60230 Federal Register / Vol. 65, No. 196 / Tuesday, October 10, 2000 / Notices

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

2 17 CFR 240.19b–4.

3 In Amendment No. 1, which was incorporated

into the proposed rule change, CHX replaced a

reference to ‘‘trust issued receipts’’ with a reference

to ‘‘a series of HOLDRs’’ in the text of proposed

Interpretation and Policy .01 to CHX Rule 27. See

Letter from Ellen J. Neely, Vice President and

General Counsel, CHX, to Andrew Shipe, Attorney,

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

Commission, dated June 6, 2000.

4Securities Exchange Act Release No. 42049

(June 28, 2000), 65 FR 42049.

5 In Amendment No. 2, CHX changed all

references to ‘‘HOLDRs’’ in the proposed rule text

to ‘‘trust issued receipts.’’ See Letter from Ellen J.

Neely, Vice President and General Counsel, CHX,

to Heather Traeger, Attorney, Division,

Commission, dated September 5, 2000.

6 In Amendment No. 3, CHX changed the

proposed rule text to clarify that the listing criteria

apply to each ‘‘security’’ underlying the trust issued

receipt, not each ‘‘company.’’ See Letter from Ellen

J. Neely, Vice President and General Counsel, CHX

to Heather Traeger, Attorney, Division,

Commission, dated September 19, 2000.

7 17 CFR 240.19b–4.

8See letter from Scott Van Hatten, Legal Counsel,

Derivative Securities, Amex, to Nancy Sanow,

Assistant Director, Division, Commission, dated

May 24, 2000. In Amendment No. 1, Amex made

several technical changes that were incorporated

into the proposed rule change when it was noticed

in the Federal Register. Amex also clarified that it,

and not the Commission, may approve a series of

HOLDRs for listing pursuant to Rule 19b–4(e)

provided each of the component securities satisfies

the proposed listing criteria.

9Securities Exchange Act Release No. 42895

(June 2, 2000), 65 FR 36853.

10 In Amendment No. 2, Amex changed all

references to ‘‘HOLDRs’’ in the proposed rule text

to ‘‘trust issued receipts.’’ See Letter from Scott Van

Hatten, Legal Counsel, Amex, to Nancy Sanow,

Assistant Director, Division, Commission, dated

August 25, 2000.

11Rule 19b–4(e) provides that the listing and

trading of a new derivative securities product by a

self-regulatory organization (‘‘SRO’’) shall not be

deemed a proposed rule change, pursuant to

paragraph (c)(1) of Rule 19b–4, if the Commission

has approved, pursuant to section 19(b) of the Act,

the SRO’s trading rules, procedures and listing

standards for the product class that include the new

derivative securities product and the self-regulatory

organization has surveillance program for the

product class. 17 CFR 240.19b–4(e).

Managers Trust of which the Investing

Portfolio is a series will hold a meeting

for the purpose of voting on an advisory

contract under section 15 of the Act.

Before approving any advisory contract

for an Investing Portfolio, each such

Board, including a majority of the

Independent Trustees, taking into

account all relevant factors, shall

consider to what extent, if any, the

advisory fee charged to the Investing

Portfolio by the Adviser should be

reduced to account for reduced services

provided to the Investing Portfolio by

the Adviser as a result of Uninvested

Cash being invested in the Money

Market Funds. In connection with this

consideration, the Adviser to the

Investing Portfolio will provide the

Boards with specific information

regarding the approximate cost to the

Adviser of, or portion of the advisory fee

under the existing advisory fee

attributable to, managing the

Uninvested Cash of the Investing

Portfolio that can be expected to be

invested in the Money Market Funds.

The minute books of the Investing

Portfolio will record fully the Boards’

consideration in approving the advisory

contract, including the considerations

referred to above.

4. Each Investing Portfolio will invest

Uninvested Cash in, and hold shares of,

the Money Market Funds only to the

extent that the Investing Portfolio’s

aggregate investment of Uninvested

Cash in all Money Market Funds does

not exceed 25 percent of the Investing

Portfolio’s total assets. For purposes of

this limitation, each Investing Portfolio

will be treated as a separate investment

company.

5. Each Investing Portfolio, each

Money Market Fund, and any future

investment company that may rely on

the order shall be part of the same group

of investment companies as defined in

section 12(d)(1)(G)(ii) of the Act and

shall be advised, or provided the

Adviser manages the Cash Balances,

sub-advised by the Adviser, or a person

controlling, controlled by, or under

common control with the Adviser.

6. No Money Market Fund in which

an Investing Portfolio invests shall

acquire securities of any other

investment company in excess of the

limits contained in section 12(d)(1)(A)

of the Act, except as permitted by

section 12(d)(1)(E) of the Act.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–25865 Filed 10–6–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43396; File No. SR–CHX–

00–16 and SR–Amex–00–10]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change and

Amendment No. 1 Thereto and Notice

of Filing and Order Granting

Accelerated Approval of Amendment

Nos. 2 and 3 by the Chicago Stock

Exchange, Inc. Relating to the Listing

and Trading of Trust Issued Receipts,

and Order Approving Proposed Rule

Change and Amendment No. 1 Thereto

and Notice of Filing and Order

Granting Accelerated Approval of

Amendment No. 2 by the American

Stock Exchange LLC Relating to the

Listing and Trading of Trust Issued

Receipts

September 29, 2000.

I. Introduction

On May 5, 2000, the Chicago Stock

Exchange, Incorporated (‘‘CHX’’), filed

with the Securities and Exchange

Commission (‘‘Commission’’), pursuant

to Section 19(b)(1) of the Securities

Exchange Act of 1934 (‘‘Act’’),1 and

Rule 19b–4 thereunder,2 a proposed rule

change relating to the listing and trading

of trust issued receipts. On June 7, 2000,

CHX filed Amendment No. 1 to the

proposal.3 The proposed rule change

and Amendment No. 1 were published

in the Federal Register on July 7, 2000.4

No comments were received on the

proposal. On September 7, 2000, CHX

filed Amendment No. 2 to the

proposal.5 On September 20, 2000, CHX

filed Amendment No. 3 to the

proposal.6 This notice and order

approves the proposed rule change and

Amendment No. 1, solicits comment

from interested persons on Amendment

Nos. 2 and 3, and approves Amendment

Nos. 2 and 3 on an accelerated basis.

On February 14, 2000, the American

Stock Exchange LLC (‘‘Amex’’)

submitted to the Commission, pursuant

to Section 19(b)(1) of the Act and Rule

19b–4 thereunder,7 a proposed rule

change relating to generic listing

standards for trust issued receipts. On

June 2, 2000, Amex filed Amendment

No. 1.8 The proposed rule change and

Amendment No. 1 were published for

comment in the Federal Register on

June 12, 2000.9 No comments were

received on the proposal. On August 29,

2000, Amex filed Amendment No. 2 to

the proposal.10 This notice and order

approves the proposed rule change and

Amendment No. 1, solicits comment

from interested persons on Amendment

No. 2, and approves Amendment No. 2

on an accelerated basis.

II. Description of the Proposals

The proposals would amend CHX

Article XXVII, Rule 27 and Amex Rule

1202 to provide generic standards that

permit listing and trading, or trading

pursuant to unlisted trading privileges

(‘‘UTP’’), of trust issued receipts

pursuant to Rule 19b–4(e) of the Act.11

This procedure would allow Amex and

CHX to begin trading qualifying

products without the need for notice

and comment and Commission approval

under section 19(b) of the Act, thus

reducing the Exchanges’ regulatory

burden, and benefiting the public

interest.

Amex and CHX believe that their

proposals supplement the existing

Federal Register / Vol. 65, No. 196 / Tuesday, October 10, 2000 / Notices 60231

12The existing Amex and CHX rules provide that

trust issued receipts will be listed and traded, or

traded pursuant to UTP, subject to application of

the following criteria: (a) Initial Listing—For each

trust, the Exchange will establish a minimum

number of trust issued receipts required to be

outstanding at the time of commencement of

trading on the Exchange; (b) Continued Listing—

Following the initial twelve month period following

formation of a trust and commencement of trading

on the Exchange, the Exchange will consider the

suspension of trading in or removal from listing of

a Trust upon which a series of trust issued receipts

is based under any of the following circumstances:

(i) If 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; (ii) if the trust

has fewer than 50,000 receipts issued and

outstanding; (iii) if the market value of all receipts

issued and outstanding is less than $1,000,000; or

(iv) if such other event shall occur or condition

exists which in the opinion of the respective

Exchange, makes further dealings on the Exchange

inadvisable.

13 15 U.S.C. 781.

14 17 CFR 240.19b–4(e).

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

16 15 U.S.C. 78f(b)(5). In approving these rules,

the Commission notes that is has considered the

proposed rules’ impact on efficiency, competition,

and capital formation. 15 U.S.C. 78c(f).

17See Securities Exchange Act Release No. 40761

(December 8, 1998), 63 FR 70952 (December 22,

1998).

18See, e.g., Securities Exchange Act Release No.

42056 (October 22, 1999), 64 FR 58870 (November

1, 1999) (CHX); Securities Exchange Act Release

No. 41892 (September 21, 1999), 64 FR 52559

(September 29, 1999) (Amex).

rules 12 with generic listing criteria

meant, in part, to ensure that no security

underlying a trust issued receipt will be

readily susceptible to manipulation,

while permitting sufficient flexibility in

the construction of various trust issued

receipts to meet investors’ needs. Amex

and CHX further believe that the

additional criteria are meant to ensure

sufficient liquidity for investors seeking

to purchase and deposit the underlying

securities with the trustee to create a

new trust issued receipt.

Thus, under the proposals, Amex and

CHX could list or trade, pursuant to

Rule 19b–4(e), any trust issued receipt

product that met the following

additional criteria: (1) Each component

security in the trust issued receipt must

be registered under Section 12 of the

Act,13 (2) each component security

underlying the trust issued receipt must

have a minimum public float of at least

$150 million; (3) each component

security underlying the trust issued

receipt must be listed on a national

securities exchange or traded through

the facilities of Nasdaq as a reported

national market system security; (4)

each component security underlying the

trust issued receipt must have an

average daily trading volume of at least

100,000 shares during the preceding

sixty-day trading period; and (5) each

component security underlying the trust

issued receipt must have an average

daily dollar value of shares traded

during the preceding sixty-day trading

period of at least $1 million. In addition,

no underlying security may initially

represent more than 20% of the overall

value of the receipt.

Finally, Amex and CHX will comply

with the recordkeeping requirements of

Rule 19b–4(e), and will file Form 19b–

4(e) for each trust issued receipt listed

under the rule within five business days

of commencement of trading.14

III. Discussion

After careful review, the Commission

finds that the proposed rule changes are

consistent with the requirements of the

Act and the rules and regulations

thereunder applicable to a national

securities exchange, and, in particular,

with the requirements of section

6(b)(5).15 Specifically, the Commission

finds that the proposals to provide

generic standards to permit listing and

trading of trust issued receipts pursuant

to Rule 19b–4(e) further the intent of

that rule by facilitating commencement

of trading in these securities without the

need for notice and comment and

Commission approval under section

19(b) of the Act. By establishing generic

standards, the proposals should reduce

Amex and CHX’s regulatory burden, as

well as benefit the public interest, by

enabling Amex and CHX to bring

qualifying products to the market more

quickly. Accordingly, the Commission

finds that Amex and CHX’s proposals

will promote just and equitable

principles of trade, foster cooperation

and coordination with persons engaged

in regulating, clearing, settling,

processing information with respect to,

and facilitating transactions in

securities, and, in general, protect

investors and the public interest

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

Act.16

Rule 19b–4(e) provides that the listing

and trading of a new derivative

securities product by an SRO shall not

be deemed a proposed rule change,

pursuant to paragraph (c)(1) of Rule

19b–4, if the Commission has approved,

pursuant to section 19(b) of the Act, the

SRO’s trading rules, procedures and

listing standards for the product class

that include the new derivative

securities product and the SRO has a

surveillance program for the product

class.17

As described above, the Commission

has previously approved Amex and

CHX rules that permit the listing and

trading of individual trust issued

receipts on the Exchanges or pursuant to

UTP.18 In approving these securities for

trading, the Commission considered

their structure, their usefulness to

investors and the markets, and the

Exchanges’ rules and surveillance

programs that govern their trading. The

Commission concluded then that

securities approved for listing under

those rules would allow investors to: (1)

Respond quickly to changes in the

overall securities markets generally and

for the industry represented by a

particular trust; (2) trade, at a price

disseminated on a continuous basis, a

single security representing a portfolio

of securities that the investor owns

beneficially; (3) engage in hedging

strategies similar to those used by

institutional investors; (4) reduce

transactions costs for trading a portfolio

of securities; and (5) retain beneficial

ownership of the securities underlying

the trust issued receipts. The

Commission believes, for the reasons set

forth below, that additional trust issued

receipts that satisfy the proposed

generic standards and, therefore, can be

listed under Rule 19b–4(e) without prior

Commission approval, should produce

the same benefits to Amex and CHX and

to investors.

The Commission further believes that

adopting generic listing standards for

these securities and applying Rule 19b–

4(e) should fulfill the intended objective

of that rule by allowing those trust

issued receipt products that satisfy the

generic standards to start trading,

without the need for notice and

comment and Commission approval.

Amex and CHX’s ability to rely on Rule

19b–4(e) potentially reduces the time

frame for bringing these securities to the

market or for permitting the trading of

these securities pursuant to UTP, and

thus enhances investors’ opportunities.

The Commission notes that while the

proposals reduce the Exchanges’

regulatory burden, the Commission

maintains regulatory oversight over any

products listed under the generic

standards through regular inspection

oversight.

The Commission finds that Amex and

CHX’s proposals contain adequate rules

and procedures to govern the listing and

trading of trust issued receipts pursuant

to Rule 19b–4(e) on the Amex or CHX,

or pursuant to UTP. As the Commission

noted in its previous review and

approval of CHX Article XXVIII, Rule

27, and Amex Rules 1200 et seq., all

trust issued receipt products listed

under the generic standards will be

subject to the full panoply of Amex and

CHX rules and procedures that now

govern both the trading of trust issued

60232 Federal Register / Vol. 65, No. 196 / Tuesday, October 10, 2000 / Notices

19 Id.

20 15 U.S.C. 78f(b)(5).

21See note 18, supra.

22 Id.

23 15 U.S.C. 78f(b)(5).

24 15 U.S.C. 78s(b)(5). 25 15 U.S.C. 78s(b)(5).

receipts and the trading of equity

securities on the Amex and CHX,

including, among others, rules and

procedures governing trading halts,

disclosures to members, responsibilities

of the specialist, account opening and

customer suitability requirements, the

election of a stop or limit order, and

margin.19

The Commission further finds that: (1)

By requiring that the underlying

securities in a trust issued receipt are

registered under section 12 of the Act

and listed on a national securities

exchange or Nasdaq and (2) by

establishing minimum values for the

number of outstanding receipts, average

daily trading volume, average daily

dollar volume, and public float, the

Exchanges’ proposed listing criteria will

help to ensure that a minimum level of

liquidity will exist to allow for the

maintenance of fair and orderly markets

for those trust issued receipt products

listed and traded pursuant to Rule 19b–

4(e). The Commission believes that

these listing criteria will help to ensure

that no security underlying a trust

issued receipt will be readily

susceptible to manipulation, while

permitting sufficient flexibility in the

construction of various trust issued

receipts to meet investors’ needs. The

Commission further believes that these

criteria should serve to ensure that the

underlying securities of such trust

issued receipts are well capitalized and

actively traded, which will help to

ensure that U.S. securities markets are

not adversely affected by the listing and

trading of new trust issued receipts

under Rule 19b–4(e). Accordingly, the

Commission finds that these criteria are

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

Act, because they serve to prevent

fraudulent or manipulative acts;

promote just and equitable principles of

trade; remove impediments to and

perfect the mechanism of a free and

open market and a national market

system; and protect investors and the

public interest.20

Additionally, as the Commission

noted in its previous review and

approval of CHX Article XXVIII, Rule

27, and Amex Rules 1200 et seq., the

Exchanges’ delisting criteria allow them

to consider the suspension of trading

and the delisting of a trust issued

receipt if an event occurs that makes

further dealings in such securities

inadvisable. This will give Amex and

CHX flexibility to delist trust issued

receipts if circumstances warrant. The

proposals also rely on procedures to halt

trading in trust issued receipts in certain

enumerated circumstances that were

approved previously by the

Commission.21

The Commission notes that, in

connection with its previous review and

approval of CHX Article XXVIII, Rule

27, and Amex rules 1200 et seq., it

approved the Exchanges’ minimum

price increments, their surveillance

procedures, and their disclosure and

prospectus delivery requirements for

trust issued receipts.22 In accord with

these previous findings, the

Commission believes that these rules,

which will govern the trading of trust

issued receipt products listed pursuant

to Rule 19b–4(e), will provide adequate

safeguards to prevent manipulative acts

and practices and to protect investors

and the public interest. Further, the

Commission believes that the proposals

will ensure that investors have

information that will allow them to be

adequately apprised of the terms,

characteristics, and risk of trading trust

issued receipts.

Finally, Amex and CHX will file Form

19–4(e) with the Commission within

five business days of commencement of

trading a trust issued receipt under the

generic standards, and will comply with

all Rule 19–4(e) recordkeeping

requirements.

Accordingly, the Commission believes

that Amex and CHX’s proposed rules

governing the listing and trading of trust

issued receipts pursuant to Rule 19–4(e)

provide adequate safeguards to prevent

manipulative acts and practices and to

protect investors and the public interest,

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

Act.23

The Commission finds good cause for

approving Amendments No. 2 to the

CHX and Amex proposed rule changes

prior to the thirtieth day after the date

of publication of notice in the Federal

Register, pursuant to section 19(b)(2) of

the Act. Amendments No. 2 to the

proposed rule changes established that

the proposed generic standards are for

the listing and trading of all trust issued

receipts that satisfy the proposed

standards. The proposed generic

standards are not limited to HOLDRs, a

type of trust issued receipt. Because the

amendments establish the scope of the

proposed rule change, the Commission

believes that it is necessary to approve

them at the same time as approving the

proposed rule changes. Accordingly, the

Commission finds that there is good

cause, consistent with section 6(b)(5) of

the Act,24 to approve Amendments No.

2 to the proposals on an accelerated

basis.

The Commission also finds good

cause for approving Amendment No. 3

to the CHX proposed rule change prior

to the thirtieth day after the date of

publication of notice in the Federal

Register pursuant to section 19(b)(2) of

the Act. Amendment No. 3 changes the

CHX proposed rule text to clarify that

the listing criteria apply to the specific

‘‘security’’ underlying the trust issued

receipt, and not to the ‘‘company’’

underlying the trust issued receipt. The

Commission believes that this

clarification is significant. A company

could have multiple issues, only one of

which underlies the trust issued receipt.

If the text of the proposed rule change

used the word ‘‘company,’’ the aggregate

values for all issues of the company

could meet the listing criteria for

minimum daily float, daily trading

volume and daily dollar volume; yet,

these values would not be an accurate

accounting of the value of the specific

security that underlies the trust issued

receipts. Thus, it is conceivable that a

security underlying a trust issued

receipt might not satisfy the proposed

listing criteria, but the company’s

securities as a whole would satisfy the

proposed criteria. Because Amendment

No. 3 changes the proposed rule text to

specify that it is the individual security

that must be evaluated for listing

purposes, the Commission believes that

it is necessary to approve it at the same

time as approving the proposed rule

changes. Accordingly, the Commission

finds that there is good cause, consistent

with section 6(b)(5) of the Act,25 to

approve CHX Amendment No. 3 on an

accelerated basis.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning both Amex

Amendment No. 2 and CHX

Amendment Nos. 2 and 3, including

whether those amendments are

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

Federal Register / Vol. 65, No. 196 / Tuesday, October 10, 2000 / Notices 60233

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

4On October 13, 1999, the Commission approved,

on a pilot basis, the CHX’s proposed rule change

that allowed the CHX to implement an extended

hours trading session. See Securities Exchange Act

Release No. 42004 (October 13, 1999), 64 FR 56548

(October 20, 1999)(SR–CHX–99–16). The

Commission recently approved the CHX’s proposal

to make the E-Session a permanent part of the

CHX’s operations. See Securities Exchange Act

Release No. 43304 (September 19, 2000), 65 FR

57850 (SR–CHX–00–26). The E-Session takes place

from 3:30 p.m. to 5:30 p.m., Central Time, Monday

through Friday.

5See Securities Exchange Act Release No. 42784

(May 15, 2000), 65 FR 33383 (May 23, 2000 (SR–

CHX–00–12).

6 15 U.S.C. 78f(b)(4).

7 15 U.S.C. 78s(b)(3)(A)(ii).

8 17 CFR 240.19b–4(f)(2).

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

available for inspection and copying at

the Commission’s Public Reference

Room. 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–CHX–00–16 or SR–Amex–00–10

and should be submitted by October 31,

2000.

V. Conclusion

For the foregoing reasons, the

Commission finds that Amex and CHX’s

proposals relating to the listing and

trading of trust issued receipts pursuant

to Rule 19–4(e) are consistent with the

requirements of the Act and rules and

regulations thereunder.

It is therefore ordered, pursuant to

section19(b)(2) of the Act,26 that the

proposed rule change (SR–CHX–00–16),

as amended, and the proposed rule

change (SR–Amex–00–10), as amended,

are approved.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.27

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–25866 Filed 10–6–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43402; File No. SR–CHX–

00–29]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Chicago Stock Exchange, Incorporated

Relating to Fees for the E-Session

October 2, 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 22, 2000, the Chicago Stock

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

Exchange had designated this proposal

as one establishing or changing a due,

fee, or other charge imposed by the CHX

under section 19(b)(3)(A)(ii) 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.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to amend its

membership dues and fees schedule (the

‘‘Schedule’’) to provide Exchange

specialists and floor brokers with a

credit of $.25 per trade executed during

the Exchange’s extended hours trading

session (‘‘E-Session’’) 4 through

December 31, 2000. The text of the

proposed rule change is below.

Additions are in italics. Deletions are in

brackets.

Membership Dues and Fees

* * * * *

M. Credits

1. Specialists Credits

Total monthly fees owed by a specialist to

the Exchange will be reduced (but to no less

than zero) by the application of the following

[transaction] credits:

a. No change to text.

b. No change to text.

c. E-Session Credits. A credit of $.25 per

trade executed during the E-Session. This

credit shall be available through December

31, 2000 [October 1, 2000].

2. Floor Broker Credits

a. No change to text.

b. No change to text.

c. E-Session Credits. Total monthly fees

owed by a floor broker to the Exchange will

also be reduced (but to no less than zero) by

the application of an E-Session Credit. ‘‘ESession Credit’’ means a credit of $.25 per

trade executed during the E-Session. This

credit shall be available through December

31, 2000 [October 1, 2000].

* * * * *

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 Section 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 October 29, 1999, the Exchange

implemented the E-Session, which

permits investors to submit limit orders

for execution until 5:30 p.m., Central

Time. To encourage members to seek

additional order flow during the ESession, the Exchange developed an ESession credit program that provides

Exchange specialists and floor brokers

with a credit of $.25 per trade executed

during the E-Session. The credit

program was effective on filing with the

Commission in May 2000,5 and is

scheduled to expire on October 1, 2000.

This proposal extends the E-Session

credit program through December 31,

2000.

2. Statutory Basis

The Exchange believes the proposed

rule change is consistent with Section

6(b)(4) of the Act 6 in that it provides for

the equitable allocation of reasonable

dues, fees and other charges among its

members.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any inappropriate burden on

competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No written comments were solicited

or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The proposed rule change has become

effective pursuant to Section

19(b)(3)(A)(ii) of the Act 7 and

subparagraph (f)(2) of Rule 19b–4

thereunder,8 because it involves a due,

fee, or other charge. At any time within

60 days of the filing of the proposed rule

change, the Commission may summarily