Federal Register / Vol. 65, No. 111 / Thursday, June 8, 2000 / Notices 36495

14 15 U.S.C. 78s(b)(2).

15 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

contested elections, will be

administered in a manner that is fair to

all participants in the election process.

Finally, the Commission believes that

it is reasonable for the Exchange to

consolidate all three of its Quality of

Markets Committees into one Quality of

Markets Committee responsible for all

three Phlx trading floors. The

COmmission does not disagree with the

Phlx’s conclusion that the resulting

committee could function more

efficiently by taking advantage of the

overlap in issues that face each of the

three current committees. The

Commission notes that the resulting

committee will be required to contain at

least as many non-industry as industry

members, which will ensure that the

committee will retain appropriate nonindustry representation. While current

rules require each of the Quality of

Markets Committees to be ‘‘equally

balanced,’’ the new language will, in the

Phlx’s view, give it more flexibility in

the new committee’s composition.

Without specifically addressing this

issue, the Commission simply notes that

by requiring the newly merged

committee to be comprised of broad

representation with at least the same

number of non-industry and industry

directors, the new rule language should

ensure that the composition of the new

Quality of Markets Committee is

consistent with the section 6(b)(3)

requirement for fair representation in

the administration of the Exchange.

IV. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,14 that the

proposed rule change (SR–PHLX–99–

26), as amended, is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.15

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14404 Filed 6–7–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42883; File No. SR–Phlx–

00–40]

Self Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Philadelphia Stock

Exchange, Inc., Proposing To Amend

Phlx By-Law Article IV, Section 4–18

June 1, 2000.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on April 21,

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 and II below, which Items I

and II below, which Items have been

prepared by the Exchange. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons and to

approve the proposal on an accelerated

basis.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to amend

Phlx By-Law Article IV, sections 4–18(a)

and (e) by expanding its

indemnification and insurance coverage

to directors and committee members of

the Exchange. Below is the text of the

proposed rule change. New language is

italicized.

By-Law Article IV

Indemnification

Sec. 4–18.(a) Right to Indemnification.

Each person who was or is made a party or

is threatened to be made a party to or is

otherwise involved in any action, suit or

proceeding, whether civil, criminal,

administrative or investigative (hereinafter a

‘‘proceeding’’), by reason of the fact that he

or she is or was Governor, officer, or

committee member of the Exchange or is or

was serving at the request of the Exchange as

an officer, director, employee or agent of

another corporation or of a partnership, joint

venture, trust or other enterprise, including

service with respect to an employee benefit

plan (hereinafter an ‘‘indemnitee’’), whether

the basis of such proceeding is alleged action

in an official capacity as a Governor, officer,

committee member, director, employee or

agent or in any other capacity while serving

as a Governor, officer, committee member,

director, employee or agent, shall be

indemnified and held harmless by the

Exchange to the fullest extent authorized by

the Delaware General Corporation Law, as

the same exists or may hereafter be amended

(but, in the case of any such amendment,

only to the extent that such amendment

permits the Exchange to provide broader

indemnification rights than permitted prior

thereto), against all expense, liability and loss

(including attorney’s fees, judgments, fines,

ERISA excise taxes or penalties and amounts

paid in settlement) reasonably incurred or

suffered by such indemnitee who has ceased

to be a Governor, officer, committee member,

director, employee or agent and shall inure

to the benefit of the indemnitee’s heirs,

executors and administrators; provided,

however, that, except as provided in

paragraph (c) hereof with respect to

proceedings to enforce rights to

indemnification, the Exchange shall

indemnify any such indemnitee in

connection with a proceeding (or part

thereof) initiated by such indemnitee only if

such proceeding (or part thereof) was

authorized by the Board of Governors of the

Exchange.

Section 4–18(b) through (d). No change.

Sec. 4–18.(e) Insurance. The Exchange may

maintain insurance, at its expense, to protect

itself and any Governor, officer, committee

member, director, employee or agent of the

Exchange or another corporation,

partnership, joint venture, trust or other

enterprise against any expense, liability or

loss, whether or not the Exchange would

have the power to indemnify such person

against such expense, liability or loss under

the Delaware General Corporation Law.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

Phlx 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

The Phlx represents that the purpose

of the proposed rule change is to clarify

the original intent of the Exchange, by

expanding the Exchange’s

indemnification and insurance coverage

to include persons serving at the request

of the Exchange as a Governor, officer,

committee member, director, employee,

or agent of another corporation or of a

partnership, joint venture, trust or other

enterprise, including service with

respect to an employee benefit plan.

Although Governors, officers,

36496 Federal Register / Vol. 65, No. 111 / Thursday, June 8, 2000 / Notices

3See Securities Exchange Act Release No. 38960

(August 22, 1997), 62 FR 45904 (August 29, 1997).

4Telephone conversation between Murray Ross,

Vice President and Secretary, Phlx, and Susie Cho,

Attorney, Division of Market Regulation

(‘‘Division’’), Commission (May 8, 2000).

5 Id.

6 15 U.S.C. 78f.

7 15 U.S.C. 78f(b)(5).

8 15 U.S.C. 78f.

9 15 U.S.C. 78f(b)(5).

10 In approving the proposal, the Commission has

considered the rule’s impact on efficiency,

competition, and capital formation. 15 U.S.C. 78c(f).

11See Chicago Board Options Exchange, Inc.,

Constitution Article IX, Section 9.1; New York

Stock Exchange, Inc., Constitution Article XII,

Section 1; NASD Regulation, By-Law Article X,

Sections 10.1 and 10.2; and Nasdaq By-law Article

VII, sections 8.1 and 8.2.

12 15 U.S.C. 78s(b). See Securities Exchange Act

Release No. 39175 (September 30, 1997), 62 FR

62385 (October 10, 1997); Securities Exchange Act

Release No. 39326 (November 14, 1997), 62 FR

62385 (November 21, 1997).

13 15 U.S.C. 78f(b)(5) and 78s(b).

14 15 U.S.C. 78s(b)(2).

15 17 CFR 200.30–3(a)(12).

employees, and agents are expressly

covered by the relevant provisions, the

words ‘‘director’’ and ‘‘committee

member’’ were inadvertently omitted

from Phlx By-Law Article IV, section 4–

18(a) when it was last amended on

August 22, 1997.3 The word ‘‘director’’

was also inadvertently omitted from

Phlx By-Law Article IV, section 4–

18(e).4

The Exchange believes that the

proposed amendments to its By-Law

Article IV, sections 4–18(a) and (e) will

remove any uncertainty as to whether a

person serving as a director or

committee member of another entity, at

the request of the Exchange, is entitled

to mandatory indemnification to the

fullest extent provided in the

Exchange’s By-Laws.5 The Phlx claims

that such persons arguably are already

covered as ‘‘agents’’ in sections 4–18(a)

and (e). The Phlx, however, proposes to

amend By-Law Article IV, sections 4–

18(a) and (e) to make this coverage more

explicit. The Phlx believes that

clarifying the extent of its

indemnification and insurance coverage

is important in the recruitment of

qualified persons to serve as Governors,

directors, committee members and or

agents for the Exchange, to actively

participate in Exchange Governance,

and to represent the Exchange on the

boards of other committees and entities.

2. Statutory Basis

The Phlx represents that the proposed

rule change would afford persons such

as Governors, employees, agents,

committee members, and directors for

the Exchange, mandatory

indemnification and insurance coverage

to the fullest extent provided in the

Exchange’s By-Laws. For this reason,

the Exchange believes that the proposed

rule change is consistent with section 6

of the Act 6 in general, and in particular,

with section 6(b)(5),7 in that it is

designed to promote just and equitable

principles of trade, as well as to protect

investors and the public interest.

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

The Exchange did not receive any

written comments on the proposed rule

change.

III. Commission’s Findings and Order

Granting Accelerated Approval of the

Proposed Rule Change

The Commission has reviewed the

Phlx’s proposed rule change and finds,

for the reasons set forth below, that the

proposal is consistent with the

requirements of section 6 of the Act 8

and the rules and regulations

thereunder applicable to a national

securities exchange. Specifically, the

Commission believes the proposal is

consistent with section 6(b)(5) of the

Act,9 because it promotes just an

equitable principles of trade, removes

impediments to and perfects the

mechanism of a free and open market

and a national market system, and

protects investors and the public

interest, by permitting persons serving

as committee members and directors for

the Exchange to receive mandatory

indemnification and insurance coverage

as provided in the Exchange’s ByLaws.10

The Commission finds that the Phlx’s

proposed rule change will correct the

Phlx’s inadvertent omission of persons

serving as directors and committee

members for the Exchange from its

indemnification and insurance

provisions, thus clarifying the

Exchange’s original intentions. The

Commission also supports the Phlx’s

goal of attracting qualified candidates to

serve as Governors, directors, committee

members and/or agents for the

Exchange, to participate in Exchange

Governance, and to represent the

exchange on the boards or other

committees and entities.

The Commission finds good cause for

approving the proposed rule change

(SR–Phlx–00–40) prior to the thirtieth

day after the date of publication of

notice thereof in the Federal Register.

Specifically, the Commission notes that

other exchanges, the National

Association of Securities Dealers

Regulation, Inc. (‘‘NASD Regulation’’)

and the Nasdaq Stock Market, Inc.

(‘‘Nasdaq’’) have similar

indemnification and insurance

provisions.11 The Commission also

notes that the proposed rule change

concerns issues that previously have

been the subject of a full comment

period pursuant to section 19(b) of the

Act.12 Accordingly, the Commission

believes that there is good cause,

consistent with section 6(b)(5) and 19(b)

of the Act,13 to approve the proposal on

an accelerated basis.

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 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–Phlx–00–40 and should be

submitted by June 29, 2000.

V. Conclusion

It is therefore ordered, pursuant to

section 19(b)(2) of the Act,14 that the

proposed rule change is hereby

approved on an accelerated basis.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.15

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14409 Filed 6–7–00; 8:45 am]

BILLING CODE 8010–01–M