38010 Federal Register / Vol. 65, No. 118 / Monday, June 19, 2000 / Notices

1Section 11A(a)(3)(B) authorizes the Commission,

in furtherance of its statutory directive to facilitate

the establishment of a national market system, by

rule or order, ‘‘to authorize or require selfregulatory organizations to act jointly with respect

to matters as to which they share authority under

[the Act] in planning, developing, operating, or

regulating a national market system (or a subsystem

thereof) or one or more facilities thereof.’’ 15 U.S.C.

78k–1(a)(3)(B).

2The Commission selected September 5, 2000 as

the latest start-up date for the phase-in period

because it is the first trade date following the

September 4, 2000 Labor Day holiday.

3Additional requirements are discussed in the

text accompanying infra notes 28 through 41.

4See Securities Exchange Act Release No. 42360

(Jan. 28, 2000), 65 FR 5004 (Feb. 2, 2000).

5See Letters from Frank G. Zarb, Chairman and

Chief Executive Officer, NASD, to Arthur Levitt,

Chairman, Commission, dated March 6, 2000 and

March 21, 2000.

6Nasdaq has committed to intensify its efforts

(including, at the Commission’s request, hiring an

independent consultant to advise on capacity

issues) to help ensure that it manages its growth

responsibly. The NASD has assured the

Commission that Nasdaq will dedicate all required

SECURITIES AND EXCHANGE

COMMISSION

[File No. 500–1]

E-Pawn.com, Inc.; Order of

Suspension of Trading

June 14, 2000.

It appears to the Securities and

Exchange Commission that there is a

lack of current and accurate information

concerning the securities of EPawn.com, Inc. (‘‘E-Pawn’’) because of

questions regarding the accuracy of

assertions by E-Pawn, and by others, in

documents sent to and statements made

to market makers of the stock of E-Pawn,

other broker-dealers, and to investors

concerning, among other things, the

identity of the persons in control of the

operations and management of the

company. In addition, recent market

activity in E–Pawn securities may be the

result of manipulative conduct or other

illegal activity.

The Commission is of the opinion that

the public interest and the protection of

investors require a suspension of trading

in the securities of the above listed

company.

Therefore, it is ordered, pursuant to

section 12(k) of the Securities Act of

1934, that trading in the above listed

company is suspended for the period

from 9:30 a.m. EDT, June 14, 2000

through 11:59 p.m. EDT, on June 27,

2000.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–15444 Filed 6–14–00; 5:08 pm]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[File No. 500–1]

WAMEX Holdings, Inc.; Order of

Suspension of Trading

June 14, 2000.

It appears to the Securities and

Exchange Commission that there is a

lack of current and accurate information

concerning the securities of WAMEX

Holdings, Inc. (‘‘WAMEX’’) because of

questions regarding the accuracy of

assertions by WAMEX, and by others, in

documents sent to and statements made

to market makers of the stock of

WAMEX, other broker-dealers, and to

investors concerning: (1) WAMEX’s

ability to comply with the Commission’s

regulations regarding the operation of an

Alternative Trading System; and (2)

funds purportedly raised by WAMEX

from private investors. In addition,

recent market activity in WAMEX

securities may be the result of

manipulative conduct or other illegal

activity.

The Commission is of the opinion that

the public interest and the protection of

investors require a suspension of trading

in the securities of the above listed

company.

Therefore, it is ordered, pursuant to

section 12(k) of the Securities Act of

1934, that trading in the above listed

company is suspended for the period

from 9:30 a.m. EDT, June 14, 2000

through 11:59 p.m. EDT, on June 27,

2000.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–15443 Filed 6–14–00; 4:59 pm]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42914]

Order Directing the Exchanges and the

National Association of Securities

Dealers, Inc. to Submit a Phase-in Plan

to Implement Decimal Pricing in Equity

Securities and Options; Pursuant to

Section 11A(a)(3)(B) of the Securities

Exchange Act of 1934

June 8, 2000.

Notice is hereby given that, pursuant

to Section 11A(a)(3)(B) of the Securities

Exchange Act of 1934 (‘‘Exchange

Act’’) 1 the Securities and Exchange

Commission (‘‘Commission’’) orders the

American Stock Exchange LLC

(‘‘AMEX’’), the Boston Stock Exchange,

Inc. (‘‘BSE’’), the Chicago Board Options

Exchange, Inc. (‘‘CBOE’’), the Chicago

Stock Exchange, Inc. (‘‘CHX’’), the

Cincinnati Stock Exchange, Inc.

(‘‘CSE’’), the International Securities

Exchange, LLC (‘‘ISE’’), the National

Association of Securities Dealers, Inc.

(‘‘NASD’’), the New York Stock

Exchange, Inc. (‘‘NYSE’’), the Pacific

Exchange, Inc. (‘‘PCX’’) and the

Philadelphia Stock Exchange, Inc.

(‘‘PHLX’’) (collectively the

‘‘Participants’’ and individually a

‘‘Participant’’) to act jointly in planning,

discussing, developing, and submitting

to the Commission a plan that will begin

phasing in the implementation of

decimal pricing in equity securities and

options on or before September 5,

2000.2 The Participants should discuss

the development and implementation of

the phase-in plan with interested market

participants, including, but not limited

to, the Securities Industry Association

(‘‘SIA’’) and its members, the National

Securities Clearing Corporation, the

Depository Trust and Clearing

Corporation (‘‘DTCC’’), the Options

Clearing Corporation (‘‘OCC’’), the

Securities Industry Automation

Corporation, the Intermarket Trading

System Operating Committee, the

Options Price Reporting Authority, the

Consolidated Tape Association, and the

Consolidated Quote Operating

Committee (collectively the ‘‘Interested

Parties’’). The Commission further

directs the Participants to submit the

phase-in plan to the Commission no

later than 45 days after the issuance of

this Order. Finally, the Commission

directs each Participant to submit the

rule changes necessary to implement the

phase-in plan no later than 60 days after

the issuance of this Order.3

1. Background

On January 28, 2000, the Commission

issued an Order 4 requiring the

Participants to facilitate an orderly

transition to decimal pricing in the

United States securities markets. The

Order prescribed a timetable for the

Participants to begin trading some

equity securities, and options on those

equity securities, in decimals by July 3,

2000, and all equities and options by

January 3, 2001.

On March 6, 2000, the NASD

announced that the Nasdaq Stock

Market, Inc. (‘‘Nasdaq’’) would not have

sufficient capacity to meet the target

dates for implementation.5 The NASD

also expressed concern regarding overall

industry readiness and requested that

the Commission work with the industry

and the markets to determine an

appropriate time frame that would not

impose unnecessary risks on investors.6

Federal Register / Vol. 65, No. 118 / Monday, June 19, 2000 / Notices 38011

resources and the attention of senior management

to the conversion to decimal pricing. The

Commission is monitoring Nasdaq’s efforts closely.

7See Securities Exchange Act Release No. 42685

(April 13, 2000), 65 FR 21046 (April 19, 2000)

(‘‘April 13 Order’’); see also Securities Exchange

Act Release No. 42516 (March 10, 2000), 65 FR

14637 (March 17, 2000).

8See Letter from Chairman Thomas Bliley,

Committee on Commerce, U.S. House of

Representatives; Chairman Michael G. Oxley,

Subcommittee on finance and Hazardous Materials,

U.S. House of Representatives; and Congressman

Edward J. Markey Ranking Member, Subcommittee

on Telecommunications, Trade, and Consumer

Protection, U.S. House of Representatives to Arthur

Levitt, Chairman, Commission, dated April 4, 2000

(‘‘Commerce Committee Letter’’).

9Nasdaq has assured the Commission that it will

be able to support decimal trading of exchangelisted securities by Labor Day of this year (i.e., for

the third market), and of Nasdaq stocks by March

31, 2001. See Letter from Richard G. Ketchum,

President, NASD, to Annette Nazareth, Director,

Division of Market Regulation (‘‘Division’’) and

Robert L. D. Colby, Deputy Director, Division, dated

April 12, 2000.

10Copies of the comment letters are available in

the Public Reference Room in file No. 4–430.

11See e-mail from Nathaniel J. Olsson, dated

April 23, 2000; e-mail from Don Welsh, dated April

23, 2000; e-mail from Michael Esch, dated April 22,

2000; e-mail from H. Rogers, dated April 23, 2000;

e-mail from D. Zilant, dated April 23, 2000; e-mail

from Steve Sutherland, dated May 3, 2000; e-mail

from Patrick Murray, dated May 4, 2000; e-mail

from Douglas Hawkins, dated May 23, 2000; and email from Peter Pfieffer, dated May 12, 2000 (who

identifies himself as a programmer analyst and sees

no technical bars to implementing decimal pricing

by July 3, 2000).

12See letter from Don Finucane, Vice President,

Marketing and Product Development, Standard &

Poor’s Comstock, dated May 10, 2000 (‘‘S&P

Comstock Letter’’); and e-mail from ILX Systems,

dated May 3, 2000 (‘‘ILX E-Mail’’).

13Several commenters argued that decimalization

should wait until all major securities markets,

including Nasdaq, are ready to begin simultaneous.

See letter from Fred Reif, Senior Vice President,

A.G. Edwards & Sons, Inc., dated May 9, 2000

(‘‘A.G. Edwards Letter’’); letter from Paul B.

O’Kelly, Executive Vice President, Market

Regulation and Legal, CHX, dated May 9, 2000

(‘‘CHX Letter’’); letter from Bob Munro, Senior

Director, ADP/SIS, dated May 15, 2000 (‘‘ADP/SIS

Letter’’); letter from Norman Eaker, Principal,

Edward Jones, dated May 9, 2000 (‘‘Edward Jones

Letter’’); e-mail from Robert B. Sloan, Partner,

Director of Information Services, J.C. Bradford,

dated April 13, 2000 (‘‘Bradford E-Mail’’); letter

from W. Leo McBlain, Chairman, and Thomas J.

Jordan, Executive Director, Financial Information

Forum, dated May 15, 2000 (‘‘FIF Letter’’); letter

from Michael J. Ryan, Jr., Chief of Staff, AMEX,

dated May 25, 2000 (‘‘AMEX Letter’’); and e-mail

from Jeffrey C. Wells, Senior Vice President, Bridge

Information Systems, dated May 10, 2000 (‘‘Bridge

E-Mail’’). One commenter indicated that, in view of

the complexities involved and the need for

adequate planning and testing, the beginning of any

decimalization should be delayed until mid to late

October, 2000. See e-mail from Joyce L. Ulrich, First

Vice President, Brokerage Applications, Legg

Mason, dated May 9, 2000 (‘‘Legg Mason E-Mail’’).

One commenter suggested that the date for full

decimalization implementation be moved from

March 31, 2001 to April 30, 2001. See letter from

Tracey E. Curvey, Executive Vice President, Online

Brokerage Group, Fidelity Investments, dated May

25, 2000 (‘‘Fidelity Letter’’). In addition, one

commenter suggested that decimalization in

exchange-listed securities should be initiated no

sooner than early January 2001 in order to shorten

the period of dual pricing until decimal pricing in

Nasdaq securities can begin on March 31, 2001. See

letter from Michael J. Simon, Senior Vice President

and General Counsel, ISE, dated May 10, 2000 (‘‘ISE

Letter’’).

14Several commenters favored the Decimals Pilot

starting on or before September 4, 2000. See letter

from Charles J. Henry, President and Chief

Operating Officer, CBOE, dated May 2, 2000

(‘‘CBOE Letter’’); letter from Scott G. Abbey, Chief

Information Officer and Executive Vice President,

Paine Webber, Inc., dated May 8, 2000 (‘‘BSE

Letter’’); letter from Marc E. Lackritz, President,

SIA, dated May 10, 2000 (‘‘SIA Letter’’); letter from

Robert C. King, Chairman, and Lee Korins,

President and Chief Executive Officer, Securities

Traders Association, dated May 12, 2000 (‘‘STA

Letter’’); letter from Wayne P. Luthringshausen,

Chairman, OCC, dated may 17, 2000 (‘‘OCC

Letter’’); and letter from Philip D. DeFeo, Chairman

and Chief Executive Officer, PCX, dated May 17,

2000 (‘‘PCX Letter’’). DTCC indicated that it would

be ready for the Decimals Pilot on or before

September 4, 2000, but indicated that it may be

prudent to wait until September 25, 2000, after the

options expiration cycle has concluded. See letter

from Dennis J. Dirks, Chief Operating Officer,

DTCC, dated May 12, 2000 (‘‘DTCC Letter’’). The

PHLX indicated that the Decimals Pilot starting on

or before September 4, 2000 was feasible and

clearly preferable to the Dual Pricing alternative,

but acknowledged that decimal trading ideally

should begin at the end of February 2001. See letter

from Meyer S. Frucher, Chairman and Chief

Executive Officer, PHLX, dated May 10, 2000

(‘‘PHLX Letter’’). The NYSE preferred a modified

phase-in schedule that would rapidly expand the

number of exchange-listed securities subject to

decimal pricing (this proposal is described fully

below). See letter from James E. Buck, Senior Vice

President and Secretary, NYSE, dated May 16, 2000

(‘‘NYSE Letter’’). A major clearing firm also favored

a flexible Decimals Pilot that would allow for the

addition of more securities if conditions permit. See

letter from C. Michael Viviano, Chairman, BNY

Clearing Services, LLC, dated April 27, 2000 (‘‘BNY

Letter’’). The NASD indicated that it could be ready

for either Dual Pricing or the Decimals Pilot starting

on or before September 4, 2000. See letter from Joan

C. Conley, Senior Vice President and Corporate

Secretary, NASD, dated May 10, 2000 (‘‘NASD

Letter’’). One commenter indicated that, while Dual

Pricing on or before September 4, 2000 was feasible,

minimum pricing increments of a nickel

(presumably for at least a phase-in period) would

be best in order to permit the industry to experience

potential volume increases at a slower pace.

Moreover, this commenter acknowledged that dual

pricing could result in confusion for its ‘‘traders,

clearing clients, and prime brokers.’’ See e-mail

from George Tumas, Managing Director, Banc of

America Securities, dated May 10, 2000 (‘‘Banc of

America E-Mail’’). Similarly, another commenter

indicated that, while it would be ready for Dual

Pricing on or before September 4, it would

recommend that decimal pricing begin with a large

number of exchange-listed securities in nickel

minimum pricing increments. After a thorough

evaluation of its impact on system and line

capacity, decimal pricing in penny increments

could begin at a later stage. See e-mail from Sara

Banerjee, Vice President, Data Operations and

Procurement, and Doug O’Hearen, Vice President,

Development, Telekurs Financial, dated May 10,

2000 (‘‘Telekurs E-Mail’’).

15See S&P Comstock Letter and ILX E-Mail supra

note 12.

Subsequently, on April 13, 2000, the

Commission issued an Order staying the

original deadlines for decimalization.7

In the April 13 Order, the Commission

also requested comment on two

alternatives for implementing decimal

pricing in exchange-listed equity

securities this year. The first alternative

would begin decimal pricing in all

exchange-listed securities on or before

September 4, 2000 (‘‘Dual Pricing’’).

Congressman Thomas Bliley, Michael

Oxley, and Edward Markey had strongly

urged the implementation of decimal

pricing on or before September 4, 2000

because of the benefits to investors.8

The second alternative envisioned a

temporary or ‘‘pilot’’ program to begin

decimal pricing in certain exchangelisted securities and options on or

before September 4, 2000 (‘‘Decimals

Pilot’’). Under both alternatives, all

stocks would be traded in decimals by

March 31, 2001.9

II. Summary of Comments

The Commission received 36

comment letters on the decimal

implementation alternatives presented

in the April 13 Order.10 Nine

individuals urged the Commission to

support full decimalization for both

exchanged-listed and Nasdaq securities

either immediately or no later than the

July 3, 2000 start-up date proposed in

the Commission’s original Order.11 Two

vendors favored the Dual Pricing

alternative proposed in the April 13

Order, in which all exchange-listed

stocks would be priced in decimals on

or before September 4, 2000.12 Nine

commenters, consisting of brokerdealers, exchanges, and service bureaus,

however, argued in favor of postponing

any decimalization until a date closer to

when Nasdaq is prepared to price its

securities in decimals on March 31,

2001.13 The remaining 16 commenters,

consisting of broker-dealers, exchanges,

clearing organizations, the NASD, and

the SIA, supported some form of

phased-in dual pricing on or before

September 4, 2000.14

A. Immediate Decimalization

Nine individual investors argued in

favor of the Commission mandating all

markets to begin decimal pricing in all

securities either immediately or at least

by the original July 3, 2000 start-up

date. These commenters did not address

how the markets and the securities

industry could accomplish the

conversion to decimalization in an

orderly manner.

B. Full Dual Pricing Starting On or

Before September 4, 2000

Two vendors stated that they would

be ready for the Dual Pricing alterntaive

proposed by the April 13 Order.15 One

of the commenters stated that, from a

market data vendor’s point of view, it

would strongly prefer trading to

38012 Federal Register / Vol. 65, No. 118 / Monday, June 19, 2000 / Notices

16See S&P Comstock Letter supra note 12.

17See supra note 13.

18See supra note 14.

19See SIA Letter supra note 14.

20See NYSE Letter supra note 14. 21See id. 22The CBOE and PCX favored a phase-in in the

form of an extended pilot of decimal pricing in a

small number of stocks. See CBOE Letter and PCX

Letter supra note 14. While the PHLX also

supported a pilot, it indicated that widespread

decimal pricing in listed stocks would be feasible

‘‘with a controlled, phase-in initial period.’’ See

PHLX Letter supra note 14.

23See SIA Letter and OCC Letter supra note 14.

24See SIA Letter and OCC Letter supra note 14.

25 15 U.S.C. 78k-1(a)(2).

26 15 U.S.C. 78k-1a(a)(B).

27See, e.g., Securities Exchange Act Release No.

41843 (Sept. 7, 1999), 64 FR 50126 (Sept. 15, 1999);

and Securities Exchange Act Release No. 42849

(May 26, 2000), 65 FR 36180 (June 7, 2000)

(directing options exchanges to develop strategies to

mitigate quote message traffic). The Participants

previously requested that, to address concerns

about antitrust liability, the Commission order them

to work together to coordinate decimal planning.

28The Commission selected April 9, 2001 as the

deadline of Full Implementation to avoid

disruptions of securities pricing systems at brokerdealers, mutual funds, and other market

participants during the critical period immediately

following the quarter-end on March 31, 20001.

These pricing systems are essential for accurate

quarter-end pricing for millions of mutual fund

investors, as well as for large numbers of

institutional investors and other market participants

who use over-the-counter equity derivatives that

employ quarter-end expiration cycles.

commence in all exchange-listed

securities in decimals on or before

September 4, 2000 (compared to the

Decimals Pilot).16

C. Postponement Until Dates Closer to

March 31, 2001

Nine commenters, including brokerdealers, exchanges, and service bureaus,

argued that the Commission should

implement a relatively brief phase-in

period for both exchange-listed and

Nasdaq securities—but that the

beginning date for this process should

be postponed until a date closer to when

Nasdaq is prepared to begin pricing its

securities in decimals on March 31,

200.17 These commenters were

concerned about the potential systems

difficulties and investor confusion that

could arise from an extended period in

which exchange-listed securities were

priced in decimals while Nasdaq

securities were still priced in fractions.

The commenters stressed the benefits of

postponing decimalization until the

conversion could begin in both

exchange-listed and Nasdaq securities at

the same time. Nevertheless, while these

commenters believed that a later startup date would be advisable or

preferable, most recognized that a

phase-in schedule starting on or before

September 4, 2000 would be technically

feasible.

D. Phase-In Starting On or Before

September 4, 2000

As discussed above, the remaining

commenters agreed that some form of

phase-in for decimal pricing for

exchange-listed securities could begin

on or before September 4, 2000. Some

of these commenters preferred an

extended pilot of only a small number

of securities (along the lines of the

Decimals Pilot alternative proposed for

comment in the April 13 Order).18 For

example, the SIA believed that a pilot

was more feasible than Dual Pricing

because a pilot would, among other

things, minimize the difficulties faced

by the securities industry to create and

maintain separate processes, systems,

programs, and procedures for both

decimals and fractions and would

simplify the educational effort directed

at the investing public to assist them in

understanding how specific securities

would be priced.19 Other commenters,

however, supported a more aggressive

phase-in of decimal pricing in all

exchange-listed securities. The NYSE,

for example, favored commencing

decimal pricing in a limited number of

NYSE-listed securities, advancing to a

full pilot of perhaps 50 NYSE-listed

securities during an initial phase-in

period of one month or less. The NYSE

indicated that an expansion to all of its

listed securities could prudently occur

after approximately 60 days of trading

in all pilot stocks.20 All of these

commenters stressed the need for

careful planning and systems testing to

avoid potential market disruptions and

to minimize investor confusion.

E. Minimum Price Increments

The majority of commenters who

favored a phase-in process for exchangelisted stocks also believed that at least

some exchange-listed securities should

be quoted in minimum price increments

of a penny. For example, the NYSE

favored pricing in pennies in at least

some stocks from the beginning of any

pilot.21

F. Options Pricing

Several of the commenters who

favored beginning the decimalization

phase-in of exchanged-listed securities

on or before September 4, 2000,

nevertheless recognized that this could

present significant problems for the

options markets. For example, the three

options exchanges that supported some

form of phase-in starting on or before

September 4, 2000 cited that potential

strains on options price reporting

systems that could result from

widespread decimal pricing in both

exchange-listed securities and their

related options.22 These concerns were

also reflected in the comment letters

from the SIA and the OCC.23 These

commenters indicated that plans for the

decimalization phase-in should take

these concerns into account when

setting minimum price increments for

both stocks and options, and that it

could be necessary to a least temporarily

permit some options to trade at wide

price increments than those permitted

in the related stocks. For example, the

SIA and the OCC recommended that

options price increments be maintained

in a similar manner to what is in

existence today, i.e., options with

premiums quoted under $3 per contract

would be quoted in nickle increments

and options with higher priced

premiums would be quoted in dime

increments.24

III. Discussion

Section 11A(a)(2) of the Exchange

Act 25 directs the Commission, having

due regard for the public interest, the

protection of investors, and the

maintenance of fair and orderly markets,

to use its authority under the Exchange

Act to facilitate the establishment of a

national market system for securities.

Section 11A(a)(3)(B) of the Exchange

Act gives the Commission the ability to

authorize or require by order the selfregulatory organizations ‘‘to act jointly

* * * in planning. developing,

operating, or regulating a national

market system.’’ 26 This authority

enables the Commission to require joint

activity that otherwise might be asserted

to have an impact on competition,

where the activity serves the public

interest and the interests of investors.27

After careful consideration of the

comments received in response to the

April 13 Order and further analysis, the

Commission believes that decimal

pricing in exchange-listed securities and

options should be phased in beginning

or before September 5, 2000. Because

the NASD has indicated that it would be

possible to initiate a controlled

decimalization phase-in of a limited

number of Nasdaq securities on March

12, 2001, the Commission believes that

the NASD should implement a phase-in

plan on that date and extend

decimalization to all Nasdaq securities

no later than April 9, 2001. Accordingly,

the Commission intends that full

implementation of decimal pricing in all

exchange-traded and Nasdaq equity

securities and options (‘‘Full

Implementation’’) should be completed

no later than April 9, 2001.28 In view of

the variety of concerns over immediate,

full-scale decimalization in exchangeVerDate 11<MAY>2000 19:08 Jun 16, 2000 Jkt 190000 PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 E:\FR\FM\19JNN1.SGM pfrm02 PsN: 19JNN1
Federal Register / Vol. 65, No. 118 / Monday, June 19, 2000 / Notices 38013

29See SIA Letter supra note 14.

30The SIA’s concerns over full-scale dual pricing

are discussed in the text accompanying supra note

19.

31Moreover, the Commission notes that the

securities industry almost universally expressed the

view that trading the same securities in both

decimals and fractions would be confusing to

investors and would disrupt the markets.

32The Commission notes that, while the first

industry test was held on April 8, 2000, industry

testing is still ongoing and will continue throughout

the summer.

33The Commission believes that the Participants

should continue to canvass their members’

readiness for decimalization to establish a feasible

phase-in schedule with a view towards. Full

Implementation by April 9, 2001.

34The Commission expects that the phase-in plan

would also include a description of the securities

industry’s educational efforts directed at the

investing public to assist them in understanding

how specific securities would be priced.

35The Commission notes that, while it is

mandating a phase-in of decimal pricing, the

Participants may set a more aggressive

implementation schedule if they determine that

decimal pricing can be safely implemented before

the April 9, 2001 deadline.

36See Edward Jones Letter supra note 13.

37See Letter supra note 14.

38Reasonable exceptions may be made for high

priced securities.

39The plan should provide that the minimum

increments are no less than one cent for any option

on equity securities.

40The Commission assumes that exchange-listed

stocks will be quoted on exchanges and the third

market in the same increments. Participants should

consider whether options should trade in the same

format as the underlying security.

41See SIAC/SRI Consulting, Mitigating Options

Message Traffic Final Report (Dec. 14, 1999).

42 15 U.S.C. 78k–1(a)(3)(B).

43Although Commission staff may be consulted

in discussing the proposed phase-in plan, staff

presence at joint discussions is not required by this

Order. In issuing this Order, the Commission does

not address: (a) any joint or other conduct that

occurred prior to the issuance of this Order or prior

Orders, and (b) any joint or other conduct occurring

after the date of this Order that is not ordered or

requested by this Order.

listed securities raised by commenters

such as the SIA,29 the Commission

believes that careful phasing in of

decimal pricing is necessary to ensure

the continued orderly operation of the

markets and clearing organizations.

The Commission recognizes the

concerns expressed by members of

Congress and several small investors

that decimal pricing in equity securities

should be implemented as expeditiously

as possible. We continue to believe that

the conversion to decimal pricing will

benefit investors by enhancing investor

comprehension, facilitating

globalization of our markets, and

potentially reducing transaction costs.

Nevertheless, the Commission must

ensure that the conversion to decimal

pricing is accomplished in an orderly

and safe manners. In view of the

concerns raised by commenters such as

the SIA,30 the Commission believes that

an immediate full-scale introduction of

decimalization, without adequate

planning and systems testing, has the

potential to create widespread

operational problems in the markets and

the securities industry, which in turn

could adversely affect investors.31

The Commission is aware of the views

of some commenters that the optimal

conversion process for decimal pricing

would involve simultaneous

implementation plans for both

exchange-listed and Nasdaq securities.

Unfortunately, Nasdaq’s inability to

begin decimalization until March 31,

2001 renders this approach problematic.

Moreover, many of the commenters that

strongly preferred postponing decimal

pricing until Nasdaq securities could be

included recognized that at least some

decimal pricing in exchange-listed

securities would be feasible starting on

or before September 4, 2000.

The remainder of the commenters

believed that, with proper planning and

testing, some phase-in of decimal

pricing in exchange-listed securities and

options should begin on or before

September 4, 2000.32 The Commission

is therefore directing the Participants to

develop a phase-in plan to begin

decimal pricing exchange-listed

securities and options on or before

September 5, 2000.33 The Participants

should submit this plan to the

Commission no later than 45 days after

the issuance of this Order, and each

Participant should submit the rule

changes necessary to implement the

phase-in plan pursuant to Section 19(b)

of the Exchange Act no later than 60

days after the issuance of this Order. To

facilitate a safe and coordinated

conversion to decimal pricing, the

phase-in plan should include a formal

schedule of testing and readiness

reporting to ensure that all Participants

are ready to implement decimal pricing

within the timeframes specified in the

plan.34 Further, the phase-in plan

should provide for decimal pricing of at

least some options on exchange-listed

securities that are participating in the

phase-in. The plan should provide for

the phasing in of decimal pricing for at

least some Nasdaq securities starting no

later than March 12, 2001, with

decimalization extended to all Nasdaq

securities no later than April 9, 2001.

Finally, the phase-in plan should

provide for Full Implementation by

April 9, 2001.35 During this period, the

Participants and the Commission will

carefully monitor the effects of decimal

pricing on systems capacity, liquidity,

and trading behavior.

There was little agreement among the

commenters regarding a minimum

quoting increment during the phase-in

periods; suggestions ranged from a

dime 36 to a penny.37 As a result, the

phase-in plan may fix the minimum

quoting increment during the phase-in

periods, provided that the minimum

increment is no greater than five cents 38

and no less than one cent for any equity

security,39 and that at least some equity

securities are quoted in one cent

minimum increments.40

After the securities industry has

gained some experience with the

implementation of decimal pricing, the

Commission believes that the

Participants should study the impact of

the use of a minimum pricing variation

of one penny on trading patterns,

liquidity, and capacity (‘‘Study’’). For

example, the inter-market

communications systems are likely to

experience increased quote traffic

resulting from the conversion to decimal

pricing and other market changes.41

Therefore, two months after Full

Implementation, the Participants must

submit (individually or jointly) a study

to the Commission regarding the impact

of decimal pricing on systems capacity,

liquidity, and trading behavior,

including an analysis of whether there

should be a uniform minimum

increment for a security. If a Participant

wishes to move to quoting in an

increment of less than one cent, the

Participant should include a full

analysis of the potential impact of such

trading on the Participant’s market and

the markets as a whole.

Within thirty days after submitting

the Study, and absent Commission

action, the Participants individually

must submit for notice, comment, and

Commission consideration, proposed

rule changes under Section 19)b) of the

Exchange Act to establish their

individual choice of minimum

increments by which equities or options

are quoted on their respective markets.

It Is Hereby Ordered, pursuant to

Section 11A(a)(3)(B) of the Exchange

Act,42 that the Participants act jointly in

planning, discussing, developing, and

submitting to the Commission a phasein plan, as described above. The

Participants are ordered to submit to the

Commission a phase-in plan, as

described above. The Participants are

ordered to submit to the Commission a

phase-in plan for the equity and options

markets no later than July 24, 2000. In

addition, each Participant is ordered to

submit the rule changes necessary to

implement the phase-in plan no later

than August 7, 2000.43 This Order will

be effective until the Commission has

acted on the proposed rule changes filed

38014 Federal Register / Vol. 65, No. 118 / Monday, June 19, 2000 / Notices

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

2 17 CFR 240.19b–4.

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

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

by the individual Participants pursuant

to Section 19(b)(2) of the Exchange Act

establishing the minimum increments

by which equities or options are quoted

on the respective markets or until

otherwise ordered by the Commission.

By the Commission.

By: Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–15361 Filed 6–16–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[File No. 500–1]

American Healthcare Providers, Inc.;

Order of Suspension of Trading

June 15, 2000.

It appears to the Securities and

Exchange Commission that there is a

lack of current and accurate information

concerning the securities of American

Healthcare Providers, Inc. (‘‘American

Healthcare’’) because of questions

regarding the accuracy of assertions by

American Healthcare, and by others, in

press releases concerning, among other

things, a contract entered into by

American Healthcare.

The Commission is of the opinion that

the public interest and the protection of

investors require a suspension of trading

in the securities of the above listed

company.

Therefore, it is ordered, pursuant to

Section 12(k) of the Securities Exchange

Act of 1934, that trading in the above

listed company is suspended for the

period from 9:30 a.m. EDT, on

Thursday, June 15, 2000 through 11:59

p.m. EDT, on Wednesday, June 28,

2000.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–15488 Filed 6–15–00; 1:48 pm]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42915; File No. SR–Amex–

00–28]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

American Stock Exchange LLC,

Relating to an Increase in Fees for

Registered Options Trader and

Specialist Transactions in Exchange

Traded Fund Shares

June 9, 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 25,

2000, the American Stock Exchange LLC

(‘‘Amex’’ 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 Amex proposes to revise fees for

Registered Options Trader and

Specialist transactions in Exchange

Traded Fund Shares.

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 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

Amex 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 the

Statutory Basis for, the Proposed Rule

Change

(1) Purpose

The Ammex currently imposes

charges for transactions in Portfolio

Depositary Receipts (‘‘PDRs’’), Index

Fund Shares and Trust Issued Receipts

(‘‘TIRs’’) executed on the Exchange.

Currently, charges include fees for

Registered Options Trader and

Specialist transactions in PDRs, Index

Fund Shares and TIRs, including

Nasdaq-100 Index Trust, SPDRs,

DIAMONDS, WEBS, MidCap SPDRs,

Select Sector SPDRs, and HOLDRs. The

current rate for Specialist transactions

in these products is $0.006 per share

($0.60 per 100 shares), capped at $300

per trade (50,000 shares). The current

rate for Registered Options Trader

transactions is $0.007 per share ($0.70

per 100 shares), capped at $350 per

trade (50,000 shares). Off floor orders

(i.e., customer and broker-dealer) are

charged $0.006 per share ($0.60 per 100

shares), capped at $100 per trade

(16,667 shares).

The Exchange proposes to revise fees

for Registered Options Trader and

Specialist transactions in PDRs, Index

Fund Shares and TIRs. The Exchange

will apply the revised transaction fees to

all Registered Options Trader and

Specialist transactions in currently

traded as well as newly listed PDRs,

Index Fund Shares and TIRs. The

proposed revision is in the amount of

$0.03 per 100 shares for Specialist and

Registered Options Trader transactions.

As a result, upon implementation of the

proposed fee revision, Specialist fees for

transactions in PDRs, Index Fund

Shares and TIRs will increase from

$0.006 per share ($0.60 per 100 shares)

to $0.0063 per share ($0.63 per 100

shares) and Registered Options Trader

fees will increase from $0.007 per share

($0.70 per 100 shares) to $0.0073 per

share ($0.73 per 100 shares).

The Exchange is undertaking the

proposed revision in fees to offset

increased Exchange expenses and costs

associated with the continued

development, listing and trading of

additional PDRs, Index Fund Shares and

TIRs. Because the proposed revision in

fees will better enable the Exchange to

further develop, list and trade new

Exchange Traded Fund Shares, the

Exchange believes it is appropriate and

necessary to implement the revised fee

schedule.

(2) Statutory Basis

The proposed rule change is

consistent with Section 6(b) 3 of the Act

in general and furthers the objectives of

Section 6(b)(4) 4 in particular, in that it

is designed to provide for the equitable

allocation of reasonable dues, fees, and

other charges among its members and

issuers and other persons using its

facilities.