Federal Register / Vol. 65, No. 116 / Thursday, June 15, 2000 / Notices 37587

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

4 17 CFR 240.19b–4(f)(2). 5 17 CFR 200.30–39A)(12).

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

2 17 CFR 240.19b–4.

3 17 CFR 240.10a–1.

position itself to ensure continued

service enhancements and the

achievement of various business

initiatives without deterioration of its

capital base. GSCC’s costs to develop,

implement, and support these new

services will be considerable. For

example, real-time messaging will

involve extensive systems development

as well as the costs associated with

maintaining multiple imput

environments. Moreover, many of these

services, such as the shift to real-time

comparison and risk management, will,

in and of themselves, not generate any

additional revenues for GSCC.

Assuming that current net income

levels are sustained, it is GSCC’s

intention to reinstate a discount

methodology as a business incentive for

members to move to real-time

messaging. The reinstated discount

would be applied to both buy-sell and

repo transactions; currently, the

discount lowers fees only for buy-sell

transactions, which creates inequities in

the manner in which it applies to

members.

GSCC believes that the proposed rule

change is consistent with the

requirements of the Act and the rules

and regulations thereunder applicable to

GSCC and in particular with Section

17A(b)(3)(F) of the Act because it will

permit GSCC to cover the high costs

involved in providing its members with

new and important services.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

GSCC does not believe that the

proposed rule change will have an

impact or impose a burden on

competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments relating to the

proposed rule change have not yet been

solicited or received. Members will be

notified of the rule change filing, and

comments will be solicited, by an

Important Notice. GSCC will notify the

Commission of any written comments

received by GSCC.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Act

The foregoing rule change has become

effective pursuant to Section

19(b)(3)(A)(ii) 3 of the Act and Rule 19b–

4(f)(2) 4 promulgated thereunder

because the proposal establishes or

changes a due, fee, or other charge

imposed by GSCC. At any time within

sixty days of the filing of such proposed

rule change, the Commission may

summarily abrogate such 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 copying in

the Commission’s Public Reference

Section, 450 Fifth Street, NW,

Washington, DC 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of GSCC. All submission should

refer to File No. SR–GSCC–00–06 and

should be submitted by July 6, 2000.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–15088 Filed 6–14–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42913; File No. SR–NYSE–

00–18]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the New York Stock Exchange, Inc.

Relating to NYSe Direct+, the

Exchange’s Automatic Execution

Facility for Certain Limit Orders of

1099 Shares or Less

June 8, 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 1,

2000, the New York Stock Exchange,

Inc. (‘‘NYSE’’ 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 proposed rule change consists of

new Exchange Rules 1000 through 1005

governing trading through NYSe

Direct+ TM, a new Exchange facility to

provide automatic execution of limit

orders of a specified size. The proposed

rule change also amends Exchange Rule

13 to define an ‘‘auto ex’’ order and

Exchange Rule 476A to include

proposed Rules 1000 through 1005 in

the list of rules subject to summary fine

procedures. The Exchange is also

submitting for Commission approval

interpretations of Exchange Rules 104,

123A.40, and 91, and it will request

separately that the Commission issue

the appropriate relief from Commission

Rule 10a–1.3 The text of the proposed

rule change is set forth below. All

language is being added.

Rule 1000: Automatic Execution of

Limit Orders Against Orders Reflected

in NYSE Published Quotation

Only straight limit orders without tick

restrictions are eligible for entry as auto

ex orders. Auto ex orders to buy shall

be priced at or above the price of the

published NYSE offer. Auto ex orders to

sell shall be priced at or below the price

of the NYSE bid. An auto ex order shall

receive an immediate, automatic

execution against orders reflected in the

Exchange’s published quotation and

shall be immediately reported as NYSE

transactions, unless:

(i) The NYSE’s published quotation is

in the non-firm quote mode;

(ii) The NYSE’s published quotation

has been gapped for a brief period

because of an influx of orders on one

side of the market, and the NYSE’s

published quotation size is one hundred

shares at the bid and/or offer;

(iii) With respect to a single-sided

auto ex order, a better price exists in

another ITS participating market center;

37588 Federal Register / Vol. 65, No. 116 / Thursday, June 15, 2000 / Notices

(iv) With respect to a single-sided

auto ex order, the NYSE’s published bid

or offer is 100 shares;

(v) A transaction outside the NYSE’s

published bid or offer pursuant to Rule

127 is in the process of being

completed, in which case the specialist

should publish a 100-share bid and/or

offer;

(vi) Trading in the subject security has

been halted.

Auto ex orders that cannot be

immediately executed shall be

displayed as limit orders in the auction

market.

Rule 1001: Execution of Auto Ex Orders

(a) Subject to Rule 1000, auto ex

orders shall be executed automatically

and immediately reported. The contra

side of the execution shall be orders

reflected in the Exchange’s published

quotation, as follows:

(i) The first contra side bid or offer at

a particular price shall be entitled to

time priority, but after a trade clears the

Floor, all bids and offers at such price

shall be on parity with each other;

(ii) All bids or offers on parity shall

receive a split of executions in

accordance with Rule 72;

(iii) The specialist shall be

responsible for assigning the number of

shares to each contra side bidder and

offeror, as appropriate, in accordance

with Rule 72, with respect to each

automatic execution of an auto ex order;

(iv) The specialist shall be the contra

party to any automatic execution of an

auto ex order where interest reflected in

the published quotation against which

the auto ex order was executed is no

longer available;

(v) A universal contra shall be

reported as the contra to each automatic

execution of an auto ex order.

(b) If the depth of the published bid

or offer is not sufficient to fill an auto

ex order in its entirety, the unfilled

balance of the order shall be routed to

the Floor and shall be displayed in the

auction market.

(c) If at any time automatic executions

of auto ex orders result in the execution

of all trading interest reflected in the

Exchange’s published quotation at the

bid or offer price, the Exchange shall

disseminate a bid or offer at that price

of 100 shares until the specialist requotes the market. Auto ex orders shall

not be automatically executed against

any 100 share bid or offer, whether a

default bid or offer or otherwise, but

shall be routed to the Floor and shall be

displayed in the auction market. The

specialist shall be the contra party to

any auction market transaction at such

default bid or offer price.

(d) No published bid or offer shall be

entitled to claim precedence based on

size with respect to executions against

auto ex orders.

Rule 1002: Availability of Automatic

Execution Feature

Orders designed as ‘‘auto ex’’ in a

particular stock shall be eligible to

receive an automatic execution if

entered after the Exchange has

disseminated a published bid or order

in that stock until 3:59 p.m. or within

one minute of any other closing time of

the Exchange’s floor market. Orders

designated as ‘‘auto ex’’ in a particular

stock that are entered prior to the

dissemination of a bid or offer in that

stock, or after 3:59 p.m. or within one

minute of any other closing time, shall

be displayed as limit orders in the

auction market.

Rule 1003: Application of Tick Tests

If a transaction is being completed in

the auction market, and an automatic

execution involving auto ex orders is

reported at a different price before the

auction market transaction is reported,

any tick test applicable to such auction

market transaction shall be based on the

last reported trade prior to such

execution of auto ex orders.

Rule 1004: Election of Stop Orders and

Percentage Orders

Automatic executions of auto ex

orders shall elect stop orders and

percentage orders electable at the price

of such executions. Any stop orders so

elected shall be executed pursuant to

the Exchange’s auction market

procedures, and shall not be guaranteed

an execution at the same price as

subsequent automatic executions of auto

ex orders.

Rule 1005: Orders May Not be Broken

Into Smaller Amounts

Orders of greater than 1099 shares

many not be broken up into smaller

amounts for the purpose of receiving an

automatic execution. An auto ex order

for any account in which the same

person is directly or indirectly

interested may only be entered at

intervals of no less than 30 seconds

between entry of each such order.

* * * * *

Rule 13: Definitions of Orders

* * * * *

Auto Ex Order

An auto ex order is a limit order of

1099 shares or less priced at or above

the Exchange’s published offer (in the

case of an order to buy) or at or below

the Exchange’s published bid (in the

case of an order to sell), which a

member or member organization has

entered for automatic execution in

accordance with, and to the extent

provided, by Exchange Rules 1000–

1005.

* * * * *

List of Exchange Rule Violations and

Fines Applicable Thereto Pursuant to

Rule 476A

* * * * *

• Failure to adhere to procedures for

automatic execution of orders under the

NYSe Direct+TM facility (Rules 1000–

1005)

* * * * *

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

Exchange included statements

concerning the purpose of, and bases

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 purpose of the proposed rule

change is to provide for the automatic

execution of limit orders of 1099 shares

or less (‘‘auto ex’’ orders) against trading

interest reflected in the Exchange’s

published quotation. It would not be

mandatory that all limit orders of 1099

shares be entered as auto ex orders;

rather, the member organization

entering the order, or its customer if

enable by the member organization, can

choose to enter an auto ex order when

such member organization (or customer)

believes that the speed and certainty of

an execution at the Exchange’s

published bid or offer price is in its

customer’s best interest. In such a case,

the member organization would enter an

auto ex order priced at or above the

Exchange’s published offer price (in the

case of an auto ex order to buy), or an

auto ex order priced at or below the

Exchange’s published bid price (in the

case of an auto ex order to sell). The

auto ex order would then receive an

automatic execution without being

exposed to the auction market, provided

Federal Register / Vol. 65, No. 116 / Thursday, June 15, 2000 / Notices 37589

4To be exposed or entered in the ‘‘Exchange’s

auction market’’ means that the order would be

treated like orders received through the SuperDOT

system. Phone call between Donald Siemer

Director, Market Surveillance, NYSE, Brian

McNamara, Vice President, Market Surveillance,

NYSE, Rebekah Liu, Special Counsel, Division of

Market Regulation (‘‘Division’’), Commission, and

Sonia Patton, Attorney, Division, Commission (June

7, 2000).

5The Exchange has discussed with Commission

staff the possibility of limiting the duration of the

pilot to a one year period. The Exchange has not

determined which stocks will be eligible for

automatic execution under the pilot. Phone call

between Donald Siemer, Director, Market

Surveillance, NYSE, Brian McNamara, Vice

President, Market Surveillance, NYSE, Rebekah Liu,

Special Counsel, Division, Commission, and Sonia

Patton, Attorney, Division, Commission (June 7,

2000).

6The situations discussed in subparagraphs (ii)

and (v) of proposed Rule 1000 provide examples of

instances where the Exchange’s published bid or

offer would be 100 shares. Phone call between

Donald Siemer, Director, Market Surveillance,

NYSE, Brian McNamara, Vice President, Market

Surveillance, NYSE, Rebekah Liu, Special Counsel,

Division, Commission, and Sonia Patton, Attorney,

Division, Commission (June 7, 2000).

the bid or offer is still available.4 In any

instance where, as specified in Rule

1000, the automatic execution feature is

not available, the auto ex order will be

entered for execution in the Exchange’s

auction market. Auto ex transactions

would be identified on the Consolidated

Tape with a unique identifier. The

Exchange’s published bid or offer would

be automatically decremented to the

extent of the size of the auto ex order

to reflect the automatic execution. The

contra side of the auto ex order

execution would be the trading interest

reflected in the Exchange’s bid or offer,

with such interest participating in the

execution in accordance with the

Exchange’s auction market principles of

priority and parity as codified in

Exchange Rule 72.

Any member organization or a

customer, if enabled by the member

organization, that believed in any

particular case that the customer’s

interests would be best served by

affording the customer’s order the

opportunity for price improvement may

enter a limit or market order by means

of the SuperDOT system for

representation in the auction market,

rather than an auto ex order.

The Exchange’s proposal would be

implemented in a new series of rules,

Rules 1000 through 1005 and a

proposed amendment to Rule 13. In

addition, to facilitate the Exchange’s

ability to induce compliance with

proposed Rules 1000 through 1005, the

Exchange is proposing to amend

Exchange Rule 476A to include these

rules in the list of rules subject to

summary fine procedures.

The proposal would be implemented

at the outset as a pilot program in a

limited number of stocks prior to being

made available in all stocks.5

Rule 13

The Exchange proposes to amend

Rule 13 to define the term ‘‘auto ex

order.’’ An auto ex order is a limit order

of 1099 shares or less priced at or above

the Exchange’s published offer (in the

case of an order to buy) or at or below

the Exchange’s published bid (in the

case of an order to sell) that will receive

an automatic execution against the

interest reflected in the published

quotation, provided the size of the

published quotation is greater than 100

shares. An auto ex order or any portion

thereof that cannot be immediately

executed shall be displayed as a limit

order in the Exchange’s auction market.

The new rules provide as follows:

Rule 1000

Rule 1000 states the basic operative

principles providing for automatic

execution of limit orders of 1099 shares

or less against the Exchange’s published

quotation. The Rule lists six instances in

which the automatic feature would not

be available due to market situations,

lack of depth in the published

quotation, or inappropriate pricing of

the auto ex order, as follows:

(i) The NYSE’s published quotation is

non-firm (pursuant to Exchange Rule

60);

(ii) The NYSE’s published quotation

has been gapped (pursuant to the

Exchange’s usual procedures for such

situations) for a brief period because of

an influx of orders on one side of the

market, and the Exchange’s published

quotation size is 100 shares at the bid

and/or offer;

(iii) A better price exists in another

Intermarket Trading System

participating market center for a singlesided auto ex order;

(iv) The NYSE’s published bid or offer

is 100 shares (see Exchange Rule

1001(c));6

(v) A transaction outside the

Exchange’s published quotation

pursuant to Exchange Rule 127 is in the

process of being completed, in which

case the specialist should publish a 100-

share bid and/or offer; or

(vi) Trading in the subject security has

been halted.

Rule 1000 provides that an auto ex

order that cannot be immediately

executed for any of the above reasons

shall be automatically entered for

execution in the Exchange’s auction

market.

Rule 1001

Rule 1001(a) provides that the contra

side of an auto ex execution will be

trading interest reflected in the

Exchange’s published quotation,

consistent with the principles of priority

and parity as codified in Exchange Rule

72.

Rule 1001(a) also provides that it shall

be the specialist’s responsibility, after

receiving a report that an auto ex order

has been executed, to assign the

appropriate number of shares to each

bidder or offeror, consistent with the

principles of Exchange Rule 72, with a

universal contra being reported as the

contra to each auto ex execution. Rule

1001(a) also provides that the specialist

shall take the contra side of an auto ex

execution where the interest in the

published quotation against which the

auto ex order was executed is no longer

available.

Rule 1001(b) provides that if the

published bid or offer is not of sufficient

depth to fill an auto ex order in its

entirety, the unfilled balance of the

order shall be displayed in the auction

market.

Rule 1001(c) provides that if

executions of auto ex orders have traded

with all trading interest reflected in the

Exchange’s published bid or offer, the

Exchange will disseminate a bid or offer

at that price of 100 shares until the

specialist requotes that market. Auto ex

orders will not receive an automatic

execution against any 100 share bid or

offer, whether a default bid or offer or

otherwise, but rather will be displayed

in the auction market. Rule 1001(c)

provides that the specialist shall be the

contra party to any auction market

interest seeking to trade against the 100

share default bid or offer.

Rule 1001(d) provides that the

concept of precedence based on size,

which is codified in Exchange Rule 72,

shall not apply with respect to the

contra side of an auto ex execution, with

such contra side interest being assigned,

as noted above, in accordance with the

principles of priority and parity in Rule

72.

Rule 1002

Rule 1002 provides that auto ex

orders may be entered on any day in a

particular stock from the time the

Exchange has published a bid or offer in

that stock until 3:59 p.m., at which time

the specialist is preparing the closing

transaction in the security. If orders

designated as auto ex are entered before

a quote is published or after 3:59 p.m.,

the orders will be treated as limit orders

in the auction market.

37590 Federal Register / Vol. 65, No. 116 / Thursday, June 15, 2000 / Notices

7Commission staff notes that proposed Rule 1003

does not comply with Commission Rule 10a–1

under the Act or Exchange Rule 440B. Accordingly,

the Exchange is submitting to the Commission

under separate cover a request for appropriate relief

from Commission Rule 10a–1. Phone call between

Donald Siemer, Director, Market Surveillance,

NYSE, Brian McNamara, Vice President, Market

Surveillance, NYSE, Rebekah Liu, Special Counsel,

Division, Commission, Sonia Patton, Attorney,

Division, Commission, and Mike Trocchio,

Attorney, Division, Commission (June 7, 2000).

8Although the text of proposed Rule 1004 refers

only to stop orders, the Exchange has indicated that

they also intend to apply the provisions of the rule

to stop limit orders. Phone call between Donald

Siemer, Director, Market Surveillance, NYSE, Brian

McNamara, Vice President, Market Surveillance,

NYSE, Rebekah Liu, Special Counsel, Division,

Commission, and Sonia Patton, Attorney; Division,

Commission (June 7, 2000).

9This 30 second time frame applies on a per

stock basis (i.e., a single customer may enter

multiple orders for different stocks, in intervals of

less than 30 seconds). Phone call between Donald

Siemer, Director, Market Surveillance, NYSE, Brian

McNamara, Vice President, Market Surveillance,

NYSE, Rebekah Liu, Special Counsel, Division,

Commission, and Sonia Patton, Attorney, Division,

Commission (June 7, 2000).

10 17 CFR 240.10a–1.

11The Exchange has represented that these

interpretations of Rules 123A.40, 91, and 104 will

be included in the ‘‘Supplementary Material’’

section of the appropriate rules upon application by

the Exchange for permanent approval of the pilot

program. Phone call between Donald Siemer,

Director, Market Surveillance, NYSE, Brian

McNamara, Vice President, Market Surveillance,

Rule 1003

Rule 1003 provides that if a

transaction is being completed in the

auction market, and an execution

involving auto ex orders is reported at

a different price before the auction

market transaction is reported, any tick

test applicable to the auction market

transaction shall be based on the last

reported trade prior to the execution of

the auto ex order.

For example, assume the Exchange’s

published quotation is 20 bid for 5000

shares, with 5000 shares offered at 20

and 2⁄16. The last reported sale is 20 and 1⁄16, which is a plus tick. A broker in the

crowd bids 20 and 1⁄16 for 5000 shares,

and another broker, representing a short

sale order, agrees to trade at the 20 and

1⁄16 bid price. Before the trade at 20 and 1⁄16 is reported, an auto ex order to buy

is automatically executed at the 20 and

2⁄16 published offer price, making the

trade at 20 and 1⁄16 a minus tick, which

would preclude execution of the order

to sell short. Rule 1003 provides that in

this instance, the short sale tick test

would be based on the last reported sale

of 20 and 1⁄16, a plus tick, at the time

the crowd brokers agreed to trade.7

Rule 1004

Rule 1004 provides that executions of

auto ex orders shall elect stop orders 8

and percentage orders electable at the

price of such executions. The rule also

provides that stop orders so elected

shall be executed pursuant to

Exchange’s auction market procedures,

and shall not be guaranteed executions

at the prices of subsequent auto ex

executions.

Rule 1005

Rule 1005 provides that orders of

greater than 1099 shares may not be

broken down into smaller orders in

order to receive an automatic execution.

The rule also provides that auto ex

orders for the same customer may be

entered at time intervals of no less than

30 seconds between entry of each such

order.9

Rule 476A

The Exchange is also proposing to add

Rules 1000 through 1005, which

implement the Exchange’s NYSe

Direct+TM facility, to the List of Rules

subject to imposition of fines under

Rule 476A for minor violations of

Exchange rules. Rule 476A provides that

the Exchange may impose a fine, not to

exceed $5,000, or any member, member

organization, allied member, approved

person, or registered or non-registered

employee of a member or member

organization for a minor violation of

certain specified Exchange rules.

The purpose for the proposed rule

change to Rule 476A is to facilitate the

Exchange’s ability to induce compliance

with all aspects of Rules 1000 through

1005. The Exchange believes failure to

comply with the requirements of these

rules and procedures should be

addressed with an appropriate sanction

and seeks Commission approval to add

violations of these requirements to the

Rule 476A List so as to have a broad

range of regulatory responses available.

The Exchange believes that this would

more effectively encourage compliance

by enabling a prompt, meaningful and

heightened regulatory response (e.g., the

issuance of a fine rather than a

cautionary letter) to a minor violation of

these rules.

The Exchange wishes to emphasize

the importance it places upon

compliance with Rules 1000 through

1005. While the Exchange, upon

investigation, may determine that a

violation of any of these rules is a minor

violation of the type which is properly

addressed by the procedures adopted

under Rule 476A, in those instances

where investigation reveals a more

serious violation, the Exchange will

provide an appropriate regulatory

response. This includes the full

disciplinary procedures available under

Rule 476.

Interpretive Issues

The Exchange is also submitting

herein for Commission approval the

following interpretations of several

NYSE rules, and will submit under

separate cover a request for the

appropriate relief from Commission

Rule 10a–1.10 These matters concern

situations pursuant to proposed Rule

1001(a)(iv) where the specialist may be

required to take the contra side of an

auto ex execution against the published

quotation, even though the specialist’s

interest was not part of such quotation.

For example, the published quotation

may reflect the interest of a broker in the

crowd whose interest is then executed

in an auction market transaction. Before

the published quotation can be updated

to reflect the execution in the auction

market, an auto ex order is executed

against such quotation. In such instance,

the specialist would be required to take

the contra side of the auto ex execution.

In other instances, the crowd broker

might cancel his or her interest as

reflected in the published quotation, but

an auto ex order might be executed

against such quotation before the

published quotation can be updated.

Again, in such instance, the specialist

would be required to take the contra

side of the auto ex execution.

Exchange Rule 123A.40. The

specialist shall not be required to fill

any stop orders elected by an auto ex

execution at the price of the electing

sale in any instance where the specialist

was required by Rule 1001(a)(iv) to take

the contra side of an auto ex execution.

Exchange Rule 91. As the specialist

does not accept an auto ex order for

execution or act as agent for such order,

the transaction confirmation

requirements of Rule 91 will not apply

in any instance where the specialist is

the contra party to an auto ex execution.

Exchange Rule 104. Exchange Rule

104 contains the specialist’s affirmative

and negative obligations, and restricts

the specialists’ ability to purchase stock

on direct plus ticks, or sell stock on

direct minus ticks. The Exchange is

proposing that any instance in which

the specialist is effecting such a direct

tick transaction only because he or she

has been required to assume the contra

side of an auto ex execution as

described above shall be deemed to be

a ‘‘neutral’’ transaction for purposes of

Rule 104, and shall be deemed not to be

in violation of the rule. The Exchange

believes that this interpretation is

appropriate because the specialist is not

setting the price, but is simply being

required to trade at a price set by other

market participants.11

Federal Register / Vol. 65, No. 116 / Thursday, June 15, 2000 / Notices 37591

NYSE, Rebekah Liu, Special Counsel, Division,

Commission, and Sonia Patton, Attorney, Division,

Commission (June 7, 2000).

12 15 U.S.C. 78f(b)(5).

13 15 U.S.C. 78k–1(a)(1).

14 15 U.S.C. 78f(b)(6).

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

16 15 U.S.C. 78f(d)(1). 17 17 CFR 200.30–3(a)(12).

Commission Rule 10a–1. Commission

staff notes that Commission Rule 10a–1

and Exchange Rule 440B do not permit

the execution of short sales on a minus

or zero minus tick. The Exchange

believes that the specialist should be

exempted from Commission Rule 10a–1

when he or she is taking the contra side

of an auto ex execution on a minus or

zero minus tick because of Exchange

Rule 1001(a)(iv), and has an existing

short position, or would be creating a

short position by virtue of such

execution. In such instance, the

specialist should be granted an

exemption from Commission Rule 10a–

1 because the specialist is required to

trade at a price set by other market

participants. Accordingly, the Exchange

will be submitting under separate cover

a request for the appropriate relief from

Rule 10a–1 under these circumstances.

2. Statutory Basis

The Exchange believes the basis for

this proposed rule change is the

requirement under section 6(b)(5) of the

Act 12 that an Exchange have rules that

are designed to promote just and

equitable principles of trade, to remove

impediments to and perfect the

mechanism of a free and open market

and a national market system and, in

general, to protect investors and the

public interest. The proposed rule

change also is designed to support the

principles of Section 11A(a)(1) of the

Act 13 in that it seeks to assure

economically efficient execution of

securities transactions, make it

practicable for brokers to execute

investors’ orders in the best market, and

provide an opportunity for investors’

orders to be executed without the

participation of a dealer.

With respect to the addition to the

summary fine list under NYSE Rule

476A, the proposed rule change will

also advance the objectives of section

6(b)(6) of the Act 14 by providing a

procedure whereby member

organizations can be ‘‘appropriately

disciplined’’ in those instances when a

rule violation is minor in nature, but a

sanction more serious than a warning or

cautionary letter is appropriate. In

addition, the proposed rule change

provides a fair procedure for imposing

such sanctions, in accordance with the

requirements of sections 6(b)(7) 15 and

6(d)(1) 16 of the Act.

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 has not solicited or

received written comments on the

proposed rule change.

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 Exchange consents,

the Commission will:

A. By order approve the 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 NYSE. All

submissions should refer to the File No.

SR–NYSE–00–18 and should be

submitted by July 6, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.17

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–15127 Filed 6–14–00; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF STATE

[Public Notice 3334]

Bureau of Educational and Cultural

Affairs: Program Title: Israel-Arab

Peace Partners Program; Request for

Proposals

SUMMARY: The Office of Citizen

Exchanges of the Bureau of Educational

and Cultural Affairs of the United States

Department of State announces an open

competition for grants under the IsraelArab Peace Partners Program. U.S.

public and private non-profit

organizations meeting the provisions

described in IRS regulation 26 CFR

1.501(c) may submit proposals to

develop and implement exchange

programs involving participants from

both Israel and one or more Arab

countries/entities in the Middle East or

North Africa. Four grant awards are

anticipated, as outlined below.

Program Information

Overview

The Office of Citizen Exchanges of the

Bureau of Educational and Cultural

Affairs, U.S. Department of State,

consults with and supports American

public and private nonprofit

organizations in developing and

implementing multi-phased, often

multi-year, exchanges of professionals,

academics, youth leaders, public policy

advocates, etc. These exchanges are

focused on issues crucial to both the

United States and the foreign countries

involved, they represent focused,

substantive, and cooperative interaction

among counterparts, and they entail

both theoretical and experiential

learning for all participants. A primary

goal is the development of sustained,

international institutional and

individual linkages. In addition to

providing a context for professional

development and cooperative,

international problem-solving, these

projects are intended to introduce

participants to one another’s political,

social, and economic structures.

Desirable components of an exchange

may be local citizen involvement and

activities that orient foreign participants

to American society and culture.