net 
redemptions). In addition, the Fund's sub-custodian account would 
reflect the specific amount in fact invested in the particular 
transaction (including the ownership of the securities securing the 
repurchase agreement). If the ``sweep'' had resulted in unanticipated 
net redemptions for the Fund, the relevant sub-custodian account would 
reflect this fact and show no ownership of any of such securities 
transferred by FNBC or its affiliates to the account, since (contrary 
to expectations) none of the Fund's assets had been used to purchase 
the securities. To the extent that transferred securities exceeded the 
Fund's assets that were available for investment (as shown by the 
results of the day's computer processing), FNBC or the appropriate 
affiliate would be shown to be owner of such securities.
    15. After the Completion Time, FNBC would transmit to the Fund's 
transfer agent records relating to these automatic investment 
transactions. The transfer agent's records would show an entry to each 
of the corresponding shareholder accounts for the number of Fund shares 
automatically purchased or redeemed as of the Pricing Time through 
operation of the ``sweep.''
    16. Each Fund will purchase only securities in which it may invest 
as described in its prospectus and statement of additional information 
and as limited by rule 2a-7. The Master Repurchase Agreement into which 
each Fund proposes to enter will be collateralized only by U.S. 
Treasury Bills, Notes, and Bonds. The transactions will comply with the 
guidelines set forth in Investment Company Act Release No. 13005 
(February 2, 1983) and will be collateralized fully as that term is 
defined in rule 2a-7. The Master Repurchase Agreement will be subject 
to annual approval, with respect to each Fund, by the Fund's Board of 
Trustees, including a majority of the Trustees who are not ``interested 
persons'' (as defined in the Act) of the Fund or FNBC or its 
affiliates.
    17. The transactions would be ``repurchase agreements'' for 
purposes of Chapter 11 of the United States Bankruptcy Code and the 
Financial Institutions Reform, Recovery and Enforcement Act of 1989. 
These statutes provide that, if the bankruptcy of the counterparty 
occurs, the repurchase agreement can be liquidated without being 
subject to the potential delay associated with the automatic stay or 
similar provisions of these statutes. If the transactions were not 
``repurchase agreements'' as defined under those statutes, the Fund 
might encounter significant liquidity problems if a large percentage of 
its assets were invested in repurchase agreements with a bankrupt 
counterparty.
    18. Cash Management, the Money Market Series, the Government 
Series, and Treasury Cash Management currently invest approximately 
33%, 33%, 25%, and 50%, respectively, of their net assets on an 
overnight basis. Each Fund's average daily portfolio maturity 
customarily is between 40 and 60 days. Applicants intend to limit the 
Maximum Purchase Amount at a level that they believe should avoid 
reducing average daily portfolio maturity and thus the yield for a 
Fund.
    19. FNBC will continue to solicit independent quotes from third 
parties for the proposed ``sweep'' transactions, but to date FNBC has 
been unable to find any unaffiliated entity willing to engage in such 
transactions on a basis as favorable to the Funds as the proposed 
arrangement with FNBC. The repurchase agreement counterpart will not 
know until the next day the amount, if any, of such transactions. This 
delay results because the daily processing for FNBC's accounting system 
normally is completed well into the night of the day the order is 
placed and the actual amount to be invested in the repurchase 
transaction is not known and, thus, monies in respect thereof cannot be 
transmitted until the next morning. Unaffiliated third parties will not 
agree to operate in this ``look back'' manner with the Fund on a basis 
as favorable to the Fund as the proposed arrangement with FNBC.
    20. Before any repurchase agreements are entered into pursuant to 
the exemption, the participating Fund or FNBC must obtain and document 
competitive quotations from at least two other dealers with respect to 
repurchase agreements that are comparable in terms of size, maturity, 
and collateral, except that if quotations are unavailable from two such 
dealers only one other competitive quotation is required. In addition, 
the transactions for which quotations are sought will be conventional 
overnight repurchase agreements in which the funds would be transferred 
by the participating Fund on the same day that the transaction is 
entered into, and then returned by the counterpart on the following 
day. Before entering into a transaction pursuant to the exemption, a 
determination will be required that the income to be earned from the 
repurchase agreement is at least equal to that available from the other 
dealers from which quotes were obtained. As set forth in the 
application, applicants enter into repurchase agreements on an ongoing 
basis and, therefore, believe they are capable of obtaining such 
quotes.

Applicants' Legal Analysis

    1. Section 17(a) of the Act, among other things, generally 
prohibits certain entities affiliated with an registered investment 
company, when acting as principal, from knowingly selling to or 
purchasing from the investment company, any security. Among the 
entities precluded from dealing as principal with a registered 
investment company under section 17(a) are any affiliated person of the 
investment company and any affiliated person of an affiliated person of 
the investment company. Section 2(a)(3) of the Act defines the term 
``affiliated person'' of an investment company to include any 
investment adviser of such company. Therefore, FNBC, as each Fund's 
investment adviser, and its affiliates are subject to the prohibitions 
contained in section 17(a) with respect to the Fund.
    2. Section 6(c) of the Act provides in relevant part that ``the 
Commission, * * * by order upon application, may * * * exempt any 
person, security, or transaction * * * from any provision or provisions 
of [the Act] or of any rule or regulation thereunder, if and to the 
extent that such exemption is necessary or appropriate in the public 
interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of [the Act].''
    3. Section 17(b) of the Act provides that ``notwithstanding 
[section 17(a)], any person may file with the Commission an application 
for an order exempting a proposed transaction * * * from one or more 
provisions of that subsection. The Commission shall grant such 
application and issue such order of exemption if evidence establishes 
that * * * (1) the terms of the proposed transaction, including the 
consideration to be paid or received, are reasonable and fair and do 
not involve overreaching on the part of any person concerned; (2) the 
proposed transaction is consistent with the policy of each registered 
investment company concerned, as recited in its registration statement 
and reports filed under [the Act]; and (3) the proposed transaction is 
consistent with the general purposes of [the Act].''
    4. Each Fund believes that the relief requested is appropriate and 
in the public interest because it will permit the Fund to invest at a 
favorable price net assets attributable to the ``sweep'' program on the 
same day that such assets are available for investment. Applicants 
believe that a more attractive ``sweep'' program will result in 
increased assets for the Funds. A larger asset base for a Fund will 
benefit all Fund shareholders by reducing the amount of Fund expenses 
indirectly borne by each shareholder, thereby increasing investors' 
returns.
    5. FNBC and its affiliates are aware of the potential conflict of 
interest inherent in the operation of the ``sweep'' program if the 
proposed relief is granted. FNBC, therefore, has established procedures 
and conditions to be followed by its employees and agents to prevent 
any overreaching on the part of any person that could act to the 
detriment of the Funds and to ensure that each transaction is effected 
on a reasonable and fair basis.
    6. A Fund's overnight position should not necessarily reduce its 
yield. If the operation of the proposed ``sweep'' program shortens a 
Fund's average daily portfolio maturity, the effect of such reduction 
would be minimal because: (i) the Fund currently maintains a relatively 
short average daily portfolio maturity; (ii) as FNBC develops more 
experience operating the ``sweep'' program, FNBC will be able to manage 
the maturity of that portion of the Fund's assets held outside the sub-
custodian account for the program so as to provide optimal liquidity 
levels; and (iii) upon receipt of such assets currently, the Fund has 
invested such assets in overnight or very short-term obligations in any 
event, but such investment occurs one day later. Thus, applicant 
believe that any effect on yield as a result of the proposed relief 
would be negligible. In addition, operation pursuant to the independent 
pricing mechanism set forth in condition 8 should provide yields from 
``sweep'' investments that are no lower than similar non-sweep Fund 
investments.
    7. Based on the arguments set forth above, applicants believe that 
the requested relief is necessary and appropriate in the public 
interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act. 
Applicants also believe that the terms of the proposed transactions, 
including the consideration to be paid or received, are reasonable and 
fair and do not involve overreaching on the part of any person 
concerned, that the proposed transactions are consistent with the 
policy of each Fund, as set forth in the Fund's registration statement 
and reports filed under the Act, and that the proposed transactions are 
consistent with the general purposes of the Act.

Applicants' Conditions

    Applicants agree that the order of the Commission granting the 
requested relief shall be subject to the following conditions:
    1. No. FNBC or affiliate ``sweep'' account client will be permitted 
to affect a transaction for a Fund after the sweep has occurred and the 
Fund's net assets value has been computed for that day.
    2. The legal or compliance department of, and internal and outside 
auditors for, FNBC or its affiliates will prepare guidelines for FNBC 
and affiliate personnel to ensure that the transactions described 
herein comply with the conditions set forth herein and that the 
integrity of the program is maintained. Each Fund's independent public 
accountants will verify assets held in each sub-custodian account in 
accordance with rule 17f-2 under the Act. The legal or compliance 
department and auditors will periodically monitor the activities of 
FNBC and its affiliates in connection with the operation of the 
``sweep'' program to ensure that the conditions set forth in the 
application are adhered to.
    3. The terms of the relief will be disclosed fully in each Fund's 
prospectus and statement of additional information. A schedule of all 
transactions with FNBC and its affiliates will be filed with each semi-
annual report filed by a Fund with the Commission pursuant to sections 
30(a) and 30(b)(1) of the Act. FNBC will provide each Fund's Board of 
Trustees with a full report of the transactions under the ``sweep'' 
program, as described herein, no less frequently than quarterly. FNBC 
also will provide each Fund's Board of Trustees with a statement that, 
as the Fund's investment adviser, it determined the principal 
transactions to be necessary and appropriate under the circumstances.
    4. The Funds and FNBC will maintain such records with respect to 
those transactions conducted pursuant to the exemption as may be 
necessary to confirm compliance with the conditions to the requested 
relief. In this regard, each Fund will maintain an itemized daily 
record of repurchase agreement transactions entered into pursuant to 
the exemption, showing for each transaction: that it has entered into 
the transaction; the entity with which it has entered into the 
transaction; the purchase and repurchase prices; the type and amount of 
collateral; the date fixed for termination of the transaction; and the 
time and date of the transaction. For each transaction, such records 
also shall document the quotations received from other dealers in 
accordance with condition no. 8, including: The names of the dealers; 
the prices quoted; and the times and dates the quotations were 
received. The records required by this condition will be maintained and 
preserved in the same manner as records required under rule 31a-
1(b)(1).
    5. The Maximum Purchase Amount will be the percentage of each 
Fund's net assets upon which the applicants from time to time may 
agree, which percentage may fluctuate but shall not exceed 15%. As to a 
particular Fund on a particular day, the amount invested pursuant to 
the exemption will not exceed the amount swept into such Fund on such 
day.
    6. All records pertaining to the sweep program will be preserved 
for a period of not less than six years, the first two years in an 
easily accessible place, from the end of the fiscal year in which any 
sweep transaction occurred.
    7. In connection with overnight repurchase agreement transactions 
pursuant to the Master Repurchase Agreement, FNBC will maintain at all 
times during operation of the ``sweep'' program in a segregated sub-
custodian account in the name of each Fund collateral comprised only of 
U.S. Treasury Bills, Notes or Bonds valued at least equal to the 
Required Collateral Amount. In addition, FNBC or its affiliates will 
transfer such collateral through the book entry system of the Federal 
Reserve and, in connection therewith, the Fund's sub-custodian account 
with FNBC's Trust Department will be designated by Fedwire as the 
recipient of such securities and FNBC's internal records and written 
confirmations will indicate that the collateral is being held on behalf 
and in such Fund's name. The relevant Fund thereby will acquire a 
security interest in the collateral.
    8. Before any transaction may be conducted pursuant to the 
exemption, the participating Fund or FNBC must obtain such information 
as it deems necessary to determine that the price test set forth below 
has been satisfied. Before any repurchase agreements are entered into 
pursuant to the exemption, the participating Fund or FNBC must obtain 
and document competitive quotations from at least two other dealers 
with respect to repurchase agreements comparable to the type of 
repurchase agreement involved (including size, which would be at least 
equal to the Maximum Purchase Amount, maturity and collateral), except 
that if quotations are unavailable from two such dealers only one other 
competitive quotation is required. In addition, the transactions for 
which quotations are sought will be conventional overnight repurchase 
agreements in which the funds would be transferred by the participating 
Fund on the same day that the transaction is entered into, and then 
returned by the counterparty on the following day. Before entering into 
a transaction pursuant to the exemption, a determination will be 
required in each instance, based upon the information available to the 
participating Fund and FNBC, that the income to be earned from the 
repurchase agreement is at least equal to that available from the other 
dealers from which quotes were obtained.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-4142 Filed 2-23-94; 8:45 am]
BILLING CODE 8010-01-M