[Federal Register Volume 65, Number 123 (Monday, June 26, 2000)]
[Notices]
[Pages 39461-39462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16029]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42960; File No. SR-NYSE-00-26]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the New York Stock Exchange, 
Inc., Creating New Rule 438 Mandating Decimal Pricing Testing and 
Rescinding Rule 437 Relating to Year 2000 Testing

June 20, 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 June 14, 2000, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange '') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the NYSE. The NYSE has 
designated this proposal as one concerned solely with the 
administration of the NYSE under Section 19(b)(3)(A)(iii) of the 
Act,\3\ which renders the proposal effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The proposal consists of the adoption of new NYSE Rule 438 
(``Participation in Decimal Conversion Testing'') and the rescission of 
NYSE Rule 437 (``Participation in Year 2000 Testing''). The text of the 
proposed rule change is available upon request from the NYSE or the 
Commission.

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 regarding 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
    On January 28, 2000, the Commission issued an order (``January 28 
Order'') \4\ requiring the NYSE, the other national securities 
exchanges, and the National Association of Securities Dealers, Inc. 
(the ``Participants'') to take certain steps necessary to facilitate a 
safe and orderly transition to decimal pricing in the United States 
securities markets. The initial phase-in date of this process was 
originally scheduled for July 3, 2000.
---------------------------------------------------------------------------

    \4\ Securities Exchange Act Release No. 42360 (Jan. 28, 2000), 
65 FR 5003 (Feb. 2, 2000).
---------------------------------------------------------------------------

    In order to prepare for the implementation of decimal pricing 
industry-wide, the Commission's January 28 Order required, among other 
things, that the Participants jointly submit a ``Decimals 
Implementation Plan'' by April 14, 2000. The Commission additionally 
required each Participant to submit by April 28, 2000, such proposed 
rule changes as would be necessary to administer the Decimals 
Implementation Plan.
    On April 13, 2000, the Commission suspended by order \5\ the 
deadlines prescribed by the January 28 Order and solicited public 
comment on the feasibility of several alternatives for implementing 
decimal trading (including the possibility of trading exchange-listed 
securities in penny or nickel increments by September 4, 2000). On June 
8, 2000, the Commission subsequently issued an order \6\ directing the 
securities markets to begin phasing in decimal pricing no later than 
September 5, 2000.
---------------------------------------------------------------------------

    \5\ Securities Exchange Act Release No. 42685 (Apr. 13, 2000), 
65 FR 21046 (Apr. 19, 2000).
    \6\ Securities Exchange Act Release No. 42914 (June 8, 2000), 65 
FR 38010 (June 19, 2000).
---------------------------------------------------------------------------

    In order to assist and coordinate the efforts of the NYSE's 
membership to ensure a smooth transition to decimalization, new NYSE 
Rule 438 authorizes the Exchange to require members and member 
organizations, in a manner and frequency to be prescribed by the 
Exchange, to participate in decimal pricing testing. The Exchange is 
prepared to adjust its testing and implementation dates in accordance 
with Commission directives.
    NYSE Rule 438.10 provides the Exchange authority to exempt either 
individual or categories of members and member organizations from some 
or all of the testing requirements. Further, NYSE rule 438.20 requires 
members and member organizations to maintain adequate documentation of 
such tests as may be required, including results of those tests, which 
must be made available to the Exchange for examination. NYSE rule 
438.30 provides that the rule shall expire automatically upon the full 
implementation of decimal pricing.
    In addition to creating the foregoing new rule, the Exchange 
proposes to delete NYSE Rule 437, authorizing the Exchange to require 
the membership's participation in testing related to potential computer 
problems associated with the year 2000 date change. Further testing in 
this regard is no longer necessary.
2. Statutory Basis
    The NYSE believes proposed NYSE Rule 438, which is designed to 
authorize the Exchange to require its members and member organizations, 
in a manner and frequency prescribed by the Exchange, to participate in 
testing of computer systems in preparation for the implementation of 
decimal pricing, is consistent with Section 6(b) of the Act \7\ in 
general and furthers the objectives of Section 6(b)(5) \8\ in 
particular in that it is designed to promote just and equitable 
principles of trade, to remove impediments to and to perfect the 
mechanism of a free and open market and a national market system and, 
in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 neither solicited nor received written comments on 
the proposed rule change.

[[Page 39462]]

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Because the foregoing rule change is concerned solely with the 
administration of the Exchange, it has become effective pursuant to 
Section 19(b)(3)(A)(iii) of the Act \9\ and subparagraph (f)(3) of Rule 
19b-4 thereunder.\10\ At any time within 60 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(3).
---------------------------------------------------------------------------

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, 450 Fifth Street, N.W., Washington, 
D.C. 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-NYSE-00-26 and should be submitted by July 17, 
2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-16029 Filed 6-23-00; 8:45 am]
BILLING CODE 8010-01-M