31950 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Notices

1 17 CFR 240.11Aa3–2.

2OPRA is a National Market System Plan

approved by the Commission pursuant to Section

11A of the Act and Rule 11Aa3–2 thereunder. See

Securities Exchange Act Release No. 17638 (Mar.

18, 1981).

The OPRA Plan provides for the collection and

dissemination of last sale and quotation information

on options that are traded on the member

exchanges. The five exchanges that agreed to the

OPRA Plan are the American Stock Exchange

(‘‘AMEX’’); the Chicago Board Options Exchange

(‘‘CBOE’’); the New York Stock Exchange (‘‘NYSE’’);

the Pacific Exchange (‘‘PCX’’); and the Philadelphia

Stock Exchange (‘‘PHLX’’).

3The Commission approved three consecutive

temporary capacity allocation plans that were

proposed by OPRA Participants. See Securities

Exchange Act Release Nos. 42328 (January 11,

2000), 65 FR 2988 (January 19, 2000) (order

approving File No. SR–OPRA–00–01); 42362

(January 28, 2000), 65 FR 5919 (February 7, 2000)

(order approving File No. SR–OPRA–00–02); and

42493 (March 3, 2000), 65 FR12597 (March 9, 2000)

(order approving File No. SR–OPRA–00–03). In

addition, the Commission has sought public

comment on two alternative formulas for allocating

OPRA systems capacity during peak usage periods.

See Securities Exchange Act Release No. 42755

(May 4, 2000), 65 FR 30148 (May 10, 2000) (File No.

4–434).

4The proposed OPRA Plan amendment

incorrectly referred to 3,518 messages per second.

It had been modified here pursuant to OPRA’s

verbal request. Telephone conversation between

Joseph Corrigan, Executive Director, OPRA, and

Deborah Flynn, Senior Special Counsel, Division of

Market Regulation, Commission, on May 9, 2000.

5 ISE was registered as a national securities

exchange for options trading on February 24, 2000.

See Securities Exchange Act Release No. 42455, 65

FR 11387 (March 2, 2000).

6Although ISE initially requested from OPRA a

capacity allocation during peak periods of 60

messages per second, the Commission is allocating

55 messages per second to it during its first month

of operation. The Commission believes that the ISE,

like the other options exchanges, will need to

undertake efforts to encourage its market makers to

quote as efficiency as possible to stay within the 55

messages per second cap.

information and to ascertain that, if any,

matters have been added, deleted or

postponed, please contact:

The Office of the Secretary at (202)

942–7070.

Dated: May 16, 2000.

Jonathan G. Katz,

Secretary.

[FR Doc. 00–12687 Filed 5–16–00; 4:07 pm]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42779; File No. SR–OPRA–

00–04]

Options Price Reporting Authority;

Notice of Filing and Order Granting

Accelerated Effectiveness of

Amendment to OPRA Plan Adopting a

Temporary Capacity Allocation Plan

May 12, 2000.

Pursuant to Rule 11Aa3–2 under the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

May 9, 2000, the Options Price

Reporting Authority (‘‘OPRA’’) 2

submitted to the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) an amendment to the

Plan for Reporting of Consolidated

Options Last Sale Reports and

Quotation Information (‘‘OPRA Plan’’).

The proposed OPRA Plan amendment

would extend the current temporary

capacity allocation plan for peak usage

periods through the close of trading on

May 25, 2000, to minimize the

likelihood that during this period the

total number of messages generated by

the OPRA participant exchanges will

exceed the processor’s (i.e., Securities

Industry Automation Corporation

(‘‘SIAC’’)) aggregate message handling

capacity. In addition, to accommodate

the anticipated entry into OPRA of the

International Securities Exchange

(‘‘ISE’’), the amendment has been

modified to reallocate OPRA systems

capacity during peak usage periods

among the options exchanges to include

ISE. If, as expected, the ISE becomes a

participant in OPRA, the amendment, as

modified, would proportionally reduce

the existing allocations to the Amex,

CBOE, PCX, and Phlx, based on each

OPRA participant’s relative share of

total OPRA systems capacity, to allocate

systems capacity to the ISE. The

Commission is publishing this notice

and order to solicit comments from

interested persons on the proposed

OPRA Plan amendment, as modified,

and to grant accelerated approval to the

proposed OPRA Plan amendment, as

modified, on a temporary basis, for 120

days.

I. Description and Purpose of the

Amendment

As discussed above, OPRA proposes

to extend the temporary period during

which the message handling capacity of

its processor is allocated among the

participant exchanges, currently

scheduled to end on May 13, 2000,3 for

an additional twelve days, through the

close of trading on May 25, 2000.

Through May 25, 2000, the processor’s

aggregate message-handling capacity,

estimated by the processor to be 3,540

messages per second,4 will be allocated

among the participants by automatically

limiting the number of messages that

each participant may input to the

processor as follows:

American Stock Exchange: 1,024

messages per second

Chicago Board Options Exchange: 1,366

messages per second

Pacific Exchange: 635 messages per

second

Philadelphia Stock Exchange: 515

messages per second

ISE is scheduled to begin trading on

May 26, 2000 5 and is expected prior to

that date to become a participant in

OPRA. To date, the OPRA participants

have been unable to agree to a method

by which to allocate existing capacity to

ISE. Because there has been no increase

in overall OPRA systems capacity that

would accommodate ISE’s capacity

needs, the 60 messages per second that

ISE has requested for its first month of

operation will have to be allocated to

ISE by reducing the other OPRA

participants current allocation levels. To

facilitate the allocation of existing

capacity to ISE, the Commission is

modifying the proposed OPRA Plan

amendment to provide for a

promotional distribution of capacity to

ISE based on each OPRA participant’s

relative share of total OPRA system

capacity if, as expected, ISE becomes a

participant in OPRA.

Specifically, the proposed allocation

plan, which will be in effect on a

temporary basis for 120 days, would

operate as follows during peak usage

periods:

• The existing allocation scheme

would remain in place through May 25,

2000.

• Assuming, as anticipated, that ISE

is a participant in OPRA, from May 26

until June 25, 2000, ISE would be

allocated 55 messages per second,6 with

the other exchanges’ existing allocation

reduced proportionally. To provide ISE

with a capacity allocation of 55

messages per second during its first

month of operation, the following

allocation among the exchanges would

result: 1,008 messages per second to the

Amex (a reduction of 16 messages per

second); 1,345 messages per second to

the CBOE (a reduction of 21 messages

per second); 625 messages per second to

the PCX ( a reduction of 10 messages per

second); 507 messages per second to the

Phlx (a reduction of 8 messages per

second); and 55 messages per second to

ISE.

• Assuming, as anticipated, that ISE

is a participant in OPRA, beginning June

26, 2000, ISE’s allocation would be

increased by 55 messages per second

every 30 days for as long as this Order

is in effect (i.e., 110, 165, and 220

messages per second for ISE’s second,

third, and fourth months of operation,

respectively). The same proportional

reduction in the current level of

capacity allocated to the existing

markets would provide the additional

allocation for ISE.

In the event that additional capacity

becomes available to the OPRA system

Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Notices 31951

7 15 U.S.C. 78k–1(a)(1)(C)(iii).

8 17 CFR 240.11 Aa3–2(c)(4).

9 In approving this proposed OPRA Plan

amendment, the Commission has considered its

impact on efficiency, competition, and capital

formation. 15 U.S.C. 78c(f). 10 17 CFR 240.11Aa3–2.

11See Securities Exchange Act Release No. 42755

(May 4, 2000), 65 FR 30148 (May 10, 2000) (File No.

4–434).

12The Commission has authority to approve any

proposed National Market System Plan amendment

‘‘with such changes or subject to such conditions

as the Commission may deem necessary or

appropriate,’’ and to do so by order.

during the 120 days that this order is in

effect, and the OPRA participants fail to

agree to a new allocation plan to reflect

the higher capacity available, the

additional capacity would be

distributed in the same proportions as

allocated under this Order. If, at any

time, the OPRA participants submit to

the Commission a proposed OPRA Plan

amendment that is consistent with the

Act, the Commission will act to replace

and supersede this temporary order

with that proposal.

II. Implementation of the Plan

Amendment

OPRA believes the proposed

extension of the temporary capacity

allocation program through May 25,

2000, is needed to avoid delays and

queues in the dissemination of options

market information. The availability to

brokers, dealers and investors of

information with respect to quotations

for and transactions in securities, is

necessary to achieve the objective of

Section 11(A)(a)(1)(C)(iii) of the Act.7

Accordingly, OPRA requests that the

Commission permit the extension of the

proposed allocation program to be put

into effect summarily upon publication

of notice of this filing, pursuant to

paragraph (c)(4) of Rule 11Aa3–2 under

the Act.8 Based on a finding by the

Commission that such action, as

modified for the reasons described in

Section IV below, is necessary or

appropriate in the public interest, for

the protection of investors or the

maintenance of fair and orderly markets,

to remove impediments to, and perfect

the mechanisms of, a national market

system, or is otherwise in furtherance of

the purposes of the Act.

III. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submission

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, and all written statements

with respect to the proposed OPRA Plan

amendment that are filed with the

Commission, and all written

communications relating to the

proposed OPRA Plan amendment

between the Commission and any

person, other than those 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 the filing also will be

available at the principal offices of

OPRA. All submissions should refer to

File No. SR–OPRA–00–04 and should

be submitted by June 9, 2000.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Plan Amendment

After careful review, the Commission

finds that the proposed OPRA Plan

amendment, as modified, is consistent

with the requirements of the Act and the

rules and regulations thereunder.9

Specifically, the Commission believes

that the proposed amendment, as

modified, which allocated the limited

capacity of the OPRA system among the

options markets during peak usage

periods, is consistent with Rule 11Aa3–

2 under the Act 10 in that it will

contribute to the maintenance of fair

and orderly markets and remove

impediments to, and perfect the

mechanisms of, a national market

system. The Commission notes that the

aggregate message traffic generated by

the options exchanges is rapidly

approaching the outside limit, and at

times surpasses, OPRA’s systems

capacity. OPRA’s processor has

informed the Commission that current

plans to enhance OPRA’s systems are

not expected to be completed before the

end of the second quarter of this year,

at the earliest. Consequently, the

Commission is concerned that, absent a

program to allocate systems capacity

among the options markets that is put in

place immediately, systems queuing of

options quotes may be the norm, to the

detriment of all investors and other

participants in the option markets. The

Commission believes that the agreedupon extension of the current allocation

plan is a reasonable means for

addressing potential strains on capacity

that may occur between now and May

25, 2000.

The Commission believes that the

reallocation of OPRA systems capacity

to provide an allocation to ISE is

appropriate if, as expected, the ISE

becomes a participant in OPRA,

particularly in light of the temporary

nature of the allocation plan, which will

be in effect for no more than 120 days.

In fact, several factors make it likely that

this temporary plan will be superceded

prior to its expiration date. First, if at

any time the OPRA participant

exchanges files with the Commission a

capacity allocation plan for peak usage

periods that is consistent with the Act,

the Commission will act to substitute

that proposal for this plan. Second, the

Commission recently requested

comment on its proposed amendment to

the OPRA Plan to adopt an objective

capacity allocation formula.11 The

Commission notes that the comment

period on that proposal expires on June

9, 2000. Approving this interim measure

on a temporary basis will permit the

comment letters received by the

Commission to be carefully considered

before deciding whether to take final

action on the proposal. Finally, the

enhancements to the OPRA system are

expected to increase systems capacity

from 3,540 messages per second to 8,000

messages per second. That increase will

create incentives for the OPRA

participants to reevaluate this capacity

allocation plan and submit to the

Commission a modified capacity

allocation plan consistent with the Act.

The Commission further believes that

the proposed amendment to the OPRA

Plan to reallocate OPRA system capacity

among the options exchanges, including

ISE, on a temporary basis is necessary

to accommodate ISE’s entry into the

market. The Commission rarely invokes

its authority to modify proposed

amendments to national market system

plans, but believes that exigent

circumstances including, the inability of

the OPRA participants to agree to an

allocation that includes ISE, the

potential harm to investors should

queuing occur, and the desirability of

permitting ISE to begin trading, mandate

the Commission’s action. Specifically,

the Commission finds that it is

necessary and appropriate to approve

the proposed allocation plan, as

modified,12 to be in effect for no more

than 120 days, to ensure that all

potential barriers to entry are removed

prior to ISE’s commencement of trading.

The Commission finds good cause to

accelerate the proposed OPRA Plan

amendment prior to the thirtieth day

after the date of publication in the

Federal Register. The Commission notes

that the proposed OPRA Plan

amendment is intended to allocate

OPRA system capacity for a short period

of time, 120 days, to mitigate potential

disruption to the orderly dissemination

of options market information caused by

the inability of the OPRA system to

handle the anticipated quote message

31952 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Notices

13 15 U.S.C. 78k–1.

14 17 CFR 240.11Aa3–2.

15 17 CFR 200.30–3(a)(29).

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

2Securities Exchange Act Release No. 42482,

(March 1, 2000), 65 FR 12602.

3With respect to global share issues of issuers

such as UBS, DTC expects to hold the bulk of its

positions at DTC so that DTC’s position will be

reflected on the books of U.S. transfer agents.

4 15 U.S.C. 78q–1(b)(3)(F). 5 17 CFR 200.30–3(a)(12).

traffic. The Commission believes that

approving the proposed capacity

allocation will provide the options

exchanges and OPRA with an

immediate, short-term solution to a

pressing problem, while giving the

Commission and the options markets

additional time to evaluate, and

possibly implement, other quote

mitigation strategies. In addition, the

limited time frame of this capacity

allocation program provides the

Commission and the options exchanges

with greater flexibility to modify the

program, as necessary, to ensure the

fairness of the allocation process to all

of the options markets going forward.

The Commission finds, therefore, that

granting accelerated approval of the

proposed OPRA Plan amendment, as

modified, is appropriate and consistent

with Section 11A of the Act.13

V. Conclusion

It is therefore ordered, pursuant to

Rule 11Aa3–2 of the Act,14 that the

proposed OPRA Plan amendment, as

modified, (SR–OPRA–00–04) is

approved on an accelerated basis until

September 9, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.15

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–12601 Filed 5–18–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42782; File No. SR–DTC–

00–03]

Self-Regulatory Organizations; The

Depository Trust Company; Order

Granting Approval of a Proposed Rule

Change Relating to Establishing a

Depository Link With SIS

SegaInterSettle AG

May 15, 2000.

On February 22, 2000, The Depository

Trust Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) a proposed rule change

(File No. SR–DTC–00–03) pursuant to

Section 19(b)(1) of the Securities

Exchange Act of 1934 (‘‘Act’’).1 Notice

of the proposal was published in the

Federal Register on March 9, 2000.2 No

comment letters were received. For the

reasons discussed below, the

Commission is granting approval of the

proposed rule change.

I. Description

Under the rule change, DTC will

establish a free-of-payment omnibus

account at SIS SegaInterSettle AG

(‘‘SIS’’) in order to create a one-way

DTC–SIS link. The link will permit, but

will not require, DTC to hold in its

account at SIS positions in issues that

are eligible at both DTC and SIS. The

interface will enable DTC participants to

more efficiently move and position their

inventory through book-entry

movements from one depository’s books

to the other’s.3

Establishment of the link will enable

a DTC participant to settle a crossborder transaction with an SIS

counterparty by making a free-ofpayment book-entry delivery from

DTC’s omnibus account at SIS to the SIS

participant’s account at SIS. Conversely,

an SIS participant will be able to settle

a cross-border transaction with a DTC

participant by making a free-of-payment

book-entry delivery from the SIS

participant’s account at SIS to the DTC

omnibus account at SIS (while

identifying the DTC participant to

which the delivered securities should be

credited). The receiving DTC participant

then will be able to redeliver the

securities on either a free-of-payment or

versus-payment basis to any other DTC

participant within DTC.

SIS will make SIS’s custody and

depository services (such as income

collection, maturity presentments, and

reorganization processing) available to

DTC for securities held in DTC’s

account at SIS in accordance with SIS

procedures. Whether DTC holds its

underlying inventory in Switzerland or

in the U.S., DTC services to DTC

participants will be the same as are

currently provided.

II. Discussion

Section 17A(b)(3)(F) 4 of the Act

requires that the rules of a clearing

agency be designed to promote the

prompt and accurate clearance and

settlement of securities transactions and

to assure the safeguarding of securities

and funds that are in its custody or

control or for which it is responsible.

For the reasons set forth below, the

Commission believes that DTC’s

proposed rule change is consistent with

DTC’s obligations under the Act.

The Commission believes that the link

between DTC and SIS should promote

the prompt and accurate clearance and

settlement of securities transactions.

The central purpose of the link is to

facilitate the efficient processing of

cross-border securities transactions

between DTC participants and SIS

participants. By opening an omnibus

account at SIS, DTC will enable its

participants to substitute efficient bookentry movements for inefficient physical

movements of securities certificates

from SIS to DTC. The link should

reduce much of the time, expense, costs,

and risks associated with physically

moving certificates from SIS and

redepositing them at DTC.

The Commission also believes that

DTC has established the link with SIS

in a manner that is consistent with its

safeguarding obligations under the Act.

In order to assure itself that the linking

with SIS is safe and prudent, DTC

completed an extensive review of such

things as: (1) SIS’s operational controls,

financial strength, technology

capabilities, and audit arrangements; (2)

Swiss regulation of SIS; and (3)

application and effect of Swiss and U.S.

laws as they pertain to the link.

Accordingly, the Commission finds

that the link satisfies DTC’s obligations

to promote the prompt and accurate

clearance and settlement of securities

transactions and to foster cooperation

and coordination with persons engaged

in the clearance and settlement of

securities transactions.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposed

rule change is consistent with the

requirements of the Act and in

particular 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 No. SR–

DTC–00–03) be and hereby is approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–12628 Filed 5–18–00; 8:45 am]

BILLING CODE 8010–01–M