Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Notices 39215

24 ISG was formed on July 14, 1983, to, among

other things, coordinate more effectively

surveillance and investigative information sharing

arrangements in the stock and options markets. See

Intermarket Surveillance Group Agreement, July 14,

1983.

25See Securities Exchange Act Release No. 40157

(July 1, 1998), 63 FR 37426 (July 10, 1998).

26 15 U.S.C. 78s(b)(2).

27 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3 In Amendment No. 1, the BSE proposes to

incorporate the BSE’s Minor Rule Violation Plan

into the Boston Stock Exchange Guide, which is its

rulebook. See letter with enclosures from William

P. Cummings, Manager of Legal and Regulation,

BSE, to Richard Strasser, Assistant Director,

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

Commission, dated March 12, 2000 (‘‘Amendment

No. 1’’).

4 In Amendment No. 2, the BSE seeks to amend

the Summary Fine Schedule of the Minor Rule

Violation Plan to prohibit all forms of tobacco use.

See letter with enclosures from John A. Boese,

Assistant Vice President, Rule Development and

Market Structure, BSE, to Richard Strasser,

Assistant Director, Division, Commission, dated

May 26, 2000 (‘‘Amendment No. 2’’).

options listing standards will have to

meet the options maintenance listing

standards. The maintenance criteria

provide that an underlying security will

not meet the Exchange’s requirements

for continued listing when, among other

things: (1) The trust has more than 60

days remaining until termination and

there are fewer than 50 record and/or

beneficial holders of trust issued

receipts for 30 or more consecutive

trading days; (2) the trust has fewer than

50,000 receipts issued and outstanding;

or (3) the market value of all receipts

issued and outstanding is less than

$1,000,000. The Commission believes

these criteria will help to ensure than a

minimum level of liquidity will exist for

options on trust issued receipts to

control against manipulation and allow

for the maintenance of fair and orderly

markets. Furthermore, the Exchange

will not open additional series or

options on any HOLDR, without prior

Commission approval, if: (1) The

proportion of securities underlying

standardized equity options to all

securities held in a HOLDRs trust is less

than 80 percent (as measured by their

relative weightings in the HOLDRs

trust); or (2) less than 80 percent of the

number of securities held by a HOLDR

trust underlie standardized options. The

Commission believes that these

additional criteria will ensure that a

very significant portion of the

individual component securities of the

HOLRDs trust will be options eligible

(either by market capitalization

weighting or by total number of

component securities), thereby assuring

that the component securities for the

most part will satisfy minimum

thresholds previously approved by the

Commission.

The Commission also believes that the

surveillance standard developed by the

Amex for options on trust issued

receipts is adequate to address the

concerns associated with the listing and

grading of such securities. Specifically,

the Amex has proposed to limit to 20

percent of the weight of the portfolio

any component securities that are ADRs

when the primary market for the

securities underlying those ADRs’ are in

countries that are not subject to

comprehensive surveillance agreements.

As a general matter, the Commission

believes that comprehensive

surveillance agreements provide an

important deterrent to manipulation

because they facilitate the availability of

information needed to fully investigate

a potential manipulation, if it were to

occur. These agreements are especially

important in the context of derivative

products based on foreign securities

because they facilitate the collection of

necessary regulatory, surveillance and

other information from foreign

jurisdictions. In evaluating the current

proposal, the Commission believes that

requiring comprehensive surveillance

agreements to be in place between the

Amex and the primary markets for

ADRs that comprise 20 percent or more

of the weight of the underlying portfolio

upon which trust issued receipts are

based provides an adequate mechanism

for the exchange of surveillance sharing

information necessary to detect and

deter possible market manipulations.

Further, as to the domestically-traded

trust issued receipts themselves and the

domestic stocks in the underlying

portfolio upon which trust issued

receipts are based, the Intermarket

Surveillance Group (‘‘ISG’’)

Agreement 24 will be applicable to the

trading of options on trust issued

receipts.

Finally, the Commission believes that

it is appropriate to require minimum

margin of 100 percent of the current

market value of the option plus 15

percent of the market value of the

underlying security value for options on

trust issued receipts based on a broadbased portfolio. Moreover, the

Commission believes that requiring

minimum margin of 100 percent of the

current market value of the option plus

20 percent of the market value of the

underlying security value for options on

trust issued receipts based on a narrowbased portfolio is appropriate. The

Commission notes that these margin

requirements for options on trust issued

receipts are comparable to margin

requirements that currently apply to

broad-based and narrow-based index

options.

Amex has requested that the

Commission find good cause for

approving the proposed rule change, as

amended, prior to the thirtieth day after

the day of publication of notice in the

Federal Register. The Commission

believes the proposal is similar to the

proposal to list and trade options on

exchange-traded fund shares previously

reviewed and approved by the

Commission.25 The Commission also

notes that there were no comment

letters on the initial trust issued receipts

filing. Furthermore, the Commission

finds that the proposal raises no new

regulatory issues and should benefit

holders of trust issued receipts by

permitting them to use options to

manage the risks of their positions in

the receipts. Accordingly, the

Commission finds good cause to

accelerate approval of the proposed rule

change, as amended.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,26 that the

proposed rule change (SR–AMEX–99–

37), as amended, is hereby approved on

an accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.27

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–15903 Filed 6–22–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42951; File No. SR–BSE–

99–07]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Boston Stock Exchange, Inc.

Amending its Minor Rule Violation Plan

June 16, 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 1,

1999, the Boston Stock Exchange, Inc.

(‘‘BSE’’ 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 Exchange. On March

24, 2000, the BSE submitted

Amendment No. 1 to the proposed rule

change.3 On May 30, 2000, the BSE

submitted Amendment No. 2 to the

proposed rule change.4 The Commission

is publishing this notice to solicit

39216 Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Notices

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

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

7The Exchange added this statutory basis for the

proposed rule change on June 5, 2000. Telephone

conversation between John A. Boese, Assistant Vice

President, Rule Development and Market Structure,

BSE, and Joseph Corcoran, Attorney, Division,

Commission, on June 5, 2000.

8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

comments on the proposed rule change

form interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The BSE seeks to amend the Summary

Fine Schedule of the Minor Rule

Violation Plan by adding the violation

of ‘‘Failure to Attend Mandatory

BEACON Training Sessions’’ and

amending the prohibition titled

‘‘Violation of the Exchange Smoking

Policy’’ to prohibit all forms of tobacco

use. In addition, the Exchange proposes

to incorporate the BSE’s Minor Rule

Violation Plan into the Boston Stock

Exchange Guide, which is its rulebook.

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

BSE 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 BSE 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 BSE proposes to amend the

Exchange’s Minor Rule Violation Plan to

include the failure to attend Market

Performance Committee BEACON

training sessions and to change the

prohibition titled ‘‘Violation of the

Exchange Smoking Policy’’ to prohibit

all forms of tobacco use. The proposed

addition to the Summary Fine Schedule

will enable the Exchange to ensure that

all floor members are fully trained on

the BEACON system following

enhancements for the handling of orders

or the release of new versions of

BEACON software. The Exchange

believes that this will ensure that all

customer orders are accorded the same

professional attention by all specialists.

The Exchange proposes a written

warning for an initial offense, a $50 fine

for the second offense, and a $100 fine

for subsequent offenses. In addition, the

Exchange proposes to prohibit all forms

of tobacco use on the Equity Trading

Floor. Currently, only smoking is

prohibited.

The Exchange also proposes to

incorporate the BSE’s Minor Rule

Violation Plan into the Boston Stock

Exchange Guide, which is its rulebook.

The Plan provides an alternative

method for the Exchange to use to

discipline members who commit minor

rule violations.

2. Statutory Basis

The BSE believes the proposed rule

change is consistent with Section

6(b)(5) 5 of the Act in that it is designed

to foster cooperation and coordination

with persons engaged in regulating,

clearing, settling, processing

information with respect to, and

facilitating transactions in securities;

and is not designed to permit unfair

discrimination between customers,

issuers, brokers or dealers. In addition,

the Exchange believes that the proposal

is consistent with Section 6(b)(6) 6 of the

Act, which requires that its members

and persons associated with its

members be appropriately disciplined

for violations of the rules of the

exchange.7

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 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 self-regulatory

organization consents, the Commission

will:

(A) by order approve such proposed

rule change, or

(B) institute proceedings to determine

whether the proposed rule change

should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing,

including whether the proposed rule is

consistent with the Act. Persons making

written submissions should file six

copies thereof with the Secretary,

Securities and Exchange Commission,

450 Fifth Street, N.W., Washington, D.C.

20549–0609. Copies of the submission,

all subsequent amendments, all written

statements with respect to the proposed

rule change that are filed with the

Commission, and all written

communications relating to the

proposed rule change between the

Commission and any person, other than

those that may be withheld from the

public in accordance with the

provisions of 5 U.S.C. 552, will be

available for inspection and copying in

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the BSE. All

submissions should refer to File No.

SR–BSE–99–07 and should be

submitted by July 14, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–15902 Filed 6–22–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42948; File No. SR–NYSE–

00–20]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the New York Stock Exchange, Inc.

Relating to Listed Company Fees for

Closed-end Funds

June 15, 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 3,

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