# Self-Regulatory Organizations; American Stock Exchange, Inc., and Chicago Board Options Exchange, Inc., Order Approving Proposed Rule Changes Relating to the Listing and Trading of Warrants on the Deutscher Aktienindex (``DAX Index'')

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URL: https://www.frixlaw.com/law-library/documents/fr%3A95-20157

## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** August 15, 1995
- **Citation:** 60 FR 42205

## Text

SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36070; International Series Release No. 837 File Nos.
SR-Amex-94-55 and SR-CBOE-95-01]

Self-Regulatory Organizations; American Stock Exchange, Inc., and
Chicago Board Options Exchange, Inc., Order Approving Proposed Rule
Changes Relating to the Listing and Trading of Warrants on the
Deutscher Aktienindex (``DAX Index'')

August 9, 1995.

I. Introduction

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule 19b-4 thereunder,\2\ on December 5, 1994, the
American Stock Exchange, Inc. (``Amex'') filed with the Securities and
Exchange Commission (``Commission''), and on January 5, 1995, the
Chicago Board Options Exchange, Inc. (``CBOE'') filed with the
Commission, proposed rule changes to list and trade warrants on the
Deutscher Aktienindex (``DAX Index'' or ``Index''). The Amex and the
CBOE are collectively referred to herein as the ``Exchanges.'' Notices
of the proposals appeared in the Federal Register on January 26,
1994.\3\ The Commission received three comment letters concerning the
proposed rule changes.\4\ This order approves the Amex and the CBOE
proposals.

\1\ 15 U.S.C. Sec. 78s(b)(1) (1988).
\2\ 17 CFR 240.19b-4 (1994).
\3\ See Securities Exchange Act Release Nos. 35249 (January 19,
1995), 60 FR 5236 (notice of File No. SR-Amex-94-55), and 35247
(January 16, 1995), 60 FR 5233 (notice of File No. SR-CBOE-95-01).
\4\ All three letters were submitted on behalf of the Deutsche
Borse AG, the Frankfurt Stock Exchange (``FSE''), and the Deutsche
Terminborse (``DTB''). The Deutsche Borse AG is a holding company
formed in 1993 for the purpose of, among other things, assuming
ownership and control of the FSE and the DTB. See Letter from
Lawrence Hunt, Jr., Sidley & Austin, to Margaret McFarland, Deputy
Security, Commission, dated March 21, 1995 (commenting on File No.
SR-Amex-94-55), and letter from Lawrence Hunt, Jr., Sidley & Austin,
to Margaret McFarland, Deputy Secretary, Commission, dated March 21,
1995, (collectively, ``Comment Letters''). The commenters
subsequently submitted a follow-up statement to the Comment Letters.
See Letter from Lawrence Hunt, Jr., Sidley & Austin, to Margaret
McFarland, Deputy Secretary, Commission, dated July 19, 1995 (``July
19 Letter'').
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II. Description of the Proposals

The Amex and the CBOE propose to list index warrants based on the
DAX Index.

A. Composition and Maintenance of the Index

The DAX Index is a capitalization-weighted index of 30 German
equity securities listed on the Frankfurt Stock Exchange (``FSE''). The
capitalization of a particular stock in the Index is

[[Page 42206]]
calculated by multiplying its listed capital\5\ by the price of the
common stock (or if the common stock is not listed, the preferred
stock) and a multiplier determined by the FSE. The stocks included in
the DAX Index are among the largest German corporations, whose shares
are among the most actively traded of German issuers. The Index is
composed of securities representing more than ten broad industry
groups, including chemicals, automobile manufacturers, banks, and
insurance companies.\6\

\5\ Listed capital for a component security is determined based
on an issuer's preferred and common shares registered for trading on
the FSE. This is different from domestic capitalization-weighted
indexes, such as the S&P 500 Index, the values of which are
calculated based only on the shares of the issuer's common stock.
\6\ The components of the Index are: Allianz AG Holdings; BASF
AG; Bayer AG; Bayer Hypo/Wech; BMW; Bayer Vereinsbank AG;
Commerzbank AG; Continental AG; Daimler-Benz AG; Deutsche Babcock
AG; Deutsche Bank AG; Degussa AG; Dresdner Bank AG; Henkel KGAA-Pfd;
Hoechst AG; Karstadt AG; Kaufhof Holdings AG; Lufthansa AG; Linde
AG; Man AG; Metallgesellschaft; Mannesmann AG; Preussag AG; RWE AG;
Schering AG; Siemens AG; Thyssen AG; Veba AG; Viag AG; and
Volkswagen AG.
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The Index had a closing value of 2,184.33 on July 20, 1995. As of
December 2, 1994, the 30 stocks comprising the Index ranged in
individual market capitalizations from a low of approximately DM 1.17
billion (US. $841.73 million)\7\ to a high of approximately DM 50.59
billion (U.S. $36.40 billion) with a mean capitalization of DM 13.88
billion (U.S. $9.99 billion). Also as of that date, the five largest
stocks in the Index accounted for approximately 43.69% of the total
weight of the Index with no single security accounting for more than
12.15% of the weight of the Index. Average daily trading volume in the
components of the Index for the period from June 1, 1994, through
November 30, 1994, ranged from a low of 59,408 shares to a high of
1,042,280 shares, with an average daily trading volume for an Index
component during that period of 338,449 shares.

\7\ Based on a current German mark/U.S. dollar exchange rate of
approximately DM 1.39/U.S. $1.
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B. Calculation and Dissemination of the Index Value

The value of the DAX Index is calculated every minute by the FSE
from 10:30 a.m. to 1:30 p.m., Frankfurt time (4:30 a.m. to 7:30 a.m.
Eastern time), based on last sale prices of the component stocks. The
value of the Index is disseminated over Reuters News Service, among
others. The value of the Index, however, is not disseminated by the FSE
until opening prices are available for at least 15 components of the
Index representing at least 70% of the capitalization of the Index.
Thereafter, with respect to any stock that has not yet opened for
trading, the Index value is calculated using the previous day's closing
price for those components.
In order to maintain continuity of the value of the Index, the FSE
adjusts the Index to reflect certain events relating to the component
stocks. For example, the FSE adjusts the Index value to reflect cash
dividends paid on the component securities.\8\ An adjustment is also
applied by the FSE whenever a company issues new shares for which the
shareholders have preemptive rights, or when other intra-year events,
such as mergers and spinoffs, occur.

\8\ The FSE makes this adjustment because German companies
usually pay their dividends only once per year (generally in June or
July). If not adjusted, the annual dividend payment would result in
a significant drop in the value of the Index at the time when the
dividends are paid. As a result, the FSE calculates the dividend
adjustment such that share prices reflect full dividend
reinvestment.
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The number of listed shares of each stock used in the calculation
of the value of the Index is updated by the FSE annually in September.
At that time, the adjustment factors mentioned above, which reflect the
dividend payments and/or intra-year adjustments, are re-scaled to one,
with an additional adjustment made to maintain continuity in the value
of the Index.
In addition, the composition of the Index is reviewed periodically
by the FSE. It is the FSE's policy not to alter the composition of the
DAX Index unless a stock ceases to meet the criteria that initially
were the basis for including the stock in the Index. Replacements are
usually made from a list of substitute stocks. If it is not possible to
substitute a stock from the same industry group, a stock from another
industry may be substituted.
C. Index Warrant Trading

The Amex proposes to list DAX Index warrants pursuant to Section
106 of the Amex Company Guide (``Guide''). Under Amex's rules, the Amex
may approve for listing warrants on established foreign and domestic
market indexes. The CBOE has similar authority to list warrants on
foreign indexes pursuant to CBOE Rule 31.5(E).
The Amex and the CBOE represent that Index warrant issues will
conform to the index listing guidelines contained in Section 106 of the
Guide and CBOE Rule 31.5(E), respectively. Specifically, the listing
guidelines of the Exchanges require that: (1) issuers of DAX Index
warrants will be have assets in excess of $100,000,000 and otherwise
substantially exceed the Exchanges' size and earnings requirements; \9\
(2) the term of warrants will be for a period ranging from one to five
years from the date of issuance; and (3) the minimum public
distribution of such issues will be 1,000,000 warrants, with as minimum
of 400 public holders, and a minimum aggregate market value of
$4,000,000.

\9\ See Amex Guide Section 101 and CBOE Rule 31.5A.
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The Exchanges will apply the same margin treatment for the purchase
of Index warrants as they require for listed options.\10\

\10\ Telephone conversation between Claire McGrath, Managing
Director and Special Counsel, Derivative Securities, Amex, and Brad
Ritter, Senior Counsel, Office of Market Supervision, Division of
Market Regulation, Commission, on July 21, 1995. See Amex Rule 462
and CBOE Rule 12.3.
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The proposed Index warrants will be direct obligations of their
issuers subject to cash-settlement in U.S. dollars, and either
exercisable throughout their life (i.e., American-style) or exercisable
only immediately prior to their expiration date (i.e., Europe-style).
Upon exercise, the holder of an Index warrant structured as a ``put''
will receive payment in U.S. dollars to the extent that the DAX Index
has declined below a cash settlement value specified at the time of
issuance. Conversely, upon exercise, holders of an Index warrant
structured as a ``call'' will receive payment in U.S. dollars to the
extent that the DAX Index has increased above a cash settlement value
specified at the time of issuance. Index warrants that are ``out-of-
the-money'' at the time of expiration will expire worthless.
Because index warrants are derivative in nature and closely
resemble index options, the Exchanges will also require that DAX Index
warrants be sold only to customers whose accounts have been approved
for options trading.\11\ Second, the Exchanges' options suitability
standards will apply to recommendations in Index warrants.\12\ Third,
the exchanges' rules regarding discretionary orders will also apply to
transactions in Index warrants.\13\

\11\ See Amex Rule 921 and CBOE Rule 9.7.
\12\ See Amex Rule 411, Commentary .02 and CBOE Rule 9.9.
\13\ See Amex Rule 421, Commentary .02 and CBOE Rule 30.50,
Interpretation .04 (requiring that the standards of Rule 9.10 be
applied to index warrant transactions).
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Prior to the commencement of trading of Index warrants, the
Exchanges will distribute circulars to their members calling attention
to certain compliance responsibilities when handling transactions in
Index warrants.

[[Page 42207]]

D. Surveillance

The Exchanges will use their existing surveillance procedures to
monitor trading in Index warrants. The Exchanges represent that they
are currently negotiating to enter into separate surveillance sharing
agreements with the FSE.
Both the Amex and the CBOE have submitted to Commission approval a
proposed rule change governing, among other things, customer protection
and margin requirements for stock index warrants, currency index
warrants, and currency warrants.\14\ DAX Index warrants issued
subsequent to approval of those proposals will be subject to these new
rules.

\14\ See Securities Exchange Act Release Nos. 35086 (December
12, 1994), 59 FR 65561 (December 20, 1994) (notice of File No. SR-
Amex-94-38), and 35178 (December 29, 1994), 60 FR 2409 (January 9,
1994) (notice of File No. SR-CBOE-94-34).
III. Comment Letters

Three comment letters were received by the Commission--one
discussing the CBOE proposal, one discussing the Amex proposal, and one
follow-up letter discussing both proposals. All three comment letters
were submitted on behalf of the Deutsche Borse AG, DTB, and FSE. The
first two letters received raised the same issues concerning the
respective proposals.\15\ The commenters assert that the FSE has a
proprietary interest in the DAX Index which vests the FSE with the
exclusive right to license its use for trading index products based on
the DAX Index. According to the commenters, even if the Amex and CBOE
had any rights to use the DAX Index or the ``DAX'' name, those rights
either lapsed or were terminated by the Deutsche Borse AG.\16\ As a
result, the commenters argue that the proposals raise issues concerning
intellectual property rights which should be resolved prior to
Commission approval of the proposals.

\15\ See Comment Letters, supra note 4.
\16\ Id. The commenters, however, have informed the Commission
that the Deutsche Borse AG is currently negotiating with the CBOE
and the Amex for purposes of licensing the DAX Index and the DAX
name to the Exchanges for purposes of listing DAX Index warrants.
See July 19 Letter, supra note 4.
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Similarly, the commenters also assert that all surveillance
agreements between the FSE and each of the Exchanges have either lapsed
or been terminated by the Deutsche Borse AG.\17\ As a result, the
commenters conclude that it would be impossible for the Commission to
find that the proposed DAX Index warrants would not be susceptible to
manipulation. The commenters, however, have informed the Commission
that the Deutsche Borse AG is currently negotiating with the CBOE and
the Amex for purposes of entering into market surveillance agreements
with each Exchange.\18\

\17\ See Comment Letters, supra note 4.
\18\ See July 19 Letter, supra note 4.
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Based on these arguments, the commenters conclude that it would be
inappropriate for the Commission to approve the proposed rule changes
until these issues are resolved.\19\

\19\ See Comment Letters, supra note 4.
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IV. Commission Findings

The Commission finds that the proposed rule changes are consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange, and, in
particular, the requirements of Section 6(b)(5) of the Act.\20\
Specifically, the Commission believes that the trading of warrants
based on the DAX Index will serve to protect investors, promote the
public interest, and help to remove impediments to a free and open
securities market by providing investors with a means to hedge exposure
to market risk associated with the German equity market and provide a
surrogate instrument for trading in the German securities market.\21\
The trading of warrants based on the DAX Index should provide investors
with a valuable hedging vehicle that should reflect accurately the
overall movement of the German equity market.

\20\ 15 U.S.C. Sec. 78f(b)(5) (1988).
\21\ Pursuant to Section 6(b)(5) of the Act, the Commission must
predicate approval of any new securities product upon a finding that
the introduction of such product is in the public interest. Such a
finding would be difficult with respect to a warrant that served no
hedging or other economic function, because any benefits that might
be derived by market participants likely would be outweighed by the
potential for manipulation, diminished public confidence in the
integrity of the markets, and other valid regulatory concerns.
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In addition, the Commission believes, for the reasons discussed
below, that the Amex and the CBOE have adequately addressed issues
related to customer protection, index design, surveillance, and market
impact of DAX Index warrants.

A. Customer Protection

Due to the derivative nature of index warrants, the Commission
believes that DAX Index warrants should only be sold to investors
capable of evaluating and bearing the risks associated with trading in
such instruments and that adequate risk disclosure be made to
investors. In this regard, the Commission notes that the rules and
procedures of the Exchanges that address the special concerns attendant
to the secondary market trading of index warrants will be applicable to
DAX Index warrants. In particular, by imposing the special suitability,
account approval, disclosure, and compliance requirements noted above,
the Amex and the CBOE have adequately addressed potential public
customer problems that could arise from the derivative nature of DAX
Index warrants. Moreover, the Amex and the CBOE plan to distribute
circulars to their members identifying the specific risks associated
with warrants on the DAX Index. Finally, pursuant to the Exchanges'
listing guidelines, only substantial companies capable of meeting their
warrant obligations will be eligible to issue DAX Index warrants.

B. Index Design and Structure

The Commission finds that it is appropriate and consistent with the
Act to classify the Index as a broad-based index. Specifically, the
Commission believes the Index is broad-based because it reflects a
substantial segment of the German equity market. First, the Index
consists of 30 actively traded stocks listed by the FSE. Second, the
market capitalizations of the stocks comprising the Index are very
large. Specifically, the total capitalization of the Index, as of
December 2, 1994, was approximately U.S. $299.55 billion, with the
market capitalizations of the individual stocks in the Index ranging
from a high of $36.40 billion to a low of $841.73 million, with a mean
value of $9.99 billion.\22\ Third, no one particular stock or group of
stocks dominates the weight of the Index. Specifically, as of December
2, 1994, no single stock accounted for more than 12.15% of the Index's
total value, and the percentage weighting of the five largest issues in
the Index accounted for 43.69% of the Index's value. Accordingly, the
Commission believes it is appropriate to classify the Index as broad-
based.

\22\ These figures are based on the German mark values as of
December 2, 1994, but converted to dollars using the current
exchange rate of approximately DM 1.39/U.S. $1.00.
C. Surveillance

As a general matter, the Commission believes that comprehensive
surveillance sharing agreements between the relevant foreign and
domestic exchanges are important where an index derivative product
based on foreign securities is to be traded in the United States.\23\
In most

[[Page 42208]]
cases, in the absence of such a comprehensive surveillance sharing
agreement, the Commission believes that it would be difficult to
conclude that an exchange listing a derivative product, such as a DAX
Index warrant, would be able to monitor effectively trading involving
the derivative product. Indeed, in commenting on the DTB's application
to offer and sell DAX Index futures to U.S. persons, the Commission
relied, in part, on the existence of a surveillance sharing agreement
between the FSE and the DTB.\24\

\23\ A comprehensive surveillance sharing agreement would allow
the parties to the agreement to obtain relevant surveillance
information, including, among other things, the identity of the
ultimate purchasers and sellers of securities.
\24\ See Letter to Elisse B. Walter, General Counsel, Commodity
Futures Trading Commission (``CFTC''), from Brandon Becker,
Director, Division of Market Regulation (``Division''), Commission,
dated November 21, 1994.
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With regard to the Amex and CBOE proposals, the Commission would
prefer that comprehensive surveillance agreements be in place, and
believes that such agreements play a particularly important role in
ensuring the integrity of global securities markets. The Deutsche Borse
AG, however, terminated license and market surveillance agreements
between the FSE and the Exchanges as part of a now completed strategic
review relating to competitive concerns surrounding the trading of the
DAX Index products by the Exchanges.\25\ Since completion of the
strategic review, the Deutsche Borse AG has decided to commence active
negotiations with the Exchanges regarding their listing and trading of
DAX Index warrants and for the purpose of entering into new market
surveillance sharing agreements.\26\ The Commission views these new
efforts favorably, and believes that a major market such as the FSE
should readily enter into comprehensive surveillance sharing
agreements.\27\ Even in the absence of such agreements, however, the
Commission does not believe that the Exchanges' proposals should
continue to be detained pending the conclusion of these negotiations
when an alternative with respect to obtaining surveillance information
exists for the DAX Index products. Specifically, the U.S. Department of
State and the German Foreign Office have exchanged Diplomatic Notes
that provide a framework for mutual assistance in investigatory and
regulatory matters (``Diplomatic Notes'').\28\ The Diplomatic Notes
confirm that the Commission is qualified to obtain assistance through
the German Ministry of Justice under German law. Based on the existence
of the Diplomatic Notes, the Commission believes that the German
governmental authorities are committed to assistance in addressing
cross-border fraud. In addition, the Commission could obtain from the
German Ministry of Justice (and vice versa) information similar to that
which would be available in the event that a comprehensive surveillance
sharing agreement were executed between the FSE and the Amex and the
CBOE with respect to transactions in FSE-traded stocks related to DAX
Index warrant transactions on the Amex and the CBOE.\29\ While this
arrangement would certainly be enhanced by the existence of
comprehensive surveillance sharing agreements, it is nonetheless
consistent with other instances where the Commission has explored
alternatives to direct exchange-to-exchange surveillance sharing
agreements where the relevant foreign exchange was unwilling or unable
to enter into a comprehensive surveillance sharing agreement.\30\

\25\ See July 19 Letter, supra note 4. The commenters stated
that ``[b]ecause of the amount of work and discretion involved in
maintaining the DAX Index, under both federal and state law, [the
FSE] has a proprietary interest in its Index, which vests it with
the exclusive right to license its use for trading in stock index
products.'' See Comment Letters, supra note 4.
\26\ See July 19 Letter, supra note 4.
\27\ Ideally, such agreements should be broad in nature rather
than designed to cover a specific product, such as DAX Index
warrants. The absence of broad surveillance agreements slows down
the introduction of new international products by forcing the
relevant exchanges to amend product-specific surveillance sharing
agreements every time a new product is introduced.
\28\ See International Series Release No. 691, 1994 SEC LEXIS
2324 (July 22, 1994).
\29\ It is the Commission's expectation that this information
would include transaction, clearing, and customer information
necessary to conduct an investigation relating to trading in DAX
Index warrants or components of the DAX Index.
\30\ See, e.g., Letter to David R. Merrill, Deputy General
Counsel, CFTC, from Brandon Becker, Director, Division, Commission,
dated April 20, 1994 (Commission comment letter to the CFTC
regarding the offer by the Osaka Securities Exchange of futures
contracts based on the Nikkei 300 Index to U.S. persons), and letter
to Joanne T. Medero, General Counsel, CFTC, from William H. Heyman,
Director, Division, Commission, dated January 16, 1992 (Commission
comment letter to the CFTC regarding the offers by the Osaka Stock
Exchange and the Tokyo Stock Exchange of futures contracts based on
the Nikkei 225 and TOPIX Indexes to U.S. persons).
In addition, the Commission notes that there are factors relating
to the computation of the DAX Index that further support reliance on
arrangements other than direct exchange-to-exchange surveillance
agreements. Specifically, the size of the market for the securities
underlying the DAX Index makes it less likely that the proposed Index
warrants are readily susceptible to manipulation.\31\ For example, as
of December 2, 1994, the market capitalization of the securities in the
Index ranged from a low of approximately U.S. $841 million to a high of
approximately U.S. $36 billion, and the average trading volume for
individual Index component securities during the period from June 1,
1994, through November 30, 1994, ranged from a low of 59,408 shares per
day to a high of over one million shares per day.

\31\ In evaluating the manipulative potential of a proposed
index derivative product, as it relates to the securities that
comprise the index and the index product itself, the Commission has
considered several factors, including, among others, (1) the number
of securities contained in the index or group, (2) the
capitalizations of those securities, (3) the depth and liquidity of
the group or index, (4) the diversification of the group or index,
(5) the manner in which the index or group is weighted, and (6) the
ability to conduct surveillance on the product. See Securities
Exchange Act Release No. 31016 (August 11, 1992), 57 FR 37012
(August 17, 1992).
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The Commission continues to believe strongly that the existence of
comprehensive surveillance sharing agreements between the appropriate
German entity(ies) \32\ and each of the Exchanges would be important
measures to deter and detect potential manipulations or other improper
or illegal trading involving DAX Index warrants. Accordingly, the
Commission urges the German parties and the Exchanges to continue in
their present negotiations with the goal of finalizing formal
comprehensive surveillance sharing agreements covering DAX Index
warrants and the securities contained in the DAX Index as soon as
practicable.\33\

\32\ This would probably be the FSE and/or the Deutsche Borse
AG. See July 19 Letter, supra note 4.
\33\ See supra notes 23 and 27.
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D. Commission Response to Comment Letters

The comment letters received by the Commission in response to the
proposed rule changes raise two issues--one concerning the potential
for manipulation as a result of the lack of surveillance sharing
agreements between the American and German exchanges, and the other
concerning the FSE's intellectual property rights in the DAX Index and
the DAX name.\34\

\34\ See Section III, supra.
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As stated above, the Commission believes that, even though new
surveillance sharing agreements between the Deutsche Borse AG and the
Exchanges have not yet been finalized, the Diplomatic Notes provide, in
the interim, both the Commission and the German Ministry of Justice
with the ability to obtain and share information necessary, among other
things, to investigate suspected attempts at manipulation of the
trading of DAX

[[Page 42209]]
Index warrants at the Exchanges and of the securities of which the DAX
Index is composed. As a result, the Commission believes that the
trading of DAX Index warrants by the Exchanges in the absence of
comprehensive surveillance sharing agreements between the Exchanges and
the relevant German entity(ies) does not raise any significant
regulatory concerns.
Similarly, the Commission believes that the commenters' concerns
over the FSE's proprietary interest in the DAX Index and the DAX name
do not preclude the Commission from approving the proposed rule
changes. Specifically, to the extent that the commenters' argument
raises a claim of misappropriation or infringement of a protected
property right, the Commission believes it is inappropriate for the
Commission to attempt to resolve these issues in a proceeding involving
the approval of an exchange's proposed rule change under the federal
securities laws. To take such delaying action whenever a third party
claim is asserted could stifle Commission review of new products
proposed by self-regulatory organizations. The plain language of the
U.S. securities laws does not suggest that Congress intended that the
Commission attempt, in the context of an approval proceeding for a
securities product, to resolve intellectual property right claims that
can be pursued elsewhere.\35\ Accordingly, the commenters' assertions
do not form a basis for the Commission to either disapprove or delay
approval of the Exchanges' proposals.\36\

\35\ Congress has enacted an elaborate statutory framework for
the establishment, preservation, and protection of intellectual
property rights and has established specific federal agencies to
administer these laws. Separate state causes of action also may be
available to the holders of these proprietary rights, as well as
possible recourse to German laws.
\36\ See Securities Exchange Act Release Nos. 26709 (April 11,
1989), 54 FR 15280 (April 17, 1989) (order approving the listing of
index participations by the Amex, CBOE, and Philadelphia Stock
Exchange), and 28475 (September 27, 1990), 55 FR 40492 (October 3,
1990) (order approving the trading by the Amex of options on the
Japan Index).
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V. Conclusion

For the reasons described above, the Commission finds that the
proposed rule changes by the Exchanges are consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange, and, in particular, the
requirements of Section 6(b)(5).\37\ Specifically, the Commission finds
that the listing and trading of warrants based on the DAX Index will
serve to promote the public interest and help to remove impediments to
a free and open securities market by providing investors with a means
to hedge exposure to market risk associated with the German equity
market and provide a surrogate instrument for trading in the German
securities market.

\37\ 15 U.S.C. Sec. 78f(b)(5) (1988).
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\38\ that the proposed rule changes (File Nos. SR-Amex-94-55 and
SR-CBOE-95-01), are approved.

\38\ 15 U.S.C. Sec. 78s(b)(2) (1984).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\39\

\39\ 17 CFR 200.30-3(a)(12) (1994).
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Jonathan, G. Katz,
Secretary.
[FR Doc. 95-20157 Filed 8-14-95; 8:45 am]
BILLING CODE 8010-01-M

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A95-20157. Public record. Not legal advice.