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the direction of which the transactions in stocks or securities
* * * are effected." Sec. 864(b)(2)(C).
Petitioners argue that all of their activities are eligible
to be excluded because the exclusion extends broadly to persons
trading for their own account or for the account of others and
because the agents through which trading is effected need not be
independent in order to qualify under section 864(b)(2)(A)(i).
We disagree. The exclusion requires that the trading in stocks
or securities be effected "through a resident broker, commission
agent, custodian, or other independent agent." Sec.
864(b)(2)(A)(i). We conclude that the phrase means that
excludable trading in stocks or securities must be effected
through independent agents and that LTD's trading through INC was
not so effected.
To qualify for the exclusion, trading in stocks or
securities must be effected by the agents referred to in section
864(b)(2)(A)(i). The fourth relationship to which that section
refers is an "other independent agent." We believe that the
phrase "other independent agent" serves to modify the language
preceding it. In other words, the resident broker, commission
agent, or custodian must each be an "independent agent."
Consequently, we conclude that section 864(b)(2)(A)(i) requires
that the trading in stocks or securities be effected through an
independent resident broker, an independent commission agent, an
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