[Federal Register Volume 59, Number 69 (Monday, April 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8516]


[[Page Unknown]]

[Federal Register: April 11, 1994]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33862; International Series Release No. 645]

 

Notice of Modification of Class Exemption Letter Regarding 
Application of Cooling-Off Periods Under Rule 10b-6 to Distributions of 
Foreign Securities

    On March 4, 1993, the Division of Market Regulation (``Division''), 
acting pursuant to delegated authority, granted an exemption from Rule 
10b-6 under the Securities Exchange Act of 1934 (``Exchange Act'') with 
respect to the application of the ``cooling-off'' periods contained in 
Rule 10b-6 during distributions of foreign securities in the United 
States. See Securities Exchange Act Release No. 31943 (March 4, 1993), 
58 FR 13288 (``1993 Exemption Letter'').
    Based upon its experience with the 1993 Exemption Letter, on April 
4, 1994, the Division sent the following letter to Marc E. Lackritz, 
President, Securities Industry Association, modifying certain 
conditions of the 1993 Exemption Letter. These modifications supersede 
the 1993 Exemption Letter and are published to provide notice of the 
modifications.

    Dated: April 5, 1994.
Margaret H. McFarland,
Deputy Secretary.
April 4, 1994.
Marc E. Lackritz, Esq.
President, Securities Industry Association, 1401 Eye Street, NW., 
Suite 1000, Washington, DC 20005-2225.

Re: Application of Cooling-Off Periods Under Rule 10b-6 to 
Distributions of Foreign Securities File No. TP 94-11

    Dear Mr. Lackritz: On March 4, 1993, the Commission granted an 
exemption from Rule 10b-6 (``Rule 10b-6'' or ``Rule'')\1\ under the 
Securities Exchange Act of 1934 (``Exchange Act'') with respect to 
the application of the ``cooling-off'' periods contained in Rule 
10b-6 during distributions of foreign securities in the United 
States.\2\ Based upon its experience with the 1993 Exemption, the 
Commission has determined to modify that exemption as set forth 
below. The exemption from Rule 10b-6 granted herein supersedes the 
1993 Exemption.
---------------------------------------------------------------------------

    \1\17 CFR 240.10b-6.
    \2\Securities Exchange Act Release No. 31943 (March 4, 1993), 58 
FR 13288 (``1993 Exemption'').
---------------------------------------------------------------------------

    To facilitate multinational distributions of foreign securities, 
the Commission has determined to grant an exemption from Rule 10b-6 
under the Exchange Act that clarifies the application of the Rule's 
cooling-off periods to foreign securities.\3\ The exemption permits 
participants in a distribution (``distribution participants'') of 
foreign securities in the United States and their ``affiliated 
purchasers,''\4\ to bid for and purchase such securities, any 
securities of the same class and series, or any right to purchase 
such securities (collectively, ``related securities'') in solicited 
brokerage and principal transactions until two or nine business days 
prior to the commencement of offers or sales of the foreign security 
being distributed in the United States, subject to certain 
conditions as more fully described below.\5\
---------------------------------------------------------------------------

    \3\For purposes of this exemption, the term ``foreign security'' 
means a security issued by a ``foreign government'' or a ``foreign 
private issuer,'' as those terms are defined under Rule 3b-4 under 
the Exchange Act, 17 CFR 240.3b-4. Cf. Proposed Rule 3b-10(d), 
Securities Exchange Act Release No. 28733 (January 3, 1991), 56 FR 
820, 822 (``Rule 3b-10 Release'').
    \4\``Affiliated purchaser'' is defined in 17 CFR 240.10b-
6(c)(6). Generally, an affiliated purchaser includes any person 
acting in concert with the issuer or other person making the 
distribution; any affiliate who directly or indirectly controls 
purchases by the issuer or other person, or whose purchases are 
controlled by or under common control with the issuer or other 
person; a broker-dealer affiliate; and a non-broker-dealer affiliate 
that regularly purchases securities for its own account or for 
another's account or recommends or exercises investment discretion 
with respect to the purchase or sale of securities.
    \5\In Letter regarding Rule 10b-6: Interpretation of ``Business 
Day'' (July 29, 1991), [1991] Fed. Sec. L. Rep. (CCH)  79,751 
[hereinafter ``Business Day Letter''], the Division of Market 
Regulation (``Division'') took the interpretive position that the 
exceptions to the Rule contained in paragraphs (a)(4)(v), 
(a)(4)(xi), and (a)(4)(xii) were available to ``specified foreign 
securities markets,'' as defined in Proposed Rule 3b-10(f), Rule 3b-
10 Release, 56 FR at 822. Business Day Letter at  79,751 n.3. The 
exemption granted herein replaces that interpretive position of the 
Division.
---------------------------------------------------------------------------

I. Rule 10b-6

    Rule 10b-6 is an anti-manipulation rule that is intended to 
prevent participants in a distribution of securities from 
artificially conditioning the market for the securities in order to 
facilitate the distribution, and to protect the integrity of the 
securities trading market as an independent pricing mechanism. The 
Rule prohibits issuers, underwriters, prospective underwriters, 
dealers, brokers, and other persons who have agreed to participate 
or are participating in the distribution and their affiliated 
purchasers from bidding for or purchasing, or inducing others to 
purchase, the securities being distributed, or any related security, 
until they have completed their participation in the distribution.
    Rule 10b-6 contains exceptions to its general prohibitions that 
are intended to permit an orderly distribution of securities or to 
limit disruptions in the market for the securities being 
distributed. The exceptions to the Rule contained in paragraphs 
(a)(4)(v), (a)(4)(xi), and (a)(4)(xii) permit distribution 
participants to bid for or purchase the distribution securities and 
related securities in principal transactions until two or nine 
business days\6\ before the commencement of offers or sales of such 
securities (e.g., the effective date of the registration statement 
in the case of public offerings). Whether the security qualifies for 
the use of the two or nine business day cooling-off period contained 
in the exceptions depends upon the price and public float of the 
subject security. For stock with a minimum share price\7\ of US$5.00 
and a public float\8\ of at least 400,000 shares, the cooling-off 
period is two business days. For other securities, the cooling-off 
period is nine business days.
---------------------------------------------------------------------------

    \6\The two business day cooling-off period has been interpreted 
as a period of not less than 48 hours immediately prior to the 
commencement of offers or sales of the securities being distributed 
where such period includes two complete trading days (i.e., 
including same day opening and closing) in the principal market for 
the security. The nine business day cooling-off period is calculated 
in a similar manner. See Business Day Letter.
    \7\In general, the share price is the average price over a two-
week period. See 17 CFR 240.10b-6(c)(7).
    \8\The public float is calculated by subtracting from the total 
number of shares of stock outstanding the number of shares held by 
officers, directors, and any persons who, directly or indirectly, 
are the owners of 10% or more of the stock in distribution. 17 CFR 
240.10b-6(c)(7).
---------------------------------------------------------------------------

II. Application of the Rule to Multinational Offerings

    Since shortly after the Commission adopted Rule 10b-6 in 1955, 
the Commission has taken the position that, with respect to 
multinational distributions occurring in whole or in part in the 
United States, Rule 10b-6 applies to all distribution participants 
and their affiliated purchasers, wherever they are located or effect 
transactions.\9\ Thus, when a distribution occurs in the United 
States, the restrictions of Rule 10b-6 apply to the activities of 
non-U.S. distribution participants conducted outside the United 
States.
---------------------------------------------------------------------------

    \9\See, e.g., Letters regarding Royal Dutch Petroleum Co. 
(December 23, 1957); Philips N.V. (May 15, 1962); Standard Oil Co. 
(New Jersey) (February 6, 1970); S.S. Kresge & Co. (April 14, 1972). 
For purposes of Rule 10b-6, the term ``distribution'' means an 
offering of securities, whether or not subject to registration under 
the Securities Act of 1933, that is distinguished from ordinary 
trading transactions by the magnitude of the offering and the 
presence of special selling efforts and selling methods. 17 CFR 
240.10b-6(c)(5).
---------------------------------------------------------------------------

    While the fundamental restrictions of the Rule apply to all 
distributions in the United States, the availability of the cooling-
off periods contained in paragraphs (a)(4)(v), (a)(4)(xi), and 
(a)(4)(xii) of the Rule with respect to foreign securities is not 
clear because not all of the terms and the assumptions underlying 
Rule 10b-6 made concerning domestic securities appear to be valid 
with respect to foreign securities. For example, based on its 
experience with the U.S. markets, the Commission determined that it 
was appropriate to provide a shorter cooling-off period for 
securities trading at US$5.00 or more per share (and having a 
minimum public float). This may not be an appropriate price level 
for foreign securities because the shares of many substantial 
foreign issuers trade at prices below the equivalent of US$5.00 per 
share. Foreign securities, moreover, rarely (if ever) trade in U.S. 
dollars. Accordingly, the US$5.00 price requirement literally cannot 
be satisfied for such securities.\10\ Also, the Rule's method for 
determining a security's price incorporates U.S. market features 
that do not apply to foreign securities transactions.\11\
---------------------------------------------------------------------------

    \10\Foreign securities trading in the form of ordinary shares or 
depositary shares qualify for the exceptions providing for two 
business day cooling-off periods if the foreign ordinary or 
depositary shares have a minimum share price of US$5.00 and a public 
float of at least 400,000 shares in the United States. If either the 
ordinary shares or depositary shares qualify in the United States 
for the cooling-off periods contained in the Rule 10b-6 exceptions, 
based on the US$5.00/400,000 share criteria, the ordinary and 
depositary shares wherever traded also would qualify for the 
cooling-off periods under Rule 10b-6. Where foreign ordinary or 
depositary shares trading in the United States do not satisfy the 
US$5.00/400,000 share criteria, transactions in foreign ordinary or 
depositary shares may qualify for the exemption granted herein. If 
either the ordinary shares or the depositary shares qualify for this 
exemption, distribution participants and their affiliated purchasers 
could effect transactions in the foreign ordinary or depositary 
shares until the commencement of the applicable cooling-off period 
in all jurisdictions, including the United States, subject to the 
terms of the exemption.
    \11\For example, paragraph (c)(7) of Rule 10b-6 references the 
last sale reporting mechanism for securities trading in the U.S. 
securities markets.
---------------------------------------------------------------------------

    Moreover, unlike the case with transactions effected by U.S. 
distribution participants,\12\ the Commission does not have a 
comparable ability to obtain records of transactions in foreign 
securities markets by non-U.S. participants. This can hamper the 
Commission's ability to determine whether foreign distribution 
participants have observed the restrictions of the Rule, or have 
otherwise engaged in manipulative activity during the distribution 
period. Particularly in the context of the short time-frames 
contained in the cooling-off periods, it is essential that the 
Commission be able to obtain prompt access to transaction 
information where manipulative activity appears to have been, or to 
be, taking place during a distribution to U.S. investors. As a 
result of these uncertainties, the Commission has taken the position 
that the cooling-off periods contained in paragraphs (a)(4)(v), 
(a)(4)(xi), and (a)(4)(xii) are not automatically available with 
respect to distributions of foreign securities made in whole or in 
part in the United States.\13\
---------------------------------------------------------------------------

    \12\In particular, Rule 17a-3 under the Exchange Act, 17 CFR 
240.17a-3, requires that broker-dealers make records of, inter alia, 
each securities transaction effected for customer or proprietary 
accounts. Moreover, Rule 17a-4 under the Exchange Act, 17 CFR 
240.17a-4, requires that such records be maintained for specified 
periods, and that the records be promptly furnished to the 
Commission upon request.
    \13\See, e.g., Letters regarding Banco de Santander, S.A. 
(October 23, 1987), [1987-88] Fed. Sec. L. Rep. (CCH) 78,532; 
Societe Nationale Elf Aquitaine (June 7, 1991), [1991] Fed. Sec. L. 
Rep. (CCH) 79,734; Distributions of Certain SEAQ and SEAQ 
International Securities (July 12, 1993), [1993] Fed. Sec. L. Rep. 
(CCH) 76,707; Business Day Letter.
---------------------------------------------------------------------------

    The Commission has granted exemptions, however, from Rule 10b-6 
which provide two or nine business day cooling-off periods for 
participants in a distribution of foreign securities in the United 
States. The exemptions have been issued in connection with 
distributions of foreign securities possessing certain qualities 
comparable to those of domestic securities that would qualify for 
use of the exceptions. Those qualities have included, inter alia, a 
large U.S. dollar value of total market capitalization, a 
significant U.S. dollar value of public float, and a significant 
trading volume. In general, these exemptions have not turned on 
whether the securities traded at the equivalent of US$5.00 per 
share.\14\ In addition, the transactions permitted by these 
exemptions were subject to, among other things, the commitment of 
persons relying on the exemptions to maintain and provide the 
Commission with access to trading records upon request.\15\
---------------------------------------------------------------------------

    \14\See, e.g., LSE Letter; China Steel Corp. (May 15, 1992), 
[1992] Fed. Sec. L. Rep. (CCH) 76,274; Telefonos de Mexico, S.A. de 
C.V. (May 10, 1991), [1991] Fed. Sec. L. Rep. (CCH) 79,731; Orbital 
Engine Corp. Ltd. (November 21, 1991), [1991-92] Fed. Sec. L. Rep. 
(CCH) 76,058.
    \15\See National Australia Bank Ltd. (July 31, 1989) (available 
on LEXIS); C.H. Beazer (Holdings) PLC (May 27, 1987), [1987-88] Fed. 
Sec. L. Rep. (CCH) 78,664.
---------------------------------------------------------------------------

III. Exemption

    To clarify the application of the Rule's cooling-off periods to 
foreign securities and thus reduce the burdens and costs to issuers 
and underwriters who otherwise must seek exemptions from the 
Commission on a case-by-case basis, the Commission hereby grants an 
exemption from Rule 10b-6 pursuant to paragraph (j) of the Rule\16\ 
to permit participants in a distribution of foreign securities in 
the United States and their affiliated purchasers to bid for and 
purchase the securities being distributed and related securities in 
solicited brokerage and principal transactions until two or nine 
business days prior to the commencement of offers or sales of the 
foreign security being distributed in the United States, subject to: 
The condition that the distribution participants and their 
affiliated purchasers shall not, from the time each becomes a 
distribution participant until the completion of the distribution, 
effect any transactions in the security being distributed or related 
securities that are made for the purpose of creating actual, or 
apparent, active trading in or raising the price of such securities; 
and the additional conditions described below.
---------------------------------------------------------------------------

    \16\See 17 CFR 240.10b-6(j). The staff is currently engaged in a 
review of Rule 10b-6 and related provisions under the Exchange Act. 
The Commission has determined to proceed by exemption as described 
herein because, following the staff's review, the Commission may 
determine to modify this exemption or amend the provisions of the 
Rule with regard to the application of the Rule's cooling-off 
periods to foreign securities.
---------------------------------------------------------------------------

A. Notice Requirement

    A participant in a distribution of foreign securities relying on 
the exemption granted herein is required to provide a written notice 
(``Notice'') to the Director of the Division prior to the 
commencement of offers or sales of the foreign security being 
distributed in the United States.\17\ The Notice must:
---------------------------------------------------------------------------

    \17\The Notice should be sent to the Division's Office of 
Trading Practices.
---------------------------------------------------------------------------

    (1) State that the distribution participant and its affiliated 
purchasers are aware of the terms and conditions of the exemption;
    (2) State which cooling-off period (i.e., two or nine business 
days) is claimed;
    (3) Contain:
    (a) The identity of the issuer of the foreign security and, 
where applicable, any selling shareholder(s), and the managing and 
other underwriter(s);
    (b) The identity of the security being distributed;
    (c) The identity of all distribution participants on whose 
behalf the Notice is filed;\18\
---------------------------------------------------------------------------

    \18\Information regarding distribution participants may be 
provided in two phases, i.e., prior to the commencement of the 
applicable cooling-off period the Notice should contain the names of 
all distribution participants identified at that time; shortly after 
the commencement of offers and sales the Notice must be supplemented 
with the names of any additional distribution participants who have 
relied on this exemption. The Notice is not required to contain the 
names of affiliated purchasers.
---------------------------------------------------------------------------

    (d) The identity of the Principal Market, as that term is 
defined herein; and
    (4) Make the applicable representations relating to transaction 
recordkeeping and record production, as discussed below.
    The Notice may be provided by the person relying on the 
exemption directly or through an agent.19
---------------------------------------------------------------------------

    \1\9For example, the managing underwriter of an underwriting 
syndicate may provide notice on behalf of other members of the 
syndicate.
---------------------------------------------------------------------------

B. Nine Business Day Cooling-Off Period

    A nine business day cooling-off period is available for a 
security of any foreign issuer, provided that: (a) Transaction 
records are kept by distribution participants and their affiliated 
purchasers; and (b) the records are available to the Commission upon 
request.

1. Record Maintenance

    Distribution participants and their affiliated purchasers are 
required to make records of transactions in the securities being 
distributed or any related securities during the period commencing 
on the later of the date one month prior to the commencement of the 
offers or sales in the distribution in the United States or the date 
on which the person becomes a participant in the distribution, and 
ending when the distribution in the United States is either 
completed or abandoned (``Covered Period'').20 The records must 
be maintained for at least two years from the date thereof. The 
required transaction information is that generally recorded by a 
broker-dealer in the ordinary course of its business, i.e.: (a) The 
name of the security that is the subject of the transaction; (b) the 
date of the transaction; (c) the price and size of the transaction; 
(d) the securities market where the transaction was effected; (e) 
whether the transaction was effected for a customer or a proprietary 
account; (f) whether the transaction was a purchase or a sale; and 
(g) the identity of the account on whose behalf the transaction was 
effected.
---------------------------------------------------------------------------

    \2\0The one month period will enable the Commission to obtain 
information regarding trading during the distribution period taking 
place prior to the cooling-off period. This information is relevant 
to the condition to the exemption that manipulative transactions 
undertaken prior to the cooling-off period would make the exemption 
unavailable.
---------------------------------------------------------------------------

    If local law does not require the creation and maintenance of 
such records, however, then the Notice provided to the Commission by 
the distribution participant must include a commitment to maintain 
such records and a statement that the distribution participant has 
advised its affiliated purchasers of the requirement to maintain 
transaction records and that they have agreed to maintain such 
records.

2. Record Production

    Distribution participants are required to make the transaction 
information available to the Commission or its staff, upon request, 
through either: (a) A comprehensive information sharing and 
enforcement assistance agreement or understanding with a foreign 
securities authority (``FSA'')21 or a foreign financial 
regulatory authority (``FFRA'')22 that provides the Commission 
with the ability to obtain such transaction information when 
securities prices appear to have been manipulated during a U.S. 
distribution (``Information Sharing Agreement'');23 or (b) a 
specific written commitment by the distribution participants to be 
included in the Notice. This commitment would contain the following: 
(1) A statement that the required information will be provided to 
the Commission or its staff upon request;24 (2) the name(s) of 
the person(s) on whose behalf such notice is being provided; and (3) 
a statement that the distribution participants have examined the 
laws of the countries in which the relevant information is 
maintained and persons with knowledge of that information are 
located, and have determined that they are in a position to provide 
the relevant information to the Commission upon the Commission's 
request, provided that, with respect to customer information, 
distribution participants and their affiliated purchasers may commit 
to use their best efforts to provide such information to the 
Commission to the extent permitted by applicable law (and where the 
ability to supply such customer information under applicable law is 
unclear or uncertain, requesting the appropriate governmental body 
for guidance).
---------------------------------------------------------------------------

    \2\1FSA is defined in section 3(a)(50) of the Exchange Act as 
``any foreign government, or any governmental body or regulatory 
organization empowered by a foreign government to administer or 
enforce its laws as they relate to securities matters.'' 15 U.S.C. 
78c(a)(50).
    \2\2FFRA is defined in section 3(a)(51) of the Exchange Act to 
include any: (a) FSA; (b) other governmental body or foreign 
equivalent of a self-regulatory organization empowered by a foreign 
government to administer or enforce its laws relating to the 
regulation of fiduciaries, trusts, commercial lending, insurance, 
trading in contracts of sale of a commodity for future delivery, or 
other instruments traded on or subject to the rules of a contract 
market, board of trade, or foreign equivalent, or other financial 
activities, or (c) membership organization a function of which is to 
regulate participation of its members in activities listed above. 5 
U.S.C. 78(c)(51).
    \2\3Currently, the following Information Sharing Agreements with 
the following jurisdictions qualify under this standard: Argentina, 
International Series Release No. 354 (December 18, 1991), 50 SEC 
Docket 878; Australia, International Series Release No. 599 (October 
20, 1993), 55 SEC Docket 841; Brazil, International Series Release 
No. 7 (July 1, 1988), 43 SEC Docket 206; Ontario, Quebec, and 
British Columbia, International Series Release No. 6 (January 7, 
1988), 43 SEC Docket 186; Chile, International Series Release No. 
548 (June 3, 1993), 54 SEC Docket 737; France, International Series 
Release No. 117 (January 12, 1990), 45 SEC Docket 726; Italy, 
International Series Release No. 547 (May 18, 1993), 54 SEC Docket 
347; Japan, International Series Release No. 5 (May 23, 1986), 43 
SEC Docket 184; Mexico, International Series Release No. 181 
(October 22, 1990), 47 SEC Docket 1128; the Netherlands, 
International Series Release No. 115 (January 12, 1990), 45 SEC 
Docket 715; Norway, International Series Release No. 321 (September 
30, 1991), 49 SEC Docket 1747; Spain, International Series Release 
No. 429 (July 30, 1992), 51 SEC Docket 2838; and the United Kingdom, 
International Series Release No. 323 (September 30, 1991), 49 SEC 
Docket 1767.
    \2\4The transaction information would be made available at the 
principal office of such distribution participant for inspection and 
copying by an authorized representative of the Commission. If it is 
not feasible for the Commission to examine such records at such 
principal office and if the expense of doing so is not unreasonable, 
a copy of the records must be furnished to the Commission at its 
office in Washington, D.C., and representatives of such distribution 
participant would be made available (in person or by telephone) to 
respond to inquiries of the Division prompted by such records.
---------------------------------------------------------------------------

    A distribution participant would be required to produce, upon 
request, transaction records of its affiliated purchasers if such 
records are in the possession or control of the distribution 
participant or if the distribution participant otherwise has access 
to the records. Affiliated purchasers would be expected to provide 
the required information to their affiliated distribution 
participants and would be expected not to take any actions that 
would impede Commission access. Any person who fails to comply with 
the conditions of the exemption, including a failure to provide 
requested information, would not be permitted to rely on the 
exemption in future distributions.25
---------------------------------------------------------------------------

    \2\5Upon a showing of good cause, however, the Commission or the 
Division may determine that it is not necessary under the 
circumstances that the exemption be denied.
---------------------------------------------------------------------------

C. Two Business Day Cooling-off Period

    A two business day cooling-off period is available for equity 
securities of any foreign issuer where: (a) The conditions described 
above in paragraphs B.1. and B.2. relating to recordkeeping and 
production are satisfied; (b) the aggregate world-wide published 
average daily trading volume in the offered security26 during 
any 20 consecutive business day period within 60 consecutive 
calendar days prior to the Covered Period (``Reference Period'') 
equals or exceeds the equivalent of US$250,000 as calculated from 
transactions published by an FFRA or a registered U.S. national 
securities exchange or association;27 and (c) the offered 
security's Principal Market28 requires, at a minimum, 
contemporaneous trade reporting29 to an FFRA.30
---------------------------------------------------------------------------

    \2\6The published trading volume for the offered security also 
would include the aggregate published volume of depositary shares, 
including American Depositary Shares, adjusted for the ratio between 
depositary shares and ordinary shares.
    \2\7In order to calculate the U.S. dollar value, distribution 
participants would either: (a) obtain the average of the trading 
value in U.S. dollars during the Reference Period; or, (b) obtain an 
average trading value in local currency for the Reference Period and 
apply a current exchange rate to obtain the dollar value of the 
average trading volume. The exchange rate would be the current rate 
of exchange between the currency in which the security trades and 
the U.S. dollar, as obtained from at least one bank that regularly 
conducts currency exchange operations. See, e.g., Proposed Rule 3b-
10(a), Rule 3b-10 Release, 56 FR at 822.
    \2\8``Principal Market'' is the single securities market with 
the largest published aggregate trading volume for that class of the 
foreign issuer's securities during the Reference Period. Cf. 
Proposed Rule 3b-10(e), Rule 3b-10 Release, 56 FR at 822.
    \2\9Contemporaneous trade reporting for these purposes would be 
deemed to exist where trades effected on a market are reported to an 
FFRA within a twenty-four hour period.
    \3\0If the Principal Market is a foreign securities exchange 
that satisfies this contemporaneous trade reporting criterion, then 
any other transaction, wherever effected, would qualify for the same 
cooling-off period for purposes of this exemption.
---------------------------------------------------------------------------

    The foregoing exemption from Rule 10b-6 is strictly limited to 
the application of the Rule to the class of transactions described 
herein, and is subject to compliance with the conditions set forth 
above and the Commission's continuing ability to obtain 
investigatory information regarding trading in the relevant foreign 
market with respect to the exemption set forth herein. In addition, 
distribution participants and affiliated purchasers relying on this 
exemption are directed to the anti-fraud and anti-manipulation 
provisions of the Exchange Act, particularly sections 9(a)(2) and 
10(b) and Rule 10b-5 thereunder. This exemption is subject to 
modification or revocation if the Commission determines that such 
action is necessary or appropriate.
    Responsibility for compliance with these and any other 
applicable provisions of the federal securities laws must rest with 
each individual distribution participant and its affiliated 
purchasers. The Division expresses no view with respect to any other 
questions the class of transactions covered by the exemption might 
raise, including but not limited to, the applicability of any other 
federal or state laws to, such transactions.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Brandon Becker,
Director.
[FR Doc. 94-8516 Filed 4-8-94; 8:45 am]
BILLING CODE 8010-01-P