[Federal Register Volume 60, Number 73 (Monday, April 17, 1995)]
[Notices]
[Pages 19312-19313]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9397]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35580; File No. SR-CSE-95-04]


Self-Regulatory Organizations; Cincinnati Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change Relating to Implementation of 
a Three-Day Settlement Standard

April 7, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on April 4, 1995, the 
Cincinnati Stock Exchange Incorporated (``CSE'') filed with the 
Securities and Exchange Commission (``Commission'') a proposed rule 
change as described in Items I, II, and III below, which items have 
been prepared primarily by CSE. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.

    \1\15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CSE proposes to modify its rules to implement a three business day 
settlement standard for securities transactions.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change.

    In its filing wit the Commission, CSE 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. CSE 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

    On October 6, 1993, the Commission adopted Rule 15c6-1 under the 
Act which establishes three business days after the trade date 
(``T+3'') instead of five business days (``T+5'') as the standard 
settlement cycle for most securities transactions.\2\ The rule will 
become effective June 7, 1995.\3\

    \2\Securities Exchange Act Release No. 33023 (October 6, 1993), 
58 FR 52891.
    \3\Securities Exchange Act Release No. 34952 (November 9, 1994), 
59 FR 59137.
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    Accordingly, in order to implement the new settlement standard 
established by Rule 15c6-1, the CSE proposes to amend the following 
rules. Currently, Rule 3.8(b)(1)(iii) provides that members receive 
reasonable assurance from the customer that a security will be 
delivered within five business days of the execution of the order. The 
CSE is proposing to replace the term ``five'' with the term ``three''. 
CSE also proposes to amend Rule 3.8(b)(2) which provides that members 
note on order tickets that the customer has the ability to deliver 
stock within five business days. The CSE is proposing to replace the 
term ``five'' with the term ``three''.
    Rule 11.4 provides that transactions in stocks (other than those 
made for ``cash'') shall be ``ex-dividend'' or ``ex-rights'' on the 
fourth business day preceding the record date fixed by the company or 
the date of the closing of transfer books, except when the Board of 
Trustees of CSE otherwise. The CSE is proposing to replace the term 
``fourth'' in this provision with the term ``second''. The rule also 
provides that should such record date or such closing of transfer books 
occur upon a day other than a business day this rule shall apply for 
the fifth preceding business day. The CSE is proposing to replace the 
term ``fifth'' with the term ``third''.
    The CSE's implementation of this proposed rule change will be 
consistent with the ``T+3'' conversion schedule which the National 
Securities Clearing Corporation has proposed for industry use. The 
schedule is as follows:

------------------------------------------------------------------------
       Trade date            Settlement cycle         Settlement date   
------------------------------------------------------------------------
June 2 Friday..........  5 day..................  June 9 Friday.        
June 5 Monday..........  4 day..................  June 9 Friday.        
June 6 Tuesday.........  4 day..................  June 12 Monday.       
June 7 Wednesday.......  3 day..................  June 12 Monday.       
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    If the Commission determines to alter the exemptions currently 
provided in Rule 15c6-1, CSE may need to undertake additional rule 
amendments. It is intended that the proposed rule change will become 
effective on the same date as Commission Rule 15c6-1. [[Page 19313]] 
    The proposed rule change is consistent with Section 6(b)(5) of the 
Act in that it is designed to promote just and equitable principles of 
trade, to foster cooperation and coordination with persons engaged in 
regulating, clearing, processing information with respect to, and 
facilitating transactions in securities.

B. Self-Regulatory Organization's Statement on Burden on Competition
    CSE 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.

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period (i) as the 
Commission may designate up to ninety 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 CSE consents, the Commission will:
    (A) By order approve such 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 in the 
Commission's Public Reference Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Copies of such filing also will be available 
for inspection and copying at the principal office of CSE. All 
submissions should refer to File No. SR-CSE-95-04 and should be 
submitted by May 8, 1995.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-9397 Filed 4-14-95; 8:45 am]
BILLING CODE 8010-01-M