Self-Regulatory Organizations; Order Approving Proposed Rule Change by the New York Stock Exchange, Inc. Relating to Extensions of Time for Payment or Delivery of Securities

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34073; File No. SR-NYSE-88-35]

Self-Regulatory Organizations; Order Approving Proposed Rule

Change by the New York Stock Exchange, Inc. Relating to Extensions of

Time for Payment or Delivery of Securities

May 17, 1994.

I. Introduction and Background

On November 16, 1988, the New York Stock Exchange, Inc. (``NYSE''

or ``Exchange'') submitted to the Securities and Exchange Commission

(``SEC'' or ``Commission''), pursuant to section 19(b)(1) of the

Securities Exchange Act of 1934 (``Act'' or ``Exchange Act'')\1\ and

Rule 19b-4 thereunder,\2\ a proposal to amend the NYSE Rules to add new

NYSE Rule 434 that would require all member organizations for which the

Exchange has been appointed the designated examining authority

(``DEA'') by the Commission pursuant to Rule 17d-1 under the Act\3\ to

submit requests for extensions of time for payment, under Regulation T

promulgated by the Federal Reserve Board (``FRB''),\4\ or delivery of

securities, pursuant to SEC Rule 15c3-3(n) under the Act,\5\ to the

Exchange.

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

\2\17 CFR 240.19b-4 (1993).

\3\17 CFR 240.17d-1 (1993).

\4\12 CFR 220.4(c) and 220.8(d) (1993).

\5\17 CFR 240.15c3-3 (1993).

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Notice of the proposal appeared in the Federal Register on December

9, 1988\6\ and again on December 30, 1992.\7\ The Commission determined

to republish the notice for comment because of the significant period

of time that had lapsed since the proposal initially was published in

the Federal Register and because of the number of comment letters that

were received concerning the proposal. In addition, in 1992, the

Federal Reserve Board issued advanced notice of proposed rulemaking to

modify Regulation T,\8\ and specifically noted the NYSE proposal in its

request for comments. The FRB has not yet acted on its proposal,

however, and has not published a timetable for doing so.

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\6\See Securities Exchange Act Release No. 26341 (December 5,

1988), 53 FR 49808 (December 9, 1988).

\7\See Securities Exchange Act Release No. 31634 (December 22,

1992), 57 FR 62409 (December 30, 1992).

\8\See 57 FR 37109 (August 18, 1992).

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The Commission received fifteen comment letters on the proposal in

1988\9\ as well as a letter from the NYSE responding to the comment

letters.\10\ The Commission received five comment letters on the

proposal in 1993\11\ as well as a letter from the NYSE responding to

the 1993 comment letters.\12\ This order approves the proposal.

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\9\See letters from: Richard E. Orie, Vice President-Director of

Compliance, Q & R Clearing Corporation, to Mary Revell, Branch

Chief, Exchange Regulation, Division of Market Regulation,

Commission, dated December 21, 1988 (``Q & R Clearing Letter''); J.

Craig Long, Vice President, General Counsel and Secretary, Midwest

Stock Exchange (now the Chicago Stock Exchange or ``CHX'') to

Jonathan Katz, Secretary, Commission, dated December 23, 1988

(``1988 CHX Letter''); David Colker, Vice President, Market

Regulation and General Counsel, Cincinnati Stock Exchange, to

Jonathan Katz, Secretary, Commission, dated December 28, 1988

(``1988 CSE Letter''); Donald E. Weston, Chairman, Gradison &

Company, Incorporated, to Jonathan Katz, Secretary, Commission,

dated January 11, 1989 (``Gradison Letter''); Bernard L. Finger,

Senior Vice President, Compliance Director, Securities Settlement

Corporation to Secretary, Commission, dated January 18, 1989

(``Securities Settlement Corp. Letter''); John F. Carsley, First of

Michigan, Corporation to Jonathan Katz, Secretary, Commission, dated

January 23, 1989 (``First of Michigan Letter''); Gerald L. Oaks,

Chief Financial Officer, Bartlett & Co. to Jonathan Katz, Secretary,

Commission, dated January 30, 1989 (``Bartlett & Co. Letter'');

David Colker, Vice President, Market Regulation and General Counsel,

Cincinnati Stock Exchange to Jonathan Katz, Secretary, Commission,

dated January 31, 1989 (``January 1989 CSE Letter''); David P.

Semak, Vice President-Regulation, Pacific Stock Exchange to Jonathan

Katz, Secretary, Commission, dated January 31, 1989 (``1989 PSE

Letter''); Richard T. Chase, Philadelphia Stock Exchange to Jonathan

Katz, Secretary, Commission, dated February 1, 1989 (``1989 PHLX

Letter''); J. Craig Long, Vice President, General Counsel and

Secretary, Midwest Stock Exchange to Jonathan Katz, Secretary,

Commission, dated February 1, 1989 (``1989 CHX Letter''); Laura

Homer, Securities Credit Officer, Board of Governors of the Federal

Reserve System to Howard Kramer, Assistant Director, Exchange and

Options Regulation, Division of Market Regulation, Commission, dated

March 8, 1989 (``FRB Letter''); John E. Pinto, Executive Vice

President Compliance, National Association of Securities Dealers to

Jonathan Katz, Secretary, Commission, dated March 22, 1989 (``1989

NASD Letter''); John Caffrey, Chairman of the Board, Financial

Clearing & Services, Corporation to Secretary of the Commission,

dated March 27, 1989 (``Financial Clearing & Services Corp.

Letter''); David Colker, Vice President Market Regulation and

General Counsel, Cincinnati Stock Exchange to Howard Kramer,

Assistant Director, Exchange and Options Regulation, Division of

Market Regulation, Commission, dated July 5, 1989 (``July 1989 CSE

Letter''). See infra for a discussion of the specific comments.

\10\See letter from James E. Buck, Senior Vice President and

Secretary, New York Stock Exchange to Mary Revell, Branch Chief,

Exchange Regulation, Division of Market Regulation, Commission,

dated May 31, 1989 (responding to comment letters by the Cincinnati

Stock Exchange, Midwest Stock Exchange, Pacific Stock Exchange,

Bartlett & Company, Gradison & Company, Incorporated, and Securities

Settlement Corporation).

\11\See letters from: Bear Stearns Securities Corp. to the

Commission, dated January 15, 1993 (``Bear Stearns Letter''); David

Colker, Executive Vice President, Cincinnati Stock Exchange to

Jonathan Katz, Secretary, Commission, dated January 20, 1993 (``1993

CSE Letter''); David P. Semak, Vice President Regulation, Pacific

Stock Exchange to Jonathan Katz, Secretary, Commission, dated

February 10, 1993 (``1993 PSE Letter''); David J. Diffenauer, Vice

President, Margin Department Manager, A.G. Edwards & Sons, Inc. to

Jonathan Katz, Secretary, Commission, dated February 26, 1993

(``A.G. Edwards Letter''); Richard T. Chase, Senior Vice President,

Associate General Counsel, Lehman Brothers to Jonathan Katz,

Secretary, Commission, dated March 3, 1993 (``Lehman Brothers

Letter''). See infra for a discussion of the specific comments.

\12\See letter from James E. Buck, Senior Vice President and

Secretary, NYSE to Diana Luka-Hopson, Branch Chief, Exchange Branch,

Division of Market Regulation, Commission, dated January 19, 1994.

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II. Description of the Proposal

Registered national securities exchanges and registered national

securities associations can grant broker-dealers extensions of time for

payment on purchases and for delivery on sales of securities pursuant

to Regulation T and Rule 15c3-3(n) under the Act. Such extensions may

be granted when the self-regulatory organization (``SRO'') is satisfied

that a creditor (broker/dealer/ is acting in good faith in making such

a request and when the creditor believes exceptional circumstances

warrant such action. The Exchange is proposing the addition of new Rule

434, which would require all member firms for which the NYSE has been

appointed the DEA under the Act to submit all requests for Regulation T

and Rule 15c3-3 extensions to the NYSE.

The NYSE has developed a computerized extension processing system

for reviewing extension requests. The Exchange system contains specific

criteria regarding acceptable reasons, number of days permitted per

extension, and limits on the number of extensions permitted. These

criteria facilitate the prompt collection of monies and securities due

and reduce exposure to losses for both customers and member

organizations. The Exchange system generates daily and monthly reports

which provide member organizations and Exchange staff with a means to

monitor the incidence and reasons for the extension, potential abuses,

compliance with appropriate regulations, and indications of possible

operational problems.

The NYSE believes it is appropriate to require submission of

extension requests to the DEA for several reasons. First, as the DEA

for most of its member, the NYSE is responsible for examining its

members for compliance with industry financial responsibility rules and

the Exchange believes that complete extension information is needed for

it to adequately perform its DEA functions under section 17(d) of the

Act.

Second, the only standards for extension requests under Regulation

T and Rule 15c3-3 are that the creditor grant the request in good faith

and that exceptional circumstances warrant an extension. Under this

broad standard, each SRO that processes extension requests\13\ has

developed its own parameters and procedures for evaluating, granting,

and controlling extension requests.\14\ The Exchange asserts that, as a

result, broker-dealers could forum-shop by applying for extensions from

several or all SROs to circumvent the special requirements or the

maximum number of extensions allowed by the NYSE. In the NYSE's view,

adoption of the rule would ensure uniform application of standards to

all customers of NYSE firms for which the NYSE is the DEA.

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\13\At the time the NYSE filed the proposed rule change, the

Boston, Cincinnati, Chicago, Pacific and Philadelphia Stock

Exchanges and the National Association of Securities Dealers

processed Regulation T extension requests. See Securities Exchange

Act Release No. 26341 (December 5, 1988), 53 FR 49808 (December 9,

1988).

\14\For example, acceptable reasons for the extension, number of

extensions permitted, special limitations and restrictions on

customers are not necessarily uniformly applied, and in some cases,

possibly, not applied at all.

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Third, the Exchange believes that complete extension information

would provide it with a valuable surveillance tool in detecting

manipulation and other illegal trading activities. Rule 434 would

ensure that credit extensions would be granted on the basis of complete

information about a broker-dealer's payment and delivery status. The

NYSE states that complete extension information would enable the NYSE

to better monitor for compliance with financial and customer related

rules, such as sales practice rules. Moreover, the NYSE believes that

complete extension information would be useful to a DEA as an early

indicator of operational difficulties at member firms.

III. Comments on the Proposal

The Commission received eighteen comment letters opposing or

suggesting substantial modifications to the NYSE proposal and two

comment letters expressing support for the proposal.

A. Competitive Concerns

Most of the commenters opposed to the NYSE proposal noted their

competitive concerns, citing either section 11A(a)(1) of the Act,\15\

which encourages automation and efficiency in the markets while

assuring fair competition,\16\ or section 6(b)(8) of the Act,\17\ which

requires that the rules of an SRO not impose a burden on competition

that is not necessary or appropriate in furtherance of the purposes of

the Act. In particular, commenters argue that competition among SROs

has led to technological improvements in extension granting procedures,

such as faster turnaround and customized reports generated, and that

competition has resulted in lower fees to broker-dealers. These

commenters assert that the proposal would be anti-competitive in that

the vast majority of all requests for extension of time for payment or

delivery of securities would go to the NYSE because the NYSE is the DEA

for virtually all of its member firms.\18\

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\15\15 U.S.C. 78k-1(a)(1) (1988).

\16\See e.g., January 1989 CSE Letter and Securities Settlement

Corp. Letter, supra note 9.

\17\15 U.S.C. 78f(b)(8) (1988).

\18\See e.g., Securities Settlement Corp. Letter, supra note 9.

The Securities Settlement Corp. Letter states that competition in

the area of extension processing is consistent with section

11A(a)(1)(C) which states that it is in the public interest and

appropriate for the protection of investors to assure fair

competition among exchange markets and between exchange markets.

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The CSE asserts that the proposal would grant the NYSE a monopoly

on extension processing, thereby imposing a chilling effect on

innovation and stifling any initiative by an SRO to contribute to more

efficient and effective market operations. The CSE further asserts that

the proposal would remove any incentive for an SRO to offer technical

enhancements to improve the ability of brokers-dealers to comply with

their legal obligations and manage the risk associated with extensions

of credit.\19\

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\19\The PHLX and the Securities Corp. also assert that the NYSE

proposal would lessen incentives for further improvements in

services. See 1989 PHLX Letter and Securities Settlement Corp.

Letter, supra note 9.

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As an example, the CSE asserts that it has responded to the

industry's need for better risk management tools and technical

innovations. The CSE states that it initiated customized supervisory

reports, batch transmission capability and next-morning electronic

access to disposition reports. The CSE believes that these enhancements

help to create a more efficient and orderly marketplace.\20\ Likewise,

Lehman Brothers asserts that the NYSE replaced a cumbersome and

manually intensive processing system only after competing automated

systems had been developed by the CSE and the CHX.\21\ Both the CHX and

CSE point out that they have expended considerable expense and effort

to develop a computerized extension processing system.

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\20\See January and July 1989 CSE Letters, supra note 9.

\21\See Lehman Brothers Letter, supra note 11. The letter states

that while Lehman Brothers submits its extension requests to the

NYSE, it has clearly benefited from the competition between the

exchanges and the NASD in the form of improved services.

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Various commenters assert that by contributing to the NYSE's

overall monopolistic position within the national marketplace, the

proposal will seriously impair other SROs' ability to complete with the

NYSE. For example, both the CSE and PSE state that the anti-competitive

effects of this proposal go beyond extension processing services to

impact on the larger concept of the entire regulatory package of

services that each exchange can provide, which is one of the factors

that firms look at when considering membership and the routing of order

flow.\22\

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\22\See 1993 CSE Letter and 1993 PSE Letter, supra note 11.

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Some commenters assert that the NYSE's concerns could be addressed,

and the anti-competitive effects diminished, through less restrictive

means. Some of these commenters suggest that the regulatory objectives

could be met through the development of uniform industry standards for

processing extension requests and by formalizing information sharing

arrangements.\23\

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\23\See e.g., January 1989 and July 1989 CSE Letters; 1989 CHX

Letter; 1989 PSE Letter, supra note 9, and Lehman Brothers Letter,

supra note 11. The CSE, PSE, CHX and Lehman Brothers Letters all

state that information sharing would be the appropriate alternative

to the proposal. The CSE, for example, states that it shares all of

its extension processing information with the DEAs.

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In addition to information sharing, commenters suggest that uniform

industry standards for processing extension requests could ameliorate

the NYSE's concerns. The CSE suggests that the Intermarket Surveillance

Group (``ISG''), in cooperation with the Commission, should develop

uniform industry standards for the processing of extensions since,

currently, there is no recognized way to evaluate individual extension

requests.\24\ The NASD suggests that broker-dealers should be able to

submit extension requests to any SRO as long as there are comparable

review criteria and the SRO has policies and procedures that make

regulatory use of the data.\25\

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\24\See January 1989 CSE Letter, supra note 9.

\25\See 1989 NASD Letter, supra note 9.

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Lehman Brothers and A.G. Edwards comment that, to the extent that

consistency is the NYSE's objective, the proposal is an incomplete

solution because it has no impact on the processing of margin extension

requests for non-NYSE firms.\26\ Lehman Brothers asserts that

consistency could be achieved more effectively by the FRB or Commission

dictating uniform processing criteria for all SROs although if does not

believe that they are necessary at the present time.

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\26\See Lehman Brothers Letter and A.G. Edwards Letter, supra

note 11.

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Some commenters conclude that it appears that competition has led

to lower extension fees for broker-dealers. These commenters assert

that the NYSE currently charges more than the other SROs granting

extension requests. These commenters also assert that if the proposal

is approved, the NYSE will not be subject to competition from other

SROs and thus it will be free to charge any amount it wishes for

extensions. For example, the Gradison Letter states that competition is

the key to keeping regulatory costs under control.\27\ Likewise, First

of Michigan states that it submits its extension requests to the CSE

and its costs have been reduced. The PHLX states that approval of the

NYSE proposal would leave as the only discipline on the NYSE's

extension fees Commission review of such fees pursuant to section

6(b)(4) of the Act to assure that there was ``equitable allocation of

reasonable dues, fees and other charges among its members * * *''\28\

The PHLX asserts that such review is inevitably inexact and is far less

preferable to relying on the competitive discipline of the market to

assure fair and appropriate fees.\29\

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\27\See Gradison Letter, supra note 9.

\28\15 U.S.C. 78f(b)(4) (1988).

\29\See 1989 PHLX Letter, supra note 9.

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B. The Viability of the Existing Process

Various SRO commenters assert that the NYSE proposal is unnecessary

because there has not been any showing that the current extension

approval process does not work.\30\ For example, both the CSE and

Gradison Letters assert that there is no evidence that the CSE has not

adequately monitored extensions.\31\ The CSE further argues that

adoption of the NYSE proposal is unnecessary because the Commission has

found that the CSE has a good extension program.\32\ Similarly,

Bartlett and Company states that the CSE has effectively monitored the

extension approval process and it would be inefficient, uneconomical,

and extremely inconvenient for it to submit its extension requests to

the NYSE.\33\ Securities Settlement Corporation states that it has been

filing extension requests with the CSE and it has concluded that the

CSE has provided cost effective service and financial reports that the

NYSE has not been able to provide.\34\

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\30\See Gradison Letter and July 1989 CSE Letter, supra note 9,

and January 1993 CSE Letter, supra note 11.

\31\See id.

\32\See January 1993 CSE Letter, supra note 11.

\33\See Bartlett and Co. Letter, supra note 9.

\34\See Securities Settlement Corp. Letter, supra note 9.

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Some commenters question the NYSE's portrayal of the current

regulatory environment, and claim that their extension processing

system is comparable to that of the NYSE. The CSE and PHLX, for

example, state that there is much more uniformity than the NYSE

proposal implies.\35\ The CSE states that it believes that it uses the

same parameters and procedures as the NYSE for evaluating, granting and

controlling extensions as well as the same acceptable reasons,

acceptable number of extensions permitted, special limitations and

restrictions on customers as the NYSE. The PHLX states that it grants

extensions for reasons similar to those accepted by the NYSE, and that

both the NYSE and the PHLX grant extensions for similar lengths of

time.\36\ The CHX also states that it applies the same parameters and

procedures for evaluating, granting and controlling extension requests

as are used by the NYSE.\37\st

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\35\See January 1989 CSE Letter and 1989 PHLX Letter, supra,

note 9.

\36\See February 1989 PHLX Letter, supra not 9.

\37\See 1989 CHX Letter, supra note 9.

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C. Inconsistency With the Act

Some commenters assert that the NYSE proposal is inconsistent with

the Act.\38\ These commenters state that Regulation T and SEC Rule

15c3-3 permit a broker-dealer to apply to any SRO for an extension.

Thus, broker-dealers should be free to choose an SRO on the basis of

convenience, service and cost efficiency.\39\ For example, the CHX

states that approval of the NYSE proposal would be contrary to the

intent of Regulation T and Rule 15c3-3, which is to provide flexible

SRO oversight of the processing of Regulation T extensions. Lehman

Brothers argues that the current extension procedures can only be

altered by petitioning the FRB or the Commission to make a rule change

since both Regulation T and Rule 15c3-3 permit broker-dealers to send

extension requests to any SRO.\40\

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\38\See e.g., 1989 CHX Letter; 1988 and January 1989 CSE

Letters; 1989 PHLX Letter, supra note 9; and 1993 CSE Letter and

Lehman Brothers Letter, supra note 11.

\39\See Bartlett and Co. Letter; 1989 PHLX Letter; 1989 PSE

Letter; 1989 NASD Letter; Securities Settlement Corp. Letter; First

of Michigan Letter; Gradison Letter; July 1989 CSE Letter, supra

note 9; and Lehman Brothers Letter; A.G. Edwards Letter, supra note

11.

\40\See Lehman Brothers Letter, supra note 11.

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D. Claims of Forum Shopping

The PHLX states that it is unaware of any instance in which a

broker-dealer changed from one SRO to another in order to circumvent an

SRO's extension guidelines. The PHLX states that the reasons that its

members have given for choosing to send extension requests to one SRO

over another are, inter alia, convenience, turn-around time and

information provided by the SRO, such as providing the number of

requests emanating from a particular branch.

Similarly, the CSE states that there is no evidence to support the

NYSE's assertions that several NYSE members began using the CSE for

extension processing after the NYSE took restrictive action against

them.\41\ The CSE states that, had it been aware of such restrictive

action by the NYSE, it would have cooperated in restricting the firm.

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\41\See July 1989 CSE Letter, supra note 9.

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E. Harm to the NASD That Would Result From Implementation of the NYSE

Proposal

The NASD's comment letter asserts that it would be harmed in a

number of unique ways if the NYSE proposal is approved.\42\ The NASD

states that it has significant regulatory and examination

responsibility for all of its members, and that extension information

is not relevant exclusively to financial and operational monitoring as

the NYSE seems to assert. The NASD believes that extension requests

contain valuable data which is useful to an SRO for general market

surveillance to detect possible market or trading abuses.

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\42\See 1989 NASD Letter, supra note 9.

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In addition, the NASD notes that a significant portion of customer

activities involving NASDAQ and OTC securities is handled by NASD/NYSE

members, and if it were mandated that such members file all extension

requests with the NYSE, then the NASD would be deprived of significant

important regulatory data involving the marketplace that it is required

to regulate. The NASD further asserts that the resulting fragmentation

of NASDAQ and OTC market data would be counterproductive to

establishing efficient regulation. It states that approval of the NYSE

proposal, therefore, would deprive the NASD of significant and

important regulatory data currently used to fulfill its SRO functions.

F. Miscellaneous Comments

Extension Requests Should be Granted by Broker-Dealers

The Bear Stearns and A.G. Edwards Letters assert that brokers-

dealers should not be required to submit requests for extensions of

time for payment or delivery of securities to any SRO. These commenters

esentially assert that broker-dealer is in the best position to know

when exceptional circumstances warrant an extension and, in any event,

assume the financial risk from such extensions. The Bear Stearns Letter

asserts that suitable procedures can be established for broker-dealers

to control the time periods within which payment or delivery of

securities are made, without the need for the formal submission of

requests for permission to extend the time periods. The A.G. Edwards

Letter disagrees with the FRB's concern that broker-dealers may grant

favorable extension review to certain customers. It believes that

broker-dealers should be required periodically to notify an SRO to act

as a monitor for abuses of the Rule and provide its members with

periodic reports.\43\

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\43\See A.G. Edwards, Letter, supra note 11. A.G. Edwards

submitted similar comments to the FRB in response to its 1992

request for comments.

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Fees from Extensions Help Defray the Cost of DEA Functions

The CSE states that it is relieving the NYSE of the cost of

processing extensions since the NYSE is allocated only the on-site

portion of the broker-dealer examination relating to extensions, and

the cost associated with the NYSE's DEA function is already covered by

the NYSE's fee structure in that, pursuant to NYSE Rule 142, the NYSE

charges its members $.42 per $1,000 gross revenue for regulatory

services. Therefore, according to the CSE, the NYSE has no need for

additional revenue to subsidize its DEA functions.\44\

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\44\See January 1989 CSE Letter, supra note 9. The fee cited by

the CSE was in effect as of January 1989.

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Discussion of Section 17(d) of the Act

Both the PHLX and the CSE argue that the NYSE misapprehends the

principal purpose of section 17(d) of the Act, which is to avoid

unnecessary regulatory duplication and, secondarily, to assure that

violations are not missed because they fall between the

responsibilities of different SROs. They state that submission of

extension requests by a broker-dealer to an SRO other than its DEA

results in no duplicative regulation or burdens on broker-dealers. The

PHLX states that, to the extent that processing of extension request by

multiple SROs could cause any one SRO's financial or regulatory

oversight to be incomplete, this can be addressed through the

coordination between SROs.\45\

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\45\The PHLX believes that extension requests are far less

useful indicators of potential broker-dealer financial or regulatory

concerns than other indicia such as an increased number of

uncompared or adjusted trades, net capital deficiencies or intra-day

monitoring of large trades or positions in active markets.

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The CSE asserts that the existence of a Rule 17d-2 agreement

between the CSE and the NYSE does not mean that the CSE has abrogated

its SRO authority to the NYSE. It asserts that under its Rule 17d-2

agreement with the NYSE, the CSE retains responsibility to enforce

compliance with the CSE's extension rule, and the NYSE is only

allocated the responsibility to conduct regular on-site examinations to

ensure compliance with this rule.

The CSE further asserts that the concept of sharing extension

request data between SROs and the DEA is not, as the NYSE claims,

inconsistent with the intent of SEC Rules 17d-1 and 17d-2. The CSE

states that, as an SRO, it could conduct its own special examinations

of, or participate in a joint regulatory effort with respect to firms

who file extensions with the Exchange. The CSE asserts that it has the

necessary examination responsibilities and ongoing regulatory

relationship with its extension firms to justify the continued

processing of extension requests. The CSE concludes that as a non-DEA

SRO, it is in a position to make a good faith and informed judgment

whether ``exceptional circumstances'' warrant the granting of

extensions.

G. Comments In Support of the Proposal

Two commenters express support for the proposal. Financial Clearing

and Services Corporation (``FCSC'')\46\ states that it agrees that the

NYSE proposal serves a valid regulatory purpose. FCSC notes, however,

that the Commission should remain cognizant of the fact that new rules

must not lessen competition nor should they adversely affect technical

innovation.\47\

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\46\FCSC carries accounts on a fully disclosed basis on behalf

of other introducing broker-dealers.

\47\See Financial Clearing Letter, supra, note 9.

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The FRB staff expresses support for the purposes behind the NYSE's

proposal. The FRB staff notes that the DEA is ultimately responsible

for monitoring those firms that it examines in other areas of the

securities business where credit may be a significant factor, such as

sales practices. The FRB staff further states that it questions the

propriety of an SRO with virtually no general examination

responsibility passing on extensions of time since such SROs may lack

the requisite experience in correlating credit extensions with other

areas of regulatory concern.\48\ The FRB staff believes that only SROs

with examination responsibilities of some kind should grant extensions

of time. In this regard, the FRB specifies that,

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\48\See FRB Letter, supra note 9.

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``In our view, it would be difficult, if not impossible, for an SRO

to meet the requirements of the present rule (12 CFR 220.4(c)(3)(ii))

unless the SRO has some ongoing regulatory relationship with the

applicant to support a belief as to the good faith of the applicant or

the sufficiency of the determination that ``exceptional circumstances''

warrant the extension.''\49\

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\49\See id at 3.

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The FRB Letter asserts that the FRB anticipated that the exceptions

to the Regulation T requirements governing payment for securities would

be minimal, and that, ``[n]o one ever perceived the granting of

extensions of time as a profit-making endeavor.''\50\ The FRB Letter

also states that, for the extension request process to be effective,

cooperation, and not competition, among SROs is essential. In this

regard, the FRB Letter states that it appears that the change in the

rule to allow any SRO to grant extension requests ``may have

inadvertently permitted regulatory concerns to be subordinated to the

profit motive.''\51\ The FRB staff also expresses the view that if the

extension-granting service is viewed as a profit center, it can only

encourage more extensions of time.\52\

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\50\See FRB Letter, supra note 9 at 1.

\51\FRB Letter, supra note 9 at 2. In 1980, the FRB revised Reg

T in its entirety. The Board broadened the scope of Reg T by

authorizing a self-regulatory organization or association to grant

extensions to any creditor regardless of membership affiliation. SEC

Rule 15c3-3(n) is similarly worded.

\52\See FRB Letter, supra note 9 at 2.

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IV. The NYSE's Responses

In May 1989, the NYSE submitted a letter to the Commission

responding to negative comments by the CSE, CHX, PHLX, PSE, Bartlett &

Company, Gradison & Company, and the Securities Settlement Corporation

with respect to the Exchange's proposed Rule 434. In January, 1994, the

NYSE submitted another letter responding to comments sent to the

Commission by the CSE, PSE, Bear Stearns Securities Corp, A.G. Edwards

& Sons, Inc. and Lehman Brothers after the Commission republished

notice of this proposal. The NYSE's responses to the commenters are

summarized below.

A. Burden on Competition

The NYSE acknowledges that some loss of revenue to other SROs may

result from its proposed rule, but disagrees that the proposal will

have a significant anti-competitive effect on the marketplace that is

not necessary or appropriate in furtherance of the purposes of the Act.

The NYSE also asserts that proposed NYSE Rule 434 is justified from a

regulatory perspective and that arguments regarding competition as they

relate to revenues are inappropriate.

In support of its contention that the proposed NYSE Rule 434 is

justified, the NYSE asserts first that, as DEA for most of its members,

the Exchange is charged with overseeing compliance by its members with

the applicable financial responsibility rules. The Exchange believes

that the information gathered in processing extension requests is

essential in carrying out its statutory oversight responsibilities.\53\

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\53\The Exchange also states that the FRB concurs that the DEA

has ultimate responsibility in monitoring those firms which it

examines, and that even the CSE acknowledges that this information

is important to the DEA.

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Second, pursuant to agreements with other SROs, the NYSE has

assumed responsibility to oversee compliance by its members with sales

practices and related rules of the NYSE and other SROs. Information

derived from extension requests is necessary to perform effective on-

site review as this is a significant means for detecting potential

sales practices problems.

Third, the NYSE believes that the proposal does not conflict with

federal laws permitting any SRO to approve extensions of time. The NYSE

states that while 1980 amendments to Regulation T and similar changes

to Rule 15c3-3 under the Act permitted any SRO to grant extensions, the

FRB issued a letter outlining procedures to be followed when a non-DEA

SRO considers such requests, including notification of the DEA. The

NYSE also notes that the FRB Comment Letter states that modern

technology has significantly altered the convenience benefits of the

1980 amendments, and that the authority of non-DEAs to grant extensions

should be on an exception basis.\54\

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\54\Along these lines, the NYSE's 1989 Comment Letter states

that 99.6% of all extension requests received by the Exchange are

transmitted electronically.

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Fourth, the NYSE asserts that concentrated regulatory

responsibilities under Exchange Act Rules 17d-1\55\ and 17d-2\56\

require that the NYSE obtain continuous first-hand information from its

DEA firms and process such information. The NYSE further asserts that,

because the Exchange already has 17d-1 and 17d-2 responsibility for

regulation of its members, it does not make good regulatory sense to

break out one aspect of regulation for the economic benefit of

individual SROs. The Exchange cites to the FRB Letter, which states:

``We certainly would question the propriety of an SRO with virtually no

general examination responsibilities passing on extensions of time as

experience might be lacking in correlating credit extensions with other

areas of regulatory concern.''\57\

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\55\Rule 17d-1--Examination for Compliance with Applicable

Financial Responsibility Rules--deals with designation of a SIPC

member to an SRO for purposes of examining such member for

compliance with applicable financial responsibility rules.

\56\Rule 17d-2--Program for Allocation of Regulatory

Responsibility--deals with the creation of plans between SROs to

allocate responsibility to receive regulatory reports from persons

who are members or participants of more than one SRO, to examine

such persons for compliance, or to enforce compliance by such

persons with specified provisions of the Act and the rules and

regulations thereunder.

\57\See FRB Letter, supra note 9 at 2.

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Finally, the NYSE asserts that arguments that the proposal violates

section 11A(a)(1) of the Act are ``ill conceived.'' The NYSE states

that section 11A(a)(1), pertaining to the national market system, is

basically concerned with efficient, effective and competitive trading

systems and not regulatory obligations.\58\ Moreover, the NYS does not

agree that proposed Rule 434 would have a negative impact on the

extension processing system in terms of efficiency or technical

innovation. The NYSE asserts that it has been a pioneer in developing

and computerizing the extension processing system, and that other SROs

copied its efforts. The NYSE states that it is committed to increasing

efficiency in the process, which is reflected through, e.g., its

committment of staff dedicated to monitoring extension requests.\59\

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\58\The NYSE cites: HR Report No. 94-229, 94th Congress, 1st

Session (1975) ``The Report of the Committee of Conference to

accompany S. 249'' and Senate Report No. 94-75, 94th Congress, 1st

Session (1975) ``Report of the Committee on Banking, Housing and

Urban Affairs, United States Senate to accompany S. 249,'' at 101.

\59\The NYSE stated, at the time of the 1989 response letter,

that it had a 5-person professional staff as well as a group of

about 128 examiners and 32 coordinators who add integral

surveillance support to the Credit Regulation Function, and that it

believed its staff to be unique to the industry.

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B. A Program of Sharing Information

The NYSE does not believe information sharing between SROs would be

practical. First, the NYSE states that it needs to have extension

information on-line. The NYSE states that it needs to make immediate

decisions in order to perform daily regulatory responsibilities.

Information and reports received after the fact would not be as

valuable.

Second, the NYSE states that current SRO systems are not compatible

and could not be linked because of different parameters and methods of

processing data. The NYSE also states that information provided by

other SROs would be of little use to the NYSE because each SRO makes

decisions based on its own standards.

Third, the NYSE states that the expense necessary to link current

SRO systems would be substantial and other SROs would look to the NYSE

to pay the majority of the cost associated with the changes since the

NYSE processes 85% of its members' extensions. The NYSE also states

that it does not believe that the expense is justifiable since it

performs all of the tasks associated with margin positions, and other

SROs have little or no need for this information. The NYSE asserts that

its regulatory costs should not be increased in order to justify the

non-regulatory purposes of other SROs, and that such costs will be

passed on to customers.

Finally, the NYSE states that the concept of sharing extension data

by other SROs with the DEA is inconsistent with the intent of Rules

17d-1 and 17d-2 under the Act. The DEA initiatives were adopted in

order to eliminate unnecessary duplication by concentrating regulatory

functions within one SRO and relieving all other SROs of their

responsibility to examine for compliance with relevant rules under the

Act.

C. Lack of Uniform Standards

In its comment letter, the NYSE maintains that there are no uniform

extension processing standards among the SROs, despite several SROs'

assertions that their standards are comparable to those of the NYSE.

The NYSE states that it does not believe that the CSE's standards for

extension review are comparable to those of the NYSE, and it cites

examples of situations taken from CSE extension reports that the NYSE

would find unacceptable.

The NYSE also believes that as long as filing extension requests

with a firm's DEA is not mandatory, the Exchange is constrained from

incorporating more effective regulatory tools into its system. The NYSE

believes that those firms that require the greatest scrutiny and

oversight will commence filing for extensions with another SRO if the

NYSE takes restrictive action. The NYSE cites examples of broker-

dealers that switched from the NYSE to the CSE after restrictive action

was filed against them. The NYSE believes that the impetus for these

switches was not efficiency or economics, as stated by the CSE, but

rather to avoid regulations intended to ensure extensions are granted

for legitimate purposes and to prevent excessive credit in the

securities markets.

Finally, the NYSE dismisses suggestions by some commenters that the

ISG should develop these standards in conjunction with the Commission.

The NYSE states that the purpose of ISG is to deal with market

operations related projects rather than with credit issues.

D. Miscellaneous Comments

The NYSE states that the CSE was in error when it asserted that the

cost associated with the Exchange's DEA function is already covered by

the Exchange's fee structure. The NYSE states that it charges its

members a regulatory service fee pursuant to Rule 129 for financial

oversight responsibilities but such fee does not cover regulatory

services with respect to sales practices which are a significant aspect

of monitoring credit extensions.

The NYSE disagrees with the CSE's assertion that extension

processing by the CSE relieves the NYSE of regulatory expense, because

the NYSE must conduct field examinations of all of its members,

including those who process extensions through the CSE. The NYSE

suggests that the CSE may be able to charge less per extension than the

NYSE because the CSE has no field examination capabilities to monitor

credit extension and thus, does not incur costs for maintaining an

examination program.

The NYSE disagrees with the concerns that approval of Rule 434

would give the NYSE monopoly power with respect to pricing. The NYSE

states that it would impose a price increase unless appropriate.

Moreover, the NYSE notes that any fee increase would be subject to

Commission review.

The NYSE states that it agrees with the FRB's conclusion that only

SROs with some examination responsibilities should grant extensions, as

well as its conclusion that it would be difficult or impossible to

comply with the Regulation T requirement that exceptional circumstances

warrant an extension if the SRO does not have an ongoing regulatory

relationship with the broker-dealer requesting the extension. The NYSE

also notes that it processes 85% of the extensions generated by its

members and thus economics is not its major consideration in proposing

Rule 434. The NYSE states that equal and effective regulation of its

members is the primary goal of the proposal.

The Exchange does not believe it is appropriate to allow a broker-

dealer to grant extensions of time to its own customers given the

potential for conflict between regulatory and customer service

considerations.

Finally, the NYSE states that, since its 1989 letter, it has

continued to undertake enhancements to its automated extension

processing system. In January, 1994, it implemented a system to

transmit daily extension reports back to member organizations.

According to the Exchange, over 99% of all extension requests received

by the Exchange are processed and returned electronically to member

organizations the same day so that extension data is available to them

before the start of the next business day. The NYSE is not aware of any

other SRO which provides this service.

V. Discussion

After careful consideration of the comments received as well as

applicable statutory provisions, the Commission believes that proposed

NYSE Rule 434, which would require all NYSE member firms for which the

NYSE is the DEA to submit their requests for extensions of time for

payment or delivery of securities to the NYSE, is consistent with the

ACT, and in particular, sections 6(b) (5) and (8) of the Act.\60\

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\60\15 U.S.C. 78f(b) (5) and (8) (1988).

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Section 6(b)(5) of the Act requires, among other things, that the

rules of an exchange be designed to prevent fraudulent and manipulative

acts and practices, to promote just and equitable principles of trade,

to remove impediments to and perfect the mechanism of a free and open

market and, in general, to protect investors and the public interest.

The Commission believes that proposed NYSE Rule 434 will serve to

prevent fraudulent and manipulative acts and to protect investors and

the public interest by enhancing the NYSE's ability to monitor the

continued financial viability of its member firms where it is the DEA.

In addition, the proposed rule will help the NYSE to ensure its

members' compliance with the requirements of Regulation T and Rule

15c3-3 of the Act. The Commission also believes that NYSE Rule 434 will

help to effectuate uniform standards for NYSE members' requests for

extensions of time for payment or delivery of securities. The uniform

application of the NYSE's standards to a large majority of its member

firms' extension requests will promote fairness by helping to ensure

equal treatment for NYSE member firms.

As the DEA for most of its member firms, the NYSE is responsible

for examining such firms for compliance with the financial

responsibility rules.\61\ The Commission believes that information

about extensions for payment or delivery of securities is essential in

helping the NYSE carry out its DEA responsibilities under the Act.\62\

In particular, Regulation T and Rule 15c3-3 require that extensions be

granted only if the broker-dealer is acting in good faith and

exceptional circumstances exist to warrant an extension. As the DEA,

the NYSE must ensure that requests that are granted have met these

conditions. Under the current structure, however, another SRO may grant

numerous extensions without the NYSE being adequately informed as to

the nature of the requests and the conditions under which they are

being granted. This not only can impair the NYSE's ability to ensure

member firm compliance with financial responsibility rules but it can

affect the NYSE's ability to detect potential sales practice

problems.\63\

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\61\For firms where the NYSE is the DEA, the Exchange is

responsible for examining the firms' compliance with rules

pertaining to, among other things: Hypothecation or lending in

customer reserve accounts (under section 8 of the Act); the

maintenance of books and records (under section 17(a) of the Act);

capital, margin or recordkeeping (under section 17(d) of the Act);

broker-dealer balance sheets (under section 17(e) of the Act), or

any other Commission or SRO rules relating to the protection of

customer accounts or securities.

\62\The Commission agrees with the NYSE's claim that information

derived from extension requests is necessary, among other things, to

perform effective on-site review to detect potential sales practice

problems. See 1989 NYSE Letter, supra note 10.

\63\The Commission notes that the NASD has expressed concern

that this proposal would prevent the NASD from obtaining extension

information necessary to perform its SRO functions. The NASD states

that the proposal would prevent the NASD from obtaining information

regarding a large number of its members since a significant portion

of customer activities involving NASDAQ and OTC securities is

handled by NASD/NYSE members for whom the NYSE is the DEA. The

Commission finds this argument unpersuasive as the regulatory

structure already distinguishes between DEA SROs and non-DEA SROs

and this proposal merely follows this distinction.

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Further, the rule change will serve to eliminate the possibility of

forum shopping among SROs for extensions. For example, the NYSE's 1989

comment letter notes instances where a NYSE member firm began to send

its extension requests to another SRO after the NYSE took restrictive

action against it. Although some comment letters dispute the extent of

forum shopping, the Commission's experience in reviewing SRO compliance

programs leads it to believe that the potential for forum shopping for

extensions exists under the current scheme and that approval of the

NYSE proposal will diminish this.\64\

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\64\In this regard, other SROs may wish to adopt similar rule

proposals that would require those members for which the SRO is the

DEA to submit extension request to that SRO.

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In summary, given the NYSE's Rule 17d-1\65\ and Rule 17d-2\66\

responsibilities under the Act, it will improve regulatory oversight by

the NYSE if the Exchange receives extension request information for

firms for which it is the DEA so that it may have a complete picture of

each member's financial and regulatory situation. The proposed rule

change will accomplish this by enabling the NYSE to have all the

regulatory information necessary to get a complete view of each NYSE

member firm's activity so that the NYSE may more effectively prevent

members' financial difficulties or fraud.

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\65\See supra note 55.

\66\See supra note 56.

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The Commission also believes that implementing proposed NYSE Rule

434 is the simplest and quickest way to meet the goal of ensuring that

credit related financial restrictions placed upon a member firm are

based upon complete information. The Commission does not agree with

assertions that the Act's objectives could be better met by

implementing a uniform system of sharing extension information.

Although improved sharing of extension information would provide data

to the NYSE, it would not relay this information in time for the NYSE

to act before the receiving SRO decides on an extension request. In

addition, information sharing would involve two SROs reviewing

extension requests and result in substantial expense and modifications

of existing extension processing systems. This would necessarily

involve considerable duplication of efforts since two SROs would review

extension information. In contrast, the NYSE proposal is consistent

with the current regulatory structure of designating one SRO as the DEA

for firms that are members of more than one SRO. The DEA scheme was

adopted in order to eliminate unnecessary duplication of efforts in the

area of member regulation.\67\ As a result, the Commission does not

believe that the Act mandates that information sharing be utilized in

place of the NYSE's approach.

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\67\See SEC Rule 17d-1, 17 CFR 240.17d-1 (1993), which provides

that the Commission shall consider, inter alia, unnecessary

regulatory duplication when designating an SRO for purposes of

examination for compliance with financial responsibility rules.

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The Commission also believes that the regulatory benefits from NYSE

Rule 434 outweigh any competitive concerns raised by the commenters.

Under section 6(b)(8) of the Act, the Commission may not approve an

exchange rule if it imposes a burden on competition that is not

necessary or appropriate in furtherance of the purposes of the Act. For

the reasons discussed below, the Commission believes that any

competitive burden raised by NYSE Rule 434 is necessary and appropriate

under the Act.

First, the Commission believes that the NYSE, as the DEA for most

of its member firms, is in the best position to monitor extension

requests and to ensure that they do not affect the financial viability

of member firms. In this regard, the NYSE has a sound system for

monitoring extension requests and ensuring that member firms do not

exceed established parameters. We do not believe that approval of the

rule and the resulting lessening of competition for processing NYSE

members' requests will have a harmful effect on the system for handling

credit extension requests. In particular, because of the NYSE's

responsibility as the DEA, it will have a continuing responsibility to

ensure that firms are not receiving numerous credit extensions that may

indicate potential abuse and financial difficulties, and accordingly,

they will have an incentive to properly maintain their monitoring

systems.

Second, the Commission believes that the DEA may experience

difficulty in meeting its responsibilities when extensions are granted

by another SRO.\68\ Consistent and current information about firm

requests for extensions of time for payment or delivery of securities

will help the NYSE to measure the financial viability of the firm. As

the DEA, the NYSE is solely responsible for examining its members for

compliance with industry financial responsibility rules. Therefore, the

Exchange is best-suited to monitor and effectively impose restrictions

on the extension of credit by its members. If the NYSE obtains all

extension information, credit related financial restrictions placed

upon a member firm will be made based upon complete information,

comprising all extensions requested. Therefore, any potential burden on

competition stemming from the NYSE proposal is justified by the

overriding regulatory benefit.

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\68\See FRB Letter, supra note 9.

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Third, the Commission does not believe that the proposal reduces

competition in an inappropriate manner. The SRO's monitoring of margin

requirements, as with their other regulatory responsibilities, was not

and is not intended to act as a profit making arm of the market

activities of SROs. Provision of necessary regulatory services by the

DEA is an essential component of its statutory requirements, and should

not be impaired by price competition from other SROs who do not carry

DEA responsibilities.

Fourth, as with any regulatory fee, the Commission has the

authority under the Act to review and abrogate excessive fees. Even if

approval of the rule proposal eliminates fee competition, the

Commission will continue to exercise its statutory authority to ensure

that only reasonable fees for extension requests are imposed by the

NYSE on member firms.\69\

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\69\Section 6(b)(4) of the Act, 15 U.S.C. 78f(b)(4) (1988),

requires that the rules of an exchange provide for the equitable

allocation of reasonable dues, fees, and other charges.

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Accordingly, for all of the above reasons, the Commission believes

that to the extent that the proposal does impose a burden on

competition, such burden is justified as necessary and appropriate

under the Act.

The Commission also believes that it is appropriate to approve the

NYSE's proposal notwithstanding the fact that both Regulation T and

Rule 15c3-3 provide that a broker-dealer may go to any SRO for credit

extension requests, irrespective of whether the SRO is the broker-

dealer's DEA. In this regard, the NYSE proposal does not prevent other

SROs from granting extension requests, but simply narrows the choice

for firms for which the NYSE is the DEA. Firms for which the NYSE is

not the DEA can still use other SROs for their extension requests. In

addition, the FRB has stated that it supports the NYSE's proposal and

that it generally believes that only SROs with examination

responsibilities of some kind should grant extensions. The FRB noted

that the changes to Regulation T which were adopted in 1980 were

intended to accommodate firms who found it more convenient to send

extension requests to a nearby SRO and that this same need may not

still exist in the computer age. Finally, because the terms of the

proposal are not inconsistent with Regulation T and Rule 15c3-3, and

the proposal furthers the NYSE's responsibility under the Act, the

Commission believes that it is an appropriate exercise of the NYSE's

ability to adopt rules consistent with the Act.

The CSE also argues that the NYSE proposal should be disapproved

because there has been not showing that the current extension approval

systems have not been working.\70\ The Commission does not believe that

in order to approve a proposal there must be a showing that the current

system is not working, only a showing that the new rule would create

better procedures or a better system and that the proposal is

consistent with the Act. As discussed above, the NYSE's proposal will

improve the regulation of extension requests. In addition, however, the

Commission's review of extension request programs has indicated certain

inadequacies in the extension process at various SROs. These

inadequacies could be reduced if the NYSE proposal is approved.

Moreover, the current structure lacks uniform standards and as a result

can encourage forum shopping. Accordingly, the Commission believes that

the proposal will address these concerns and help to create a more

effective review of credit extensions. The Commission disagrees with

the assertions of some commenters that approval of the proposal would

be inconsistent with section 11A of the Act. Section 11A(a)(1)(C)

provides that it is in the public interest and appropriate for the

protection of investors to assure fair competition among exchange

markets and between exchange markets. The NYSE proposal will not

prevent competition among SROs in their role as markets, and it is

intended to make the extension request process consistent with the DEA

structure that the other SROs have already agreed to.

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\70\See July 1989 CSE Letter, supra note 9 and 1993 CSE Letter,

supra note 11.

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The Commission also disagrees with some commenters' argument that

approval of NYSE Rule 434 would greatly enhance the NYSE's power in the

marketplace. Rule 434 will merely make such that in instances in which

the NYSE is the DEA, the NYSE will obtain all pertinent regulatory

information about firm activities. The commenters have made no showing

that the rule would affect other markets' ability to compete for order

flow. Moreover, the DEA program, to which all the SROs have joined, is

intended to concentrate the provision of regulatory services into the

major SROs for efficiency and effectiveness. Proposed Rule 434 is a

logical adjunct to the DEA program.

Several commenters argue that broker-dealers should be able to

submit extension requests to any SRO which is convenient for them. The

Commission, however, believes that proximity is not a significant

factor because in today's electronic environment it would generally be

just as convenient to submit extension requests to the NYSE as it would

be to submit them to any other SRO.

Finally, the Commission does not agree with some commenters who

argue that broker-dealers should not be required to submit requests for

extensions of time for payment or delivery of securities to any

SRO.\71\ These commenters argue that broker-dealers should make such

determinations since it is their capital at stake. The Commission does

not need to address these arguments in the context of this rule

proposal which concerns the allocation of extension requests among the

SROs. The Commission, however, preliminarily believes that there is a

need for checks on the granting of such extensions by broker-dealers.

Without SRO review in this area, broker-dealers would be free to add

unwarranted risk to securities transactions by granting credit in

excess of what is reasonable or granting excessive extensions of time

in order to ensure that a transaction for which a commission is earned

is completed. The Commission, however, along with the FRB's ongoing

review of Regulation T, will continue to examine these issues.

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\71\See Bear Sterns and A.G. Edwards Letters, supra note 11.

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VI. Conclusion

For the reasons discussed above, we believe that the proposal is

consistent with the Act.

It is therefore ordered, pursuant to section 19(b)(2) of the

Act,\72\ that the proposed rule change (SR-NYSE-88-35) be, and hereby

is, approved.

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\72\15 U.S.C. 78s(b)(2) (1988).

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\73\

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\73\17 CFR 200.30-3(a)(12) (1993).

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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-12573 Filed 5-23-94; 8:45 am]

BILLING CODE 8010-01-M