36180 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 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 six exchanges that are participants

to the OPRA Plan are the American Stock Exchange

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

(‘‘CBOE’’); the International Securities Exchange

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

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

Stock Exchange (‘‘PHLX’’).

3The current temporary allocation program is

embodied in an amendment to the OPRA Plan

proposed by OPRA and approved by the

Commission. Securities Exchange Act Release No.

42779 (May 12, 2000), 65 FR 31950 (May 19, 2000)

(order approving File No. SR–OPRA–00–04). As

proposed by OPRA, that program was to expire by

its terms on May 25, 2000. However, in its approval

order the Commission modified the OPRA Plan

12. On September 27, 1999,

Nationwide supplemented the separate

account prospectuses informing all

existing and prospective Contract

Owners that it is the process of applying

for approval from the Commission to

effect a substitution of VP Balanced for

VP Advantage. In addition, the

prospectus supplements state that

Nationwide will not exercise any right

reserved by it under the Contracts to

impose an restriction or fee on transfers

until at least 30 days after the proposed

substitutions.

13. All Contract Owners have

received a copy of the prospectus for VP

Balanced because the portfolio is

currently offered as an investment

option under all contracts issued

through the Separate Accounts.

14. Following the establishment of the

Exchange Date, Contract Owners with

interests remaining VP Advantage will

be advised that the fund will be

replaced on the Exchanged Date and

that they are free to make any allocation

change changes among the available

investment options in advance of the

Exchange Date.

15. Within five days of the Exchange

Date, all Contract Owners affected by

the substitution will receive a written

confirmation of the substitution. The

confirmation will state that Contract

Owners may transfer all cash value in

the affected sub-account to any other

available sub-account(s). The

confirmation will reiterate that

Nationwide will not exercise any right

reserved by it under the Contracts to

impose any restriction or fee on

transfers until at least 30 days after the

proposed substitution.

16. The proposed substitution will

take place at relative net asset value

with no increase or decrease in the

amount of any Contract Owner’s policy

value. The substitution will not result in

any additional fees for Contract Owners

nor will current charges increased.

Contract Owners will not bear any

added cost or expense, including any

additional brokerage costs or expenses,

associated with the proposed

substitution. None of the contractual

obligations currently assumed by

Nationwide will in any way be abridged

or modified as a result of the

substitution. The proposed substitution

will in no way alter a Contract Owner’s

right to surrender the contract at any

time prior to or after the substitution in

accordance with the terms of the

contract. Finally, the substitution

should in no way affect whatever tax

benefits Contract Owners currently

enjoy and will not engender any adverse

tax consequences.

Applicants’ Legal Analysis

1. Section 26(b) of the 1940 Act

requires the depositor of a registered

unit investment trust holding the

securities of a single issuer to obtain

Commission approval before

substitution of the securities held by the

trust. The section further provides that

the Commission shall issue an order

approving such substitution if the

evidence establishes that the

substitution is consistent with the

protection of investors and the purposes

fairly intended by the policies and

provisions of the 1940 Act.

2. Applicants assert that the proposed

substitution meets the standards that the

Commission has applied to past

substitutions.

3. Applicants assert that the

investment objectives and policies of VP

Advantage and VP Balanced are

sufficiently comparable that the

investment strategies currently

employed by Contract Owners may be

maintained after the substitution. Both

funds seek to provide investors with the

benefits of a balanced portfolio of fixed

income and equity securities that serves

as a more conservative alternative to

traditional growth funds and as a more

aggressive alternative to traditional

bond funds.

4. Applicants further assert that

Contract Owners will benefit from the

proposed substitution because VP

Balanced has greater assets than VP

Advantage. Accordingly, VP Balanced

should continue to have lower expenses

as a percentage of net asset than does VP

Advantage, creating the opportunity for

better performance.

Conclusion

Applicants assert, for the reasons

stated above, that the proposed

substitution is consistent with the

protection of investors and the purposes

fairly intended by the policy and

provisions of the 1940 Act and the

requested order approving the

substitution should be granted.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14247 Filed 6–6–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42849; File No. SR–OPRA–

00–05]

Options Price Reporting Authority;

Notice of Filing and Order Granting

Accelerated Effectiveness of

Amendment to OPRA Plan Adopting a

Temporary Capacity Allocation Plan

May 26, 2000.

Pursuant to Rule 11Aa3–2 under the

Securities Exchange Act of 1934

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

May 18, 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 modify the current temporary

capacity allocation plan for peak usage

periods, which 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.

The Commission is publishing this

notice and order to solicit comments

from interested persons on the proposed

OPRA Plan amendment and to grant

accelerated approval to the proposed

OPRA Plan amendment.

I. Description and Purpose of the

Amendment

OPRA proposes to modify the most

recent amendment allocating the

message handling capacity of its

processor among the participant

exchanges.3 This modification will

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Notices 36181

amendment as filed by OPRA by extending the

duration of the temporary allocation program for an

additional 120 days from the date of the order, and

further modified the program by providing an

allocation of OPRA’s capacity to ISE during this

extended period. In its order, the Commission

stated that any OPRA Plan amendment

subsequently proposed by OPRA and found to be

consistent with the Act would supersede the

Commission’s order. OPRA questions the authority

of the Commission to impose such modifications to

the OPRA Plan by order, as opposed to acting by

rule, which is the procedure established in Rule

11Aa3–2(c)(2) for national market system plan

amendments initiated by the Commission. Because

the OPRA Plan amendment proposed in this filing

would extend the temporary allocation program

until the earlier of August 24, 2000, or the

expansion of OPRA’s capacity to the point where

the allocation program is no longer needed, and

because it would also provide an appropriate

allocation of capacity to ISE during this period,

OPRA believes that the approval of this amendment

will obviate the need to resolve the issue of the

Commission’s authority to impose modifications to

the OPRA Plan in its May 12 order.

4OPRA expects this upgrade to go into

production on July 17, 2000.

5 17 CFR 240.11Aa3–2.

6 15 U.S.C. 78k–1(a)(1)(C)(iii).

7 17 CFR 240.11Aa3–2.

8 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).

9 17 CFR 240.11Aa3–2.

10Consequently, the Commission recently

solicited comment on a proposed amendment to the

OPRA Plan to adopt an objective capacity allocation

formula. See Securities Exchange Act Release No.

42755 (May 4, 2000), 65 FR 30148 (May 10, 2000)

(File No. 4–434). The comment period on this

proposal expires on June 9, 2000.

11See Securities Exchange Act Release No. 42779

(May 12, 2000), 65 FR 31950 (May 19, 2000) (‘‘May

12 order’’). The Commission has authority to

modify by order an amendment to a national market

system plan submitted by plan participants as it did

in the May 12 order. Rule 11a3–2(c)(2).

commence on May 26, 2000, which is

the day when ISE is scheduled to

commence trading, and will continue

until the earlier of the date when OPRA

implements a system upgrade that will

increase its maximum message handling

capacity from the current 3,540

messages per second (‘‘mps’’) to 8,000

mps 4 or August 24, 2000. During the

modification provided for in this

amendment, the current allocation will

continue in effect: from May 26, 2000,

through June 22, 2000, ISE will be

allocated 55 mps; from June 23, 2000,

through July 27, 2000, ISE will be

allocated 110 mps; and from July 28,

2000, through August 24, 2000, ISE will

be allocated 165 mps. Each of the

foregoing allocations to ISE is subject to

being reduced if, on or before the third

day preceding the first day preceding

the first day of an allocation period, ISE

notifies OPRA that it does not need its

full share of capacity for the ensuing

allocation period and agrees to accept a

specified reduced capacity share. Any

reduction in capacity share that may be

agreed to by ISE will be reallocated

proportionately to the other exchanges,

and will not affect the capacity share to

which ISE is entitled during the next

allocation period.

OPRA has filed this proposed

modification of its temporary capacity

allocation program as an amendment to

its national market system plan, and

accordingly, is filing the proposed

amendment for Commission review and

approval pursuant to paragraph (b) of

Rule 11Aa3–2 under the Act.5 ISE has

represented to OPRA that it finds the

capacity share proposed to be allocated

to it in the proposed amendment to be

acceptable.

II. Implementation of the Plan

Amendment

OPRA believes the proposed

modification of the temporary capacity

allocation program is necessary and

appropriate to avoid delays and queues

in the dissemination of options market

information, which in tern helps to

achieve the objectives of Section

11A(a)(1)(C)(iii),6 including assuring the

availability to brokers, dealers and

investors of information with respect to

quotations for and transactions in

securities. Accordingly, OPRA requests

the Commission permit the modification

of the proposed allocation program be

put into effect summarily upon

publication of notice of this filing,

pursuant to paragraph (c)(4) of Rule

11Aa3–2 7 of the Act, based on a finding

by the Commission that such action 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,

including whether the proposed OPRA

Plan 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, 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–00–05 and should

be submitted by June 28, 2000.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Prosed Plan Amendment

After careful review, the Commission

finds that the proposed OPRA Plan

amendment is consistent with the

requirements of the Act and the rules

and regulations thereunder.8

Specifically, the Commission believes

that the proposed amendment, which

allocates the limited capacity of the

OPRA system among the options

markets during peak usage periods, is

consistent with Rule 11Aa3–2 under the

Act 9 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 of, and at

times surpasses, OPRA’s systems

capacity. OPRA estimates that its

current plans to expand OPRA systems

capacity will not be completed until

July 17, 2000. Consequently, the

Commission is concerned that, absent a

program to allocate systems capacity

among the options markets, systems

queuing of options quotes may be the

norm, to the detriment of all investors

and other participants in the options

markets. The Commission believes that

the agreed-upon allocation plan is a

reasonable means for addressing

potential strains on capacity.

The Commission notes that the

anticipated enhancements to the OPRA

system should increase systems capacity

from 3,540 mps to 8,000 mps. The

Commission does not, however, believe

that the enhancement will end the need

for a capacity allocation 10 as the

imminent move to decimalization and

the dissemination of quotations with

size will continue to strain OPRA

systems capacity. For the above reasons,

among others, the Commission modified

the temporary allocation proposed by

OPRA to extend its capacity

allocation. 11

36182 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Notices

12See note 11 supra.

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).

2 17 CFR 240.19b–4.

The Commission believes that the

proposed amendment to the OPRA Plan

is consistent with the Act and has

determined to substitute the provisions

of this proposal for the modifications

made by the Commission to OPRA’s

previous capacity allocation

amendment. 12 Therefore, OPRA

capacity should be allocated according

to the terms of the capacity allocation

set forth in this amendment.

The Commission finds good cause to

accelerate the proposed OPRA Plan

amendment prior to the date of

publication in the Federal Register. The

Commission notes that the proposed

OPRA Plan amendment is intended 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 traffic. The

Commission believes that approving the

amendment 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 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 (SROPRA-00-05) is approved on an

accelerated basis until the earlier of the

date when OPRA implements a system

upgrade that will increase its maximum

message handling capacity to 8,000 mps

or August 24, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority. 15

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14262 Filed 6–6–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42853; File No. SR–AMEX–

00–19]

Self-Regulatory organizations; Notice

of Filing of Proposed Rule Change by

the American Stock Exchange LLC

Relating to the Establishment of an

Interim Seat Allocation Program

May 30, 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 14,

2000, the American Stock Exchange LLC

(‘‘Amex’’ or ‘‘Exchange’’) 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 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

Amex is filing with the Commission

a proposed rule change to establish an

Interim Seat Allocation Program that

would allow a member or member

organization designate one or more

iterim members. Thereafter, the member

or member organization would be

permitted to allocate temporarily its

membership, with certain restrictions,

to the interim member whenever the

member or member organization’s active

member or nominee is absent from the

trading floor. The text of the proposed

rule change is available for inspection at

the places specified in item IV below.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

Amex 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. Amex has prepared

summaries, set forth in Sections A, B,

and C below, of the most significant

aspects of such statements.

A. Self-Regulatory Organizations’

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

Active Exchange seats are assigned to

a person not a firm. Consequently, when

a person to whom a seat is assigned is

absent from the trading floor, the seat

cannot be used to participate in trading

activities on the floor. In effect, at any

given time, some measurable percentage

of one of the Exchange’s most valuable

assets lies dormant and unavailable for

use. Therefore, the Exchange is

proposing an Interim Seat Allocation

Program which would allow an active

member (i.e. the person to whom the

seat has been assigned and who actively

participates in securities transactions on

the floor of the Exchange) temporarily to

allocate the membership to an interim

member when the active member is

absent from the trading floor. The active

member would pay an interim member

status annual fee of $1,500 and a flat fee

of $250 for each allocation. A temporary

allocation may be for a minimum of one

day to a maximum of one year.

The interim member would have to be

approved for membership in accordance

with the Constitution and Rules of the

Exchange. Once approved, and upon

payment of the flat allocation fee and

submission of the appropriate from to

the Exchange’s Membership Services

Department, an interim member could

be allocated the membership held by the

active member. Contracts made on the

trading floor of the Exchange by an

interim member would be considered

contracts made by the active member.

The active member would also be

responsible for all obligations to the

Exchange and all obligations to other

members resulting from Exchange

transactions or transactions in other

securities conducted by the interim

member. The Exchange would require

prior approval of the interim members

by lessor.

The owner of the membership, rather

than the interim member, would be

deemed to be the member of the

Exchange for purposes of participating

in any distribution of the assets and

funds of the Exchange in the event of

any voluntary or involuntary final

liquidation, dissolution, or winding up

of the Exchange’s affairs. The owner of

the membership or active member, as

the case may be, rather than the interim

member, would be the Participant in the

Exchange’s Gratuity Fund and entitled

to the benefits described in Article IX of

the Exchange Constitution. In addition,

an interim member will not be

permitted to vote the active member’s