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

OFFICE OF MANAGEMENT AND BUDGET

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-37121; International Series Release No. 969; File No.

SR-CHX-96-12]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change and Amendment No. 1 Thereto by the Chicago Stock Exchange, Inc.

Relating to Listing Standards for Investment Company Units

April 17, 1996.

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

1934, 15 U.S.C. 78s(b)(1) (``Act''), notice is hereby given that on

March 27, 1996, the Chicago Stock Exchange, Inc. (``CHX'' or

``Exchange'') filed with the Securities and Exchange Commission the

proposed rule change as described in Items I, II, and III below, which

Items have been prepared by the self-regulatory organization. On April

12, 1996, the Exchange filed Amendment No. 1 to its proposal.\1\ The

Commission is publishing this notice to solicit comments on the

proposed rule change from interested persons.

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\1\ Amendment No. 1 serves to supersede entirely the Exchange's

initial rule filing. Therefore, this notice incorporates Amendment

No. 1 in its entirety. Letter from Charles R. Haywood, Foley &

Lardner, to Francois Mazur, Attorney, Division of Market Regulation,

Commission, dated April 11, 1996 (``Amendment No. 1'').

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

of the Proposed Rule Change

The Exchange proposes to amend Article XXVIII of its Rules

governing the listing requirements of securities on the CHX, as well as

Article XXX of the CHX's Rules governing specialists.

II. Self-Regulatory Organization's Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the self-regulatory organization

included statements concerning the purpose of and basis for the

proposed rule change and discussed any comments it received on the

proposed rule change. The text of these statements may be examined at

the places specified in Item IV below. The self-regulatory organization

has prepared summaries, set forth in sections A, B and C below, of the

most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule Change

The Exchange is proposing listing standards for units of trading

(``Units'') that represent an interest in a registered investment

company (``Investment Company'') that could be organized as a unit

investment trust (``UIT''), an open-end management investment company,

or a similar entity. The investment company would hold securities

comprising, or otherwise based on or representing an investment in, an

index or portfolio of securities. The investment company could either

hold the securities directly or could hold another security

representing the index or portfolio of securities (such as shares of a

UIT that holds shares of an open-end investment company).

Under the proposed rules, the Investment Company would be required

either to: (i) hold securities comprising or otherwise based on or

representing and interest in an index or portfolio of securities, or

(ii) hold securities in another registered investment company.\2\ The

Investment Company would then issue Units in a specified aggregate

number in return for a deposit of either: (i) shares of securities

[[Page 17933]]

comprising or otherwise based on the relevant index or portfolio, or

(ii) shares of a registered investment company. In addition or instead

of the ``in-kind'' deposit, the Investment Company might require a cash

deposit. Thus, Units could be structured as series of an open-end

management investment company investing in a portfolio of securities

(``Fund-only structure''). Alternatively, Units could be structured as

UITs that have as their assets shares of an open-end investment company

holding a portfolio of securities (``Fund/UIT structure''). Unit

holders would receive periodic cash payments corresponding to the

regular cash dividends or distributions declared with respect to the

securities held by the Investment Company (after subtracting applicable

expenses and charges).

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\2\ Telephone Conversation between David T. Rusoff, Foley &

Lardner, and Francois Mazur, Office of Market Supervision, Division

of Market Regulation, on April 12, 1996.

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Units would be distributed in ``Creation Transactions.'' To effect

a Creation Transaction in a Fund-only structure, an entity would buy

shares from the investment company (``Fund'') in ``Creation Unit'' size

aggregations in exchange for a deposit of a basket of securities

reflecting the securities underlying the Fund and/or cash deposit. To

effect a Creation Transaction in a Fund/UIT structure, an entity would

buy a Fund share with a similar deposit and exchange it for a Creation

Unit.\3\ The owner of a Creation Unit could then subdivide the Creation

Unit into a specific number of identical fractional non-redeemable sub-

units, the Units, that would constitute securities traded. Units could

be recombined into Creation Unit aggregations, and redeemed for the

securities underlying the Fund and/or an amount of cash, either

directly, or indirectly, depending on the structure chosen. The

securities would not be redeemable other than in Creation Unit

aggregations.\4\

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\3\ Id.

\4\ Id.

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Dealing in Units on the Exchange will be conducted pursuant to the

Exchange's general agency-auction trading rules. The Exchange's general

dealing and settlement rules would apply, including its rules on

clearance and settlement of securities transactions and its equity

margin rules. Other generally applicable Exchange equity rules and

procedures also would apply. Unless the prospectus for a specific

security states otherwise, the Units trading on the Exchange will have

one vote per share; however, as with other securities issued by

registered investment companies, there will not be a ``pass-through''

of the voting rights on the actual index securities held by a fund or

directly or indirectly by a trust.

With respect to specialist dealings, Article XXX, Rule 23(a) of the

Exchange's Rules precludes certain business relationships between an

issuer of an ``exclusive issue'' and the specialist in that exclusive

issue.\5\ Rule 23(a) could be interpreted when listing certain types of

Units to prevent a specialist from engaging in Creation Transactions

with the issuer. The Exchange believes, however, that such market

activities could enhance liquidity in the Units and facilitate the

specialist's market-making responsibilities. In addition, since the

specialist will be able to engage in Creation Transactions and

redemptions only according to the same terms and conditions as every

other investor (and only at net asset value), the Exchange believes

that there is no potential for abuse.

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\5\ Interpretation and Policy .01 of Article XXX, Rule 23

defines ``exclusive issue'' as the stock of any company traded on

the Exchange no otherwise traded on the NYSE, American Stock

Exchange, or NASDAQ/NMS, and, where there exists another market for

such issue, the Exchange has executed 15% or more of the volume in

the issue during the three previous months.

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Therfore, the Exchange proposes amending Article XXX, Rule 23(a) to

permit specialists to engage in these types of transactions if such

transactions would facilitate the maintenance of a fair and orderly

market in the Security. Any Creation Transactions in which the

specialist engages, however, will have to be effected through the

Distributor (as defined herein), and not directly with the issuer. This

requirement will make clear that the specialist is purchasing Units in

Creation Unit-size aggregations only to facilitate normal specialist

trading activity.

With respect to investor disclosure, the Exchange notes that,

pursuant to the requirements of the Securities Act of 1933 (``1933

Act''), all investors in Units will receive a prospectus regarding the

Units. Because the Units will be in continuous distribution, the

prospectus delivery requirements of the 1933 Act will apply to all

investors in Units. It is possible, however, that an exemption from the

prospectus delivery requirement may be obtained at some point in the

future with respect to Units listed or traded on the Exchange. In the

event of such an exemption, the Exchange will discuss with Commission

staff the appropriate level of disclosure that should be required with

respect to the Units being listed or traded, as appropriate, and will

file any necessary rule change to provide for such disclosure.

Upon the initial listing of any class of Units or trading of such

Units pursuant to unlisted trading privileges, the Exchange will issue

a circular to its membership explaining the unique characteristics and

risks of this type of security. The circular will, among other things,

inform member organizations of their responsibility to deliver a

prospectus to investors.

With respect to trading halts, the trading of Units would be

halted, along with the trading of all other listed stocks, in the event

the ``circuit breaker'' thresholds of Article IX, Rule 10A of the

Exchange's Rules are reached.

The Exchange proposes that Units trade either in certificated form

or solely through the use of a global certificate. Permitting the use

of global certificates would be consistent with expediting the

processing of transactions in Units and would minimize the costs of

engaging in transactions in these securities.

One existing form of Units are CountryBasket securities

(``Securities''),\6\ Which are created pursuant to a Fund-only

structure. The New York Stock Exchange (``NYSE'') has received

permission to list and trade CountryBaskets.\7\ CHX is not asking

permission to list CountryBaskets at this time, but rather will trade

CountryBaskets pursuant to unlisted trading privileges (``UTP'') once

the generic listing standards set forth herein are approved.

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\6\ CHX understands that ``CountryBaskets'' and ``The

CountryBaskets Index Fund'' are service marks of Deutsche Morgan

Grenfell/C.J. Lawrence, Inc. (``DMG''), the investment advisor to

the fund.

\7\ Securities Exchange Act Release No. 36923 (March 5, 1996),

61 FR 10410.

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Pursuant to Rule 12f-5 under the Act,\8\ prior to trading a

particular class or type of security pursuant to UTP, CHX must have

listing standards comparable to those of the primary exchange on which

the security is listed. The NYSE has adopted listing standards for

investment company units, and CHX's proposed rule change is designed to

create similar standards for investment company unit listing and/or

trading on CHX. As stated above, CHX propose to trade CountryBaskets

pursuant to UTP upon approval of this rule filing.

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\8\ 17 CFR 240.12f-5 (1995).

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The remainder of this section of the filing merely provides

background information on CountryBaskets. The information, taken from

File No. SR-NYSE-95-23, describes the structure and mechanics of

CountryBaskets.

CountryBasket securities are issued as series of an open-end

management investment company that will invest in a portfolio of

securities (``Index Securities'') included in a corresponding index.

Each series of the

[[Page 17934]]

investment company is designed to provide investment results that

substantially correspond to the price and yield performance of a

corresponding FT/S&P-Actuaries World Index (``Index'' or ``FT/

S&P'').\9\ The initial nine series of Funds will be based on the

following Indices: Australia, France, Germany, Hong Kong, Italy, Japan,

South Africa, United Kingdom, and the United States.

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\9\ According to Amendment No. 1 to SR-NYSE-95-23, the Indices

are a continuation of the FT-Actuaries World Indices, which were

jointly founded by The Financial Times Limited (``FT''), Goldman,

Sachs & Co. (``Goldman''), and NatWest Securities Limited

(``NatWest,'' and each a ``Founding Member''). In May 1995, Standard

& Poor's (``S&P''), a division of The McGraw-Hill Companies, Inc.,

joined FT and Goldman as co-publishers of the predecessor to the

Indices. As part of the new arrangement, NatWest withdrew from the

management of those indices, but continues to be recognized as a

Founding Member. The Indices are now jointly owned by S&P, FT and

Goldman. Following a transition period, FT and S&P will jointly

calculate the Indices. In November 1995, FT transferred its

ownership rights in the Indices to FT-SE International, a new

company jointly owned by the FT and the London Stock Exchange. By

the end of 1996, it is expected that FT-SE International will assume

responsibility for calculating the European and Asia-Pacific Indices

and S&P will calculate the U.S. Index.

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Distribution of the Securities

The Securities are distributed in transactions with the Fund

through Creation Transactions. To effect a Creation Transaction, a

person would buy Fund shares from the Fund at their net asset value

(``NAV'') next computed. The sales will be in Creation Unit-size

aggregations in exchange for a deposit (``Deposit'') of Index

Securities (a ``Fund Basket'') and a specified amount of cash

sufficient to equal the NAV of such shares.

Securites in Creation Unit-size aggregations may be redeemed, at

NAV, generally for an in-kind distribution of Index Securities

comprising the Fund shares, plus a cash payment. A Creation Unit-size

of Fund shares will represent securities with approximately $2 to $9.5

million in market value. The Creation Unit would be disaggregated into

the individual Securities that would trade on the Exchange.\10\ For the

nine initial CountryBasket securities, there would be the following

number of Securities per Creation Unit:

\10\ If a Fund/UIT structure instead had been used, a

``Redeemable Unit'' would represent the functional equivalent of the

Creation Unit. The owner of a Redeemable Unit could separate it into

a specific number of identical fractional non-redeemable sub-units

that would constitute the Securities traded on the Exchange. In the

case of the Germany CountryBasket series, for example, there would

be 100,000 Securities per Redeemable Unit. These Securities could be

recombined into Redeemable Units and then redeemed, at NAV, for the

appropriate number of Fund shares. In turn, the Fund shares could be

redeemed for the Index Securities and cash. The Securities would not

be redeemable other than in the Creation Unit aggregations.

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Australia--100,000

France--100,000

Germany--100,000

Hong Kong--100,000

Italy--100,000

Japan--250,000

South Africa--100,000

United Kingdom--100,000

United States--100,000

There may be an initial distribution period of Fund shares lasting

from one to a few weeks. During this period, the principal underwriter

or distributor (``Distributor'') directly or through soliciting dealers

would accept subscriptions to purchase Fund shares.

Exchange Trading of Units

The proposed listing criteria provide flexible standards for the

listing of Units. Before commencing trading, the Exchange will require

that there be at least 300,000 tradeable Units outstanding,

representing, for the nine series encompassed by this filing, at least

three Creation Units (except for the Japan CountryBasket). The Exchange

will consider the suspension of trading and the delisting of a series

of Units if:

After the first year of trading, there are fewer than

50 record or beneficial holders of the Units for 30 or more

consecutive trading days;

The value of the underlying index or portfolio of

securities is no longer calculated or available; or

There occurs another event that makes further dealings

in the Units on the Exchange inadvisable.

The FT/S&P-Actuaries World Indices

Deutsche Bank Securities Corporation, formerly investment adviser

to the Funds, provided the NYSE with certain information describing the

FT/S&P-Actuaries World Indices, contained within NYSE filing SR-NYSE-

95-23, as amended. The following combines information from the initial

filing and Amendment Nos. 1 and 2 to that filing.

Establishing an Index

The FT/S&P are jointly compiled by the Financial Times Limited,

Goldman, Sachs & Co., and Standard & Poor's, a division of The McGraw-

Hill Companies, Inc., in conjunction with the Institute of Actuaries

(together, the ``consortium'').\11\ The aim of the Consortium is to

create and maintain a series of high quality equity indices for use by

the global investment community. Specifically, the Consortium seeks to

establish and maintain the FT/S&P so that the respect to their

corresponding markets, they are comprehensive, consistent, flexible,

accurate, investible, and representative.

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\11\ In Amendment No. 1 to SR-NYSE-95-23, the NYSE stated that

certain modifications had occurred to the indices. The Chicago Stock

Exchange's filing has incorporated the additional information, and

operates under the assumption that the original information detailed

in SR-NYSE-95-23 continues to be accurate to the extent not modified

by the NYSE's amendment.

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The World Index Policy Committee (``WIPC'') makes all policy

decisions concerning the FT/S&P, including objectives, selection

criteria, liquidity requirements, calculation methodologies, and the

timing and disclosure of additions and deletions. The WIPC makes those

decisions in a manner that is consistent with the stated aims and

objectives of the Consortium. In general, the WIPC aims for a minimum

of 70 percent coverage of the aggregate value of all domestic exchange-

listed stocks in every country, region and sector in which it maintains

an index.

The WIPC consists of one representative of each Consortium member,

one member nominated by each of the parties as representing an actual

or prospective main user group of the World Indices, a Chairman and

additional member who are members of the Institute of Actuaries of the

Facility of Actuaries.

A country must satisfy the following criteria for the WIPC to

include it in the FT/S&P-Actuaries World Indices: (1) Direct equity

investment by non-nationals must be permitted, (2) accurate and timely

data must be available; (3) no significant exchange controls should

exist that would prevent the timely repatriation of capital or

dividends; (4) significant international investor interest in the local

equity market must have been demonstrated; and (5) adequate liquidity

must exist.

Securities in the FT/S&P are subject to the following

``investibility screens'': (1) Securities comprising the bottom five

percent of any market's capitalization are excluded; (2) securities

must be eligible to be owned by foreign investors; (3) 25 percent or

more of the full capitalization of eligible securities must be publicly

available for investment and not in the hands of a single party or

parties ``acting in concert''; and (4) securities that fail to trade

for more than 15 business days within each of two consecutive quarters

are excluded.

The WIPC seeks to select constituent stocks that capture 85 percent

of the equity that remains in any market (known as the ``investible

universe'') after applying the investibility screens. Securities are

selected with regard to economic sector and market

[[Page 17935]]

capitalization to make a given FT/S&P highly representative of the

overall economic sector make-up and market capitalization distribution

of the investible universe of a market.

Maintaining an Index

The WIPC may add securities to the FT/S&P for any of the following

reasons: (1) The addition would make the economic sector make-up and

market capitalization distribution of the FT/S&P component more

representative of its investible universe; (2) a non-constituent

security has gained in importance and replaces an existing constituent

security under the rules of review established by the WIPC; (3) the FT/

S&P component represents less than its targeted percentage of the

capitalization of its investible universe (usually in cases where the

investible universe has grown faster than the corresponding FT/S&P);

(4) a new, eligible security becomes available whose total

capitalization is one percent or more of the current capitalization of

the relevant FT/S&P; (5) an existing constituent ``spins off'' a part

of its business and issues new equity to the existing shareholders; or

(6) changes in investibility factors lead to a stock becoming eligible

for inclusion and that stock now qualifies on other grounds.

The WIPC may adjust the FT/S&P for any of the following reasons:

(1) The component comprises too high a percentage of its representative

universe; (2) a review by the WIPC shows that a constituent security

has declined in importance and should be replaced by a non-constituent

security; (3) the deletion of a security that has declined in

importance would make the FT/S&P more representative of the economic

make-up of its investible universe; (4) circumstances regarding

investibility and free float change, causing the constituent security

to fail the FT/S&P screening criteria; (5) and existing constituent

security is acquired by another entity; or (6) the stock has been

suspended from trading for a period of more than ten working days.

Generally, but not in all cases, changes resulting from review by the

WIPC occur at the end of a calendar quarter. Changes resulting from

merger or ``spin-off'' activity will be effectuated as soon as

practicable.

Dissemination of Changes to the Constituent Stocks in the Indices

Changes to an Index made during a calendar quarter are noted at the

foot of the tables containing the Indices that are published daily in

the ET. Consistent with the FT publication policy, these changes also

are shown prior to the actual day of implementation (unless for reasons

beyond the control of FT this is not possible). Decisions regarding the

addition of new eligible constituent stocks that are unrelated to

existing stocks in an Index, or weighting changes to existing

constituent stocks, are announced in the FT at least four working days

before they are implemented. Monday editions of the FT also show all

constituent changes made during the previous week, together with base

values for each Index. Changes to be made in an Index at the end of a

calendar quarter are published as soon as is practicable following the

quarterly meeting of the World Indices Policy Committee, but before the

quarter-end.

Calculation and Dissemination of an Index

The FT/S&P are calculated through widely accepted mathematical

formulae, with the effect that the Indices are weighted arithmetic

averages of the price relatives of the constituents--as produced solely

by changes in the marketplace--adjusted for intervening capital

changes. The FT/S&P are base-weighted aggregates of the initial market

capitalization, the price of each issue being weighted by the number of

shares outstanding, modified to reflect only those shares outstanding

that are eligible to be owned by foreign investors.

For each constituent security, the implied annual dividend is

divided by 260 (an accepted approximation for the number of business

days in a calendar year). This dividend is then reinvested daily

according to standard actuarial calculations. Distributions affect

adjustments to the base capital or the price per share in accordance

with prescribed FT/S&P standards. The indices' values and related

performance figures for various periods of time are calculated daily

and are disseminated to the public.

The FT/S&P are valued in terms of local currency, U.S. dollars, and

U.K. pounds sterling, thereby allowing the effect of currency value on

the Index value to be measured. Changes to the indices are announced as

soon as possible, and on Mondays the Financial Times publishes a list

of changes to each index implemented during the previous week, if any.

The FT/S&P are calculated once a day on weekdays when one or more of

the constituent markets are open; the indices are syndicated and

published in the financial sections of several newspapers worldwide.

FT/S&P data also may be purchased electronically.

Recognizing the importance of having current information on the

value of the Indices, DMG has arranged for Telesphere Corporation

(formerly Telekurs (North America) Inc.) (``Telesphere'') to calculate

``indicative values'' for the nine Indices on which CountryBaskets are

based on a more frequent basis. CHX understands that the NYSE will

provide for the dissemination of these indicative values through the

facilities of the Consolidated Tape Association (``CTA'').

In calculating ``indicative values,'' Telesphere will use the most

currently available stock price information for the constituent stocks

in an Index (based on home currency prices) and prevailing currency

exchange rates to translate the Index value into U.S. dollars.

Telesphere will also use the same pricing algorithm and methodology as

the Index calculators in calculating the indicative values. These

values will be disseminated every 30 seconds by the NYSE during regular

trading hours of 9:30 A.M. to 4:00 P.M. Eastern time. Due to the

differences in trading hours in the markets for the stocks underlying

the Indices, the calculation of the indicative values will be

implemented as follows:

Pacific Rim. Australia, Hong Kong, and Japan. There is

no overlap between the NYSE trading hours and the home-country

trading hours. Thus, the indicative values will always reflect the

closing prices of the underlying securities on the most recently

completed trading day, but will be updated every 30 seconds to

reflect changes in exchange rates.

Europe. France, Germany, Italy, and the United Kingdom.

There is some overlap between NYSE trading hours and home-country

trading hours. Thus, the 30-second updates for these Indices will

reflect changes in both current stock price information and currency

exchange rates while the relevant market is open; it will reflect

only changes in exchange rates once the home-market closes.

United States. Each 30-second update will reflect the

current price of U.S. component stocks.

South Africa. During Eastern Standard Time there is no

overlap between NYSE and South African trading hours. During Eastern

Daylight Savings Time there is a half-hour overlap. Thus, during

Standard Time, the disseminated Index values will reflect the

closing South African prices. During Daylight Savings Time, there

will be a real-time feed of stock prices from the Johannesburg Stock

Exchange and there will be a real-time calculation of the indicative

value of the Index at 30-second intervals during the half-hour

overlap.

While these indicative values will not be the official values of

the Indices (which will continue to be calculated and disseminated once

each day), the

[[Page 17936]]

Exchange believes that these values will provide investors with

accurate, timely information on the values of the Indices. Of course,

it cannot be guaranteed that the indicative value will at all times be

a completely accurate reflection of the value of the underlying index.

This also will provide all investors with equal access to information

concerning the values of the Indices. While some market participants

may be able to perform these calculations for their own trading

purposes during the business day, many participants lack sufficient

resources to do so. Providing standardized information through CTA

facilities will help ensure that all investors have equal access to

this market information.\12\

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\12\ In the unlikely event that Telesphere determines that it no

longer will calculate the indicative values of the Indices,

according to the NYSE DMG will seek to find another entity to

provide such values on substantially the same basis as Telesphere.

if this were to occur, the NYSE has represented that it will consult

with the staff of the Division of Market Regulation to ensure that

the staff finds any proposed new arrangements acceptable, including

the possibility of ending trading in the securities.

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Although the Chicago Stock Exchange operates under Central Time,

its trading hours are timed to coincide with those of the NYSE.

Therefore, the time zone difference will not affect the ability to

trade CountryBaskets on the CHX with full price information.

Telesphere is providing the indicative values subject to

substantially the following terms regarding its liability:

The values are representative, unofficial, and indicative

estimates of the FT/S&P-Actuaries World Indices (``FT/S&P'')

calculated by Telesphere Corporation (``Telesphere''). Although they

are provided with permission under a licensing agreement with

Deutsche Morgan Grenfell/C.J. Lawrence Inc. (``Subscriber''), they

are not, and should not be considered as, official FT/S&P index

values. They are provided as an information service to benefit the

investment community. Neither Telesphere nor Subscriber, The

Financial Times Ltd., Standard & Poor's, Goldman, Sachs & Co., or

their partners, affiliates employees and Agents, shall have any

liability contingent or otherwise, to third parties for the

completeness, or interruption in the delivery of the indicative

indices. In no event will any such party be liable for any special,

indirect, incidental, or consequential damages.

The Exchange believes that its proposal is consistent with Section

6(b)(5) of the Act in that the proposal fosters cooperation and

coordination with persons engaged in regulating, clearing, settling,

processing information with respect to, and facilitating transactions

in securities, removes impediments to and perfects the mechanism of a

free and open market and a national market system and protects

investors and the public interest.

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

The proposed rule change does not impose any burden on competition

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

the 1934 Act.

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

Rule Change Received From Members, Participants or Others

The Exchange has not solicited, and does not intend to solicit,

comments on this proposed rule change. The Exchange has not received

any unsolicited written comments from members or other interested

parties.

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

Commission Action

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

Federal Register or within such longer period (i) as the Commission may

designate up to 90 days of such date if it finds such longer period to

be appropriate and publishes its reasons for so finding or (ii) as to

which the self-regulatory organization consents, the Commission will:

(a) By order approve such proposed rule change, or

(b) Institute proceedings to determine whether the proposed rule

change should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views and

arguments concerning the foregoing. Persons making written submissions

should file six copies thereof with the Secretary, Securities and

Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.

Copies of the submission, all subsequent amendments, all written

statements with respect to the proposed rule change that are filed with

the Commission, and all written communications relating to the proposed

rule change between the Commission and any person, other than those

that may be withheld from the public in accordance with the provisions

of 5 U.S.C. 552, will be available for inspection and copying in the

Commission's Public Reference Section, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such filing will also be available for

inspection and copying at the principal office of the above-mentioned

self-regulatory organization. All submissions should refer to File No.

SR-CHX-96-12 and should be submitted by May 14, 1996.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\13\

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\13\ 17 CFR 200.30-3(a)(12) (1994).

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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96-9893 Filed 4-22-96; 8:45 am]

BILLING CODE 8010-01-M