[Federal Register Volume 65, Number 142 (Monday, July 24, 2000)]
[Notices]
[Pages 45640-45644]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18625]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43042; File No. SR-CSE-00-03]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the Cincinnati 
Stock Exchange, Incorporated to Provide for the Listing and Trading of 
Certain Trust Issued Receipts

July 17, 2000.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 30, 2000, the Cincinnati Stock Exchange, Incorporated (``CSE''or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons and to grant accelerated 
approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The CSE proposes to amend its rules to adopt listing standards for 
trust issued receipts. Upon approval of the listing standards, the 
Exchange intends to trade two series of trust issued receipts--Internet 
Holding Company Depository Receipts (``Internet HOLDRs'') and 
Biotechnology Holding Company Depository Receipts (``Biotech 
HOLDRs'')--pursuant to unlisted trading privileges (``UTP''). The text 
of the proposed rule change is available at the principal office of the 
CSE and at the Commission.

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 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 III below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The CSE proposes, in a new Rule 11.9, to adopt listing standards 
that would allow the Exchange to trade, whether by listing or pursuant 
to UTP, trust issued receipts based on one or more securities.
    i. Trust Issued Receipts: Trust issued receipts are negotiable 
receipts that are issued by a trust in which securities of issuers are 
deposited and held on behalf of the holders of the trust issued 
receipts. Trust issued receipts are designed to allow investors to hold 
interests in a variety of companies in a particular industry through a 
single, exchange-listed and -traded instrument that represents 
beneficial ownership in the deposited securities. Holders may cancel 
their trust issued receipts at any time to receive their pro rata share 
of the underlying securities.

[[Page 45641]]

    Beneficial owners of the receipts have the same rights, privileges, 
and obligations as they would if they beneficially owned the underlying 
securities outside the trust issued receipt program. Holders of the 
receipts have the right to instruct the trustee to vote their pro rata 
share of the underlying securities evidenced by the receipts. They will 
receive reports, proxy solicitations, and other information distributed 
by the issuers of the deposited securities to their security holders, 
and will receive their pro rata share of the dividends and other 
distributions declared and paid by the issuers to the trustee.
    Trust issued receipts will be issued by a trust created pursuant to 
a depositary trust agreement. After the initial offering, the trust may 
issue additional receipts on a continuous basis when an investor 
deposits the requisite securities in the trust. An investor in the 
trust issued receipts will be permitted to withdraw the underlying 
securities upon delivery to the trustee of one or more round lots of 
100 trust issued receipts. Conversely, an investor may deposit the 
necessary securities and receive trust issued receipts in return.
    ii. Criteria for Initial and Continued Listing: If trust issued 
receipts are to be listed on the Exchange, the CSE will establish a 
minimum number of receipts that must be outstanding at the time trading 
commences on the Exchange. In connection with continued listing, the 
CSE will consider the suspension of trading in, or removal from listing 
of, a series of trust issued receipts when any of the following 
circumstances arise: (1) The issuing trust has more than 60 days 
remaining until termination and there have been fewer than 50 record 
and/or beneficial holders of the trust issued receipts for 30 or more 
consecutive trading days; (2) the trust has fewer than 50,000 receipts 
issued and outstanding; (3) the market value of all receipts issued and 
outstanding is less than $1 million; or (4) such other event occurs or 
conditions exists which, in the opinion of the CSE, makes further 
dealings on the Exchange inadvisable. These flexible criteria will 
allow the CSE to avoid delisting trust issued receipts (and possibly 
terminating the trust) due to relatively brief fluctuations in market 
conditions that may cause the number of holders to vary. However, these 
delisting criteria will not be applied for the initial 12-month period 
following formation of a trust and commencement of trading on the 
Exchange.
    In addition, if the number of companies represented by the 
deposited securities drops to fewer than nine, and each time the number 
of companies is reduced thereafter, the Exchange will consult with the 
staff of the Division of Market Regulation to confirm the 
appropriateness of the continued listing of the trust issued receipts.
    The Exchange believes that the proposed criteria are similar to the 
trust issued receipt listing criteria currently used by the American 
Stock Exchange (``Amex''), Chicago Stock Exchange (``CHX''), and Boston 
Stock Exchange (``BSE'').\3\
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    \3\ See infra note 14.
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    iii. Exchange Rules Applicable to the Trading of Trust Issued 
Receipts: Trust issued receipts are considered ``securities'' under the 
Exchange's Rules and are subject to all applicable trading rules, 
including the provisions of CSE Rule 14.9 (ITS Trade-Through and Locked 
Markets) which prohibits Exchange members from initiating trade-
throughs for ITS securities. The trust issued receipts are also subject 
to margin rules; rules governing priority, parity, and precedence of 
orders; operational and regulatory trading halt provisions; and 
responsibilities of Designated Dealers.\4\
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    \4\ However, the Exchange's rules relating to odd lot executions 
will not apply, because the trust issued receipts will be traded 
only in round lots or round lot multiples. Additionally, the 
Exchange understands that the Commission has provided an exemption 
from the short sale rule, Rule 10a-1 under the Act (17 CFR 240.10a-
1), for transactions in securities issued under the HOLDRs program. 
The CSE will issue a notice to its members detailing the terms of 
the exemption.
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    Trust issued receipts are currently traded on the Amex, CHX, and 
BSE at minimum variations of one-sixteenth of $1.00 for trust issued 
receipts trading at or above $0.25, and one-thirty-second of $1.00 for 
those trading below $0.25. the Exchange is proposing the same minimum 
fractional increments for the trading in trust issued receipts until 
decimalization is inaugurated.
    The CSE's surveillance procedure for trust issued receipts will be 
similar to the procedures used for portfolio depositary receipts and 
will incorporate and rely upon existing Exchange surveillance systems.
    Prior to commencement of trading in trust issued receipts, the CSE 
will issue a circular to members highlighting the characteristics of 
trust issued receipts, including that trust issued receipts are not 
individually redeemable. In addition, the circular will inform members 
about trading halts in such securities issued pursuant to CSE Rule 
12.11, which grants authority to the Chairman of the Board of Trustees 
or the President of the Exchange to suspend trading any and all 
securities whenever, in their determination, it is in the public 
interest to do so. In addition, the circular will advise that, along 
with other factors that may be relevant, the CSE may consider the 
extent to which trading is not occurring in one or more of the 
underlying securities and whether other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present.
    iv. Disclosure to Customers: The CSE will require its member to 
provide all purchasers of newly issued trust issued receipts with a 
prospectus for that series of trust issued receipts.
    v. Creation of Internet and Biotech HOLDRs: The Internet HOLDRs 
(``HHH'') are issued by the Internet HOLDRs trust which was created 
pursuant to a depositary trust agreement dated September 2, 1999, among 
the Bank of New York, as trustee; Merrill Lynch, Pierce, Fenner & Smith 
Incorporated; other depositors; and the owners of the Internet HOLDRs. 
The Internet HOLDRs trust will hold shares of common stock issued by 20 
specified companies in Internet-related industries. The 20 companies 
represented by the securities in the portfolio underlying the Internet 
HOLDRs trust \5\ met the following minimum criteria when they were 
selected on August 312, 1999: (1) The market capitalization for each 
company was equal to or greater than $1 billion; (2) the average daily 
trading volume for each security was a least 1.2 million shares over 
the 60 trading days prior to August 31, 1999; (3) the average daily 
dollar volume of the shares traded for each company during the 60-day 
trading period prior to August 31, 1999, was at least $60 million; and 
(4) each company was traded on a national securities exchange or Nasdaq 
for at least 90 days prior to August 31, 1999.
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    \5\ As of September 22, 1999, the deposited securities 
underlying Internet HOLDRs were: American Online, Inc. (AOL); Yahoo! 
Inc. (YHOO); Amazon.com, Inc. (AMZN); eBay Inc. (EBAY); At Home 
Corporation (ATHM); priceline.com Incorporated (PCLN); CMGI Inc. 
(CMGI); Inktomi Corporation (INKT); RealNetworks, Inc. (RNWK); 
Exodus Communications, Inc. (EXDS); E*TRADE Group Inc. (EGRP); 
DoubleClick Inc. (DCLK); Ameritrade Holding Corporation (AMTD); 
Lycos, Inc. (LCOS); CNET, Inc. (CNET); PSINet Inc. (PSIX); Networks 
Associates, Inc. (NETA); Earthlink, Inc. (ELNK); MindSpring 
Enterprises, Inc. (MSPG); and Go2Net, Inc. (GNEt).
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    The Biotech HOLDRs trust was formed under a depositary trust 
agreement, dated November 8, 1999, among the Bank of New York, as 
trustee; Merrill Lynch, Pierce, Fenner & Smith Incorporated; other 
depositors; and the owners of the trust issued receipts. The Biotech 
HOLDRs trust will hold shares of common stock issued by 20 specified

[[Page 45642]]

companies that are generally considered to be representative of the 
biotechnology industry.
    Each of the companies represented by the securities in the 
portfolio underlying the Biotech HOLDRs trust \6\ met the following 
minimum criteria: (1) The market capitalization for each company was 
equal to or greater than $840 million; (2) the average daily trading 
volume for each security was at least 200,000 shares over the 60 
trading days prior to and including October 27, 1999; (3) the average 
daily dollar value of the shares traded for each company during the 60-
day trading period prior to and including October 27, 1999, was at 
least $7.5 million; (4) each company was traded on a national 
securities exchange or Nasdaq for at least 90 days prior to October 27, 
1999.
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    \6\ The deposited securities underlying the Biotech HOLDRs are: 
Amgen Inc. (AMGN); Genentech, Inc. (DNA); Biogen, Inc. (BGEN); 
Immunex Corporation (IMNX); PE Corp.--PE Biosystems Group (PEB); 
MedImmune, Inc. (MEDI); Chiron Corporation (CHIR); Genzyme 
Corporation (GENZ); Gilead Sciences Inc. (GILD); Speracor Inc. 
(SEPR); IDEC Pharmaceuticals Corporation (IDPH); QLT Photo 
Therapeutics Inc. (QLTI); Millennium Pharmaceuticals, Inc. (MLNM); 
Biochem Pharma Inc. (BCHE); Affymetrix, Inc. (AFFX); Human Genome 
Sciences, Inc. (HGSI); ICOS Corporation (ICOS); Enzon, Inc. (ENZN); 
Celera Genomics (CRA); and Alkermes, Inc. (ALKS).
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    The companies represented by the securities in the portfolio 
underlying the two HOLDRs trusts were required to meet the following 
minimum criteria when they were selected: (1) Each company's common 
stock was registered under section 12 of the Act, \7\ (2) the minimum 
public float of each company included in the portfolio was at least 
$150 million; (3) each security was either listed on a national 
securities exchange or on Nasdaq and was a reported national market 
system security; (4) the average daily trading volume for each security 
was at least 100,000 shares during the preceding 60-day trading period; 
and (5) the average daily dollar value of the shares traded during the 
preceding 60-day trading period was at least $1 million. The initial 
weighting of each security in the portfolio was based on its market 
capitalization; however, if a security represented more than 20 percent 
of the overall value of the receipt on the date such weighting was 
determined, then the amount of such security was to be reduced to no 
more than 20 percent of the receipt value.
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    \7\ 15 U.S.C. 78l.
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    vi. Trading Issues: A round lot of any of the above trust issued 
receipts represents a holder's individual and undivided beneficial 
ownership interest in the whole number of securities represented by the 
receipt. The amount of deposited securities for each round lot of 100 
trust issued receipts will be determined at the beginning of the 
marketing period and will be disclosed in the prospectus to investors. 
Trust issued receipts may be acquired, held, or transferred only in 
round lots of 100 receipts or in round lot multiples. Orders for less 
than a round lot will be rejected, while orders for greater than a 
round lot, but not a round lot multiple, will be executed to the extent 
of the largest round lot multiple, rejecting the remaining odd lots.\8\
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    \8\ For example, an order for 50 trust issued receipts would be 
rejected, while an order for 1050 trust issued receipts would be 
executed in part (1000 receipts) and rejected in part (50 receipts).
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    The CSE believes that trust issued receipts will not trade at a 
material discount or premium to the assets held by the issuing trust, 
because the arbitrage process should promote correlative pricing 
between the trust issued receipts and the deposited securities. If the 
price of the trust issued receipt deviates enough from the value of the 
portfolio of deposited securities to create a material discount or 
premium, an arbitrage opportunity would be created allowing the 
arbitrageur either (1) to buy the trust issued receipts at a discount, 
exchanging them for shares of the underlying securities, and selling 
those shares at a profit; or (2) to sell the trust issued receipts 
short at a premium, buying the securities underlying the trust issued 
receipts, depositing them in exchange for the trust issued receipts, 
and delivering against the short position. In both instances, the 
arbitrageur locks in a profit and the markets move back into line.
    vii. Maintenance of the HOLDRs Portfolios: Except when a 
reconstitution event occurs, as described below, the securities 
represented by a trust issued receipt will not change. According to the 
prospectuses of the HOLDRs products, under no circumstances will a new 
company be added to the group of issues of the underlying securities, 
and weightings of component securities will not be adjusted after they 
are initially set.\9\
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    \9\ However, the number of shares of each security represented 
in a receipt may change due to certain corporate events such as 
stock splits or reverse stock splits on the deposited securities, 
and the relative weightings among the deposited securities may 
change based on the current market price of the deposited 
securities.
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    viii. Reconstitution Events: As described in the prospectuses, the 
securities underlying the trust issued receipts will be automatically 
distributed to the beneficial owners of the receipts in four 
circumstances:

    1. If the issuer of the underlying securities no longer has a 
class of common stock registered under Section 12 of the Act, \10\ 
then its securities will no longer be an underlying security and the 
trustee will distribute the securities of that company to the owners 
of the trust issued receipts;
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    \10\ 15 U.S.C. 78l.
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    2. If the Commission finds that an issuer of underlying 
securities should be registered as an investment company under the 
Investment Company Act of 1940, and the trustee has actual knowledge 
of the Commission's finding, then the trustee will distribute the 
shares of that company to the owners of the trust issued receipts;
    3. If the underlying securities of an issuer cease to be 
outstanding as a result of a merger, consolidation, or other 
corporate combination, the trustee will distribute the consideration 
paid by and received from the acquiring company to the beneficial 
owners of the trust issued receipts, unless the acquiring company's 
securities are already included in the trust issued receipt as 
deposited securities, in which case such additional securities will 
be deposited into the trust; or
    4. If an issuer's underlying securities are delisted from 
trading on a national securities exchange or Nasdaq and are not 
listed for trading on another national securities exchange or Nasdaq 
within five business days of the date the securities are delisted.

Also as described in the prospectuses, if a reconstitution event 
occurs, the trustee will deliver the underlying security to the 
investor as promptly as practicable after the date the trustee has 
knowledge of the occurrence of a reconstitution event.
    ix. Issuance and Cancellation of HOLDRs: The trust will issue and 
cancel--and an investor may obtain, hold, trade, or surrender--HOLDRs 
only in round lots of 100 or in round lot multiples. While investors 
will be able to acquire, hold, transfer, and surrender only round lots, 
the bid and asked prices will be quoted on a per-receipt basis. The 
trust will issue additional receipts on a continuous basis when an 
investor deposits the required securities with the trust.
    An investor may obtain trust issued receipts either by purchasing 
them on an exchange or by delivering to the trustee the underlying 
securities equivalent to a round lot. The trustee will charge an 
issuance and a cancellation fee of up to $10.00 per 100 trust issued 
receipts. Lower charges may be assigned for bulk issuance and 
cancellations. An investor may cancel trust issued receipts and 
withdraw the deposited securities by delivering a round lot or round 
lot multiple of the trust issued receipts to the trustee during normal 
business hours. According to the prospectuses, the trustee expects 
that, in most cases, it

[[Page 45643]]

will deliver the deposited securities within one business day of the 
withdrawal request.
    x. Termination of the Trusts: The trusts shall terminate upon the 
earliest of: (1) The removal of the receipts from Amex listing if they 
are not listed for trading on another national securities exchange or 
Nasdaq within five business days from the date the receipts are 
delisted; (2) the trustee resigns and no successor trustee is appointed 
within 60 days from the date the trustee provides notice to the initial 
depositor of its intent to resign; (3) 75 percent of the beneficial 
owners of outstanding trust issued receipts (other than Merrill Lynch, 
Pierce, Fenner & Smith Incorporated) vote to dissolve and liquidate the 
trust; or (4) December 31, 2039. If a termination event occurs, the 
trustee will distribute the underlying securities to the beneficial 
owners as promptly as practicable after the termination event.
2. Statutory Basis
    The CSE believes that the proposed rule change is consistent with 
Section 6(b) of the Act \11\ in general, and furthers the objectives of 
Sections 6(b)(5) \12\ in particular, in that it is designed to promote 
just and equitable principles of trade, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The CSE does not believe that the proposed rule would impose any 
inappropriate burden on competition.

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

    No written comments were solicited or received in connection with 
the proposed rule change.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying at the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-CSE-00-03 and 
should be submitted by August 14, 2000.

IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Rule Change

A. Generally

    The Commission finds that the proposed rule change is consistent 
with the requirements of section 6(b)(5) of the Act \13\ and the rules 
and regulations thereunder applicable to a national securities 
exchange. Specifically, the Commission finds, as it did in previous 
orders approving the listing and trading of trust issued receipts 
generally, and Internet HOLDRs and Biotech HOLDRs specifically, that 
the CSE's proposal to list and trade Biotech and Internet HOLDRs will 
provide investors with a convenient and less expensive way of 
participating in the securities markets.\14\ The proposal should 
advance the public interest by allowing investors to purchase and sell 
throughout the business day a single security replicating the 
performance of a broad portfolio of biotechnology or Internet stocks, 
thus providing investors with increased flexibility in satisfying their 
investment needs. Accordingly, the Commission finds that the proposal 
will facilitate transactions in securities, remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, protect investors and the public interest. 
Moreover, the proposal is not designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers.\15\
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    \13\ 15 U.S.C. 78f(b)(5).
    \14\ See Securities Exchange Act Release No. 42348 (January 18, 
2000), 65 FR 5006 (February 2, 2000) (approving listing and trading 
of Biotech HOLDRs on CHX pursuant to UTP); Securities Exchange Act 
Release No. 42347 (January 18, 2000), 65 FR 4451 (January 27, 2000) 
(approving listing and trading of Internet HOLDRs on BSE pursuant to 
UTP); Securities Exchange Act Release No. 42159 (November 19, 1999), 
64 FR 66947 (November 30, 1999) (approving listing and trading of 
Biotech HOLDRs on Amex); Securities Exchange Act Release No. 42056 
(October 22, 1999), 64 FR 58870 (November 1, 1999) (approving 
listing and trading of trust issued receipts and Internet HOLDRs on 
CHX pursuant to UTP); and Securities Exchange Act Release No. 41892 
(September 21, 1999), 64 FR 52559 (September 29, 1999) (approving 
listing and trading of trust issued receipts and Internet HOLDRs on 
Amex).
    \15\ In approving this rule, the Commission notes that it has 
also considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
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    Although trust issued receipts are not leveraged instruments and, 
therefore, do not possess any of the attributes of stock index options, 
their prices will be derived and based upon the securities held in 
their respective trusts. Accordingly, the level of risk involved in the 
purchase or sale of trust issued receipts is similar to the risk 
involved in the purchase or sale of traditional common stock, with the 
exception that the pricing mechanism for trust issued receipts is based 
on a basket of securities.\16\ Nevertheless, the Commission believes 
that the unique nature of trust issued receipts raises certain product 
design, disclosure, trading, and other issues.
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    \16\ The Commission has concerns about continued trading of the 
trust issued receipts--whether listed or pursuant to UTP--if the 
number of component securities falls below nine, because the 
receipts may no longer adequately reflect a cross section of the 
selected industry. Accordingly, the CSE has agreed to consult the 
Commission concerning continued trading once the trust has fewer 
than nine component securities, and for each loss of a security 
thereafter.
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B. Trading of Trust Issued Receipts--Listing and UTP

    The Commission finds that the CSE's proposal to trade Biotech and 
Internet HOLDRs meets all of the specific criteria and listing 
standards that the Commission approved in earlier orders.\17\ Biotech 
and Internet HOLDRs are equity securities that will be subject to the 
full panoply of rules governing the trading of equity securities on the 
CSE, including, among others, rules governing margin; the priority, 
parity, and precedence of orders; operational and regulatory trading 
halts; and the responsibilities of Designated Dealers.\18\
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    \17\ See supra note 14.
    \18\ But see supra note 4.
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    Moreover, in approving this proposal, the Commission notes the 
CSE's representation that Biotech and Internet HOLDRs will not trade at 
a material discount or premium in relation to the overall value of the 
trusts' assets because of potential arbitrage opportunities. The CSE 
represents that the potential for arbitrage should keep the market 
price of a trust issued receipt comparable to the composite value of 
the deposited securities.
    Finally, the CSE has developed surveillance procedures for trust 
issued receipts that incorporate and rely upon

[[Page 45644]]

existing CSE surveillance procedures governing equities. The Commission 
believes that these surveillance procedures will provide adequate 
safeguards to prevent manipulative acts and practices and to protect 
investors and the public interest.

C. Disclosure and Dissemination of Information

    The Commission believes that the CSE's proposal will ensure that 
investors have sufficient information to be adequately apprised of the 
terms, characteristics, and risks of trading trust issued receipts. The 
CSE will require its members to provide all purchasers of newly issued 
trust issued receipts with a prospectus for that series of trust issued 
receipt. The Commission also notes that, upon the initial listing of 
any trust issued receipts, the CSE will issue a circular to its members 
highlighting the characteristics of trust issued receipts, including 
that trust issued receipts are not individually redeemable.

D. Accelerated Approval

    The CSE has requested that the Commission grant the proposed rule 
change accelerated effectiveness. As noted above, the Commission has 
approved the listing and trading of Biotech and Internet HOLDRs on 
other exchanges, under rules that are substantially similar to the 
CSE's rules. The Commission published those rules in the Federal 
Register for the full notice and comment period. No comments were 
received on the proposed rules, and the Commission found them 
consistent with the Act.\19\ The Commission believes that the trading 
of Biotech and Internet HOLDRs on the CSE raises no new regulatory 
issues, and that the Biotech and Internet HOLDRs to be traded on the 
CSE are structurally the same as the HOLDRs previously approved by the 
Commission for listing and trading on the other exchanges. Accordingly, 
the Commission finds good cause for approving the proposed rule change 
prior to the thirtieth day after the date of publication of notice of 
the filing thereof in the Federal Register.\20\
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    \19\ See supra note 15.
    \20\ However, the Commission notes that, notwithstanding 
approval of the listing standards for Biotech and Internet HOLDRs, 
other similarly structured products, including trust issued receipts 
based on other industries, will require review by the Commission 
prior to being traded on the Exchange. In addition, the CSE may be 
required to submit a rule filing prior to trading a new issue or 
series on the Exchange.
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    It Is Therefore Ordered, pursuant to section 19(b)(2) of the 
Act,\21\ that the proposed rule change (SR-CSE-00-03), is hereby 
approved on an accelerated basis.
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    \21\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 00-18625 Filed 7-21-00; 8:45 am]
BILLING CODE 8010-01-M