[Federal Register Volume 61, Number 79 (Tuesday, April 23, 1996)]
[Notices]
[Pages 17932-17936]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9893]



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OFFICE OF MANAGEMENT AND BUDGET
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37121; International Series Release No. 969; File No. 
SR-CHX-96-12]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto by the Chicago Stock Exchange, Inc. 
Relating to Listing Standards for Investment Company Units

April 17, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934, 15 U.S.C. 78s(b)(1) (``Act''), notice is hereby given that on 
March 27, 1996, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the self-regulatory organization. On April 
12, 1996, the Exchange filed Amendment No. 1 to its proposal.\1\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ Amendment No. 1 serves to supersede entirely the Exchange's 
initial rule filing. Therefore, this notice incorporates Amendment 
No. 1 in its entirety. Letter from Charles R. Haywood, Foley & 
Lardner, to Francois Mazur, Attorney, Division of Market Regulation, 
Commission, dated April 11, 1996 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Article XXVIII of its Rules 
governing the listing requirements of securities on the CHX, as well as 
Article XXX of the CHX's Rules governing specialists.

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

    The Exchange is proposing listing standards for units of trading 
(``Units'') that represent an interest in a registered investment 
company (``Investment Company'') that could be organized as a unit 
investment trust (``UIT''), an open-end management investment company, 
or a similar entity. The investment company would hold securities 
comprising, or otherwise based on or representing an investment in, an 
index or portfolio of securities. The investment company could either 
hold the securities directly or could hold another security 
representing the index or portfolio of securities (such as shares of a 
UIT that holds shares of an open-end investment company).
    Under the proposed rules, the Investment Company would be required 
either to: (i) hold securities comprising or otherwise based on or 
representing and interest in an index or portfolio of securities, or 
(ii) hold securities in another registered investment company.\2\ The 
Investment Company would then issue Units in a specified aggregate 
number in return for a deposit of either: (i) shares of securities

[[Page 17933]]

comprising or otherwise based on the relevant index or portfolio, or 
(ii) shares of a registered investment company. In addition or instead 
of the ``in-kind'' deposit, the Investment Company might require a cash 
deposit. Thus, Units could be structured as series of an open-end 
management investment company investing in a portfolio of securities 
(``Fund-only structure''). Alternatively, Units could be structured as 
UITs that have as their assets shares of an open-end investment company 
holding a portfolio of securities (``Fund/UIT structure''). Unit 
holders would receive periodic cash payments corresponding to the 
regular cash dividends or distributions declared with respect to the 
securities held by the Investment Company (after subtracting applicable 
expenses and charges).
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    \2\ Telephone Conversation between David T. Rusoff, Foley & 
Lardner, and Francois Mazur, Office of Market Supervision, Division 
of Market Regulation, on April 12, 1996.
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    Units would be distributed in ``Creation Transactions.'' To effect 
a Creation Transaction in a Fund-only structure, an entity would buy 
shares from the investment company (``Fund'') in ``Creation Unit'' size 
aggregations in exchange for a deposit of a basket of securities 
reflecting the securities underlying the Fund and/or cash deposit. To 
effect a Creation Transaction in a Fund/UIT structure, an entity would 
buy a Fund share with a similar deposit and exchange it for a Creation 
Unit.\3\ The owner of a Creation Unit could then subdivide the Creation 
Unit into a specific number of identical fractional non-redeemable sub-
units, the Units, that would constitute securities traded. Units could 
be recombined into Creation Unit aggregations, and redeemed for the 
securities underlying the Fund and/or an amount of cash, either 
directly, or indirectly, depending on the structure chosen. The 
securities would not be redeemable other than in Creation Unit 
aggregations.\4\
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    \3\ Id.
    \4\ Id.
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    Dealing in Units on the Exchange will be conducted pursuant to the 
Exchange's general agency-auction trading rules. The Exchange's general 
dealing and settlement rules would apply, including its rules on 
clearance and settlement of securities transactions and its equity 
margin rules. Other generally applicable Exchange equity rules and 
procedures also would apply. Unless the prospectus for a specific 
security states otherwise, the Units trading on the Exchange will have 
one vote per share; however, as with other securities issued by 
registered investment companies, there will not be a ``pass-through'' 
of the voting rights on the actual index securities held by a fund or 
directly or indirectly by a trust.
    With respect to specialist dealings, Article XXX, Rule 23(a) of the 
Exchange's Rules precludes certain business relationships between an 
issuer of an ``exclusive issue'' and the specialist in that exclusive 
issue.\5\ Rule 23(a) could be interpreted when listing certain types of 
Units to prevent a specialist from engaging in Creation Transactions 
with the issuer. The Exchange believes, however, that such market 
activities could enhance liquidity in the Units and facilitate the 
specialist's market-making responsibilities. In addition, since the 
specialist will be able to engage in Creation Transactions and 
redemptions only according to the same terms and conditions as every 
other investor (and only at net asset value), the Exchange believes 
that there is no potential for abuse.
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    \5\ Interpretation and Policy .01 of Article XXX, Rule 23 
defines ``exclusive issue'' as the stock of any company traded on 
the Exchange no otherwise traded on the NYSE, American Stock 
Exchange, or NASDAQ/NMS, and, where there exists another market for 
such issue, the Exchange has executed 15% or more of the volume in 
the issue during the three previous months.
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    Therfore, the Exchange proposes amending Article XXX, Rule 23(a) to 
permit specialists to engage in these types of transactions if such 
transactions would facilitate the maintenance of a fair and orderly 
market in the Security. Any Creation Transactions in which the 
specialist engages, however, will have to be effected through the 
Distributor (as defined herein), and not directly with the issuer. This 
requirement will make clear that the specialist is purchasing Units in 
Creation Unit-size aggregations only to facilitate normal specialist 
trading activity.
    With respect to investor disclosure, the Exchange notes that, 
pursuant to the requirements of the Securities Act of 1933 (``1933 
Act''), all investors in Units will receive a prospectus regarding the 
Units. Because the Units will be in continuous distribution, the 
prospectus delivery requirements of the 1933 Act will apply to all 
investors in Units. It is possible, however, that an exemption from the 
prospectus delivery requirement may be obtained at some point in the 
future with respect to Units listed or traded on the Exchange. In the 
event of such an exemption, the Exchange will discuss with Commission 
staff the appropriate level of disclosure that should be required with 
respect to the Units being listed or traded, as appropriate, and will 
file any necessary rule change to provide for such disclosure.
    Upon the initial listing of any class of Units or trading of such 
Units pursuant to unlisted trading privileges, the Exchange will issue 
a circular to its membership explaining the unique characteristics and 
risks of this type of security. The circular will, among other things, 
inform member organizations of their responsibility to deliver a 
prospectus to investors.
    With respect to trading halts, the trading of Units would be 
halted, along with the trading of all other listed stocks, in the event 
the ``circuit breaker'' thresholds of Article IX, Rule 10A of the 
Exchange's Rules are reached.
    The Exchange proposes that Units trade either in certificated form 
or solely through the use of a global certificate. Permitting the use 
of global certificates would be consistent with expediting the 
processing of transactions in Units and would minimize the costs of 
engaging in transactions in these securities.
    One existing form of Units are CountryBasket securities 
(``Securities''),\6\ Which are created pursuant to a Fund-only 
structure. The New York Stock Exchange (``NYSE'') has received 
permission to list and trade CountryBaskets.\7\ CHX is not asking 
permission to list CountryBaskets at this time, but rather will trade 
CountryBaskets pursuant to unlisted trading privileges (``UTP'') once 
the generic listing standards set forth herein are approved.
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    \6\ CHX understands that ``CountryBaskets'' and ``The 
CountryBaskets Index Fund'' are service marks of Deutsche Morgan 
Grenfell/C.J. Lawrence, Inc. (``DMG''), the investment advisor to 
the fund.
    \7\ Securities Exchange Act Release No. 36923 (March 5, 1996), 
61 FR 10410.
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    Pursuant to Rule 12f-5 under the Act,\8\ prior to trading a 
particular class or type of security pursuant to UTP, CHX must have 
listing standards comparable to those of the primary exchange on which 
the security is listed. The NYSE has adopted listing standards for 
investment company units, and CHX's proposed rule change is designed to 
create similar standards for investment company unit listing and/or 
trading on CHX. As stated above, CHX propose to trade CountryBaskets 
pursuant to UTP upon approval of this rule filing.
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    \8\ 17 CFR 240.12f-5 (1995).
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    The remainder of this section of the filing merely provides 
background information on CountryBaskets. The information, taken from 
File No. SR-NYSE-95-23, describes the structure and mechanics of 
CountryBaskets.
    CountryBasket securities are issued as series of an open-end 
management investment company that will invest in a portfolio of 
securities (``Index Securities'') included in a corresponding index. 
Each series of the

[[Page 17934]]

investment company is designed to provide investment results that 
substantially correspond to the price and yield performance of a 
corresponding FT/S&P-Actuaries World Index (``Index'' or ``FT/
S&P'').\9\ The initial nine series of Funds will be based on the 
following Indices: Australia, France, Germany, Hong Kong, Italy, Japan, 
South Africa, United Kingdom, and the United States.
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    \9\ According to Amendment No. 1 to SR-NYSE-95-23, the Indices 
are a continuation of the FT-Actuaries World Indices, which were 
jointly founded by The Financial Times Limited (``FT''), Goldman, 
Sachs & Co. (``Goldman''), and NatWest Securities Limited 
(``NatWest,'' and each a ``Founding Member''). In May 1995, Standard 
& Poor's (``S&P''), a division of The McGraw-Hill Companies, Inc., 
joined FT and Goldman as co-publishers of the predecessor to the 
Indices. As part of the new arrangement, NatWest withdrew from the 
management of those indices, but continues to be recognized as a 
Founding Member. The Indices are now jointly owned by S&P, FT and 
Goldman. Following a transition period, FT and S&P will jointly 
calculate the Indices. In November 1995, FT transferred its 
ownership rights in the Indices to FT-SE International, a new 
company jointly owned by the FT and the London Stock Exchange. By 
the end of 1996, it is expected that FT-SE International will assume 
responsibility for calculating the European and Asia-Pacific Indices 
and S&P will calculate the U.S. Index.
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Distribution of the Securities

    The Securities are distributed in transactions with the Fund 
through Creation Transactions. To effect a Creation Transaction, a 
person would buy Fund shares from the Fund at their net asset value 
(``NAV'') next computed. The sales will be in Creation Unit-size 
aggregations in exchange for a deposit (``Deposit'') of Index 
Securities (a ``Fund Basket'') and a specified amount of cash 
sufficient to equal the NAV of such shares.
    Securites in Creation Unit-size aggregations may be redeemed, at 
NAV, generally for an in-kind distribution of Index Securities 
comprising the Fund shares, plus a cash payment. A Creation Unit-size 
of Fund shares will represent securities with approximately $2 to $9.5 
million in market value. The Creation Unit would be disaggregated into 
the individual Securities that would trade on the Exchange.\10\ For the 
nine initial CountryBasket securities, there would be the following 
number of Securities per Creation Unit:

    \10\ If a Fund/UIT structure instead had been used, a 
``Redeemable Unit'' would represent the functional equivalent of the 
Creation Unit. The owner of a Redeemable Unit could separate it into 
a specific number of identical fractional non-redeemable sub-units 
that would constitute the Securities traded on the Exchange. In the 
case of the Germany CountryBasket series, for example, there would 
be 100,000 Securities per Redeemable Unit. These Securities could be 
recombined into Redeemable Units and then redeemed, at NAV, for the 
appropriate number of Fund shares. In turn, the Fund shares could be 
redeemed for the Index Securities and cash. The Securities would not 
be redeemable other than in the Creation Unit aggregations.
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Australia--100,000
France--100,000
Germany--100,000
Hong Kong--100,000
Italy--100,000
Japan--250,000
South Africa--100,000
United Kingdom--100,000
United States--100,000

    There may be an initial distribution period of Fund shares lasting 
from one to a few weeks. During this period, the principal underwriter 
or distributor (``Distributor'') directly or through soliciting dealers 
would accept subscriptions to purchase Fund shares.
Exchange Trading of Units
    The proposed listing criteria provide flexible standards for the 
listing of Units. Before commencing trading, the Exchange will require 
that there be at least 300,000 tradeable Units outstanding, 
representing, for the nine series encompassed by this filing, at least 
three Creation Units (except for the Japan CountryBasket). The Exchange 
will consider the suspension of trading and the delisting of a series 
of Units if:

     After the first year of trading, there are fewer than 
50 record or beneficial holders of the Units for 30 or more 
consecutive trading days;
     The value of the underlying index or portfolio of 
securities is no longer calculated or available; or
     There occurs another event that makes further dealings 
in the Units on the Exchange inadvisable.
The FT/S&P-Actuaries World Indices
    Deutsche Bank Securities Corporation, formerly investment adviser 
to the Funds, provided the NYSE with certain information describing the 
FT/S&P-Actuaries World Indices, contained within NYSE filing SR-NYSE-
95-23, as amended. The following combines information from the initial 
filing and Amendment Nos. 1 and 2 to that filing.
Establishing an Index
    The FT/S&P are jointly compiled by the Financial Times Limited, 
Goldman, Sachs & Co., and Standard & Poor's, a division of The McGraw-
Hill Companies, Inc., in conjunction with the Institute of Actuaries 
(together, the ``consortium'').\11\ The aim of the Consortium is to 
create and maintain a series of high quality equity indices for use by 
the global investment community. Specifically, the Consortium seeks to 
establish and maintain the FT/S&P so that the respect to their 
corresponding markets, they are comprehensive, consistent, flexible, 
accurate, investible, and representative.
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    \11\ In Amendment No. 1 to SR-NYSE-95-23, the NYSE stated that 
certain modifications had occurred to the indices. The Chicago Stock 
Exchange's filing has incorporated the additional information, and 
operates under the assumption that the original information detailed 
in SR-NYSE-95-23 continues to be accurate to the extent not modified 
by the NYSE's amendment.
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    The World Index Policy Committee (``WIPC'') makes all policy 
decisions concerning the FT/S&P, including objectives, selection 
criteria, liquidity requirements, calculation methodologies, and the 
timing and disclosure of additions and deletions. The WIPC makes those 
decisions in a manner that is consistent with the stated aims and 
objectives of the Consortium. In general, the WIPC aims for a minimum 
of 70 percent coverage of the aggregate value of all domestic exchange-
listed stocks in every country, region and sector in which it maintains 
an index.
    The WIPC consists of one representative of each Consortium member, 
one member nominated by each of the parties as representing an actual 
or prospective main user group of the World Indices, a Chairman and 
additional member who are members of the Institute of Actuaries of the 
Facility of Actuaries.
    A country must satisfy the following criteria for the WIPC to 
include it in the FT/S&P-Actuaries World Indices: (1) Direct equity 
investment by non-nationals must be permitted, (2) accurate and timely 
data must be available; (3) no significant exchange controls should 
exist that would prevent the timely repatriation of capital or 
dividends; (4) significant international investor interest in the local 
equity market must have been demonstrated; and (5) adequate liquidity 
must exist.
    Securities in the FT/S&P are subject to the following 
``investibility screens'': (1) Securities comprising the bottom five 
percent of any market's capitalization are excluded; (2) securities 
must be eligible to be owned by foreign investors; (3) 25 percent or 
more of the full capitalization of eligible securities must be publicly 
available for investment and not in the hands of a single party or 
parties ``acting in concert''; and (4) securities that fail to trade 
for more than 15 business days within each of two consecutive quarters 
are excluded.
    The WIPC seeks to select constituent stocks that capture 85 percent 
of the equity that remains in any market (known as the ``investible 
universe'') after applying the investibility screens. Securities are 
selected with regard to economic sector and market

[[Page 17935]]

capitalization to make a given FT/S&P highly representative of the 
overall economic sector make-up and market capitalization distribution 
of the investible universe of a market.
Maintaining an Index
    The WIPC may add securities to the FT/S&P for any of the following 
reasons: (1) The addition would make the economic sector make-up and 
market capitalization distribution of the FT/S&P component more 
representative of its investible universe; (2) a non-constituent 
security has gained in importance and replaces an existing constituent 
security under the rules of review established by the WIPC; (3) the FT/
S&P component represents less than its targeted percentage of the 
capitalization of its investible universe (usually in cases where the 
investible universe has grown faster than the corresponding FT/S&P); 
(4) a new, eligible security becomes available whose total 
capitalization is one percent or more of the current capitalization of 
the relevant FT/S&P (5) an existing constituent ``spins off'' a part 
of its business and issues new equity to the existing shareholders; or 
(6) changes in investibility factors lead to a stock becoming eligible 
for inclusion and that stock now qualifies on other grounds.
    The WIPC may adjust the FT/S&P for any of the following reasons: 
(1) The component comprises too high a percentage of its representative 
universe; (2) a review by the WIPC shows that a constituent security 
has declined in importance and should be replaced by a non-constituent 
security; (3) the deletion of a security that has declined in 
importance would make the FT/S&P more representative of the economic 
make-up of its investible universe; (4) circumstances regarding 
investibility and free float change, causing the constituent security 
to fail the FT/S&P screening criteria; (5) and existing constituent 
security is acquired by another entity; or (6) the stock has been 
suspended from trading for a period of more than ten working days. 
Generally, but not in all cases, changes resulting from review by the 
WIPC occur at the end of a calendar quarter. Changes resulting from 
merger or ``spin-off'' activity will be effectuated as soon as 
practicable.
Dissemination of Changes to the Constituent Stocks in the Indices
    Changes to an Index made during a calendar quarter are noted at the 
foot of the tables containing the Indices that are published daily in 
the ET. Consistent with the FT publication policy, these changes also 
are shown prior to the actual day of implementation (unless for reasons 
beyond the control of FT this is not possible). Decisions regarding the 
addition of new eligible constituent stocks that are unrelated to 
existing stocks in an Index, or weighting changes to existing 
constituent stocks, are announced in the FT at least four working days 
before they are implemented. Monday editions of the FT also show all 
constituent changes made during the previous week, together with base 
values for each Index. Changes to be made in an Index at the end of a 
calendar quarter are published as soon as is practicable following the 
quarterly meeting of the World Indices Policy Committee, but before the 
quarter-end.
Calculation and Dissemination of an Index
    The FT/S&P are calculated through widely accepted mathematical 
formulae, with the effect that the Indices are weighted arithmetic 
averages of the price relatives of the constituents--as produced solely 
by changes in the marketplace--adjusted for intervening capital 
changes. The FT/S&P are base-weighted aggregates of the initial market 
capitalization, the price of each issue being weighted by the number of 
shares outstanding, modified to reflect only those shares outstanding 
that are eligible to be owned by foreign investors.
    For each constituent security, the implied annual dividend is 
divided by 260 (an accepted approximation for the number of business 
days in a calendar year). This dividend is then reinvested daily 
according to standard actuarial calculations. Distributions affect 
adjustments to the base capital or the price per share in accordance 
with prescribed FT/S&P standards. The indices' values and related 
performance figures for various periods of time are calculated daily 
and are disseminated to the public.
    The FT/S&P are valued in terms of local currency, U.S. dollars, and 
U.K. pounds sterling, thereby allowing the effect of currency value on 
the Index value to be measured. Changes to the indices are announced as 
soon as possible, and on Mondays the Financial Times publishes a list 
of changes to each index implemented during the previous week, if any. 
The FT/S&P are calculated once a day on weekdays when one or more of 
the constituent markets are open; the indices are syndicated and 
published in the financial sections of several newspapers worldwide. 
FT/S&P data also may be purchased electronically.
    Recognizing the importance of having current information on the 
value of the Indices, DMG has arranged for Telesphere Corporation 
(formerly Telekurs (North America) Inc.) (``Telesphere'') to calculate 
``indicative values'' for the nine Indices on which CountryBaskets are 
based on a more frequent basis. CHX understands that the NYSE will 
provide for the dissemination of these indicative values through the 
facilities of the Consolidated Tape Association (``CTA'').
    In calculating ``indicative values,'' Telesphere will use the most 
currently available stock price information for the constituent stocks 
in an Index (based on home currency prices) and prevailing currency 
exchange rates to translate the Index value into U.S. dollars. 
Telesphere will also use the same pricing algorithm and methodology as 
the Index calculators in calculating the indicative values. These 
values will be disseminated every 30 seconds by the NYSE during regular 
trading hours of 9:30 A.M. to 4:00 P.M. Eastern time. Due to the 
differences in trading hours in the markets for the stocks underlying 
the Indices, the calculation of the indicative values will be 
implemented as follows:

     Pacific Rim. Australia, Hong Kong, and Japan. There is 
no overlap between the NYSE trading hours and the home-country 
trading hours. Thus, the indicative values will always reflect the 
closing prices of the underlying securities on the most recently 
completed trading day, but will be updated every 30 seconds to 
reflect changes in exchange rates.
     Europe. France, Germany, Italy, and the United Kingdom. 
There is some overlap between NYSE trading hours and home-country 
trading hours. Thus, the 30-second updates for these Indices will 
reflect changes in both current stock price information and currency 
exchange rates while the relevant market is open; it will reflect 
only changes in exchange rates once the home-market closes.
     United States. Each 30-second update will reflect the 
current price of U.S. component stocks.
     South Africa. During Eastern Standard Time there is no 
overlap between NYSE and South African trading hours. During Eastern 
Daylight Savings Time there is a half-hour overlap. Thus, during 
Standard Time, the disseminated Index values will reflect the 
closing South African prices. During Daylight Savings Time, there 
will be a real-time feed of stock prices from the Johannesburg Stock 
Exchange and there will be a real-time calculation of the indicative 
value of the Index at 30-second intervals during the half-hour 
overlap.

    While these indicative values will not be the official values of 
the Indices (which will continue to be calculated and disseminated once 
each day), the

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Exchange believes that these values will provide investors with 
accurate, timely information on the values of the Indices. Of course, 
it cannot be guaranteed that the indicative value will at all times be 
a completely accurate reflection of the value of the underlying index. 
This also will provide all investors with equal access to information 
concerning the values of the Indices. While some market participants 
may be able to perform these calculations for their own trading 
purposes during the business day, many participants lack sufficient 
resources to do so. Providing standardized information through CTA 
facilities will help ensure that all investors have equal access to 
this market information.\12\
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    \12\ In the unlikely event that Telesphere determines that it no 
longer will calculate the indicative values of the Indices, 
according to the NYSE DMG will seek to find another entity to 
provide such values on substantially the same basis as Telesphere. 
if this were to occur, the NYSE has represented that it will consult 
with the staff of the Division of Market Regulation to ensure that 
the staff finds any proposed new arrangements acceptable, including 
the possibility of ending trading in the securities.
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    Although the Chicago Stock Exchange operates under Central Time, 
its trading hours are timed to coincide with those of the NYSE. 
Therefore, the time zone difference will not affect the ability to 
trade CountryBaskets on the CHX with full price information.
    Telesphere is providing the indicative values subject to 
substantially the following terms regarding its liability:

    The values are representative, unofficial, and indicative 
estimates of the FT/S&P-Actuaries World Indices (``FT/S&P'') 
calculated by Telesphere Corporation (``Telesphere''). Although they 
are provided with permission under a licensing agreement with 
Deutsche Morgan Grenfell/C.J. Lawrence Inc. (``Subscriber''), they 
are not, and should not be considered as, official FT/S&P index 
values. They are provided as an information service to benefit the 
investment community. Neither Telesphere nor Subscriber, The 
Financial Times Ltd., Standard & Poor's, Goldman, Sachs & Co., or 
their partners, affiliates employees and Agents, shall have any 
liability contingent or otherwise, to third parties for the 
completeness, or interruption in the delivery of the indicative 
indices. In no event will any such party be liable for any special, 
indirect, incidental, or consequential damages.

    The Exchange believes that its proposal is consistent with Section 
6(b)(5) of the Act in that the proposal fosters cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, removes impediments to and perfects the mechanism of a 
free and open market and a national market system and protects 
investors and the public interest.

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

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the 1934 Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

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

    Within 35 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 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (a) By order approve 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, 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 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, NW., 
Washington, DC 20549. 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 File No. 
SR-CHX-96-12 and should be submitted by May 14, 1996.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-9893 Filed 4-22-96; 8:45 am]
BILLING CODE 8010-01-M