25780 Federal Register / Vol. 65, No. 86 / Wednesday, May 3, 2000 / Notices

4The Trade Clearance fees represent fees for

netting, issuing instructions to receive or deliver;

effecting book-entry deliveries, and related

activities.

5 15 U.S.C. 78q–1.

6 15 U.S.C. 78s(b)(3)(A)(ii).

7 17 CFR 240.19b–4(f)(2).

8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3 ‘‘ITS Coordinator’’ is used interchangeably with

the term ‘‘PCX Coordinating Specialist’’ as defined

in new PCX Rule 5.20(a)(xi). 4See November 1, 1999 letter from Michael

Pierson, Director, Regulatory Policy, PCX, to Marla

Chidsey, Law Clerk, Division of Market Regulation,

Commission (‘‘Amendment No. 1’’). Amendment

No. 1 clarifies that the ITS coordinator need not

confirm with other PCX specialists executions made

on behalf of those other PCX specialists before

executions occur. Also, Amendment No. 1 explains

that when an ITS inbound commitment is received

on the PCX, and the commitment would match

against multiple specialists’ bids or offers, every

specialist in that issue will receive a ‘‘shadow’’

notification of the ITS commitment. 5See December 6, 1999 letter from Michael

Pierson, Director, Regulatory Policy, PCX to Marla

Chidsey, Law Clerk, Division of Market Regulation,

Commission (‘‘Amendment No. 2’’). Amendment

No. 2 adds PCX 5.20(a)(xi) defining the term ‘‘PCX

Coordinating Specialist’’ as the specialist

responsible for coordinating the acceptance of

inbound ITS commitments.

the fee for each side entered to $.005 per

100 shares with a minimum fee of $.020

and a maximum fee of $.30.

The Trade Clearance fee 4 for receipts

from Continuous Net Settlement

(‘‘CNS’’) to satisfy a long valued

position currently is $.40 per issue

received. The proposed rule change

reduces the fee for such items to $.35

per issue received.

The Trade Clearance fee for deliveries

to CNS in the night processing cycle to

cover a short valued position currently

is $.40 per delivery. The proposed rule

change reduces the fee for these items

to $.35 per delivery.

The Trade Clearance fee for deliveries

to CNS in the day processing cycle to

cover a short valued position currently

is $1.00 per delivery. The proposed rule

change reduces the fee for these items

to $.75 per delivery.

The Trade Clearance fee for fails to

deliver to CNS (Short-in-CNS) currently

is $.35 per item. The proposed rule

change reduces the fee for these items

to $.25 per delivery.

The Trade Clearance fee for trade

clearance (netting) currently is $.03 per

side. The proposed rule change reduces

the fee for these items to $.025 per side.

The Trade Clearance fee for

designated valued deliveries

(transaction Processing) entered into the

clearance system through special

representation procedures currently is

$.10 per side. The proposed rule change

reduces the fee for these items to $.075

per side.

The ACATSTIF fee represents the fee

charged by NSCC’s enabling members

and Qualified Securities Depositories

(‘‘The Depository Trust Company’’) to

transfer accounts of their customers

between themselves on an automated

basis through the Automated Customer

Account Transfer Service. The

ACATSTIF fee currently is $1.00 per

submission. The proposed rule change

reduces the fee for such items to $.85

per submission.

NSCC intends to give members the

benefit of these fee changes effective as

of January 1, 2000. The necessary

adjustments to accommodate these

reductions will be reflected in billing

statements transmitted in February

2000.

NSCC believes the proposed rule

change is consistent with the

requirements of Section 17A of the Act 5

and the rules and regulations

thereunder applicable to NSCC and in

particular with Section 17A(b)(3)(F) of

the Act because it provides for the

equitable allocation of dues, fees, and

other charges among NSCC’s

participants.

(B) Self-Regulatory Organization’s

Statement on Burden on Composition

NSCC does not believe that the

proposed rule change will impact or

impose a burden on competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No written comments have been

solicited or received. NSCC will notify

the Commission of any written

comments received by NSCC.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become

effective pursuant to Section

19(b)(3)(A)(ii) 6 of the Act and Rule 19b–

4(f)(2) 7 promulgated thereunder

because the proposal establishes or

changes a due, fee, or other charge

imposed by NSCC. At any time within

sixty days of the filing of such proposed

rule change, the Commission may

summarily abrogate such rule change if

it appears to the Commission that such

action is necessary or appropriate in the

public interest, for the protection of

investors, or otherwise in furtherance of

the purposes of the Act.

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 in

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of NSCC. All submissions should

refer to File No. SRO–NSCC—00–01 and

should be submitted by May 24, 2000.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–11004 Filed 5–2–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42708; File No. SR–PCX–

99–37]

Self-Regulatory Organizations; Pacific

Exchange, Inc.; Order Approving

Proposed Rule Change and

Amendment Nos. 1 and 2 Authorizing

the PCX ITS Coordinator To Accept

Inbound Commitments on Behalf of

Other PCX Specialists

April 20, 2000.

I. Introduction

On October 5, 1999, the Pacific

Exchange, Inc. (‘‘PCX’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘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 to authorize the

PCX Intermarket Trading System

(‘‘ITS’’) Coordinator 3 (‘‘ITS

Coordinator’’) to accept inbound

commitments on behalf of other PCX

specialists. PCX filed an amendment on

November 2, 1999 (‘‘Amendment No.

1’’),4 and an amendment on December 7,

1999 (‘‘Amendment No. 2’’),5 The

Federal Register / Vol. 65, No. 86 / Wednesday, May 3, 2000 / Notices 25781

6See Securities Exchange Act Release No. 42349

(January 19, 2000), 65 FR 4008.

7See Amendment No. 1 (explaining that the ITS

coordinator will not need to confirm with the other

PCX specialists because every specialist in that

issue will receive a ‘‘shadow’’ notification of the

ITS commitment at the time it is received on the

PCX).

8The PCX expects that there will be more than

one specialist per stock when its competing

specialist program is implemented. See Securities

Exchange Act Release No. 41327 (April 22, 1999),

64 FR 23370 (April 30, 1999) (SR–PCX–99–07).

9The ITS Coordinator need not coordinate the

commitment if he or she is not quoting at the price

of the inbound commitment and is not representing

an order at that price.

10For example, assume Specialist A and

Specialist B (PCX specialists) are both bidding $20

(the national best bid) for 500 shares of XYZ stock.

If the PCX receives an inbound ITS commitment to

sell 1,000 shares of stock, and if Specialist A is the

ITS Coordinator, then Specialist A will confirm

with Specialist B that 500 shares of XYZ may be

accepted by Specialist A on Specialist B’s behalf.

The proposed rule change would allow Specialist

A to accept the 500 shares on Specialist B’s behalf,

on the ground that Specialist B’s bid for 500 shares

is still outstanding at the time that Specialist A

receives the inbound commitment for 1,000 shares.

11 15 U.S.C. 78f(b)(5).

12 15 U.S.C. 78k-1.

13 15 U.S.C. 78f(b)(5).

14 15 U.S.C. 78f(b)(5).

15 15 U.S.C. 78k-1.

16 15 U.S.C. 78k-1(a)(1)(B).

17 15 U.S.C. 78k-1(a)(1)(C).

18 15 U.S.C. 78k-1(a)(1)(D).

19 15 U.S.C.. 78k-a(a)(1)(D).

20See footnotes 4 and 10, supra

21 17 CFR 270.11Ac1–1(c)(2).

proposed rule change, as amended, was

published for comment in the Federal

Register on January 25, 2000.6 The

Commission did not receive any

comment letters on the proposal. This

order approves the proposal.

II. Description of the Proposal

The PCX proposed to adopt PCX Rule

5.20 Commentary .04, which will

provide that in the case of the

assignment of an ITS stock to more than

one PCX Registered Specialist, the PCX

Coordinating Specialist or PCX

Registered Specialist at whose ITS

station an ITS commitment to trade is

received is authorized to accept such

commitment at the PCX bid or offer

price, if still available (or at a better

price if available), and up to the size of

the PCX bid or offer without the need

to communicate with other PCX

members. Whenever an inbound ITS

commitment is received on the PCX, the

specialists whose quotes prompted the

inbound commitment will be notified

by a ‘‘shadow’’ message that the

inbound commitment has been received

on the PCX.7

At the PCX, there are generally two

registered specialists per equity issue

traded on the Exchange.8 However,

there is only one specialist per issue

who acts as the ITS Coordinator. The

ITS Coordinator is generally responsible

for coordinating acceptance of incoming

ITS commitments among the specialists

in a particular stock. The PCX expects

that there will continue to be only one

ITS Coordinator per stock after the

Exchange expands the number of

specialists per issue.

Currently, any PCX specialist may

send an outbound ITS commitment to

another market center without that ITS

Coordinator’s assistance. A PCX

specialist who is not an ITS Coordinator

may also receive inbound ITS

commitments without the involvement

of the ITS Coordinator, as long as the

ITS Coordinator is not designated to

participate in the trade as a result of the

inbound commitment.9 However, if an

inbound commitment involved more

than one PCX specialist as the contra

side, then the ITS Coordinator is

required to coordinate the execution of

the commitment among the PCX

participants verbally.

The current PCX rules do not

authorize expressly the ITS Coordinator

to accept ITS commitments on behalf of

other specialists. The ITS Coordinator

must obtain the verbal consent of the

other specialist before accepting an

inbound commitment on behalf of that

other specialist. The PCX proposed to

provide the ITS Coordinator with the

express authority to accept ITS

commitments on behalf of other

specialists.10

III. Discussion

The Commission has reviewed

carefully the PCX’s proposed rule

change, as amended, and, for the

reasons set forth below, finds the

proposed rule change is consistent with

the Act and the rules and regulations

under the Act applicable to a national

securities exchange. In particular, the

Commission finds the proposed rule

change is consistent with Section

6(b)(5) 11 and Section 11A of the Act.12

The Commission finds the proposed

rule change is consistent with the

Section 6(b)(5) 13 requirements that the

rules of an exchange be designed to

foster cooperation and coordination

with persons engaged in regulating,

clearing, settling, processing

information with respect to, and

facilitating transactions in securities, to

promote just and equitable principles of

trade and to protect investors and the

public interest. The proposed PCX Rule

5.20, Commentary .04 allows the PCX

Coordinating Specialist or the PCX

Registered Specialist to accept an ITS

commitment at the PCX bid or offer

price without the need to communicate

with other PCX members. Allowing the

PCX Coordinating Specialist to accept

ITS commitments on behalf of other

specialists is consistent with Section

6(b)(5) 14 of the Act because it fosters

cooperation and coordination by

providing quick and efficient execution

of securities transactions.

In addition, the Commission finds the

proposed rule change is consistent with

the goals set forth in Section 11A 15 of

the Act. Section 11A(a)(1)(B) notes that

new data processing and

communications techniques may create

the opportunity for more efficient and

effective market operations.16 Under

Section 11A(a)(1)(C), Congress found

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.17 The linking of

markets for qualified securities through

communication and data processing

facilities should help to foster

efficiency, enhance competition,

increase the information available to

brokers, dealers, and investors, facilitate

the offsetting of investors’ orders, and

contribute to the best execution of such

orders.18 The proposed PCX rule change

should facilitate the acceptance of ITS

commitments, and should help foster

efficiency, facilitate the offsetting of

investors’ orders, and contribute to the

best execution of such orders.19

Further, whenever an inbound ITS

commitment is received on the PCX, the

specialists whose quotes prompted the

inbound commitment will be notified

by a ‘‘shadow’’ message that the

inbound commitment has been received

on the PCX.20 The shadow notification

gives the specialists (other than the ITS

Coordinator) an opportunity to notify

the ITS Coordinator that the

commitment should not be accepted on

the specialist’s behalf, under

appropriate circumstances. The PCX

specialist must stand up to the quote

and cannot back away from executing

the trade. This is consistent with the Act

because the ‘‘shadow’’ message

increases the information available to

brokers, dealers, and investors, and

facilitates efficiency by providing the

specialist with the opportunity to notify

the ITS Coordinator that the

commitment should not be accepted on

the specialist’s behalf.

The Commission notes that if the PCX

receives notification of incoming ITS

commitments, it must comply with the

firm quote rule.21 The Commission also

notes that priority and parity rules will

25782 Federal Register / Vol. 65, No. 86 / Wednesday, May 3, 2000 / Notices

22 January 18, 2000, telephone conversation

among Michael Pierson, Director, Regulatory Policy,

PCX, and Christine Richardson, Attorney, and

Marla Chidsey, Attorney, Division of Market

Regulation, Commission.

23 In approving this proposed rule change, the

Commission has considered the proposal’s impact

on efficiency, competition, and capital formation.

15 U.S.C. 78c(f).

24 15 U.S.C. 78s(b)(2).

25 17 CFR 200.30.3(a)(12).

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

2 17 CFR 240.19b–4.

3For the purposes of this filing, an ‘‘owner’’ shall

mean any person or entity who or which is a holder

of equitable title to a membership in the Exchange.

4Although the term ‘‘seat owner’’ is not defined

in Phlx’s By-laws or Certificate of Incorporation, the

term ‘‘seat-owner’’ is the equivalent of an owner of

a ‘‘membership’’ as referenced in Phlx’s By-laws

and Certificate of Incorporation.

5The Commission approved the original pilot

program on January 5, 2000. See Securities

Exchange Act Release No. 42318 (January 5, 2000),

65 FR 2216 (January 13, 2000) (SR–Phlx–99–49). On

November 24, 1999, the Exchange filed a proposal

seeking permanent approval of the $1,500 capital

funding fee. See Securities Exchange Act Release

No. 42405 (February 8, 2000), 65 FR 8226 (February

17, 2000) (SR–Phlx–99–51). The proposal is

pending.

6For example, a seat owner on September 30th

will be billed $1,500 for the month of October.

7This fee is distinguished from the Exchange’s

technology fee in that the technology fee was

intended to cover system software modifications,

Year 2000 modifications, specific system

development (maintenance) costs, SIAC and OPRA

communication charges, and ongoing system

maintenance charges. See Securities Exchange Act

Release No. 38394 (March 12, 1997), 62 FR 13204

(March 19, 1997) (SR–Phlx–97–09).

8 15 U.S.C. 78f(b).

9 15 U.S.C. 78f(b)(4).

not be affected by the proposed rule

change.22

The PCX asserts that currently the ITS

Coordinator can accept commitments on

behalf of other specialists without

creating reasonable disputes among PCX

specialists. However, the PCX is waiting

for Commission approval of the

proposed rule change prior to providing

the ITS Coordinator with the express

authority to accept inbound ITS

commitments on behalf of other

specialists. The Commission believes

that codification of practices and

procedures in written form is

appropriate. The new PCX Rule

provides the ITS Coordinator with the

express authority to accept ITS

commitments on behalf of other

specialists without verbal consent. The

Commission therefore finds it is

appropriate for the Exchange to adopt

new PCX Rule 5.20, Commentary .04.23

IV. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,24 that the

proposed rule change (SR–PCX–99–37)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.25

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–11008 Filed 5–2–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42714; File No. SR–Phlx–

00–29]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.

Extending Pilot Program Assessing a

Monthly Capital Funding Fee

April 24, 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 April 7,

2000, the Philadelphia Stock Exchange,

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

the Securities and Exchange

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

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.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Phlx proposes to extend its threemonth pilot program, which imposed on

each of the 505 Exchange seat owners 3

a monthly capital funding fee of $1,500

per seat owned.4 The Exchange is

requesting that the current pilot

program, which expired on April 5,

2000, be extended for an additional

three-month period.5

II. Self-Regulatory Organization’s

Statement for 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 III below. The

Exchange 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 for the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The purpose of the proposed rule

change is to extend the applicability of

the Exchange’s current monthly capital

funding fee of $1,500 for a three-month

period, until July 6, 2000. As it did

during the initial phase of the pilot

program, the Exchange intends to charge

each seat owner a monthly capital

funding fee of $1,500 per Exchange set.

The $1,500 capital funding fee will be

imposed on each of the 505 Exchange

seat owners at the beginning of each

month. In order to be charged the fee,

a seat owner must own a seat on the last

business day of the month preceding the

month that is being billed. Thus, at the

beginning of each month, the seat owner

will be billed for that entire month.6

The Exchange intends to segregate the

funds generated from the $1,500 fee

from Phlx’s general funds.

The monthly $1,500 fee is part of the

Exchange’s long-term financing plan.

This monthly fee is intended to provide

funding for technological improvements

and other capital needs.7 Specifically, it

is intended to fund capital purchases,

including hardware for capacity

upgrades, development efforts for

decimalization and trading floor

expansion. The revenue generated from

the fee will assist the Exchange in

remaining competitive in the capital

markets environment.

2. Statutory Basis

For these reasons, the Exchange

believes that the proposed rule change

is consistent with Section 6 of the Act,8

in general, and with Section 6(b)(4),9 in

particular, in that it provides for the

equitable allocation of reasonable dues,

fees and other charges among its

members, issuers, and other persons

using its facilities.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes that the

proposed rule change will not impose

any burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

The Exchange received 22 written

comments on the proposal, which it

forwarded to the Commission on

December 23, 1999.