Federal Register / Vol. 65, No. 89 / Monday, May 8, 2000 / Notices 26649

9 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3 In the original filing, the Exchange requested a

one-year extension of the pilot program. In a

telephone call on May 1, 2000, between Paul

O’Kelly, Executive Vice President, Market

Regulation and Legal, CHX, and Katherine England,

Assistant Director, Division of Market Regulation

(‘‘Division’’), Commission, the Exchange agreed to

a six month extension for the pilot.

4See Securities Exchange Act Release No. 24424

(May 4, 1987), 52 FR 17868 (May 12, 1987) (order

approving File No. SR–MSE–87–2); see also,

Securities Exchange Act Release Nos. 28146 (June

26, 1990), 55 FR 27917 (July 6, 1990) (order

expanding the number of eligible securities to 100);

36102 (August 14, 1995), 60 FR 43626 (August 22,

1995) (order expanding the number of eligible

securities to 500); 41392 (May 12, 1999), 64 FR

27839 (May 21, 1999) (order expanding the number

of eligible securities to 1000).

5The MAX system may be used to provide an

automated delivery and execution facility for orders

that are eligible for execution under the Exchange’s

BEST Rule and certain other orders. See CHX Rules,

Art. XX, Rule 37(b). A MAX order that fits within

the BEST parameters is executed pursuant to the

BEST Rule via the MAX system. If an order is

outside the BEST parameters, the BEST rule does

not apply, but MAX system handling rules remain

applicable.

6See Securities Exchange Act Release No. 38119

(January 3, 1997), 62 FR 1788 (January 13, 1997).

a stated policy and interpretation with

respect to the meaning of an existing

rule.

At any time within 60 days of the

filing of the 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 proposal 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

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to file number

SR–NASD–00–26 and should be

submitted by May 30, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Jonathan G. Katz,

Secretary.

[FR Doc. 00–11400 Filed 5–05–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

(Release No. 34–42740; File No. SR–CHX–

00–11)

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Chicago Stock

Exchange, Incorporated Relating to the

Trading of Nasdaq/NM Securities on

the CHX

May 1, 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 25,

2000, the Chicago Stock Exchange,

Incorporated (‘‘CHX’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change as described in

Items I and II 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 of the

proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange has requested a sixmonth extension 3 of the pilot program

relating to the trading of Nasdaq/NM

securities on the Exchange. Specifically,

the pilot program amended Article XX,

Rule 37 and Article XX, Rule 43 of the

Exchange’s rules. The pilot currently is

due to expire on May 1, 2000. The

Exchange proposes that the pilot remain

in effect on a pilot basis through

November 1, 2000. The text of the

proposed rule is available at the

Exchange and at the Commission.

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 regarding 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 of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

On May 4, 1987, the Commission

approved certain Exchange rules and

procedures relating to the trading of

Nasdaq/NM securities on the

Exchange.4 Among other things, these

rules rendered the Exchange’s BEST

Rule guarantee (Article XX, Rule 37(a))

applicable to Nasdaq/NM securities and

made Nasdaq/NM securities eligible for

the automatic execution feature of the

Exchange’s Midwest Automated

Execution System (the ‘‘MAX’’ system).5

On January 3, 1997, the Commission

approved,6 on a one year pilot basis, a

program that eliminated the

requirement that CHX specialists

automatically execute orders for

Nasdaq/NM securities when the

specialist is not quoting at the national

best bid or best offer disseminated

pursuant to Commission Rule 11Ac1–1

(the ‘‘NBBO’’). When the Commission

approved the program on a pilot basis,

it requested that the Exchange submit a

report to the Commission describing the

Exchange’s experience with the pilot

program. The Commission stated that

the report should include at least six

months of trading data. Due to

programming issues, the pilot program

was not implemented until April 1997.

Six months of trading data did not

become available until November 1997.

As a result, the Exchange requested an

additional three-month extension to

collect the data and prepare the report

for the Commission.

26650 Federal Register / Vol. 65, No. 89 / Monday, May 8, 2000 / Notices

7See Securities Exchange Act Release No. 39512

(December 31, 1997), 62 FR 1517 (January 9, 1998).

8See Securities Exchange Act Release No. 39823

(March 31, 1998), 63 FR 17246 (April 8, 1998).

9See Securities Exchange Act Release No. 40150

(July 1, 1998), 63 FR 36983 (July 8, 1998).

10See Securities Exchange Act Release No. 40868

(December 31, 1998), 64 FR 1845 (January 12, 1999).

11See Securities Exchange Act Release No. 41586

(June 30, 1999), 64 FR 36938 (July 8, 1999).

12See Securities Exchange Act Release No. 42372

(January 31, 2000), 65 FR 6425 (February 9, 2000).

13See Letter to Katherine England, Assistant

Director, Division, Commission, from Paul B.

O’Kelly, Executive Vice President, Market

Regulation and Legal, CHX, dated April 27, 2000.

14The term ‘‘agency order’’ means an order for

the account of a customer, but does not include

professional orders, as defined in CHX Rule, Art.

XXX, Rule 2, Interp. and Policy .04. The rule

defines a ‘‘professional order’’ as any order for the

account of a broker-dealer, the account of an

associated person of a broker-dealer, or any account

in which a broker-dealer or an associated person of

a broker-dealer has any direct or indirect interest.

15Specifically, the autoquote is currently for one

normal unit of trading (usually 100 shares) for

issues that became subject to mandatory

compliance with Commission Rule 11Ac1–4 on or

prior to February 24, 1997 and 1000 shares for other

issues.

16 15 U.S.C. 78f(b).

17 15 U.S.C. 78f(b)(5).

On December 31, 1997, the

Commission extended the pilot program

for an additional three months, until

March 31, 1998, to give the Exchange

additional time to prepare and submit

the report and to give the Commission

adequate time to review the report prior

to approving the pilot on a permanent

basis.7 The Exchange submitted the

report to the Commission on January 30,

1998, Subsequently, the Exchange

requested another three-month

extension, in order to give the

Commission adequate time ot approve

the pilot program on a permanent basis.

On March 31, 1998, the Commission

approved the pilot for an additional

three-month period, until June 30,

1998.8 On July 1, 1998, the Commission

approved the pilot for an additional sixmonth period, until December 31,

1998.9 On December 31, 1998, the

Commission approved the pilot for an

additional six-month period, until June

30, 1999.10 On June 30, 1999, the

Commission approved the pilot for an

additional seven-month period, until

January 31, 2000.11 On January 31,

2000, the Commission approved the

pilot for an additional three-month

period, until May 1, 2000.12 The

Exchange now requests another

extension of the current pilot program,

through November 1, 2000. The

Exchange also submitted to the

Commission a report relating to

executions in accordance with the pilot

program, to enable the Commission to

continue its review of the pilot program

on April 27, 2000.13

Under the pilot program, specialists

must continue to accept agency 14

market orders or marketable limit

orders, but only for orders of 100 to

1,000 shares in Nasdaq/NM securities

rather than the 2,099 share limit

previously in place. Specialists,

however, must accept all agency limit

orders in Nasdaq/NM securities from up

to and including 10,000 shares for

placement in the limit order book. As

described below, however, specialists

are required to automatically execute

Nasdaq/NM orders only if they are

quoting at the NBBO when the order

was received.

The pilot program requires the

specialists to set the MAX autoexecution threshold at 1,000 shares or

greater for Nasdaq/NM securities. When

a CHX specialists is quoting at the

NBBO, orders for a number of shares

less than or equal to the auto-execution

threshold designated by the specialist

are executed automatically (in an

amount up to the size of the specialist’s

quote). Orders in securities quoted with

a spread greater than the minimum

variation are executed automatically

after a fifteen second delay from the

time the order is entered into MAX. The

size of specialist’s bid or offer is then

automatically decremented by the size

of the execution. When the specialist’s

quote is exhausted, the system will

generate an autoquote at an increment

away from the NBBO, as determined by

the specialist from time to time, for

either 100 or 1,000 shares, depending on

the issue.15

When the specialist is not quoting a

Nasdaq/NM security at the NBBO, it can

elect, on an order-by-order basis, to

manually execute orders in that

security. If the specialists does not elect

manual execution, MAX market and

marketable limit orders in the security

that are of a size equal to or less than

the auto-execution threshold is less than

or equal to the NBBO. If the specialists

elects manual execution, the specialist

must either manually execute the order

at the NBBO or a better or act as agent

for the order in seeking to obtain the

best available price for the order on a

marketplace other than the Exchange. If

the specialist decides to act as agent for

the order, the pilot program requires the

specialist to use order-routing systems

to obtain an execution where

appropriate. Market and marketable

limit orders that are for a number of

shares greater than the auto-execution

threshold are not subject to these

requirements, and may be canceled

within one minute of being entered into

MAX to designated as an open order.

2. Statutory Basis

The CHX believes that the proposed

rule is consistent with the requirements

of the Act and rules and regulations

thereunder that are applicable to a

national securities exchange, and, in

particular, with the requirements of

Section 6(b).16 In particular, the

proposed rule is consistent with Section

6(b)(5) 17 of the Act in that it designed

to promote just and equitable principles

of trade, to remove impediments and to

perfect the mechanism of a free and

open market and a national market

system, and, in general, to protect

investors and the public interest.

Th CHX’s proposal is intended to

conform CHX specialist obligations to

those applicable to OTC market makers

in Nasdaq/NM securities, while

recognizing that the CHX provides a

separate, competitive market for

Nasdaq/NM securities. The rules

establish execution procedures and

guarantees that attempt to provide

executions reflective of the best quotes

among OTC market makers and

specialists in Nasdaq/NM securities

without subjecting CHX specialists to

execution guarantees that are

substantially greater than those imposed

on their competitors.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any inappropriate burden on

competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments were neither

solicited nor received.

III. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing

including whether the proposal is

consistent with the Act. Persons making

written submission should file six

copies thereof with the Secretary,

Securities and Exchange Commission,

450 Fifth Street, N.W., Washington, DC

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

Federal Register / Vol. 65, No. 89 / Monday, May 8, 2000 / Notices 26651

18 In reviewing this proposal, the Commission has

considered its impact on efficiency, competition

and capital formation. 15 USC 78c(f). 19 15 U.S.C. 78f(b)(5). 20 15 U.S.C. 78k–1(a)(1)(C).

21 15 U.S.C. 78k–1(a)(1)(D).

22See January 1997 Order, supra note 7.

23See Securities Exchange Act Release No. 42372

(January 31, 2000), 65 FR 6425 (February 9, 2000).

24 15 U.S.C. 78sZ(b)(2). 25 17 CFR 200.30–3(a)(12).

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. Copies of such filings will also be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to File No.

SR–CHX–00–11 and should be

submitted by May 30, 2000.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission finds that the

Exchange’s proposal is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange.18 Specifically, the

Commission finds that the proposed

rule change is consistent with Section

6(b)(5) 19 of the Act, which requires that

an Exchange have rules designed to

prevent fraudulent and manipulative

acts and practices, to promote just and

equitable principles of trade, to 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 Commission also

believes that the proposal is consistent

with Section 11A(a)(1)(C) 20 and

11A(a)(1)(D) 21 of the Act. The proposal

is consistent with Section 11A(a)(1)(C)

in that it seeks to ensure economically

efficient execution of securities

transactions. Moreover, the proposal is

consistent with Section 11A(a)(1)(D) in

that it attempts to foster the linking of

markets for qualified securities through

communication and data processing

facilities.

The Commission notes, however, that

while the Exchange has been working

toward establishing a linkage,

specialists and OTC market makers do

not yet have an effective method of

routing orders to each other. The

Commission expects the Exchange to

continue to work towards establishing a

linkage with the Nasdaq systems as

requested in the January 1997 Order.22

In connection with this effort, the

Commission has requested an update on

the information provided in the

December 21, 1999 and April 27, 2000

reports using the Exchange’s

surveillance system. The Commission

requests that the Exchange supplement

the available trading data so that it can

consider issues concerning the pilot

program, including the circumstances

involving orders that are not

automatically executed through MAX,

whether orders are given the NBBO

shown at the time the order is received

or the NBBO posted at the time the

order is executed, and what

explanations are available for price

disimprovment. The Commission’s is

extending the pilot program through

November 1, 2000 so that the Exchange

may compile this data for the

Commission’s review. The Commission

requests that the Exchange provide a

report addressing the above no later

than August 15, 2000.

Upon approval of SR–CHX–99–27,23

wherein the Exchange last sought an

extension of this pilot, the Commission

also requested that the Exchange rewrite

Article XX, Rule 37 and Article XX,

Rule 43 of the Exchange’s rules so these

rules clearly explain the difference

between how listed (or dually traded)

securities and over-the-counter (or

Nasdaq/NM) securities are routed and

executed by the Exchange, and submit

the new proposed language to the

Commission for review and approval.

Further, the Commission requested that

the Exchange include in its rules an

explanation of how the provisions of the

Exchange’s Best Rule interact with the

Exchange’s Rules governing automatic

execution of orders. The Exchange has

been working with Commission staff in

an effort to revise these rules, and the

Commission expects that these efforts

will continue until the Exchange has

sufficiently clarified these rules for their

members and the public.

Thus, the Commission’s approval of

the pilot extension has several

ramifications. Approval will: (1) Allow

the Exchange to operate the BEST pilot

without interruption; (2) provide a

period for compilation of additional

data; and (3) allow the Exchange

additional time to revise the language of

the existing rules for clarity and ease of

understanding in the public interest and

for protection of investors.

The Commission does not want to

interrupt the current operations of the

Exchange’s pilot while the abovedescribed issues are being addressed.

The Commission, therefore, finds good

cause for approving the proposed rule

change prior to the thirtieth day after

the date of publication of notice of filing

thereof in the Federal Register.

It is therefore ordered, pursuant to

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

proposed rule change (SR–CHX–00–11),

be, and hereby is, approved through

November 1, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.25

Jonathan G. Katz,

Secretary.

[FR Doc. 00–11402 Filed 5–5–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

Sunshine Act Agency Meeting

FEDERAL REGISTER CITATION OF PREVIOUS

ANNOUNCEMENT: [65 FR 25410, May 1,

2000]

STATUS: Closed meeting.

PLACE: 450 Fifth Street, NW,

Washington, DC.

DATE PREVIOUSLY ANNOUNCED: April 28,

2000.

CHANGE IN THE MEETING: Cancellation of

meeting.

The closed meeting scheduled for

Wednesday, May 3, 2000, at 2 p.m. has

been cancelled.

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact:

The Office of the Secretary at (202)

942–7070.

Dated: May 3, 2000.

Jonathan G. Katz,

Secretary.

[FR Doc. 00–11473 Filed 5–3–00; 4:10 pm]

BILLING CODE 8010–01–M

OFFICE OF THE UNITED STATES

TRADE REPRESENTATIVE

Notice With Respect to List of

Countries Denying Fair Market

Opportunities for Government-Funded

Airport Construction Projects

AGENCY: Office of the United States

Trade Representative.

ACTION: Notice with respect to a list of

countries denying fair market

opportunities for products and suppliers

of the United States in airport

construction procurements.

SUMMARY: Pursuant to section 533 of the

Airport and Airway Improvement Act of

1982, as amended (49 U.S.C. 50104), the

United States Trade Representative

(‘‘USTR’’) has determined not to include