36492 Federal Register / Vol. 65, No. 111 / Thursday, June 8, 2000 / Notices

15 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

Written comments on the proposed

rule change 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 period 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 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 PCX. All

submissions should refer to File No.

SR–PCX–99–45 and should be

submitted by June 29, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.15

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14406 Filed 6–7–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42866; File No. SR–Phlx–

00–27]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.

Codifying a Provision Implementing a

Closing Rotation on the Last Day of

Each Calendar Quarter

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 March 16, 2000, the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by the Exchange. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Phlx proposes to amend Phlx

Rule 1047 to codify a provision

implementing a closing rotation on the

last trading day of each calendar

quarter. Specifically, Phlx Rule 1047,

Commentary .01(e) would provide that

on the last day of each calendar quarter,

a closing rotation for some equity

options series may be commenced at

4:02 p.m. or after the closing price of the

stock in its primary market is

established, whichever is later. Orders

will not be accepted at or after 4:02 p.m.

The trading floor will be given prior

notice regarding which options series

will be subject to a closing rotation. 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, Statutory

Basis for, the Proposed Rule Change

In its filing with the Commission, the

Exchange included statements

concerning the purpose of, and basis for,

the proposed rule change and discussed

any comments it received on the

proposed rule change. The text of these

statements may be examined at the

places specified in Item IV 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

Currently, under Phlx Rule 1047,

Commentary .01, two Floor Officials,

with the concurrence of a Market

Regulation Officer, may direct that a

trading rotation be employed to aid in

producing a fair and orderly market and

shall specify for each trading rotation,

the options contracts to be included and

the sequence of such options contracts

in the rotation. According to the Phlx,

this provision is commonly relied upon

to permit quarterly rotations.

The Phlx is proposing to amend its

Rule 1047 to expressly provide for

closing rotations on the last trading day

of each calendar quarter, for certain

equity options traded on the Phlx. The

Exchange will provide prior notice to

the trading floor of which options series

will be subject to a closing rotation. As

with other rotations, the procedures

governing quarterly closing rotations

will require that two Floor Officials and

a Market Regulation Officer may direct

that the rotation take place. They will

specify the particular equity options

contracts to be included and the

sequence of such options contracts in

the rotation.

The Exchange believes that on the last

day of the calendar quarter there is

increased order flow in exchange-traded

options and in the underlying securities,

particularly at the end of the trading

day. For instance, many large money

managers adjust their positions at the

end of the calendar quarter for tax

reasons. As a result of this activity in

both the underlying and the options

market, the last sale print for many

stocks is often delayed. Therefore, the

Exchange believes that it is important to

provide the opportunity for a closing

rotation at the end of each calendar

quarter to account for late prints and

increased order flow. These rotations

will allow the Exchange members to

Federal Register / Vol. 65, No. 111 / Thursday, June 8, 2000 / Notices 36493

3 15 U.S.C. 78f(b).

4 15 U.S.C. 78f(b)(5).

5 15 U.S.C. 78s(b)(3)(A).

6 17 CFR 240.19b–4(f)(1). 7 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Letter to Michael Walinskas, Associate

Director, Division of Market Regulation (Division’’),

Commission, from John Dayton, Counsel, Phlx,

dated October 1, 1999 (‘‘Amendment 1’’).

Amendment No. 1 proposes certain technical

changes. Specifically, it amends Phlx Rule 930 to

reflect the fact that the Arbitration Committee is

being eliminated from the By-Laws. Amendment

No. 1 also proposes changes to Phlx Rule 950, §§ 1

and 2, to reflect the elimination of the Arbitration

Committee. The Phlx also submitted a letter

(hereinafter referred to as ‘‘Amendment No. 2’’),

confirming that the board will continue to engage

an independent auditing firm to administer all

elections. The contents of Amendment No. 2 were

substantively discussed in the notice.

4Securities Exchange Act Release No. 42464 (Feb.

28, 2000), 65 FR 11826.

adjust options prices in line with the

closing prices of the underlying

securities.

In addition, quarterly rotations allow

the execution at the end of the day of

orders at a single price more efficiently.

The closing rotation will also give

investors and other interested parties

more accurate closing prices for Phlx

options on these high volume days. The

Exchange believes that a specific rule

governing quarterly closing rotation acts

as notification to the investing public

that a quarterly rotation may take place.

However, the Exchange believes that the

procedure described above also allows

flexibility for those equity options series

which do not experience increased

activity, and, thus, will not be subject to

a closing rotation.

2. Statutory Basis

The Exchange represents that the

proposed rule change is consistent with

Section 6(b) of the Act 3 in general, and

furthers the objectives of Section

6(b)(5) 4 in particular, in that it is

designed to promote just and equitable

principles of trade and provide for a fair

and orderly market by codifying specific

provisions which allow the Exchange to

conduct quarterly rotations in order to

account for late prints and high amounts

of order flow.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Phlx represents that it does not

believe that the proposed rule change

will impose any burden on competition

that is not necessary or appropriate in

furtherance of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants or Others

The Exchange has neither solicited

nor received written comments on the

proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The proposed rule change has become

effective pursuant to Section 19(b)(3)(A)

of the Act 5 and Rule 19b–4(f)(1) 6

thereunder because it constitutes a

stated policy, practice, or interpretation

with respect to the meaning,

administration, or enforcement of an

existing rule. Phlx Rule 1047 currently

provides the authority to floor officials

to direct trading rotations in specific

option classes, thus the Exchange

believes the proposal satisfies the

requirements of Rule 19b–4(f)(1). This

proposed rule change serves as

clarification to note that there may be

closing rotations in certain equity

options on the last day of the calendar

quarter.

At any time within 60 days of the

filing of the proposed rule change, the

Commission may summarily abrogate

the proposed rule change if it appears to

the Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors

or otherwise in furtherance of the

purposes of the Act.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing

including whether the proposed rule

change is consistent with the Act.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street 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 coping 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 Phlx.

All submissions should refer to File

No. SR–Phlx–00–27 and should be

submitted by June 29, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14403 Filed 6–07–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42868; File No. SR–Phlx–

99–26]

Self-Regulatory Organizations; Order

Approving Proposed Amendment to

the By-Laws and Corresponding

Changes to the Rules of the

Philadelphia Stock Exchange, Inc.,

Relating to Various Committees

May 31, 2000.

I. Introduction

On July 30, 1999, the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission

(‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’),1 and Rule 19b–4

thereunder,2 a proposed rule change

amending the Exchange’s By-Laws and

corresponding Phlx Rules to streamline

its committee process. The Phlx filed

Amendments No. 1 and No. 2 to the

proposed rule change on October 4,

1999 3 and February 23, 2000,

respectively. The Federal Register

published the proposed rule change,

Amendment No. 1, and the substance of

Amendment No. 2, for comment on

March 6, 2000.4 The Commission

received no comments on the proposal.

This order approves the proposal, as

amended.

II. Description of Proposal

The Exchange has proposed By-Law

amendments to provide for streamlining

the committee process as follows: (i)

Dissolving the Arbitration Committee,

whose limited remaining functions

would be transferred to the Executive

committee, who will oversee ongoing

arbitrations filed before the transfer of

arbitration responsibilities to the

National Association of Securities

Dealers, Inc. (‘‘NASD’’) in October,