5922 Federal Register / Vol. 65, No. 25 / Monday, February 7, 2000 / Notices

4 Department of the Treasury, IRS REG–104641–

97, 63 FR 34616 (June 25, 1998).

5 Department of the Treasury, IRS REG–104641–

97, 65 FR 3812 (January 25, 2000).

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

7 Id.

8 In addition, pursuant to Section 3(f) of the Act,

the Commission has considered the proposed rule’s

impact on efficiency, competition, and capital

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

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

10The Commission expects that the Options

Disclosure Document (‘‘ODD’’) will promptly be

amended to reflect the removal of the risk strike

price limitation for FLEX equity call options. See

October 1996 Supplement to the ODD. Telephone

call between Timothy Thompson, Director,

Regulatory Affairs, CBOE, and Katherine A.

England, Assistant Director, Division of Market

Regulation, Commission, on January 31, 2000.

11See Release No. 34–40584 (October 21, 1998),

63 FR 58080 (October 29, 1998) (notice of filing of

SR–CBOE–98–39.)

12 15 U.S.C. 78f.

13 15 U.S.C. 78s(b)(2).

14 17 CFR 200.30–3(a)(12)

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

2 17 CFR 240.19b–4.

The Internal Revenue Service (‘‘IRS’’)

reviewed this issue and proposed

rulemaking that would not require that

strike prices established by equity

options with flexible terms be taken into

account in determining whether

standard term equity options are too

deep in the money to receive qualified

covered call treatment.4 The IRS

approved this proposal on January 25,

2000.5 The effect of the IRS rulemaking

and the Exchange’s proposed

withdrawal of the limitation on the

exercise price of Equity FLEX call

options is that certain taxpayers,

particularly institutional and other large

investors, can engage in transactions in

Equity FLEX call options with a wider

range of exercise prices (as was

originally intended) without affecting

the applicability of Section 1092 of the

Internal Revenue Code for qualified

covered call options involving equity

options with standard terms.

The Exchange believes that the

proposed rule change, by eliminating a

restriction on Equity FLEX call options

which has restricted their usefulness as

a risk managing mechanism, will

remove impediments to and perfect the

mechanism of a free and open market in

FLEX Equity Options, and thus is

consistent with the objectives of Section

6(b)(5) 6 of the Act.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

and furthers the objectives of Section

6(b)(5) 7 of the Act in that it is designed

to remove impediments to a free and

open market and to protect investors

and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The CBOE does not believe that the

proposed rule change will impose any

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 with respect to the proposed

rule change.

III. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing,

including whether the proposed rule is

consistent wit 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 CBOE. All

submissions should refer to File No.

SR–CBOE–99–63 and should be

submitted by February 28, 2000.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

After careful review, the Commission

finds that the proposal is consistent

with the requirements of the Act.8 In

particular, the Commission finds the

proposal is consistent with Section

6(b)(5) 9 of the Act. Section6(b)(5)

requires, among other things, that the

rules of an exchange be designed to

remove impediments to a free and open

market and to protect investors and the

public interest.

The Commission believes that the

proposal allows sophisticated, high networth investors to take full advantage of

FLEX options. In part, FLEX options

were created to allow investors to

manage their risks by having the ability

to negotiate strike prices, contract terms

for exercise style (i.e., American,

European, or capped), and expiration

dates. However, because of the potential

adverse tax effect on qualified covered

calls, the Exchange limited FLEX call

strike prices to those available for

standardized equity calls. Now that the

tax issue has been clarified, this

limitation is being removed. With the

removal of this limitation, the

Commission believes that sophisticated,

high net-worth investors will better be

able to take advantage of the riskmanagement mechanisms provided by

FLEX options. 10

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice thereof in the

Federal Register. A virtually identical

proposal, SR–CBOE–98–39, was

published in the Federal Register for

the full 21-day comment period and the

Commission received no public

comment.11 CBOE later withdrew SR–

CBOE–98–39 because the IRS had not

yet acted on its proposed rulemaking.

The current proposal mirrors the

changes that were originally proposed

in SR–CBOE–98–39. In addition, the

proposal allows FLEX options to be

used as they were originally intended to

be used, and therefore raises no new

regulatory issues. The Commission

believes, therefore, that granting

accelerated approval to the proposed

rule change is appropriate and

consistent with Section 6 of the Act.12

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,13 that the

proposed rule change (SR–CBOE–98–

39) is hereby approved on an

accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.14

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–2606 Filed 2–4–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42365; File No. SR–Phlx–

99–46]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.

Relating to Registration of Trading

Floor Personnel

January 28, 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 November

19, 1999, the Philadelphia Stock

Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’)

Federal Register / Vol. 65, No. 25 / Monday, February 7, 2000 / Notices 5923

3The Phlx’s current practice is to administer an

examination to specialists, market makers and other

floor trading personnel before giving them access to

the trading floor. This examination, developed by

the Phlx, is undergoing conversion from a paper test

to a computer-generated test of 100 random

questions covering Phlx trading rules. Although the

Phlx does not currently administer an examination

to clerks and other ‘‘non-member’’ floor personnel,

the Phlx will explore the feasibility of such a test

during the current year. Telephone conversion

among Adrienne Hart, First Vice President,

Regulatory Group, Cynthia Hoekstra, Counsel, Phlx,

and Joseph Morra and Geoffrey Pemble, Attorneys,

Division of Market Regulations, SEC, December 10,

1999.

4Regulation 7 was enacted pursuant to Phlx Rule

60, Assessments for Breach of Regulations. See

Securities Exchange Act Release No. 27629 (January

16, 1990), 55 FR 2469 (Jan. 24, 1990) (File No. SR–

Phlx–90–1).

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

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 adopt new Phlx

Rule 620, Trading Floor Registration.

The proposed rule requires that all

trading floor personnel be registered

with the Exchange; trading floor

personnel successfully complete

specified examinations,3 and all

member/participant organizations notify

the Exchange of any change in the status

of such personnel. The Exchange also is

proposing to amend Regulation 7(b),

Required Filing for Floor Member Firm

Employee Status Notices with the

Exchange, to include members, nonmembers and clerks to be consistent

with the test of new Phlx Rules 620.4

Proposed new language is in italics;

proposed deletions are in brackets.

* * * * *

Rule 620. Trading Floor Registration

(a) Trading Floor Member

Registration—Registered Options Trader

on any Exchange trading floor must

register as such with the Exchange by

completing the appropriate form(s)

(with period updates submitted by the

firm, as determined by the Exchange)

and successfully complete the

appropriate floor trading

examination(s), if prescribed by the

Exchange, in addition to requirements

imposed by other Exchange rules. The

Exchange may also require periodic

examinations due to changes in trading

rules, products or automated systems.

Following the termination of, or the

initiation of a change in the trading

status of any such members/participant

who has been issued an Exchange

access card and a trading floor badge,

the appropriate Exchange form must be

completed, approved and dated by a

firm principal, officer, or member of the

firm with authority to do so, and

submitted to the appropriate Exchange

department as soon as possible, but no

later than 9:30 A.M. the next business

day by the member/participant

organization employer. Every effort

should be made to obtain the person’s

access card and trading floor badge and

to submit these to the appropriate

Exchange department.

(b) Non-member/Clerk Registration—

All trading floor personnel, including

clerks, interns, stock execution clerks

and any other associated person, of

member/participant organizations not

required to register pursuant to Rule

620(a) must register as such with the

Exchange by completing the appropriate

form(s) for non-registered persons (with

periodic updates submitted by the firm,

as determined by the Exchange).

Further, the Exchange may require

successful completion of an

examination, in addition to

requirements imposed by other

Exchange rules. The Exchange may also

require periodic examinations due to

changes in trading rules, products or

automated systems. Following the

termination of, or the initiation of a

change in the status of any such

personnel of a member/participant

organization who has been issued an

Exchange access card and a trading

floor badge, the appropriate Exchange

form must be completed, approved and

dated by a firm principal, officer, or

member of the firm with authority to do

so, and submitted to the appropriate

Exchange department as soon as

possible, but no later than 9:30 A.M. the

next business day by the member/

participant organization employer.

Every effort should be made to obtain

the person’s access card and trading

floor badge and to submit these to the

appropriate Exchange department.

* * * * *

Regulation 7

(a) No Change

(b) Required Filing for Floor Member

Firm Employee Status Notices with the

Exchange

Following the termination of, or the

initiation of a change in the trading

status of any member/participant or any

non-member/clerk and trading floor

personnel including clerks, interns,

stock execution clerks and any other

associated person, of member/

participant organizations [employee of a

member/participant firm] who have

been issued an Exchange access card

and trading floor badge, the appropriate

Exchange form must be completed,

approved and dated by a firm principal,

officer, or member of the firm with

authority to do so, and [a completed

‘‘Status Notice’’ must be] submitted to

the appropriate Exchange Department

[Director of Regulatory Services of the

exchange] as soon as possible, but no

later than 9:30 A.M. the next business

day by the member/participant

organization employer. Further, every

effort should be made to obtain the

employee’s access card and trading floor

badge and to submit these to the

appropriate Exchange Department

[Security Department].

1st Occurrence ...... $100.00

2nd Occurrence .... $200.00

3rd Occurrence

and Thereafter.

Sanction is discretionary with the

Business Conduct

Committee.

* * * * *

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with 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 III 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

The proposed rule change requires, in

a single Exchange rule, all floor

personnel to be registered with the

Exchange and all member/participant

organizations to notify the Exchange of

any change in the status of such

personnel. The Phlx believes that this

will enable the Exchange to more

efficiently monitor individuals on the

Exchange’s trading floors, as well as

their current status.

Currently, Regulation 7(b) governs the

termination of, or the initiation of

change in the trading status of, an

employee of a member/participant firm

who has been issued an exchange access

card and trading floor badge. New Phlx

Rule 620 codifies Regulation 7(b) into a

more comprehensive Exchange Rule.

Phlx Rule 620(a) sets forth a

comprehensive rule that addresses

registration, examinations, termination

5924 Federal Register / Vol. 65, No. 25 / Monday, February 7, 2000 / Notices

5The Exchange presently requires the completion

of forms and procedures for registering new floor

members pursuant to various Phlx Rules, including

Rule 202, Registrant (Specialists); Rule 214,

Violations of Rules (Specialists); Rule 604,

Registration and Termination of Registered Person;

Rule 623, Fingerprinting; Rule 1020, Registration

and Functions of Options Specialists; Rule 1014,

Obligations and Restrictions Applicable to

Specialists and Registered Options Traders; and

Rule 1061, Registration of Floor Brokers.

6 15 U.S.C. 78f.

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

8 15 U.S.C. 78f(c)(3)(B).

9 Id. 10 17 CFR 200.30–3(a)(12).

and change in status of trading floor

members, which includes floor brokers,

specialists, and market makers,

including Registered Options Traders on

any Exchange trading floor. Phlx Rule

620(b) addresses non-member/clerk

registration of all trading floor

personnel, including clerks, interns,

stock execution clerks and any other

associated persons of member/

participant organizations who are not

required to be registered pursuant to

Phlx Rule 620(a).5

The exchange believes that the

proposal to require all floor personnel to

be registered with the Exchange and to

require all member/participant

organizations to notify the exchange of

any change in the status of such

personnel is consistent with Section 6 of

the Act,6 in general, and with Sections

6(b)(5) 7 and 6(c)(3)(B),8 in particular.

Specifically, new Phlx Rule 620 is

designed to promote just and equitable

principles of trade, to remove

impediments to and perfect the

mechanism of a free and open market

and a national market system and, in

general, to protect investors and the

public interest by ensuring that all

trading floor personnel are properly

registered and, thus, monitored. In

addition, Section 6(c)(3)(B) 9 provides

that a national securities exchange may

examine and verify the qualifications of

an applicant to become a person

associated with a member in accordance

with procedures established by the rules

of the Exchange and require any person

associated with a member, or any class

of such persons, to be registered with

the Exchange in accordance with

procedures so established.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule 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 either

solicited or received.

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 20540–0609. 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 File No.

SR–Phlx–99–46 and should be

submitted by February 28, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–2662 Filed 2–4–00; 8:45 am]

BILLING CODE 8010–01–M

OFFICE OF SPECIAL COUNSEL

Appointment of Member to Agency

Performance Review Board

AGENCY: Office of Special Counsel

(OSC).

ACTION: Notice.

Authority: 5 U.S.C. § 4314(c)(4).P=’04’≤

SUMMARY: This notice announces the

appointment of the following individual

to serve as a new member of the

Performance Review Board previously

established by the OSC pursuant to 5

U.S.C. 4314(c)(2): Steven J. Mandel,

Associate Solicitor, Fair Labor

Standards Division, Office of the

Solicitor, U.S. Department of Labor.

FOR FURTHER INFORMATION, CONTACT: M.

Marie Glover, Director of Personnel,

Management Division, U.S. Office of

Special Counsel, 1730 M Street, NW,

Washington, DC 20036–4505, telephone

(202) 653–8964.

Dated: February 1, 2000.

Elaine Kaplan,

Special Counsel.

[FR Doc. 00–2634 Filed 2–4–00; 8:45 am]

BILLING CODE 7405–01–U

DEPARTMENT OF STATE

[Public Notice 3217]

Culturally Significant Objects Imported

for Exhibition Determinations: ‘‘The

Renaissance Portrait in Northern Italy:

The Art of Giovanni Battista Moroni’’

AGENCY: United States Department of

State.

ACTION: Notice.

SUMMARY: Notice is hereby given of the

following determinations: Pursuant to

the authority vested in me by the Act of

October 19, 1965 (79 Stat. 985, 22 U.S.C.

2459), the Foreign Affairs Reform and

Restructuring Act of 1998 (112 Stat.

2681, et seq.), Delegation of Authority

No. 234 of October 1, 1999, and

Delegation of Authority No. 236 of

October 19, 1999, as amended, I hereby

determine that the objects to be

included in the exhibition ‘‘The

Renaissance Portrait in Northern Italy:

The Art of Giovanni Battista Moroni,’’

imported from abroad for temporary

exhibition without profit within the

United States, are of cultural

significance. These objects are imported

pursuant to loan agreements with

foreign lenders. I also determine that the

exhibition or display of the exhibit

objects at the Kimbell Art Museum, Fort

Worth, Texas, from on or about