59242 Federal Register / Vol. 65, No. 193 / Wednesday, October 4, 2000 / Notices

14See letter from Mark J. Mackey, President and

Chief Executive Officer, NAVA, to John M. Ramsay,

Vice President and Deputy General Counsel, Office

of General Counsel, NASD Regulation, dated April

16, 1999. 15NASD Rule 2820(a) states ‘‘[t]his Rule shall

apply exclusively (and in lieu of Rule 2830) to the

activities of members in connection with variable

contracts, to the extent such activities are subject

to regulation under the federal securities laws.’’ 16 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 Exchange made

technical corrections to the rule language and made

non-substantive changes to the purpose section of

the filing for clarity. See letter from Cindy L. Sink,

Senior Attorney, Regulatory Policy, PCX to Jennifer

L. Colihan, Division of Market Regulation,

Commission, dated September 20, 2000.

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

Written comments were not solicited.

However, NASD Regulation received a

letter from the National Association for

Variable Annuities (‘‘NAVA’’), which

argues that the non-cash compensation

rules do not apply to sales of group

variable annuities for several reasons.14

First, NAVA contends that the specific

language of NASD Rule 2820 limits its

application to activities of members in

connection with variable contracts, to

the extent such activities are subject to

regulation under the federal securities

laws.15 However, although certain

provisions of the federal securities laws

do not apply to exempted securities,

other provisions of the federal securities

laws do apply, including the anti-fraud

provisions. Therefore, NASD Rule

2820(a) does not restrict the application

of NASD Rule 2820(g) to group variable

activities.

Second, NAVA argues that because

NASD Rule 2820(g) was not specifically

included in the 1996 Order’s list of

NASD rules applicable to exempted

securities, the non-cash compensation

provisions do not apply to sales of

group variables. As described above,

NASD Rule 2820(g) had not been

adopted at the time the NASD identified

the NASD rules that would apply to

exempted securities, other than

municipal securities. Accordingly,

NASD Rule 2820(g) was not listed as

one of the provisions applicable to

exempted securities.

Third, NAVA argues that if the noncash compensation rules do apply to

group variables, separate contests

should be permissible for group variable

products given their different design,

cost structures and commission payouts.

With respect to the allowance of

separate contests for group variable

products, NASD Regulation staff has

stated in Question #22 of Notice to

Member 99–55 (July 1999) that a

member may structure a non-cash

arrangement that is limited only to a

specific division of the firm. Therefore,

if a separate sales force or division sells

group variable contracts, as the NAVA

letter indicates often occurs, then a

separate contest may be appropriate.

However, where the same salesperson

sells both group variable products and

individual variable annuities, separate

contests would not be permissible, i.e.,

the contest must be based on the entire

universe of products within a specific

product category that the individual

sells.

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 Exchange 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

change and Amendment No. 1 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

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 NASD. All

submissions should refer to file number

SR–NASD–00–38 and should be

submitted by October 19, 2000.16

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–25441 Filed 10–3–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43342; File No. SR–PCX–

00–08]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 Thereto by the

Pacific Stock Exchange, Inc. Relating

to the Dissolution of the Appointments

Committee

September 26, 2000.

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

Securities Exchange Act of 1934

(‘‘Act’’),1and Rule 19b–4 thereunder,2

notice is hereby given that on March 20,

2000, the Pacific Stock Exchange, Inc.

(‘‘PCX’’ or the ‘‘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.

On September 21, 2000, the Exchange

filed Amendment No. 1 to the

proposal.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 Exchange has filed with the

Commission a proposed rule change to

dissolve the Options Appointments

Committee and to transfer all powers of

the Options Appointments Committee

to the Options Allocation Committee.

The text of the proposed rule change is

available at the Office of the Secretary,

the PCX and at 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

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 PCX has prepared

summaries, set forth in Sections A, B,

and C below, of the most significant

aspects of such statements.

Federal Register / Vol. 65, No. 193 / Wednesday, October 4, 2000 / Notices 59243

4See PCX Rules 6.35, 6.37, 6.82, 11.10(c).

5See PCX Rules 6.35 and 6.82.

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

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

8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

Current PCX rules state that the duty

of the Options Appointment Committee

is to recommend to the Board of

Governors the appointment, assignment,

retention, reassignment, transfer, and

taking leave of the privileges to deal in

and trade options to, by, and among

members on the Options Trading Floor.4

The Options Appointment Committee is

also responsible for appointing Market

Makers and appointing and approving

Lead Market Makers (‘‘LMMs’’).5 The

Options Appointment Committee may

relieve LMMs of their appointments,

designate interim LMMs, and make

determinations pertaining to LMMrelated issues not within the jurisdiction

of any other standing committee. The

Exchange proposes to eliminate the

Options Appointment Committee and to

transfer all of its authority and duties to

the Options Allocation Committee, in

order to centralize the PCX rules

relating to the approval, evaluation,

allocation to, and appointment of

LMMs.

Specifically, the Exchange proposes to

change all references to the ‘‘Options

Appointment Committee’’ in PCX Rule

11.10(a), to the ‘‘Options Allocation

Committee’’ and to transfer the language

of PCX Rule 11.10(a), relating to the

current duties of the Options

Appointment Committee, to the Options

Allocation Committee under new

proposed PCX Rule 11.10(b)(2). The

Exchange also proposes to renumber

PCX Rule 11.10(b) as 11.10(a) and PCX

Rule 11.10(c) as 11.10(b)(1). The

Exchange believes that these changes

will make the application of the transfer

of all authority and duties from the

Options Appointment Committee to the

Options Allocation Committee

consistent throughout the text of PCX

Rule 11.

The Exchange also proposes to change

the references to the ‘‘Options

Appointment Committee’’ in PCX Rules

6.35; 6.37; Commentary .08; 6.82(a)(1)

and (3); 6.82(b)(1) and (2); 6.82(f)(3);

6.82(g)(1); and 6.82(h)(1) to the

‘‘Options Allocation Committee.’’ The

Exchange believes that these changes

will make all rules referencing or

relating to the Options Appointment

Committee consistent with that

committee’s elimination and the

delegation of its duties and powers to

the Options Allocation Committee.

2. Statutory Purpose

The Exchange believes that the

proposed rule changes are consistent

with Section 6(b) of the Act,6 in general,

and further the objectives of Section

6(b)(5),7 in particular, in that they are

designed to promote just and equitable

principles of trade, to enhance

competition and to protect investors and

the public interest.

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 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 neither solicited nor

received written comments with respect

to 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 Amex 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, N.W.,

Washington, D.C. 20549–0609. Copies of

the submissions, 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 persons, 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 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 PCX. All

submissions should refer to File No.

SR–PCX–00–08 and should be

submitted by October 25, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–25439 Filed 10–3–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43343; File No. SR–Phlx–

00–80]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc. To

Waive Transaction and Comparison

Fees on Customer Equity Option

Orders.

September 26, 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 1, 2000, the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’ 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 Phlx. 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 Phlx proposes to amend its

schedule of dues, fees and charges to

waive all comparison and transaction

charges for customers trading equity

options. The proposed fee is effective on

September 1, 2000.

The text of the proposed rule change

is available at the Phlx and the

Commission.