Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices 58137

5The Amex will not charge a hearing fee to

appeal the Exchange Staff’s listing determination.

Telephone conservation between Michael Cavalier,

Associate General Counsel, Amex, and Susie Cho,

Attorney, Division of Market Regulation

(‘‘Division’’), Commission, April 19, 2000.

6The Amex Adjudicatory Council, is established

by the Amex Board pursuant to Article II, Section

6 of the Amex Constitution. The Council consists

of six individuals, all of whom are nominated by

the Amex Nominating Committee and elected by

the regular and options principal members voting

together as a single class. Three of the Council’s

members are Floor Governors and three are Public

Governors.

7The Amex will not charge a hearing fee to

appeal the Subcommittee’s determination.

Telephone conservation between Michael Cavalier,

Associate General Counsel, Amex, and Susie Cho,

Attorney, Division, Commission, April 19, 2000.

8See Section 1206(c).

9The Commission notes that any applicant

aggrieved by a final action of the Amex may apply

for review to the Commission in accordance with

Section 19 of the Act.

10Although members of the Amex Staff may

waive their rights under Section 1211, the

Commission expects that the record on review will

include all of the information used as the basis for

the Amex’s decision.

11 In approving this rule, the Commission has

considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

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

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

13See NASD 4800 Series Rules.

14Securities Exchange Act Release No. 41367

(May 13, 1999), 64 FR 25942.

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

16 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

Section 1202, the Exchange will notify

applicants of a decision to deny a

application, citing the specific

quantitative or qualitative standards in

Part 1 of the Amex Company Guide that

were not met. The Exchange will notify

the applicant that, upon request, the

applicant will be provided an

opportunity for a hearing under these

procedures. An applicant may request a

written or oral hearing within 7 days of

the date of the Staff’s determination to

deny the application.5 Section 1203

specifies written materials that the

applicant may submit in connection

with a hearing.

Section 1204 provides that all

hearings will be conducted before a

subcommittee of the Committee on

Securities (‘‘Subcommittee’’) consisting

of at least two persons. Following the

hearing, the Subcommittee must issue a

written decision (‘‘Subcommittee

Decision’’) citing specific grounds for

the Subcommittee’s determination. The

Subcommittee will promptly provide its

decision to the applicant and will also

provide notice that the applicant may

request review by the Adjudicatory

Council 6 within 15 days of the date of

the Subcommittee Decision.7 The

applicant will also be notified that the

Adjudicatory Council may call for

review of the Subcommittee Decision

within 45 days, at the request of one or

more of the Council’s members, as

provided in Section 1205.

The Adjudicatory Council will

consider the written record and can

hold additional hearings. It may also

recommend that the Amex Board

consider the matter. The Adjudicatory

Council will set forth specific grounds

for its decision and provide notice that

the Amex Board may call the decision

for review at any time before its next

meeting which is at least 15 days after

the decision. If the Amex Board

conducts a discretionary review, the

applicant will be provided with a

written decision affirming, modifying,

reversing, or remanding the

Adjudicatory Council’s decision.8 The

Board’s decision constitutes final action

of the Exchange and will take

immediate effect unless it specifies to

the contrary.9

Section 1207 describes the documents

included in the written record. Section

1208 provides for the maintenance of

the written record of review, as well as

any documents excluded from the

written record.

Section 1211 prohibits the Amex Staff

or an applicant from making any

communication relevant to the merits of

a proceeding with anyone who is

participating in or advising in the

consideration of a matter unless the

applicant and the appropriate Amex

Staff have been provided notice and an

opportunity to participate in the

communication. The Exchange

currently expects that Amex Staff

generally will waive their rights under

this provisions in the interest of

providing a non-adversarial business

forum for listing decisions.10

III. Discussion

The Commission finds that the

Exchange’s proposal is consistent with

the requirements of Section 6 of the

Act,11 and furthers the objectives of

Section 6(b)(5) 12 in particular because 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

information with respect to, and

facilitating transactions in securities,

and, in general, to protect investors and

the public interest.

The Commission believes that the

proposed rule change, by establishing

procedures for the review of initial

listing determinations, will provide

clarity and transparency to issuers

concerning the Amex’s decisionmaking

process. The new rules require the

Exchange to notify applicants of a

decision to deny listing and set forth the

specific grounds for the determination

at each level of review.

The proposed rules also provide a fair

and independent review for issuers,

with provisions detailing the

maintenance of the record on review

and prohibiting communications

outside of the official proceeding. The

Commission further notes that the

proposed rules are modeled on the

Nasdaq listing process.13 Similar to the

rules proposed herein, the rules of the

National Association of Securities

Dealers, Inc. codify the procedures for

the review of initial listing

determinations.14

IV. Conclusion

For the reasons discussed above, the

Commission finds that the proposal is

consistent with the Act and the rules

and regulations thereunder.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,15 that the

proposed rule change, SR–Amex–00–12,

be and hereby is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.16

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–24735 Filed 9–26–00; 8:45 am]

BILLING CODE 8010–10–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43309; File No. SR–NYSE–

00–37]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the New York Stock Exchange, Inc.

Rescinding Parts of, or the Entire Text

of, Exchange Rule 112A.10, Rule

321.25, Rule 392, Rule 393 and Rule

395, Which Reference Rescinded

Exchange Rule 390 or Off-Board

Trading Restrictions

September 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 August

17, 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

58138 Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices

3For purposes of this notice, the terms ‘‘offFloor’’ and ‘‘off-Board’’ are used interchangeably.

4Securities Exchange Act Release No. 42758 (May

5, 2000); 65 FR 30175 (May 10, 2000) (SR–NYSE–

99–48). 5 15 U.S.C. 78f(b)(5).

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 rescinds

parts of, or the entire text of, the

following Exchange rules that reference

rescinded Exchange Rule 390, or offBoard trading restrictions: Rule

112A.10, Rule 321.25, Rule 392, Rule

393 and Rule 395.3

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

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 this proposed rule

change is to rescind parts of, or the

entire text of, Exchange Rules that either

reference rescinded Exchange Rule 390,

or restrict off-Board transactions. Rule

390 was the Exchange’s off-Board

trading rule, which prohibited Exchange

members and their affiliates from

effecting transactions in exchange-listed

securities away from a national

securities exchange. The Commission

approved the rescission of Exchange

Rule 390 on May 5, 2000.4 The

proposed rule change also rescinds

Exchange Rules that restrict off-Board

transactions in general because the

rescission of Rule 390 permits members

to execute orders in Exchange-listed

securities in any marketplace at any

time.

The following Rules meet the criteria

described above, and are therefore,

proposed to be deleted, in whole or in

part: Rule 112A.10 (Reports by Off-Floor

Traders, Form 82–P); Rule 321.25

(Formation or Acquisition of

Subsidiaries—Off-Board transactions);

Rule 392 (Notification Requirements for

Offerings of Listed Securities); Rule 393

(Secondary Distributions); and Rule 395

(Off-Floor Transactions in Listed

Rights).

Rule 112A.10: Reports by Off-Floor

Traders (Forms 82–P)

This rule requires members or

member organizations to send a weekly

report on Form 82–P covering off-Floor

trading, upon the request of the

Exchange. Since Rule 390 has been

rescinded, this practice is no longer in

effect and the report is no longer

needed.

Rule 321.25: Formation or Acquisition

of Subsidiaries—Off-Board Transactions

Section .25 of Rule 321 requires

subsidiaries of members or member

organizations to obtain Exchange

permission before effecting a transaction

in a listed stock off the Floor of the

Exchange. Since Rule 390 has been

rescinded, such permission would no

longer be needed before effecting a

transaction in a listed stock off the Floor

of the Exchange.

Rule 392: Notification Requirements for

Offerings of Listed Securities

The reference in this Rule to

‘‘secondary distributions pursuant to

Rule 393’’ is no longer necessary as the

Exchange proposes to rescind Rule 393

(see below).

Rule 393: Secondary Distributions

Rule 393 requires the prior approval

of the Exchange for member

organizations to participate in an ‘‘overthe-counter’’ or ‘‘off-board’’ secondary

distribution of a security admitted to

dealing on the Exchange. With the

rescission of Rule 390, members may

execute order/transactions in Exchangelisted securities in any marketplace at

any time. Therefore, the Exchange

proposes to rescind this Rule as it is an

off-Board transaction restriction.

Rule 395: Off-Floor Transactions in

Listed Rights

Rule 395 mandates that members,

member organizations, and affiliated

persons not effect any transaction in any

subscription right admitted to dealing

on the Exchange, in the over-the-counter

market, either as principal or agent

(subject to certain exceptions). The

rescission of Rule 390 necessitates the

rescission of this Rule because it is a

restriction against off-Floor transactions;

Exchange Rule 390 no longer restricts

members, member organizations, and

affiliated persons from trading as

principal or agent in the over-thecounter market in a covered security.

2. Statutory Basis

The Exchange believes the basis

under the Act for the proposed rule

change is the requirement under Section

6(b)(5) 5 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, in general, to protect investors and

the public interest. The rescission of

Rule 390 as well as these related

Exchange Rules, and the Exchange’s

request that the Commission adopt an

industry-wide customer price protection

rule, serve to support free and open

markets and the national market system.

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, Participates or Others

The Exchange has neither solicited

nor 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 self-regulatory

organization 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

Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices 58139

6 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Letter from Cindy L. Sink, Senior Attorney,

Regulatory Policy, PCX, to Jennifer L. Colihan,

Attorney, Division of Market Regulation,

Commission, dated September 11, 2000. In

Amendment No. 1, the Exchange deleted the word

‘‘exclusive’’ from Article IV, Section 9(a) of the PCX

Constitution as the Exchange did not intend the

jurisdiction described in that Section to be

exclusive to the Ethics and Business Conduct

Committee (‘‘EBCC’’ or ‘‘Committee’’). Also, the

Exchange represented that the proposed rule change

was approved by the PCX membership on January

27, 2000. Lastly, the Exchange provided an example

of where a Floor Trading Committee (‘‘FTC’’) may

act as the disciplinary committee in place of the

EBCC.

4An example of a situation where an FTC may

act as the disciplinary committee is a ‘‘Marking the

Close’’ trading violation. That is, an incident

involves a market maker changing the quotes at the

close to not accurately reflect the market to improve

the market maker’s position. See Amendment No.

1, supra note 3.

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

6 15 U.S.C. 78f(b)(5).

7 15 U.S.C. 78f(b)(6).

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 4 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 File

No. SR–NYSE–00–37 and should be

submitted by October 18, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–24736 Filed 9–26–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43312; File No. SR–PCX–

00–12]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 by the Pacific

Exchange, Inc. Relating to Disciplinary

Jurisdiction of the Ethics and

Business Conduct Committee

September 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 March 26,

2000, the Pacific Exchange, Inc. (‘‘PCX’’

or ‘‘Exchange’’) 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 the PCX. On September 12,

2000, the PCX filed Amendment No. 1

to the proposed rule change.3 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 PCX proposes to broaden the

jurisdiction of the EBCC to include the

enforcement of rules and regulations

relating to trading, order, decorum,

health, safety, and welfare on the

trading floors.

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

PCX 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 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

Currently, Article IV, Section 9(b) of

the PCX Constitution, regarding the

jurisdiction of the EBCC, states that

‘‘The jurisdiction of this Committee

shall not extend to the enforcement of

rules and regulations of the Floor

Trading Committees relating to trading,

order, decorum, health, safety, and

welfare on the trading floors, or to

hearings held by and sanctions imposed

by such committees relating to such

matters.’’ The Exchange now proposes

to expand the disciplinary jurisdiction

of the EBCC to include the enforcement

of rules and regulations relating to

trading, order, decorum, health, safety,

and welfare on the trading floors by

deleting this provision from the PCX

Constitution.

Currently, these rules and regulations

are within the exclusive jurisdiction of

the FTCs. It is intended that the EBCC

will be used as the primary disciplinary

committee at the Exchange and the

FTCs will retain jurisdiction to hear

disciplinary matters, if necessary. For

example, it may be appropriate to take

a case to an FTC rather than the EBCC

if the case involves technical issues. In

such a case, having the expertise of

Floor Officials would be appropriate.4

The Exchange proposes this change to

centralize disciplinary actions with one

committee at the Exchange. The

Exchange believes that having one

disciplinary committee will better

assure consistency in the decisions

rendered. Moreover, the Exchange notes

that, unlike the EBCC, the members of

the FTCs are Floor Officials on the

trading floors.

In that regard, the Exchange believes

that in the process of adjudicating

disciplinary cases that arise on the

trading floor, it is less likely that the

members of the EBCC will have

personal knowledge of the relevant

incident of a Floor Official ruling

relating to the incident. Therefore, the

Exchange believes that making the

EBCC, in general, the sole disciplinary

committee will result in a more

objective disciplinary process at the

PCX.

2. Basis

The Exchange believes the proposed

rule change is consistent with section

6(b) 5 of the Act, in general, and furthers

the objectives of section 6(b)(5),6 in

particular, in that it is designed to

regulate communications to and from

the Exchange’s Options Trading Floor in

a manner that promotes just and

equitable principles of trade and

protects investors and the public

interest. The proposal is also consistent

with section 6(b)(6) 7 of the Act in that

it is designed to assure that Exchange

members and persons associated with

Exchange members are appropriately

disciplined for violations of the Act, the

rules and regulations thereunder, and

the rules of the Exchange.

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.