SECURITIES AND EXCHANGE COMMISSION

     17 CFR PART 240

     Rel. No. 34-39624

     COMMISSION PROCEDURES FOR FILING APPLICATIONS FOR ORDERS FOR EXEMPTIVE

     RELIEF PURSUANT TO SECTION 36 OF THE EXCHANGE ACT

     AGENCY: Securities and Exchange Commission

     ACTION: Final Rule

     SUMMARY:  The Securities and Exchange Commission is amending its Rules of

     General Application to set forth procedures to be followed by the Divisions

     of Market Regulation and Corporation Finance in assessing and processing

     applications for exemptive relief pursuant to Section 36 of the Securities

     Exchange Act of 1934.  Section 36 requires the Commission to determine the

     procedures under which an exemptive order under that section may be

     granted.

     EFFECTIVE DATE: [Insert date of publication in the Federal Register].

     FOR FURTHER INFORMATION CONTACT: Catherine McGuire, Chief Counsel, or Paul

     P. Andrews, Special Counsel at (202) 942-0073, Office of Chief Counsel,

     Division of Market Regulation, Mail Stop 7-11; or Anita Klein, Special

     Counsel at (202) 942-2900, Office of Chief Counsel, Division of Corporation

     Finance, Mail Stop 3-3, Securities and Exchange Commission, 450 Fifth

     Street, N.W., Washington, D.C. 20549.

     SUPPLEMENTARY INFORMATION:

     I.   BACKGROUND

          The National Securities Markets Improvement Act of 1996 ("NSMIA")

     added Section 36 to the Securities Exchange Act of 1934 ("Exchange Act").




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     <(1)>  This section gives the Securities and Exchange Commission

     ("Commission") the authority to exempt any person, security, or transaction

     from the provisions of the Exchange Act.  The Commission has similar

     authority under the Trust Indenture Act of 1939 (15 U.S.C. 77ddd(d)), the

     Investment Company Act of 1940 (15 U.S.C. 80a-6(c)), and the Investment

     Advisers Act of 1940 (15 U.S.C. 80b-6(a)).  In particular, Section 36(a)(1)

     provides that "the Commission by rule, regulation, or order, may

     conditionally or unconditionally exempt any person, security, or

     transaction, or any class or classes of persons, securities, or

     transactions, from any provision or provisions of [the Exchange Act] or any

     rule or regulation thereunder, to the extent that such exemption is

     necessary or appropriate in the public interest, and is consistent with the

     protection of investors." 15 U.S.C. 78mm(a). <(2)> 

          Before the Commission may begin using its new order authority, it must

     develop procedures that applicants must follow in seeking such an exemption

     from provisions of the Exchange Act.  Accordingly, the Commission is

     amending its Rules of General Application to set forth the following

     procedures pursuant to which it will consider applications for these

     exemptive orders.  These procedures are similar to those now used by the

     Commission in considering exemptive order applications under the Trust

                              

          <(1)>     P.L. No. 104-290, 110 Stat. 3442.

          <(2)>     The Commission also has authority to issue exemptive
                    orders that grant relief from specific provisions of
                    the Exchange Act as well as from specific Commission
                    rules promulgated thereunder.  For example, either by
                    rule or by order, the Commission may, pursuant to
                    Section 15(a)(2) of the Exchange Act, conditionally or
                    unconditionally exempt any broker or dealer from the
                    registration provisions of Section 15(a)(1).  

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     Indenture Act (see 17 CFR 260.4d-7; 260.4d-8), the Investment Company Act

     (see 17 CFR 270.0-2; Investment Company Act Release No. 14492 (April 30,

     1985)); and the Investment Advisers Act (see 17 CFR 275.0-5).  Applicants

     should also be aware, however, that under Section 36(a)(2), the Commission

     has sole discretion to decline to consider any application.

          Some provisions under the Exchange Act give the Commission specific

     authority to provide exemptions. <(3)>  In those areas, the Commission

     intends to continue to consider exemptive requests under the specific

     exemptive provisions.  Under general exemptive authority, the Division of

     Corporation Finance will evaluate on a case-by-case basis any requests for

     exemptive relief it receives.  With respect to areas of the Exchange Act

     administered by the Division of Market Regulation <(4)> where the

     Exchange Act does not provide specific exemptive authority, the Commission

     currently views two areas as appropriate for requests for exemptive relief

     under Section 36: (1) requests made under Section 11(d)(1) of the Exchange

     Act, which prohibits broker-dealers from extending, arranging, or

     maintaining credit on a new issue the broker-dealer is distributing and for

     thirty days thereafter; and (2) requests made under the various statutory

                              

          <(3)>     For example, Section 12(h) of the Exchange Act permits
                    the Commission to exempt certain persons, or classes of
                    persons, from the provisions of Sections 12(g), 13, 14,
                    15(d), and 16.

          <(4)>     The Division of Corporation Finance is responsible for
                    administering various sections of the Exchange Act,
                    including provisions of Sections 10A, 12, 13, 14,
                    15(d), 16, and 21E.  The Division of Market Regulation
                    administers other provisions of the Exchange Act,
                    including Sections 6, 11, 15, 17 and 19.  The Division
                    of Investment Management administers Section 13(f) of
                    the Exchange Act and that Division follows certain
                    other procedures in considering exemptive applications. 

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     and regulatory requirements otherwise imposed on a broker or dealer by

     Sections 15 and 17 of the Exchange Act, if such broker or dealer has

     received an exemption from the Commission from the registration provisions

     of Section 15. <(5)> 

     II.  AMENDMENT TO RULES OF GENERAL APPLICATION

          The Commission today announces an amendment to its Rules of General

     Application governing procedures to be followed for filing application for

     exemptive orders pursuant to Section 36 of the Exchange Act.  The amendment

     adds new Rule 240.0-12 which sets forth the general procedures.

          The Commission finds, in accordance with Section 553(b)(3)(A) of the

     Administrative Procedure Act, 5 U.S.C. 553(b)(3)(A), that these rules

     relate to agency organization, procedure, or practice, an agency

     interpretation, and a general statement of policy.  Accordingly, notice,

     opportunity for public comment, and publication of these procedures and

     guidelines prior to their effective date are unnecessary.

     List of Subjects in 17 CFR Part 240

          Brokers, Confidential business information, Fraud, Reporting and

     recordkeeping requirements, Securities.

          For the reasons set out in the preamble, Title 17, Chapter II, Part

     240 of the Code of Federal Regulations is amended as follows:

          PART 240 -- GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF

     1934

          1.   The general authority citation for Part 240 is revised to read as

     follows:

                              

          <(5)>     See, e.g., Exchange Act Section 15(c)(3) and the rules
                    thereunder.

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          Authority:  15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee, 77ggg,

     77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78k, 78k-1, 78l, 78m, 78n,

     78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d), 78mm, 79q, 79t, 80a-20, 80a-

     23, 80a-29, 80a-37, 80b-3, 80b-4 and 80b-11, unless otherwise noted.



                              *     *     *     *     *

          2.   Section 240.0-12 is added to read as follows:

           240.0-12 Commission procedures for filing applications for orders

     for exemptive relief under Section 36 of the Exchange Act.

          (a)  The application shall be in writing in the form of a letter, must

     include any supporting documents necessary to make the application

     complete, and otherwise must comply with  240.0-3.  All applications must

     be submitted to the Office of the Secretary of the Commission.  Requestors

     may seek confidential treatment of their applications to the extent

     provided under  200.81 of this chapter.  If an application is incomplete,

     the Commission, through the Division handling the application, may request

     that the application be withdrawn unless the applicant can justify, based

     on all the facts and circumstances, why supporting materials have not been

     submitted and undertakes to submit the omitted materials promptly.  

          (b)  An applicant may submit a request electronically in standard

     electronic mail text or ASCII format.  The electronic mailbox to use for

     these applications is described on the Commission's website at www.sec.gov

     in the "Exchange Act Exemptive Applications" subsection located under the

     "Current SEC Rulemaking" section.  In the event electronic mailboxes are

     revised in the future, applicants can find the appropriate mailbox by

     accessing the Commission's website directory of electronic mailboxes at


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     http://www.sec.gov/asec/mailboxs.htm.

          (c)  An applicant also may submit a request in paper format.  Five

     copies of every paper application and every amendment to such an

     application must be submitted to the Office of the Secretary at 450 Fifth

     Street, N.W., Washington, D.C. 20549.  Applications must be on white paper

     no larger than 8-1/2 by 11 inches in size.  The left margin of applications

     must be at least 1-1/2 inches wide, and if the application is bound, it

     must be bound on the left side.  All typewritten or printed material must

     be on one side of the paper only and must be set forth in black ink so as

     to permit photocopying.  

          (d)  Every application (electronic or paper) must contain the name,

     address and telephone number of each applicant and the name, address, and

     telephone number of a person to whom any questions regarding the

     application should be directed.  The Commission will not consider

     hypothetical or anonymous requests for exemptive relief.   Each applicant

     shall state the basis for the relief sought, and identify the anticipated

     benefits for investors and any conditions or limitations the applicant

     believes would be appropriate for the protection of investors.  Applicants

     should also cite to and discuss applicable precedent.       (e)

     Amendments to the application should be prepared and submitted as set forth

     in these procedures and should be marked to show what changes have been

     made.  

          (f)  After the filing is complete, the applicable Division will review

     the application.  Once all questions and issues have been answered to the

     satisfaction of the Division, the staff will make an appropriate

     recommendation to the Commission.  After consideration of the


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     recommendation by the Commission, the  Commission's Office of the Secretary

     will issue an appropriate response and will notify the applicant.  If the

     application pertains to a section of the Exchange Act pursuant to which the

     Commission has delegated its authority to the appropriate Division, the

     Division Director or his or her designee will issue an appropriate response

     and notify the applicant. 

          (g)  The Commission, in its sole discretion, may choose to publish in

     the Federal Register a notice that the application has been submitted.  The

     notice would provide that any person may, within the period specified

     therein, submit to the Commission any information that relates to the

     Commission action requested in the application.  The notice also would

     indicate the earliest date on which the Commission would take final action

     on the application, but in no event would such action be taken earlier than

     25 days following publication of the notice in the Federal Register.

          (h)  The Commission may, in its sole discretion, schedule a hearing on

     the matter addressed by the application. 

     By the Commission.





                                             Jonathan G. Katz

                                             Secretary

     Dated: February 5, 1998










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