Federal Register / Vol. 65, No. 200 / Monday, October 16, 2000 / Notices 61207

8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See August 4, 2000 letter from Jurij Trypupenko,

Esq. (‘‘Trypupenko’’), PHLX, to Alton S. Harvey

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

(‘‘Division’’), SEC, and attachment (‘‘Amendment

No. 1’’). Amendment No. 1 converts the original

filing to a non-controversial proposal pursuant to

Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)

thereunder, which renders the proposal effective

upon filing with the Commission. The Commission

accepts the original proposal as notice of the

PHLX’s intention to file the proposed rule change

as a non-controversial proposal. See 15 U.S.C.

78s(b)(3)(A) and 17 CFR 240.19b–4(f)(6)(iii).

4See August 31, 2000 letter from Trypupenko,

PHLX, to Harvey, Division, SEC and attachment

(‘‘Amendment No. 2’’). In Amendment No. 2, the

PHLX deleted references to decimal ‘‘trading’’ and

added language to refer to ‘‘quoting’’ and ‘‘pricing’’

in decimals. Amendment No. 2 also included

proposed language to reflect an amendment to the

Intermarket Trading System Plan regarding decimal

pricing. See also September 7, 2000 letter from

Trypupenko, PHLX, to Harvey, Division, SEC

(‘‘Amendment No. 3’’). In Amendment No. 3, the

Exchange deleted section (c) of proposed Rule 1034.

See also October 6, 2000 letter from Trypupenko,

PHLX, to Harvey, Division, SEC (‘‘Amendment No.

4’’). In Amendment No. 4, the PHLX made minor,

technical corrections to certain proposed rule

language.

5 15 U.S.C. 78s(b)(3)(A).

6 17 CFR 240.19b–4(f)(6).

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 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, as amended, 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 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 the File No. SR–Amex–00–46 and

should be submitted by November 6, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–26465 Filed 10–13–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43421; File No. SR–PHLX–

00–05]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change and

Amendment Nos. 1–4 by the

Philadelphia Stock Exchange, Inc.

Relating to Decimal Pricing

October 6, 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 January

10, 2000, the Philadelphia Stock

Exchange, Inc. (‘‘PHLX’’ 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 PHLX. On

August 7, 2000, the Exchange filed an

amendment to the proposed rule

change, which amendment completely

replaced and superseded the original

filing.3 Subsequently, the PHLX filed

three additional amendments to the

proposed rule change.4 The PHLX filed

the proposal pursuant to Section

19(b)(3)(A) of the Act,5 and Rule 19b–

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

proposal effective upon filing with the

Commission. The Commission is

publishing this notice to solicit

comments on the proposed rule change,

as amended, 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 rules

to provide for the implementation of

decimal pricing, in accordance with the

joint submission to the Commission by

the PHLX and other interested parties

dated July 24, 2000, entitled ‘‘Decimals

Implementation Plan for the Equities

and Options Markets’’ (‘‘Decimal Plan’’).

Proposed new PHLX Rule 134

establishes that, during the

decimalization phase-in period

established by the Decimals Plan,

securities will be priced in fractions and

in decimals, and that the Exchange may

issue decimalization guidelines to its

members, member organizations,

participants, and participant

organizations regarding, among other

things, what equities and options on

equities will be quoted in decimals and

when, the timing of partial or full

conversion to decimal pricing, and open

order conversion and dividend

processing.

In addition, the PHLX proposes to

amend the following Options Advices:

A–9, All-or-None Option Orders; A–11,

Responsibility to Make Ten-Up Markets;

B–11, Crossing, Facilitation and

Solicited Orders; and F–6, Option Quote

Parameters. The Exchange believes that

the proposed amendments to these

provisions are non-controversial in

nature, and are necessary for the

Exchange to convert from fraction to

decimal pricing in accordance with the

Decimals Plan.

Finally, the PHLX proposes to amend

Rule 2001 to conform to the rule to

amendments made to the Intermarket

Trading System Plan.

The text of the proposed rule change,

as amended, is available at the PHLX

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

PHLX 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

PHLX has prepared summaries, set forth

in Sections A, B and C below, of the

most significant aspects of such

statements.

61208 Federal Register / Vol. 65, No. 200 / Monday, October 16, 2000 / Notices

7Securities Exchange Act Release No. 42914

(June 8, 2000), 65 FR 38010 (June 19, 2000). 8 15 U.S.C. 78f.

9 15 U.S.C. 78f(b)(5).

10 15 U.S.C. 78s(b)(3)(A).

11 17 CFR 240.19b–4(f)(6).

12The Decimals Plan contemplates that the

options exchanges may wish to consider a pilot

program for one-cent minimum price variations for

quoting in a limited number of options (‘‘Penny

Pilot’’) at some point in the implementing process.

The Commission expects that, before implementing

a Penny Pilot, the options exchanges will carefully

coordinate on such issues as the selection and

number of options to be included in the pilot to

ensure the continued orderly operation of the

markets and clearing organizations. In particular,

the Commission expects that the options exchanges

will consult with the Commission regarding the

impact on market-wide capacity. Before

implementing a Penny Pilot, each options exchange

should also submit appropriate rule filings to the

Commission under Section 19(b) of the Exchange

Act.

The Decimals Plan provides for minimum price

variations for equities and options of no less than

one cent. The Commission’s June 8th Order requires

the Participants to submit joint or individual

studies two months after Full Implementation (as

defined in the Decimals Plan) regarding the impact

of decimal pricing on systems capacity, liquidity,

and trading behavior, including an analysis of

whether there should be a uniform minimum

quoting increment. If a Participant wishes to move

to quoting in an increment of less than one cent,

the Participant should include in its study a full

analysis of the potential impact of such trading on

the Participant’s market and the markets as a whole.

Within thirty days after submitting the study, and

absent Commission act, the Participants

individually must submit for notice, comment, and

Commission action, proposed rule changes under

Section 19(b) of the Act to establish their individual

choice of minimum increments by which equities

or options are quoted on their respective markets.

13For 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). For purposes of calculating the 60-day

abrogation period, the Commission considers the

period to begin as of the date of filing of the most

recent substantive amendment, September 7, 2000.

14 17 CFR 200.30–3(a)(12).

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The PHLX proposes to amend certain

Exchange Rules and Options Advices to

comply with the implementation of

decimal pricing pursuant to the

Commission’s June 8, 2000 Order.7 The

PHLX believes these changes are needed

to implement decimal pricing on August

28, 2000, and thereafter in phases in

accordance with the Decimals Plan.

The proposed amendments to certain

Rules and Options Advices would

clarify existing language that refers only

to pricing in fractions. The PHLX

proposes to add language that is

applicable to both fractional and

decimal pricing. Other PHLX Rules and

Options Advices contain examples in

fractions. The Exchange proposes to add

decimal equivalents.

The proposed rule changes

incorporate the quoting increment

requirements of the Decimals Plan.

Thus, the proposed amendment to

PHLX Rule 125 establishes the $.01

Minimum Price Variation (‘‘MPV’’) for

equities pricing in decimals. The

proposed amendment to PHLX Rule

1034 establishes the $3.00 or higher and

the $.05 MPV for options quoting at

under $3.00, while PHLX Rule 1014

establishes quote spread parameters in

fractions and decimals. Proposed PHLX

Rule 134 allows the Exchange to issue

guidelines to members as needed

throughout the decimalization phase-in

period.

2. Statutory Basis

The PHLX believes that the proposal

is consistent with Section 6 of the Act 8

in general, and with the provisions of

Section 6(b)(5) of the Act 9 in particular,

in that it is designed to promote just and

equitable principals of trade, foster

cooperation and coordination with

persons engaged in regulating, clearing,

settling, processing information with

respect to, and facilitating transactions

in securities, remove impediments to

and perfect the mechanism of a free and

open market and a national market

system, and, in general, protect

investors and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The PHLX does not believe that the

proposed rule change will impose any

inappropriate burden on competition.

C. Self-Regulatory Organization’s

Statement on Comment 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

from 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 10 and Rule 19b–4(f)(6)

thereunder.11 At any time within 60

days of the filing 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 PHLX has requested that the

Commission accelerate the operative

date. The Commission finds good cause

to designate the proposal, as amended,

to become immediately operative upon

filing, because such designation is

consistent with the protection of

investors and the public interest.12

Acceleration of the operative date will

ensure that the PHLX is able to operate

in accordance with the terms and

conditions of the Decimals Plan. For

these reasons, the Commission finds

good cause to designate that the

proposal, as amended, become operative

immediately upon filing.13

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, 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 PHLX. All

submissions should refer to file number

SR–PHLX–00–05 and should be

submitted by November 6, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.14

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–26464 Filed 10–13–00; 8:45 am]

BILLING CODE 8010–01–M