Federal Register / Vol. 65, No. 80 / Tuesday, April 25, 2000 / Notices 24245

22Supra note 5.

23 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3The third proposed change to Rule 123B related

to reports of executions within two minutes for

orders stopped by specialists. The Exchange is not

requesting extension of this provision at this time.

See letter from James E. Buck, Senior Vice President

and Secretary, NYSE, to Richard Strasser, Assistant

Director, Division of Market Regulation, SEC, dated

February 25, 2000. The Commission published

notice of these two amendments to Rule 123B. See

Exchange Act Release No. 42572 (March 23, 2000),

65 FR 17325 (March 31, 2000) (SR–NYSE–00–09).

4 15 U.S.C. 78f(b)(5).

paper-based process that is labor

intensive and slow and that often results

in transfer delays. Using Profile, DTC

participants and DRS limited

participants will send automated and

standardized instructions which should

reduce the possibility that an

instruction to move an investor’s

position will contain erroneous or

incomplete information. Because Profile

will eliminate the need for paper in

transferring an investor’s positions,

Profile should also greatly reduce the

possibility that an investor’s

instructions to move her position will

be misplaced or lost.

In order to implement a more efficient

manner in which to move an investor’s

position than is currently available

using the paper-based DRS processing,

DTC has decided to make Profile fully

operational by using a screen-based

indemnification until on an electronic

guarantee program is established.

Although some transfer agents and

issuers do not believe that the screenbased indemnification provides

sufficient protection against fraudulent

transfers or potential losses resulting

from such transfers, that view does not

appear to be held by all transfer agents,

issuers, or broker-dealers. Many

industry participants believe that Profile

using the screen-based indemnification

provides sufficient protection and have

expressed their intention to use it.

As the Commission has stated in prior

orders dealing with DRS and Profile,

participation in DRS by issuers and DRS

limited participants is not mandatory.22

Issues regarding risks and liabilities to

issuers or DRS limited participants are

internal business issues and should be

addressed prior to an issuer’s, transfer

agent’s, or DRS limited participant’s

decision to participate or participate

further in DRS.

V. Conclusion

On the basis of the foregoing, the

Commission finds that DTC’s proposal

to modify Profile to include an

electronic screen-based indemnification

is consistent with the requirements of

the Act and in particular with the

requirements of Section 17A of the Act

and the rules and regulations

thereunder.

It is Therefore Ordered, pursuant to

section 19(b)(2) of the Act, that the

proposed rule change (File N. SR–DTC–

00–04) be and hereby is approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.23

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–10264 Filed 4–24–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42694; File No. SR–NYSE–

00–13]

Self-Regulatory Organizations: Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the New York Stock

Exchange, Inc. Extending the Pilot

Program for Amendments to Exchange

Rule 123B Until April 26, 2000

April 17, 2000.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder, 2

notice is hereby given that on March 22,

2000, the New York Stock Exchange,

Inc. (‘‘NYSE’’ or ‘‘Exchange’’) filed with

the Securities and Exchange

Commission (‘‘Commission’’ or ‘‘SEC’’)

the proposed rule change as described

in Items I, II and III below, which Items

have been prepared by the Exchange.

The Commission is publishing this

notice to solicit comments on the

proposed rule change from interested

persons and to grant accelerated

approval to the proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange requests that the pilot

program for commission-free execution

of orders received by specialists through

the SuperDOT System, and language

clarifying the status of an order that is

cancelled and replaced, be extended for

60 days.

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

Exchange 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

Exchange has prepared summaries, set

forth in sections A, B, and C, 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

1. Purpose

On October 4, 1999, the Exchange

filed a proposed rule change with the

Commission consisting of three

amendments to Exchange Rule 123b.

One amendment provided for the

commission-free execution of all orders

received by the Exchange specialists

through the SuperDOT system if such

orders were executed within five

minutes. A second amendment added

language to Rule 123B to clarify that if

an order placed with the specialist is

cancelled and replaced, the replacement

order is considered a new order for

purposes of the Rule.3 The Commission

approved these changes as a pilot

program through February 26, 2000.

The Exchange requests that the pilot

be extended for 60 days as it relates to

the commission-free policy and the

provision in Rule 123B relating to

cancelled and replaced orders. The

Exchange instituted the pricing

initiative of commission-free

executions, in conjunction with the

Exchange’s specialist community,

effective with trades executed on

December 29, 1999. To date, the

procedure has worked well. The

Exchange has not received any

complaints concerning this policy. As to

that portion of Rule 123B on cancelled

and replaced orders, the Exchange is not

aware of any problems associated with

the clarifying language.

2. Statutory Basis

The Exchange believes that the basis

under the Act for the proposed rule

change is the requirement under Section

6(b)(5) 4 that the Exchange have rules

that are designed to promote just and

equitable principles of trade, that

facilitate transactions in securities, that

remove impediments to and perfect the

mechanism of a free and open market

and a national market system and, in

general, to protect investors and the

public interest. The Exchange also

believes that the basis under the Act for

24246 Federal Register / Vol. 65, No. 80 / Tuesday, April 25, 2000 / Notices

5 15 U.S.C. 78k–1(a)(1)(C).

6 15 U.S.C. 78f(b).

7 In approving this rule change, the Commission

has considered its impact on efficiency,

competition, and capital formation. 15 U.S.C. 78c(f).

8 15 U.S.C. 78k–1(a)(1)(C).

9 15 U.S.C. 78f(b)(5) and 78s(b)(2).

10 15 U.S.C. 78s(b)(2).

11 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3 In Amendment No. 1, the Exchange made

technical changes to the proposal. See Letter from

Nandita Yagnik, Phlx, to Richard Strasser, Assistant

Director, Division of Market Regulation,

Commission, dated November 3, 1999

(‘‘Amendment No. 1’’).

4See Securities Exchange Act Release No. 42161

(November 19, 1999), 64 FR 66958.

5See Securities Exchange Act Release No. 34606

(August 26, 1994), 59 FR 45741 (September 2,

1994). Initially , the enhanced parity split was

approved as a one year pilot expiring August 26,

1995.

6See Securities Exchange Act Release No. 35028

(November 30, 1994), 59 FR 63151 (December 7,

1994).

the proposed rule change is the

requirement under Section

11A(a)(1)(C) 5 which states that it is in

the public interest and appropriate for

the protection of investors and the

maintenance of fair and orderly markets

to assure economically efficient

execution of securities transactions, fair

competition among brokers and dealers,

among exchange markets, and between

exchange markets and markets other

than exchange markets.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

These enhancements will provide the

Exchange the opportunity to compete

more effectively for order flow with

other marketplaces. Thus, the Exchange

does not believe that the proposed rule

change will impose any burden on

competition that is not necessary or

appropriate in furtherance of the

purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

The Exchange reviewed the proposed

rule change with members and

organizations representing various

constituencies of the Exchange and the

responses to the proposed rule changes

were positive. The Exchange has not

otherwise solicited, and does not intend

to solicit, comments on this proposed

rule change. The Exchange has not

received any written comments from

members or other interested parties.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange, and, in particular, with the

requirements of Section 6(b) of the Act.6

Eliminating specialist commissions on

orders executed within five minutes

will improve the cost competitiveness of

Exchange executions, which the

Exchange believes will inure to the

benefit of investors. Additionally, this

may assist broker-dealers in fulfilling

their best execution duties for their

customers. The Commission notes that

the proposed rule change also extends

provisions of a previously approved

pilot program.7

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice thereof in the

Federal Register. Approval of the

proposal will allow the Exchange to

continue the pilot program. Therefore,

the Commission believes it is consistent

with Section 6(b)(5) and Section

11A(a)(1)(C) of the Act 8 to grant

accelerated approval to the proposed

rule change.9

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing,

including whether the proposed rule

change is consistent with the Act.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549–0609. 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 at

the Commission’s Public Reference

Room, located at the above address.

Copies of such filing will also be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to File No.

SR–NYSE–00–13 and should be

submitted by May 16, 2000.

V. Conclusion

It is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act,10 that the

proposed rule change (SR–NYSE–00–

13) extending the pilot program for

amendments to Exchange Rule 123B

until April 26, 2000 is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–10263 Filed 4–24–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42700; File No. SR–Phlx–

99–39]

Self-Regulatory Organizations;

Philadelphia Stock Exchange, Inc.;

Order Approving Proposed Rule

Change Regarding Specialist

Enhanced Participation

April 18, 2000.

I. Introduction

On October 4, 1999, the Philadelphia

Stock Exchange, Inc. (‘‘Exchange’’ or

‘‘Phlx’’) submitted to the Securities and

Exchange Commission (‘‘Commission’’),

pursuant to section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,2 a

proposed rule change seeking to amend

Exchange Rule 1014, ‘‘Obligations and

Restrictions Applicable to Specialists

and Registered Options Traders,’’ and

its corollary Option Floor Procedure

Advice B–6 to revise the enhanced

participation available to Exchange

specialists. The proposal was amended

on November 4, 1999.3 Notice of the

proposed rule change and Amendment

No. 1 appeared in the Federal Register

on November 30, 1999.4 The

Commission received no comments on

the proposal. This order approves the

proposed rule change, as amended.

II. Description of the Proposal

On August 26, 1994, the Commission

approved the Exchange’s proposal to

adopt an enhanced participation for

Exchange specialists in equity options.5

The enhancement, or ‘‘enhanced parity

split,’’ provides Exchange specialists

with a greater participation in parity

trades than the specialists would

otherwise be entitled to receive.

On November 30, 1994, the

Commission approved the Exchange’s

proposal to make the enhanced parity

split available to index option

specialists.6 The enhanced parity split

was later revised with respect to