33602 Federal Register / Vol. 65, No. 101 / Wednesday, May 24, 2000 / Notices

29See supra, note 15.

30 15 U.S.C. 78s(b)(2).

31 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Note: the reference to NASD Regulation will be

changed to NASD Dispute Resolution, Inc., when

such new subsidiary becomes operational.

Commentary .01 to Amex Rule 1000

which, under similar circumstances,

requires delivery of a product

description to purchasers of PDRs and

was approved by the Commission in

December 1992.29 The Commission

believes it is appropriate to approve this

proposed provision at the same time as

approving the generic standards because

it establishes an important parallel

requirement for Index Fund Shares that

apply for listing under the proposed

generic standards to that of PDRs.

Accordingly, the Commission finds that

there is good cause, consistent with

Section 6(b)(5) of the Act, to approve

Amendment No. 1 to the proposal on an

accelerated basis.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment No.

1, including whether this amendment is

consistent with the Act. Persons making

written submissions should file six

copies thereof with the Secretary,

Securities and Exchange Commission,

450 Fifth Street, NW., 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

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 filing will also be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to File No.

SR–Amex–00–14 and should be

submitted by June 14, 2000.

V. Conclusion

It Is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act,30 that the

proposed rule change (SR–Amex–00–

14), as amended, is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.31

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–13004 Filed 5–23–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42792; File No. SR–NASD–

00–11]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc., Amending Its Mediation

Fee Structure

May 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 9,

2000, the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), through its wholly

owned subsidiary, NASD Regulation,

Inc. (‘‘NASD Regulation’’), filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by NASD Regulation. 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

NASD Regulation proposes to amend

the Code of Arbitration Procedure

(‘‘Code’’) of the NASD to encourage the

use of mediation, increase revenue by

adjusting mediation fee schedules, and

permit parties to agree to stay

arbitrations in order to mediate their

claims. The text of the proposed rule

change follows. Proposed new language

appears in italics; proposed deletions

appear in brackets.

* * * * *

Rule 10205. Schedule of Fees for

Industry and Clearing Controversies

(a)–(i) No change.

[(j) Each party to a matter submitted

to a mediation administered by the

Association where there is no

Association arbitration proceeding

pending shall pay an administrative fee

of $250. The parties to a mediation

administered by the Association shall

pay all of the mediator’s charges,

including the mediator’s travel and

other expenses. The charges shall be

specified in the Submission Agreement

and shall be apportioned equally among

the parties unless they agree otherwise.

Each party shall deposit with the

Association their proportional share of

the anticipated mediator charges and

expenses, as determined by the Director

of Mediation, prior to the first mediation

session. Mediator charges, except travel

and other expenses, are as follows:

(1) Initial Mediation Session: $600 or

four (4) times the mediator’s hourly rate

agreed by the parties and the mediator;

and

(2) Additional Mediation Sessions:

$150 per hour, or such other hourly rate

agreed by the parties and the mediator.]

* * * * *

Rule 10332. Schedule of Fees for

Customer Disputes

(a)–(h) No change.

[(i) Each party to a matter submitted

to a mediation administered by the

Association where there is no

Association arbitration proceeding

pending shall pay an administrative fee

of $150.]

[(j) The parties to a mediation

administered by the Association shall

pay all of the mediator’s charges,

including the mediator’s travel and

other expenses. The charges shall be

specified in the Submission Agreement

and shall be apportioned equally among

the parties unless they agree otherwise.

Each party shall deposit with the

Association their proportional share of

the anticipated mediator charges and

expenses, as determined by the Director

of Mediation, prior to the first mediation

session. Mediator charges, except travel

and other expenses, are as follows:

(1) Initial Mediation Session: $600 or

four (4) times the mediator’s hourly rate

agreed to by the parties and the

mediator; and

(2) Additional Mediation Sessions:

$150 per hour, or such other hourly rate

agreed to by the parties and the

mediator.]

* * * * *

Rule 10403. Arbitration Proceedings

(a) Unless the parties agree otherwise,

the submission of a matter for mediation

shall not stay or otherwise delay the

arbitration of a matter pending under

this Code. When the parties agree to

stay the arbitration in order to mediate

the claim, the arbitration proceeding

shall be stayed, notwithstanding any

provision to the contrary in this Code.

(b) If mediation is conducted through

NASD Regulation, no adjournment fees

will be charged for staying the

arbitration proceeding in order to

mediate.3

* * * * *

Federal Register / Vol. 65, No. 101 / Wednesday, May 24, 2000 / Notices 33603

4See Securities Exchange Act Release No. 35990

(July 19, 1995), 60 FR 38384 (July 26, 1995), (SR–

NASD–95–25).

Rule 10407. Mediation Fees

(a) Filing Fees: Cases Filed Directly in

Mediation.

Each party to a matter submitted

directly to a mediation administered by

the Association shall pay an

administrative fee to the Association in

the amounts indicated in the schedule

below, unless such fee is specifically

waived by the Director of Mediation.

Amount in controversy

Customer

and associated

person

fee

Member

fee Total fees

$.01–$25,000 ....................................................................................................................................................... $50 $150 $200

$25,000.01–$100,000 .......................................................................................................................................... 150 300 450

Over $100,000 ..................................................................................................................................................... 300 500 800

(b) Filing Fees: Cases Initially Filed in

Arbitration.

When a matter is initially filed an

arbitration and subsequently submitted

to a mediation administered by the

Association, each party shall pay an

administrative fee to the Association in

the amounts indicated in the schedule

below, unless such fee is specifically

waived by the Director of Mediation.

Amount in controversy

Customer

and associated

person

fee

Member

fee Total fees

$.01–$25,000 ....................................................................................................................................................... $0 $0 $0

$25,000.01–$100,000 .......................................................................................................................................... 100 150 250

Over $100,000 ..................................................................................................................................................... 250 500 750

(c) Mediator Fees and Expenses.

The parties to a mediation

administered by the Association shall

pay all of the mediator’s charges,

including the mediator’s travel and

other expenses. The charges shall be

specified in the Submission Agreement

and shall be apportioned equally among

the parties unless they agree otherwise.

Each party shall deposit with the

Association its proportional share of the

anticipated mediator charges and

expenses, as determined by the Director

of Mediation, prior to the first mediation

session.

* * * * *

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NASD Regulation 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.

NASD Regulation 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

The proposed rule change is designed

to encourage the use of mediation,

especially in smaller cases, and to adjust

mediation fee schedules. This proposed

adjustment would be a first step toward

making the NASD Regulation Mediation

Program (‘‘Mediation Program’’)

financially self-sustaining. The

proposed rule change would also permit

parties to stay arbitrations by agreement

in order to mediate the claim, and

would eliminate the adjournment fees

when parties conduct their mediation

through NASD Regulation.

The NASD will announce the

effective date of the proposed rule

change in a Notice to Members to be

published no later than 60 days

following Commission approval. The

effective date will be 30 days following

publication of the Notice to Members

announcing Commission approval.

Background. In 1995, NASD

Regulation initiated a mediation

program to provide an additional

dispute resolution option for parties.4

Mediation is an informal, non-binding,

voluntary process in which an impartial

person, trained in facilitation and

negotiation techniques, helps the parties

reach a mutually acceptable resolution.

What distinguishes mediation from

other forms of dispute resolution—

principally, arbitration and litigation—

is that the mediator does not impose a

resolution on the parties, but rather

works with the parties to create their

own resolution. The settlement resulting

from mediation, rather than arbitration

or litigation, often saves the parties

substantial time and expense.

The goal of the Mediation Program is

to provide public customers, member

firms, and associated persons with an

alternative and effective means for

resolving their disputes. Since its

inception in 1995, over 3,500 cases have

been submitted to the Mediation

Program. By 1999, parties in twenty

percent of all arbitration cases filed with

NASD Regulation used mediation to

help resolve their disputes.

The Mediation Program has been

extremely successful, in terms of both

settlement rates and customer

satisfaction. Approximately eighty

percent of the mediations settle within

60 to 90 days of the parties’ formal

agreement to mediate. Parties that used

the Mediation program consistently

express satisfaction with their

experience, including those who have

not ultimately reached full agreement.

Sometimes parts of a dispute are

resolved in mediation, leaving fewer

issues to be resolved in arbitration.

During the mediation, leaving fewer

33604 Federal Register / Vol. 65, No. 101 / Wednesday, May 24, 2000 / Notices

issues to be resolved in arbitration.

During the mediation process, the

parties and their representatives gain a

better understanding of their case.

Improved lines of communication often

place the parties in a better position to

settle the case at a later stage.

The features that have contributed to

the success of the Mediation Program

include:

• The mediators on the roster are

highly qualified and experienced. Prior

to admission to the roster, mediators are

carefully screened by NASD Regulation

staff and by members of the National

Arbitration and Mediation Committee.

Formal multi-day mediator training and

experience as a mediator are

requirements of service. NASD

Regulation’s 850 mediators represent a

cross-section of people from diverse

cultures, professions, and backgrounds.

Many have extensive knowledge of

securities law and industry practices,

and many are also arbitrators with

training and experience in resolving

securities matters.

• The NASD Regulation staff in the

Office of Dispute Resolution (‘‘ODR’’)

performs a number of administrative

services to facilitate the mediation. The

staff works diligently to educate parties

on the mediation process, to encourage

them to mediate, to assist them in

finding the best mediator for their case,

and to ensure that the process runs

smoothly. When one party expresses an

interest in mediation, the ODR will

contact the other party or parties,

explain the mediation process, and

answer any questions that arise. The

ODR staff are trained to explain the

benefits of mediation and to help bring

all parties to the table. After conferring

with the parties, the ODR will propose

a list of several neutrals from its roster

of experienced mediators who seem

consistent with the parties’ needs. The

list is accompanied by a complete

profile of each mediator. The parties

may select their mediator from that list

or ask for additional lists. The parties

may also choose another mediator not

on the list or from outside the Mediation

Program roster. The staff works with the

mediator and the parties to select a

mutually convenient date and location

for the mediation.

• Participation in the Mediation

Program is voluntary. Parties choose

whether, and at what point in the course

of their case, to enter mediation.

• The Mediation Program is flexible

and controlled by the engaged parties,

who control the process, schedule, and

outcome of the dispute. Parties may

mediate before filing a formal claim or

pleading in arbitration, or at any stage

of the arbitration process. They may

submit all or some of the issues in

dispute to mediation, including selected

substantive or procedural issues such as

the extent, nature, and schedule of

discovery. The first session can be

scheduled in a matter of days or weeks.

Meetings can be conducted in person in

over 50 cities in the United States and

abroad, by telephone, video conference,

or by any other method to which the

parties and the mediator agree.

• Mediating through NASD

Regulation is cost-effective. Most

mediations are successfully concluded

in less than a single day, resulting in

lower attorney fees for the parties.

Parties that choose to mediate may also

avoid the fees for an arbitration hearing

if they can settle before proceeding to a

hearing. Finally, parties in mediation

benefit by avoiding the discovery costs

typically associated with other forms of

dispute resolution.

Operating the Mediation Program.

The Mediation Program is currently

subsidized. There are fifteen employees,

located in five offices, in ODR’s

mediation department. For 1999, the

total direct expenses for the Mediation

Program were approximately $960,000,

compared to $100,000 in direct

revenues, resulting in an annual

program deficit of $860,000. Because the

Mediation Program has continued to

grow steadily since its inception, NASD

Regulation believes that this is an

appropriate time to change the

mediation fee structure.

The objective of the proposed rule

change is to take preliminary steps

toward making the Mediation Program

financially self-sustaining while still

keeping mediation as a cost-effective

alternative to arbitration for parties with

claims of any dollar value. NASD

Regulation estimates that the proposed

mediation fee package would generate

income of $640,000 on an annual basis,

assuming a level number of case filings.

These funds would be used to help

offset the operational costs of the

Mediation Program and to ensure the

continuation of this valuable service. In

addition, the fee adjustments should

add incentives for parties to mediate

smaller cases.

In addition to filing this proposed rule

change, NASD Regulation has recently

instituted another revenue-increasing

measure which did not require a change

to the Code. Mediators on the roster of

the Mediation Program individually set

the fees they charge parties on each

case. The rates are usually hourly and

vary depending upon a given mediator’s

background, experience, and reputation.

NASD Regulation then assesses a fee for

each hour that the mediator bills the

parties. This fee defrays a part of the

costs the ODR incurs in providing

services to mediators to administer the

case.

Formerly, NASD Regulation charged

mediators a fee of $25 for each hour the

mediator billed the parties. This fee was

significantly less than the charges of

other dispute resolution providers,

including those of the American

Arbitration Association and JAMS, and

will remain significantly less even with

the enhanced fees. Effective April 3,

2000, NASD Regulation has eliminated

the flat rate in favor of a sliding rate tied

to the mediator’s hourly compensation.

This fee schedule, in addition to other

changes, is designed to encourage

mediators to charge lower rates for small

claims and to agree to handle some

cases pro bono. The new rates are as

follows:

Mediator’s hourly rate NASD regulation fee

Pro Bono .................................... None.

Up to $99.99 .............................. $25.

$100 to $199.99 ........................ $35.

$200 and over ........................... $50.

Reduced Fees for Smaller Claims.

NASD Regulation is committed to

making mediation attractive to

customers with smaller claims, that is,

claims with less than $25,000 in

dispute. Mediation is especially wellsuited to resolving small disputes.

However, with most mediators’ hourly

rates at $150 or more, mediation costs

may exceed the parties’ cost (exclusive

of attorneys’ fees) to arbitrate smaller

claims. During 1997 and 1998, fewer

than ten percent of all mediations

involved claims of less than $25,000.

NASD Regulation has recently asked

its mediators to help reduce the cost of

mediation for small cases by agreeing to

charge reduced rates to mediate cases

involving claims of $25,000 or less.

Specifically, it has suggested that

mediators agree to charge $50 an hour

for mediations where the amount in

dispute is less than $25,000.

Mediators may set a limit on the

number of reduced fee medications they

will conduct during a year. After a

mediator serves the designated number

of times, ODR staff will not propose his

or her name for mediation of small

claims for the remainder of the year,

unless the mediator is willing to serve

on more cases at the reduced rate.

Summary of Proposed Rule Change.

The rules setting mediation filing fees

are currently contained in Rules 10205

and 10332 of the Code, which primarily

address intra-industry and customer

arbitration fees, respectively. NASD

Regulation proposes to delete the

provisions relating to mediation fees

Federal Register / Vol. 65, No. 101 / Wednesday, May 24, 2000 / Notices 33605

5NASD Regulation currently has a sliding scale

schedule in place for arbitration fees. See NASD

Rules 10205 and 10332.

from the arbitration sections of the

Code, and to include them in the Rule

10400 Series that pertains to mediation.

Specifically, NASD Regulation would

create a new rule, Rule 10407, entitled

‘‘Mediation Fees.’’

The proposed rule change includes

three components. First, new Rule

10407(a) would replace the current flat

fee with a sliding-scale schedule of fees

for cases filed directly in mediation.

Second, new Rule 10407(b) would

require parties to pay a mediation case

filing fee when they choose to use the

Mediation Program after having

initiated arbitration. Third, Rule

10403(a) would be changed to make

clear that the parties in arbitration can

agree to stay the proceeding in order to

mediate their claims, and new Rule

10403(b) would be added to provide an

incentive to use the Mediation Program

rather than an alternative forum when

mediation takes place after an

arbitration has been filed.

Mediation Case Filing Fees for Cases

Filed Directly in Mediation: Rule

10407(a). About fifteen percent of the

850 mediation cases filed annually are

filed directly in mediation and result in

a mediation administrative fee charged

to parties. NASD Regulation currently

charges $150 per party for customer

cases and $250 per party for intraindustry cases, irrespective of the

amount in dispute. These fees are

currently found in Rules 10205(j) and

10332(i).

NASD Regulation proposes to replace

the flat fee with a sliding scale fee

schedule in new Rule 10407(a). The

schedule has one column of filing fees

for customers and associated persons,

and another column for member firms.

The filing fees are lowest for the

smallest claims but increase as the

amount in controversy increases.5

Customers in mediation whose cases

involve up to $25,000 in controversy

would be charged only $50, rather than

the present filing fee of $150. This is

another measure that is intended to

encourage the use of mediation for

smaller claims. For claims between

$25,000 and $100,000, customers would

pay a filing fee of $150, the same as in

the current model. However, when the

claim exceeds $100,000, customers

would pay a $300 filing fee. As noted,

this same schedule also applies to

claims made by associated persons.

Fees also are adjusted for members.

Under the proposed rule, for cases up to

$25,000 in controversy, members would

continue to pay $150, which is the

current flat rate for a customer dispute,

but is lower than the current $250 flat

rate for intra-industry disputes. For

claims between $25,000 and $100,000,

the charge for members would increase

to $300, slightly higher than the current

intra-industry rate under the flat fee

schedule. For claims exceeding

$100,000, the member fee would

increase to $500. For all claims,

regardless of the amount in dispute,

customers and members would pay less

under the proposal than the

corresponding filing fees for arbitration.

Mediation Case Filing Fees for Cases

Initially Filed in Arbitration: Rule 10407

(b). For cases first filed in arbitration

that later go to mediation—which

amount to about eighty-five percent of

all the NASD Regulation mediations—

NASD Regulation currently waives all

mediation case filing fees for the parties,

as stated in Rules 10205(j) and 10332(i).

NASD Regulation proposes to eliminate

the fee waiver for all cases over $25,000

and to charge mediation filing fees to

parties choosing mediation after the

arbitration case is already filed.

The ORD’s mediation staff incurs

expenses that are distinct from those

incurred by its arbitration staff. For

cases filed in arbitration first, the

mediation staff expends a great deal of

time educating the parties about the

mediation alternative and attempting to

encourage the parties to agree to

mediate. NASD Regulation staff expends

these efforts to encourage parties to

mediate because mediation generally

saves the parties costs and time.

Settlement rates for mediation have

been consistently high and parties have

reported a high level of satisfaction with

the process.

Arbitration fees currently cover

arbitration case administrative tasks, but

they do not cover the expenses of the

mediation staff. Eliminating the fee

waiver would recover some of the

resources expended by the mediation

staff in attempting to move cases from

arbitration to mediation.

Consistent with its other efforts to

increase the incentives for parties to

mediate claims under $25,000, NASD

Regulation would not impose any filing

fee for converted small cases under the

new Rule 10407(b). NASD Regulation

believes it is beneficial to resolve these

claims through mediation because of the

cost savings to the parties involved.

NASD Regulation proposes to reduce

the mediation filing fee for cases

between $25,000 and $100,000 in order

to induce members and investors to

choose mediation. Members’ filing fees

for converted cases, found in Rule

10407(b), would be fifty percent less

than for a case that is first filed in

mediation, found in Rule 10407(a).

Similarly, fees for customers would be

reduced by $50.

In matters involving more than

$100,000 in dispute, the proposed

mediation filing fee for members is

equal to the fee for a case that is first

filed in mediation. Investors would get

the benefit of a small reduction in fees

for cases converted to mediation from

the arbitration docket.

Mediator Fees and Expense: Rule

10407(c). The rule language regarding

mediator fees and expenses contained in

Rules 10205(j) and 10332(j) would be

moved to Rule 10407(c). The rule

language would remain unchanged,

with one exception. NASD Regulation

proposes to delete the final sentence in

Rules 10205(j) and 10332(j),

respectively, specifying mediator

charges. NASD Regulation has found

that mediators do not charge the parties

fees for ‘‘mediation sessions,’’ as

indicated in the rule. Rather, mediators

charge for the actual hours of services

they provide. Therefore, NASD

Regulation proposed to delete the final

sentence in Rules 10205(j) and 10332(j)

when it moves the other relevant

language to new Rule 10407(c).

Proposed Changes to Rule 10403.

NASD Regulation proposes to amend

Rule 10403 of the Code in two ways.

First, by adding language to Rule

10403(a) to make it clear that parties

who agree to submit a matter for

mediation can also agree to stay the

arbitration. The parties can do so

notwithstanding Rule 10319, the rule

that gives arbitrators discretion whether

to stay an arbitration proceeding. This

rule change would benefit the parties to

a proceeding by saving them time and

money and by relieving them of the

problems of proceeding in two arenas at

the same time. Moreover, this change is

consistent with the approach of other

alternative dispute resolution providers.

Second, NASD Regulation proposes to

add a new provision, Rule 10403(b), that

encourages the use of the NASD

Regulation Mediation Program.

Whenever the mediation is conducted

through NASD Regulation, the parties

would avoid payment of arbitration

adjournment fees.

2. Statutory Basis

NASD Regulation believes that the

proposed rule change is consistent with

the provisions of Section 15A(b)(6) of

the Act, which requires, among other

things, that the Association’s rules must

be designed to prevent fraudulent and

manipulative acts and practices, to

promote just and equitable principles of

trade, and, in general, to protect

investors and the public interest. NASD

33606 Federal Register / Vol. 65, No. 101 / Wednesday, May 24, 2000 / Notices

6 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Letter from Edith Hallahan, Deputy General

Counsel, Phlx, to Nancy Sanow, Assistant Director,

Division of Market Regulation, Commission, dated

May 15, 2000. Amendment No. 1 summarizes the

two comment letters the Exchange received in

response to this proposal and clarifies who is

eligible for this credit. Due to the substantive nature

of Amendment No. 1, this proposed rule change is

deemed filed and immediately effective as of today.

4Out-of-pocket expenses include charges for

wireless telephone services, postage, ILX machines

and Dow Jones News Service.

5Pass-through costs include charges for member

health insurance and parcel delivery services.

6Capital funding fees are fees assessed on owners

to provide funding for technological improvements

and other capital needs. The Commission approved

the capital funding fee for a pilot period extending

to July 6, 2000. See Securities Exchange Act Release

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

17, 2000) (SR–Phlx–99–51); and Securities

Exchange Act Release No. 42714 (April 24, 2000),

65 FR 25782 (May 3, 2000) (SR–Phlx–00–29). The

proposal to adopt the capital funding fee on a

permanent basis is pending with the Commission.

See Securities Exchange Act Release No. 42318

(January 5, 2000), 65 FR 2216 (January 13, 2000)

(SR–Phlx–99–49).

7The credit-eligible fees are fees assessed on

members and include transaction as well as trading

floor fees. Transaction fees include equity

transaction value charges, equity floor brokerage

transaction fees, option comparison charges, and

option transaction charges. Trading floor fees

include charges for trading post/booth, controller

space, shelf space, transmission, execution/

communication charge, and floor facility fees. Fees

assessed on foreign currency options participants

are not considered credit-eligible fees.

8This proposed rule change is intended to

replace SR–Phlx–99–54, which was filed with the

Commission on December 22, 1999 and withdrawn

by letter dated May 13, 2000.

9Pursuant to Phlx Rule 940, the parties to an A–

B–C Agreement are an employee, general partner,

or officer, and the member organization with which

such person is associated. The member organization

provides all or part of the funds for the purchase

of a membership of which the legal title is placed

in the member and the equitable title is placed in

the member organization.

10 Immediate family member is defined as a

member’s spouse, parents, stepmother, stepfather,

mother-in-law, father-in-law, brothers, brothers-inlaws, stepbrothers, sisters, sisters-in-law,

stepsisters, children, stepchildren, and any other

person living with the member for whom the

member provides at least 50 percent of his/her

financial support per year.

Regulation believes that the proposed

rule change is in the public interest

because it will encourage the use of

mediation, especially for small claims.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

NASD Regulation does not believe

that the proposed rule change will result

in any burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act, as amended.

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. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the date of

publication of this notice in the Federal

Register or within such longer period (i)

as the Commission may designate up to

90 days of such date if it finds such

longer periods to be appropriate and

publishes its reasons for so finding or

(ii) as to which the self-regulatory

organization consents, the Commission

will:

A. by order approve such proposed

rule change, or

B. institute proceedings to determine

whether the proposed rule change

should be disapproved.

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, NW.,

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

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–00–11 and should be

submitted by June 14, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–13068 Filed 5–23–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42791; File No. SR–Phlx–

00–44]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.

Adopting a Pilot Program To Assess a

Monthly Credit of Up to $1,000 to

Qualified Members

May 16, 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 May 15,

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.

Today the Phlx filed an amendment to

the proposed rule change (‘‘Amendment

No. 1’’).3 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 amend its

schedule of fees, dues, and charges to

allow for a monthly credit of up to

$1,000 to be applied against all fees,

dues, charges, and other amounts as

may from time to time be owed to the

Exchange that month, except fines, late

fees, out-of-pocket expenses,4 passthrough costs,5 capital funding fees,6

and any fees paid by equity trading

permit holders in respect of any trading

permits the Exchange may issue

(‘‘credit-eligible fees’’) 7 by members

who own the membership by which

they are a member (‘‘member-owners’’)

and certain other categories of members

described below.8 This credit is

proposed as a six month pilot program.

In addition to member-owners, a

monthly credit of up to $1,000 may be

applied against credit-eligible fees

incurred by the following persons, who

are so closely connected to the owners

that the Exchange believes they should

be treated as member-owners: (1) All

members who are a party to an A–B–C

Agreement 9 with a member

organization who owns that

membership; or (2) all members who are

lessees if: (a) the member is also an

owner of a different membership; (b) the

member is an immediate family member

of the owner of that membership; 10 (c)

the member is associated with a member

organization in which the owner has an

interest of at least ten percent; (d) the

member leases from an owner or a