Self-Regulatory Organizations; Filing of Proposed Rule Change by the Pacific Stock Exchange, Inc. Relating to Amendments to its Listing Fee Schedule for Listed Companies

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33928; File No. SR-PSE-94-8]

Self-Regulatory Organizations; Filing of Proposed Rule Change by

the Pacific Stock Exchange, Inc. Relating to Amendments to its Listing

Fee Schedule for Listed Companies

April 19, 1994.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on March 8,

1994, the Pacific Stock Exchange, Inc. (``PSE'' 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 self-regulatory organization. The

Commission is publishing this notice to solicit comments on the

proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance

of the Proposed Rule Change

The PSE is proposing to make certain changes to its Listing Fee

Schedule for listed companies. The Fee Schedule is proposed to be

amended as follows:\1\

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\1\With respect to the following schedule, italicizing indicates

new material and brackets indicate material to be deleted.

Original Listings:

Common Stock, Dual Listing.................... $10,000.00

Common Stock, Exclusive Listing............... 20,000.00

Processing Fee:

Per Original Listing Application.............. \1\500.00 [250.00]

Annual Maintenance Fee:

For one issue, Dual listing................... 1,000.00

For one issue, Exclusive listing.............. 2,000.00

\1\This is a fixed charge for the review of potential listings and is

not refundable. Issues approved by the Equity Listing Committee may

have this charge credited towards the original listing fee.

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 Exchange included statements

concerning the purpose of and basis for the fee increase and discussed

any comments it received on the fee increase. The text of these

statements may be examined at the places specified in Item IV 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 exchange is proposing to amend its fees for listed companies.

Specifically, the Exchange is proposing, first, to increase its

original listing fee for the common stock of exclusively listed

companies from $10,000 to $20,000. Second, the Exchange is proposing to

increase its initial processing fee, applicable to all original listing

applications, from $250 to $500. Third, the Exchange is proposing to

increase its annual maintenance fee for exclusively listed companies

from $1,000 to $2,000.

The Exchange is proposing these changes in order to offset rising

costs associated with maintaining listing services and related overhead

expenses.

(2) Statutory Basis

The Exchange believes that the proposed fee increases are

consistent with Section 6(b) of the Act in general and furthers the

objectives of Section 6(b)(4) in particular in that they are intended

to assure the equitable allocation of reasonable dues, fees, and other

charges among members, issuers, and other persons using the Exchange's

facilities.

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

The Exchange 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 solicited or received with respect to the

fee increase.

III. Date of Effectiveness of the Proposed rule Change and Timing for

Commission Action

Within 35 days of the publication of this notice in the Federal

Register or within such other 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 the proposed rule change, or

(B) institute proceedings to determine whether the proposed rule

change should be disapproved.

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33927; File No. SR-PTC-94-01]

Self-Regulatory Organizations; Participants Trust Company; Filing

of Proposed Rule Change Relating to the Eligibility of Certain

Securities Guaranteed by the Government National Mortgage

Association

April 19, 1994.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''),\1\ notice is hereby given that on April 4, 1994, the

Participants Trust Company (``PTC'') filed with the Securities and

Exchange Commission (``Commission'') the proposed rule change (File No.

SR-PTC-94-01) as described in Items I, II, and III below, which Items

have been prepared primarily by the self-regulatory organization. On

April 15, 1994, PTC filed Amendment No. 1 to the proposed rule

change.\2\ The Commission is publishing this notice to solicit comments

on the proposed rule change from interested persons.

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\1\15 U.S.C. 78s(b)(1) (1988).

\2\Letter from Carol Jamison, Assistant Vice President and

Associate Counsel, PTC, to Ari Burstein, Attorney, Division of

Market Regulation, Commission (April 15, 1994).

The amendment changes the date on which principal and interest

on the GNMA REMIC will be payable from the fifteenth calendar day of

the month as was originally proposed, to the sixteenth calendar day

of the month. In addition, issuers of REMIC-eligible MBS will not be

required to pay or report principal and interest electronically, as

was originally proposed.

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I. Self-Regulatory Organization's Statement of the Terms of

Substance of the Proposed Rule Change

The proposed rule change will allow PTC to designate certain

securities guaranteed by the Government National Mortgage Association

(``GNMA'') as ``eligible securities'' as permitted by Article I, Rule 2

of PTC's Rules (``GNMA Securities'').

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 the

Statutory Basis for, the Proposed Rule Change

The purpose of the proposed rule change is to allow PTC to

designate certain securities guaranteed by GNMA as eligible securities

as permitted by Article I, Rule 2 of PTC's Rules. PTC currently acts as

depository for single-class GNMA I and GNMA II mortgage-backed

securities (``MBS'') and REMIC securities\3\ guaranteed by the

Department of Veterans Affairs (``VA'').\4\

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\3\REMIC is an acronym for ``real estate mortgage investment

conduit,'' a pass-through vehicle invented pursuant to the Tax

Reform Act of 1986 to issue multiclass mortgage-backed securities.

Interests in REMICs may be regular (debt) or residual (equity

interests). Downes, John and Goodman, Kordan Elliot, Dictionary of

Finance and Investment Terms (Barron's 1987).

\4\As of December 31, 1993, PTC had approximately 260,000 pools

of GNMA single-class securities on deposit, representing $850

billion in par value (95% of total GNMA single-class securities par

value outstanding), and 71 tranches of VA REMIC securities,

representing $4.6 billion in par value, from a total of 5 REMIC

transactions (100% of all VA REMIC par value outstanding).

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1. Current GNMA Programs

GNMA is a wholly-owned corporate instrumentality of the United

States within the Department of Housing and Urban Development

(``HUD''). Through its single-class CNMA I and GNMA II MBS programs,

GNMA guarantees the timely payment of principal and interest on

securities issued by private institutions and backed by pools of

federally insured or guaranteed mortgage loans. The GNMA guarantee is

backed by the full faith and credit of the United States.

Each issue of GNMA I and GNMA II MBS has a single class of

securities with one coupon rate and scheduled maturity. Annual volume

of new GNMA guaranteed single-class MBS over the past four years has

been approximately $65 billion in fiscal 1990, $63 billion in fiscal

1991, $72 billion in fiscal 1992, and $143 billion in fiscal 1993. Over

97% of this volume represents pools of single-family mortgage loans

and, of this, over 86% are GNMA I MBS.\5\

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\5\Approximately 95% (approximately $850 billion in par value

and $450 million of remaining principal balance) of all GNMA I and

GNMA II MBS are held on deposit at PTC as of December 31, 1993.

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2. Proposed GNMA REMIC Program

GNMA is now establishing a GNMA REMIC program under which GNMA will

guarantee multi-class securities issued by REMIC trusts. The GNMA REMIC

securities will be issued through single-purpose trusts created by

GNMA-approved sponsors which will assemble GNMA-guaranteed single-class

mortgage-backed securities to constitute the corpus of the REMIC trust.

The sponsors will be private-sector entities such as investment

bankers.

The Federal National Mortgage Association (``FNMA'') and the

Federal Home Loan Mortgage Corporation (``FHLMC'') currently issue

REMIC securities that are backed by GNMA MBS, in addition to a

substantial volume of REMIC issues backed by their own collateral. Upon

issuance, the General Counsel of HUD will render an opinion that GNMA's

obligations under the GNMA guarantee of its REMIC securities will

constitute absolute and unconditional general obligations of the United

States, for which the full faith and credit of the United States is

pledged.

The authorizing Federal statute\6\ provides that the GNMA REMIC

program be implemented by GNMA's publication of a notice in the Federal

Register, and that GNMA subsequently publish regulations within twelve

months of the publication of the initial notice, based upon the

comments received and the experience of GNMA in carrying out the

program.

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\6\Section 306(g) of the National Housing Act, 12 USC 1721(g),

as amended by Sec. 3004 of the Omnibus Budget Reconciliation Act of

1993, 107 Stat. 339.

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GNMA will implement its REMIC program in two stages. During the

initial stage, GNMA will restrict participation in the REMIC program to

a small number of participants (consisting of sponsors, co-sponsors,

trustees, trust counsel, and accounting firms) and a limited number of

REMIC issuances. The initial stage will commence upon the closing of

the first transaction, after publication of the notice in the Federal

Register, and is expected to last several months, during which time

GNMA will establish standard documentation, and guidelines and

procedures applicable to the full implementation of the REMIC

program.\7\

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\7\GNMA has not yet announced the date on which the initial

stage of the REMIC program will commence, but anticipates that it

will occur in the spring of 1994.

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GNMA has retained Kenneth Leventhal & Company as its financial

advisor and Hunton & Williams as its legal advisor in implementing the

REMIC program, and is currently engaged in approving the initial

program participants. After the initial stage, GNMA anticipates that it

will publish a REMIC Guide containing program requirements and

standardized documents as it does for its MBS programs.

While GNMA has not yet determined the characteristics of the GNMA

REMIC tranches, for processing purposes it is assumed that the GNMA

REMIC classes will have the same basic processing requirements as the

VA REMICs, which PTC has had on deposit for approximately the last two

years. It is assumed that, as in the case with the VA REMIC securities,

all classes of the GNMA REMIC securities except the residual class will

be established and maintained in book-entry form through the facilities

of PTC, although holders will have the right to request certificated

securities.

REMIC issuances will be limited during the initial stage of the

program. Once the REMIC program is fully established, however, GNMA

anticipates that a substantial percentage of its annual production of

GNMA single-class securities will be securitized by GNMA REMICs,

resulting in perhaps 100 or more REMIC transactions per year.

3. PTC as GNMA REMIC Depository

GNMA has requested that PTC serve as custodian of the new GNMA

REMIC security and is designating PTC as depository for the GNMA REMIC

securities. PTC currently acts as depository for the GNMA I and GNMA II

securities and for VA REMIC securities.

It is anticipated that each class of the GNMA REMIC securities will

be issued initially in the form of one or more physical certificates

registered in the name of the Mortgage Backed Securities Clearing

Corporation, nominee for PTC, and held in physical form by PTC's

custodian, with participants receiving and delivering REMIC securities

by book-entry on PTC's books. REMIC securities may be held subsequent

to original issuance in either certificated form, outside of PTC, or on

PTC's book-entry system, as is currently the case with the GNMA I and

GNMA II single-class MBS and the VA REMIC securities on deposit at PTC.

PTC's current custody agreement with its custodian, Chemical Bank,

accommodates the deposit of GNMA REMIC securities with the custodian.

The REMIC securities will be supported entirely by the cash flows

on the underlying GNMA-guaranteed GNMA I MBS. REMIC trustees will be

required to pay principal and interest (``P&I'') on the REMIC

securities in same day funds on the 16th day of the month, or the first

business day thereafter if the 16th is not a business day. REMIC P&I

will therefore be paid to REMIC holders on the same day that the P&I on

the underlying MBS is paid to MBS holders. PTC will pass through the

REMIC payment on the same day as received.

Not later than the 14th day of each month, the trustee will deliver

to PTC and Chemical Bank the factor information for payment on the

REMIC securities. PTC will follow the instructions from the trustee for

the disbursement of funds received on the GNMA MBS collateralizing the

REMIC trust.

The volume of the GNMA REMIC securities initially deposited at PTC

will be modest compared to the total face amount GNMA securities now on

deposit at PTC (approximately $880 billion) and is expected to have a

comparably small impact on PTC's overall transaction volume. GNMA I's

that constitute the corpus of a GNMA REMIC trust will remain

immobilized at PTC and, therefore, will be removed from PTC's

transactions volume after the creation of the REMIC. In addition, CMO/

REMIC tranches historically have been less actively traded than single-

class mortgage-backed securities.

It is expected that PTC will utilize pricing sources and the

methodology employed for the VA REMIC pricing at PTC for the GNMA REMIC

product. As an eligible security, functionally and legally comparable

to GNMA single-class and VA REMIC securities, PTC's Rules and

Procedures are currently consistent with, and govern PTC's and its

participants' rights and obligations with respect to, the GNMA REMIC

securities. PTC end-of-day borrowing agreements also currently apply to

GNMA REMIC securities without change. Finally, PTC anticipates that the

fees imposed by PTC for providing depository services for GNMA REMIC

securities will be the same as those in effect for GNMA MBS.

PTC believes that since the proposed rule change provides for the

prompt and accurate clearance and settlement of securities transactions

it is consistent with section 17A of the Act and the rules and

regulations thereunder applicable to PTC.

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

PTC does not believe that the proposed rule change will impose any

burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed

Rule Change Received from Members, Participants, or Others

PTC has neither solicited nor received comments on this proposed

rule change.

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 PTC. All submissions

should refer to file number SR-PTC-94-01 and should be submitted by May

17, 1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-10007 Filed 4-25-94; 8:45 am]

BILLING CODE 8010-01-M