57850 Federal Register / Vol. 65, No. 187 / Tuesday, September 26, 2000 / Notices

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

2 17 CFR 240.19b–4.

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

4 17 CFR 240.19b–4(f)(6).

5The Exchange provided the Commission with

written notice of its intent to file the proposal on

September 6, 2000, pursuant to Rule 19b–4(f)(6). 17

CFR 240.19b–4(f)(6).

6See Securities Exchange Act Release No. 42004

(October 13, 1999), 64 FR 56548 (October 20, 1999)

(SR–CHX–99–16).

7See Securities Exchange Act Release No. 42463

(February 28, 2000), 65 FR 11817 (March 6, 2000)

(SR–CHX–00–02).

to each class, except that the NAV and

expenses of each class will reflect

distribution fees, service fees (including

transfer agency fees), and any other

incremental expenses of that class.

Expenses of a Feeder Fund allocated to

a particular class of shares will be borne

on a pro rata basis by each outstanding

share of that class. Each Feeder Fund

may create additional classes of shares

in the future that may have different

terms from the Original Class, Class A,

Class B, and Class C shares. Applicants

state that each Feeder Fund will comply

with the provisions of rule 18f–3 under

the Act as if it were an open-end

investment company.

Applicants’ Legal Analysis

1. Section 18(c) of the Act provides,

in relevant part, that a closed-end

investment company may not issue or

sell any senior security if, immediately

thereafter, the company has outstanding

more than one class of senior security.

Applicants state that the creation of

multiple classes of shares of a Feeder

Fund may be prohibited by section

18(c).

2. Section 18(i) of the Act provides

that each share of stock issued by a

registered management investment

company will be a voting stock and

have equal voting rights with every

other outstanding voting stock.

Applicants request an exemptive order

to the extent that the proposed issuance

and sale of multiple classes of shares of

the Feeder Funds might be deemed (a)

to result in the issuance of a ‘‘senior

security;’’ within the meaning of section

18(g) of the Act and thus be prohibited

by section 18(c) of the Act; and (b) to

violate the equal voting provisions of

section 18(i) of the Act.

3. Section 6(c) of the Act provides that

the Commission may exempt any

person, security or transaction from any

provision of the Act, if and to the extent

that such exemption is necessary or

appropriate in the public interest and

consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the Act. Applicants request an

exemption under section 6(c) of the Act

from sections 18(c) and 18(i) of the Act

to permit the Feeder Funds to issue

multiple classes of shares. 4. Applicants submit that the

proposed allocation of expenses and

voting rights among multiple classes is

equitable and will not discriminate

against any group or class of

shareholders. Applicants submit that

the proposed arrangements would

permit a Feeder Fund to facilitate the

distribution of its securities and provide

investors with a broader choice of

shareholder services. Applicants assert

that their proposal does not raise the

concerns underlying section 18 of the

Act to any greater degree than open-end

investment companies’ multiple class

structures that are permitted by rule

18f–3 under the Act. Applicants state

that each Feeder fund will comply with

the provisions of rule 18f–3 as if it were

an open-end investment company.

Applicants’ Condition

Applicants agree that any order

granting the requested relief will be

subject to the following condition: Applicants will comply with the

provisions of rules 12b–1, 17d–3, 18f–3,

and 22d–1 under the Act, as amended

from time to time, as if those rules

applied to closed-end investment

companies, and will comply with NASD

Conduct rule 2830(d), as amended from

time to time.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–24610 Filed 9–25–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43304; File No. SR–CHX–

00–26]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Chicago Stock Exchange, Incorporated

to Make Its After-Hours Trading ‘‘ESession’’ a Permanent Part of its

Operations

September 19, 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

September 12, 2000, the Chicago Stock

Exchange, Incorporated (‘‘CHX’’ 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. The Exchange filed the

proposal pursuant to Section 19(b)(3)(A)

of the Act,3 and Rule 19b–4(f)(6)

thereunder,4 which renders the proposal

effective upon filing with the

Commission.5 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 Proposal

On October 13, 1999, the Securities

and Exchange Commission approved,

on a pilot basis through March 1, 2000,

a new Article XXA and amendments to

existing rules that allowed the Exchange

to implement a new extended trading

hours session (the ‘‘E-Session’’).6 On

February 28, 2000, the CHX extended

the operation of the E-Session through

October 1, 2000.7 The CHX now

proposes to make the operation of the ESession permanent.

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

CHX included statements concerning

the purpose of and basis for its proposal

and discussed any comments it received

regarding the proposal. The text of these

statements may be examined at the

places specified in Item IV below. The

CHX 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

In September 1999, the Exchange

proposed new Article XXA and several

related rule changes to implement the ESession. The E-Session was designed to

meet the needs of market participants

and CHX members who had demanded

that the Exchange begin trading in hours

that extend beyond the then-current

trading day. The Exchange continues to

believe that investors are best served if

registered securities exchanges are

participants in the burgeoning afterhours trading market and submits this

proposal to make the operation of the ESession permanent. The Exchange does

not propose to make any additional

changes to the E-Session at this time;

this proposal seeks only to make the EVerDate 11<MAY>2000 18:07 Sep 25, 2000 Jkt 190000 PO 00000 Frm 00048 Fmt 4703 Sfmt 4703 E:\FR\FM\26SEN1.SGM pfrm08 PsN: 26SEN1
Federal Register / Vol. 65, No. 187 / Tuesday, September 26, 2000 / Notices 57851

8The amendments to Article IX, Rule 10(b)

(Business Days and Hours of Trading) and Article

XX, Rule 2 (Hours of Floor Dealing) confirm the

existence of this new trading session.

9The CHX proposed a rule change to allow its

members to accept immediate or cancel limit orders

during the E-Session so that the Exchange could

participate in an anticipated linkage with a group

of electronic communications networks who accept

this type of order. Although the Commission has

approved the rule change needed to allow the CHX

to accept these orders (See Securities Exchange Act

Release No. 42916 (June 9, 2000), 65 FR 38015 (June

19, 2000)(SSR–CHX–00–17)), the CHX is still

working to develop the linkages with other market

centers through which those orders will be

transmitted.

10The amendments to Article XX, Rule 1

(Application [of Article] and Article XXI, Rule 1

(Reporting of Transaction) confirm that these rules

encompass transactions that occur during the ESession.

11The amendments to Article XX, Rule 37

(confirming that the Best System and the automatic

execution features of the Midwest Automated

Execution System do not operate during the ESession), Article XXXI, rules 6 and 9 (confirming

that odd-lot order execution occurs differently than

during the primary trading session) and Article

XXXIV (confirming that market makers do not

participate in the E-Session) reflect these

exceptions.

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

13 15 U.S.C. 78s(b)(3)(A).

14 17 CFR 240.19b-4(f)(6).

Session a permanent part of the CHX’s

current operations.

The operation of the E-Session. The ESession began operating on October 29,

1999. It currently operates from 3:30

p.m. (immediately following the close of

the CHX’s post primary trading session)

to 5:30 p.m., Central Time, Monday

through Friday.8

Trading during the E-Session is

conducted, in some respects, as it is

during the CHX’s primary trading

session; however, new features more

fully automate the transmission of

orders and provide additional

protections to investors who trade

during the session. Only unconditional

limit orders and immediate or cancel

limit orders are eligible for execution in

the E-Session, and each limit order must

be appropriately designated for trading

in the E-Session.9 Any orders remaining

unexecuted at the end of the session are

automatically canceled and do not carry

over to any other trading session.

Specialist firms continue to make twosided, continuous markets in E-Session

eligible stocks, generally the more active

stocks assigned to them during the

existing trading sessions, at their posts

on the floor of the CHX (unless a

specialist firm has transferred its

assignment, for the E-Session only, to

another specialist firm with the

approval of the Committee on Specialist

Assignment and Evaluation).

During the E-Session, in most cases

(subject to an exception described

below), limit orders must be

electronically and directly transmitted,

via the MAXTM electronic order routing

system, to the specialist’s limit order

book. Floor brokers may route limit

orders to the specialist’s limit order

book via MAX or may transmit the

orders to another market. In addition, a

floor broker may route orders to buy and

sell equivalent quantities of the same

security eligible to be executed at the

same price through MAX to the

specialist’s limit order book or may

execute those orders as a crossing

transaction at the specialist’s post in

accordance with existing Exchange

rules.

Except as described in Article XXA or

in other E-Session rule amendments,

execution, reporting, clearance and

settlement of transactions that occur

during the E-Session follow the

procedures currently in place for those

activities in the Exchange’s primarily

trading session.10 Among other things,

this general principle means that the

National Securities Clearing Corporation

clears the transactions that take place

during this session, and the Securities

Industry Automation Corporation and

Nasdaq, Inc. disseminate CHX

quotations and trade data. Three

exceptions to this general rule arise

from either the Exchange’s desire to

more fully automate the E-Session, or

from the fact that no primary market of

the kind that operates under the same

terms and conditions during traditional

trading hours is available during the ESession.11

Securities eligible for trading during

the E-Session. The CHX’s Committee on

Floor Procedure identifies, from time to

time, the securities eligible for trading

during the E-Session. In general, the

securities listed on the Standard &

Poor’s 100 Stock IndexTM (OEX) and on

the Nasdaq-100 Index (NDX), as well

as other securities that rank among the

100 most active listed and 100 most

active Nasdaq/NM securities at the end

of each quarter trade during the ESession. Currently, 303 securities are

eligible for trading during the E-Session.

Members eligible to participate in the

E-Sessioin. All CHX members have

access to the E-Session, in accordance

with applicable CHX rules.

Mandatory disclosures to nonmembers. Because the E-Session

operates in a manner, and at a time, that

is different from the CHX’s primary

trading session, members must provide

specific disclosures to non-members

before accepting orders for execution in

the E-Session. These disclosures are

designed to ensure that participants in

the after-hours market understand the

potential risks of that participation.

Surveillance and oversight. the

Exchange conducts surveillance of ESession trading using many of he same

surveillance programs it uses to monitor

trading during the primary trading

session. E-Session order delivery,

quoting and matching is almost entirely

controlled by the Exchange’s electronic

systems. These systems reduce the

possibility for intentional or inadvertent

mishandling of orders and enhance the

effectiveness of the surveillance

programs. The CHX believes that ESession surveillance has operated

effectively during the first ten months of

after-hours trading.

Procedures for reviewing capacity,

security and contingency planning. the

CHX uses many of the same review

procedures for systems security,

capacity management, and recovery and

contingency planning that it employs

for the systems that support the primary

trading session.

2. Statutory Basis

The CHX believes the proposal is

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

Act 12 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.

B. Self-Regulatory Organization’s

Statement of Burden on Competition

The Exchange believes that no burden

will be placed on competition as a result

of its proposal to make the E-Session a

permanent part of the Exchange’s

current operations.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants or Others

No written comments were either

solicited or received.

III. Date of Effectiveness of the

Proposed Rule change and Timing for

Commission Action

Because the foregoing proposed rule

change does not:

(i) significantly affect the protection of

investors or the public interest;

(ii) impose any significant burden on

competition; and

(iii) become operative for 30 days

form the date on which it was filed, or

such shorter time as the Commission

may designate, it has become effective

pursuant to Section 19(b)(3)(A) of the

Act 13 and Rule 19b-4(f)(6) thereunder.14

At any time within 60 days of the filing

57852 Federal Register / Vol. 65, No. 187 / Tuesday, September 26, 2000 / Notices

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

16For purposes only of accelerating the operative

date of this proposal, the Commission has

considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

17 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

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

4 17 CFR 240.19b–4(f)(6).

5The Commission agreed to waive the 5-day prefiling notice requirement. The Commission also

finds good cause to waive the 30-day pre-operative

waiting period. See Rule 19b–4(f)(6)(iii). 17 CFR

240.19b–4(f)(6)(iii).

6 17 CFR 240.19b–4(f)(6)(iii).

7See Securities Exchange Act Release No. 42003

(October 13, 1999), 64 FR 56554 (October 20, 1999)

(SR–NASD–99–57).

8 15 U.S.C. 78o–3(b)(6).

of the 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.

The Exchange has requested that the

Commission accelerate the operative

date. The Commission finds good cause

to designate the proposal to become

operative immediately because such

designation is consistent with the

protection of investors and the public

interest. The Commission believes that

the E-Session provides retail investors

with an additional means to trade after

traditional trading hours, and that the

operation of the E-Session is consistent

with Section 6(b)(5) of the Act 15 in that

it is designed to remove impediments

to, and to perfect the mechanism of, a

free and open market. The Commission

believes the availability of the E-Session

may enhance competition in the afterhours market. Currently, electronic

trading systems provide retail investors

the opportunity to trade after-hours. The

continued presence of a national

securities exchange in the after-hours

market will provide retail investors with

an alternative forum through which to

conduct after-hours transactions. The

CHX has been operating the E-Session

on a pilot basis. The Commission

believes there is no particular benefit to

investors if the CHX is required to wait

30 days before its proposal to make the

E-Session a permanent part of its

operations becomes operative. For these

reasons, the Commission finds good

cause to designate that the proposal is

both effective and operative upon filing

with the Commission.16

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing,

including whether the proposal 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, 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 CHX. All

submissions should refer to file number

SR–CHX–00–26 and should be

submitted by October 17, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.17

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–24641 Filed 9–25–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43302; File No. SR–NASD–

00–56]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

National Association of Securities

Dealers, Inc. to Extend the Operation

of Certain Nasdaq Services and

Facilities Until 6:30 P.M. Eastern Time

September 19, 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

September 14, 2000, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’), through its

wholly owned subsidiary, The Nasdaq

Stock Market, Inc. (‘‘Nasdaq’’) filed with

the Securities and Exchange

Commission (‘‘Commission’’ or ‘‘SEC’’)

the proposed rule change as described

in Items I, II and III below, which Items

have been prepared by Nasdaq. Nasdaq

filed the proposal pursuant to Section

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

4(f)(6) thereunder, 4 which renders the

proposal effective upon filing with the

Commission.5 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

Nasdaq proposes to extend, through

March 1, 2001, its pilot program

extending the availability of several

Nasdaq services and facilities until 6:30

p.m. Eastern Time. Nasdaq has

designated this proposal as noncontroversial, and requests that the

Commission waive both the 5-day prefiling notice and the 30-day preoperative waiting period contained in

Rule 19b–4(f)(6)(iii) under the Act,6 to

allow the proposal to be both effective

and operative immediately upon filing

with 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,

Nasdaq included statements concerning

the purpose of and basis for its proposal

and discussed any comments it received

regarding the proposal. The text of these

statements may be examined at the

places specified in Item IV below.

Nasdaq 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

Nasdaq proposes to extend, through

March 1, 2001, its current pilot program

that makes available certain Nasdaq

systems and facilities until 6:30 p.m.

Eastern Time. The Commission

originally approved the pilot on October

13, 1999.7 The pilot will continue to

operate under its current terms and

conditions, including mandating 90-

second trade reporting until 6:30 p.m.

Eastern Time.

2. Statutory Basis

Nasdaq believes that the proposal is

consistent with the provisions of

Section 15A(b)(6) of the Act8 in that it

is designed to prevent fraudulent and

manipulative acts and practices, to

promote just and equitable principles of

trade, to foster cooperation and

coordination with persons engaged in

regulating, clearing, settling, processing