Federal Register / Vol. 65, No. 221 / Wednesday, November 15, 2000 / Notices 69109

34Letter from Frank G. Zarb, Chairman and Chief

Executive Officer, NASD to Arthur Levitt,

Chairman, Commission, dated October 30, 2000.

35 17 CFR 11Aa3–1.

36 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See letter from Hassan Abedi, Attorney,

Regulatory Policy, PCX, to Nancy Sanow, Assistant

Director, Division of Market Regulation,

Commission, dated November 1, 2000

(‘‘Amendment No. 1’’). In Amendment No. 1, the

PCX made a correction to Rule 6.3 by adding the

word ‘‘must’’ which had inadvertently been left out.

The PCX also clarified that the removal of the

phrase ‘‘or other appropriately designated forms’’

from Rule 6.3 was not approved by Securities

Exchange Act Release No. 41083 (February 22,

1999), 64 FR 10052 (March 1, 1999) (SR–PCX–98–

52). The phrase is being removed because Equity

Trading Permit (‘‘ETP’’) Holders, Equity ASAP

Holders, and ETF Firms are only required to submit

SEC Form X–17A–5.

4The rules of the PCX that governed the equities

trading business of the Exchange were amended

and renumbered when the PCXE was created. See

Securities Exchange Act Release No. 42759 (May 5,

2000), 65 FR 30654 (May 12, 2000). Thus, the PCX

rules that govern the equities business are now

referred to as PCXE rules.

5Language was changed mainly to refer to ‘‘ETP

Holders, Equity ASAP Holders, and ETP Firms’’ (in

the PCXE rules) instead of ‘‘members or member

organizations’’ (in the PCX rules), and to refer to the

‘‘Corporation’’ (in the PCXE rules) instead of

‘‘Exchange’’ (in the PCX rules).

6See Securities Exchange Act Release No. 42998

(June 30, 2000), 65 FR 42412 (July 10, 2000).

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 such proposed

rule change, or

B. Institute proceedings to determine

whether the proposed rule change

should be disapproved.

IV. Commission Discussion

The Commission notes that, by

separate letter, the NASD has agreed to

provide an alternative quotation and

transaction reporting facility for NASD

members that effect transactions in the

over-the-counter market but that choose

not to participate in the

SuperMontage.34 Specifically, the

NASD has committed to provide a

quotation reporting facility that meets

the Association’s statutory obligations

under the Act, and to operate a

transaction reporting facility pursuant to

an effective transaction reporting plan

filed in accordance with the Exchange

Act Rule 11Aa3–1.35 The facility would

be designed to allow NASD members to

meet their obligations under the SEC’s

Order Handling Rules and Regulation

ATS as well as any transaction reporting

obligations imposed by the NASD rules.

This facility would provide an

electronic linkage to the Nasdaq

marketplace and would be operational

contemporaneously with SuperMontage.

V. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment No.

8, including whether Amendment No. 8

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 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 Amendment

No. 8 to File No. NASD–99–53 and

should be submitted by [insert date 21

days from the date of publication].

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.36

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–29020 Filed 11–14–00; 8:45 am]

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43526 File No. SR–PCX–

00–35]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change and

Amendment No. 1 to the Proposed

Rule Change by the Pacific Exchange,

Inc. Relating to Equity Housekeeping

Amendments

November 7, 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 October

24, 2000, the Pacific Exchange, Inc.

(‘‘PCX’’ or ‘‘Exchange’’), on behalf of its

wholly-owned subsidiary, PCX Equities,

Inc. (‘‘PCXE’’), 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 PCX. On November 2,

2000, the PCX submitted Amendment

No. 1 to the proposed rule change.3 The

Commission is publishing this notice to

solicit comments on the proposed rule

change and Amendment No. 1 to 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 make

various housekeeping and technical

changes to certain previously approved

PCX rules by making minor conforming

changes to the existing language in

order to incorporate those changes into

the PCXE rules. The text of the proposed

rule change is available at the Office of

the Secretary, 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

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 Exchange is proposing to make

the following changes below to

incorporate previously approved

changes to the rules of the PCX into the

PCXE rules.4 Specifically, the Exchange

is proposing to apply the PCX rule

language to ETP Holders, Equity ASAP

Holders, and ETP Firms by

incorporating such rule language into

the PCXE rules.5

a. PCXE Rule 2—Equity Trading

Permits. Mandatory Decimal Price

Testing—The Exchange proposes to add

PCXE Rule 2.25, based upon PCX Rule

1.15(b).6 Minor conforming changes

69110 Federal Register / Vol. 65, No. 221 / Wednesday, November 15, 2000 / Notices

7See Securities Exchange Act Release No. 42890

(June 1, 2000), 65 FR 36877 (June 12, 2000).

8 Id.

9See Securities Exchange Act Release No. 42822

(May 24, 2000), 65 FR 35150 (June 1, 2000).

10See Securities Exchange Act Release No. 41712

(August 5, 1999), 64 FR 44072 (August 12, 1999).

11See supra note 6.

12See Securities Exchange Act Release No. 42577

(March 27, 2000), 65 FR 17329 (March 31, 2000).

13See Securities Exchange Act Release No. 42431

(February 16, 2000), 65 FR 9026 (February 23,

2000).

14See Securities Exchange Act Release No. 42708

(April 20, 2000), 65 FR 25780 (May 3, 2000).

15See supra note 7.

16See Securities Exchange Act Release No. 41083

(February 22, 1999), 64 FR 10052 (March 1, 1999).

17See Securities Exchange Act Release No. 40863

(December 30, 1998), 64 FR 1057 (January 7, 1999).

18See Amendment No. 1, supra note 3.

19See Securities Exchange Act Release No. 41983

(October 6, 1999), 64 FR 56008 (October 15, 1999).

20See id.

21See Securities Exchange Act Release No. 40852

(December 28, 1998), 64 FR 1058 (January 7, 1999).

22See Securities Exchange Act Release No. 42453

(February 24, 2000), 65 FR 11620 (March 3, 2000).

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

24 15 U.S.C. 78f(b)(5).

25 15 U.S.C. 78s(b)(3)(A).

26 17 CFR 240.19b–4(f)(3).

have been made to existing language of

the PCX Rule in order to incorporate it

into the PCXE rules.

b. PCXE Rule 7—Equities Trading—

Off-Board Trading Restrictions. Cabinet

Dealings—The Exchange proposes to

amend PCXE Rule 7.20(a), formerly PCX

Rule 5.5(b), to eliminate the sentence

‘‘Securities placed in the CABINET

System, until removed, may be traded

off the Corporation without compliance

with Rule 7.49(b).’’ The SEC previously

approved the removal of this sentence

from PCX Rule 5.5(b).7 The Exchange

proposes to eliminate the sentence in

order reflect this change in PCXE Rule

7.20(a). Over the Counter Execution of

Equity Securities Transactions—The

Exchange proposes to eliminate PCXE

Rule 7.49(a)–(e), formerly PCX Rules

5.43, 5.44, 5.46, 5.48, and 5.49.8

c. PCXE Rule 7—Equity Trading—

Trading Differentials. Trading

Differentials—The Exchange proposes to

amend PCXE Rule 7.10(a), formerly PCX

Rule 5.3(b), by adding Commentary .04.9

The Exchange also proposes to add the

words ‘‘Nasdaq-100 Shares’’ to

Commentary .03.10

PCX Equities, Inc. Application of the

OptiMark System—The Exchange

proposes to amend PCXE Rule 7.71(a),

formerly PCX Rule 15.1, by adding the

phrase ‘‘provided, however, that Orders

may be generated from central

processing of the profiles designated for

the midpoint pricing service by the

OptiMark System in conformance with

the trading differential in Rule 7.10(a),

Commentary .04.’’ 11

d. PCXE Rule 9—Conducting Business

with the Public. Advertisements, Market

Letters and Sales Literature Relating to

Options—The Exchange proposes to

amend the language in paragraphs (E)–

(G) of Commentary .03 to PCXE Rule

9.28(e), adapted from PCX Rule 9.28.12

3. PCXE Rule 5—Listings. Financial

Reports and Related Notices (EDGAR

Rule Filing)—The Exchange proposes to

amend PCXE Rule 5.3(i)(1)(i), formerly

PCX Rule 3.3(t)(1)(i), by adding

Commentary .04.13

f. PCXE Rule 7—Equity Trading—

Intermarket Trading System Plan.

Definitions—The Exchange proposes to

amend PCXE Rule 7.66, formerly PCX

Rule 5.20, by adding a provision that

seeks to define the term ‘‘PCX

Coordinating Specialist,’’ and by adding

Commentary .04.14

g. PCXE Rule 8—Trading of Certain

Equity Derivatives. Nasdaq-100 Index—

The Exchange proposes to add PCXE

Rule 8.100(g) and Commentary .03,

formerly PCX Rule 8.300(g) and

Commentary .03, relating to the trading

of Nasdaq-100 Index shares.15

h. Equity Floor Procedure Advice 2–C.

Reporting of Transactions—The

Exchange proposes to amend Equity

Floor Procedure Advice 2–C by

removing one of the exceptions

provided for reporting of transactions

from PCXE Rule 7.37(a).16

i. PCXE Rule 6—Business Conduct.

Prevention of the Misuse of Material,

Nonpublic Information—The Exchange

proposes to amend PCXE Rule 6.3,

adapted from PCX Rule 2.6(e), to add

the phrase ‘‘for whom the Corporation is

the Designated Examining Authority

(‘‘DEA’’),’’ to add Commentary .02, and

to eliminate Commentary .04.17 The

Exchange also proposes to remove

certain unnecessary language.18

j. PCXE Rule 5—Listing. General

Provisions and Definitions—The

Exchange proposes to add PCXE Rule

5.1(b)(15), formerly PCX Rule

3.1(b)(15).19

Investment Company Units—The

Exchange is proposing to add PCXE

Rule 5.2(j)(3), formerly PCX Rule 3.2(k).

The Exchange is also proposing to add

PCXE Rules 5.5(g)(1) and (2), formerly

Rules 3.5(g) and (h). Finally, the

Exchange proposes to add

Commentaries .02 and .03 to PCXE Rule

7.28(a)(1), formerly PCX Rule 5.33(a).20

k. PCXE Rule 6—Business Conduct.

Communications to and on the Trading

Facilities—The Exchange proposes to

add PCXE Rule 6.17, adapted from PCX

Rule 4.23.21

l. PCXE Rule 4—Capital Requirements

and Financial Reports, Margins.

Exceptions to Margins—The Exchange

proposes to amend PCXE Rule

4.15(c)(5), adapted from PCX Rule 2.15–

2.16, by replacing the phrase ‘‘margin

required by the other provisions of this

Rule’’ with the phrase ‘‘haircut

requirements of SEC Rule 15c3–1.’’ Also

the Exchange proposes to add Rule

4.15(c)(6).22

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

the provisions of section 6(b) 23 of the

Act, in general, and section 6(b)(5),24 in

particular, because it is designed 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.

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, Participants or Others

No written comments were solicited

or received with respect to the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become

effective pursuant to section

19(b)(3)(A) 25 of the Act and

subparagraph (f)(3) of Rule 19b–4 26

thereunder because it is concerned

solely with the administration of the

Exchange. At any time within 60 days

of the filing of such 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.

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

Federal Register / Vol. 65, No. 221 / Wednesday, November 15, 2000 / Notices 69111

27 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 41823

(September 1, 1999), 64 FR 49265 (September 10,

1999) (approving PCX proposal to increase the

maximum size of index and equity option orders

that may be automatically executed, from twenty to

fifty contracts).

4The Exchange notes that, pursuant to PCX Rule

6.86(g), if the OFTC determines, pursuant to PCX

Rule 6.87(b), that the size of orders in an issue that

are eligible to be executed on Auto-Ex will be

greater than twenty contracts, then the trading

crowd will be required to provide a market depth

for manual (non-electronic) orders in that greater

amount, as provided in PCX Rule 6.86(a).

5See PCX Rule 6.87(c) (permitting the PCX to

match the maximum size of orders eligible for

automatic execution that are permitted on another

options exchange in multiply traded issues).

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

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

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 PCX. All

submissions should refer to File No.

SR–PCX–00–35 and should be

submitted by December 6, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.27

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–29181 Filed 11–14–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43518; File No. SR–PCX–

00–32]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of a Proposed

Rule Change by the Pacific Exchange,

Inc. To Increase the Maximum Size of

Orders Eligible for Automatic

Execution

November 3, 2000.

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

Securities Exchange Act of 1934

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

notice is hereby given that on August

22, 2000, the Pacific Exchange, Inc.

(‘‘PCX’’ 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 PCX. The Commission

is publishing this notice to solicit

comments on the proposed rule change

from interested persons. For the reasons

discussed below, the Commission is

granting accelerated approval of the

proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange is proposing to increase

the maximum size of equity and index

option contracts that may be designated

for automatic execution to seventy-five

contracts.

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 III below. The PCX 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 Exchange’s Automatic Execution

System (‘‘Auto-Ex’’) automatically

executes public customer market and

marketable limit orders within certain

size parameters. PCX Rule 6.87(b)

currently provides that the Options

Floor Trading Committee (‘‘OFTC’’)

shall determine the size of orders that

are eligible to be executed through

Auto-Ex. The rule further provides that

although the OFTC may change the

order size parameter on an issue-byissue basis, the maximum order size for

execution through Auto-Ex is fifty

contracts for both equity and index

options.3 The Exchange is now

proposing to increase the maximum size

of option orders that are eligible for

automatic execution, subject to

designation by the OFTC on an issue-byissue basis, to seventy-five contracts.4

The Exchange believes that these

changes will help it to meet the

changing needs of customers in the

marketplace and give the Exchange

better means of competing with other

options exchanges for order flow,

particularly in multiply traded issues.

The Exchange also believes that

increasing to seventy-five the number of

option contracts executable through

Auto-Ex will enable the Exchange to

more effectively and efficiently manage

increased order flow in actively traded

option issues consistent with its

obligations under the Act. In addition,

the Exchange indicates that this increase

should bring the speed and efficiency of

automated execution to a greater

number of retail orders. The PCX further

believes that it should have flexibility to

complete for order flow with other

exchanges without being limited to

responding to increases in automatic

execution eligibility levels initiated by

those other exchanges.5

The Exchange represents that it

believes that the increase will not

expose Auto-Ex to risk of failure or

operational capacity is sufficient to

accommodate the increased number of

automatic executions anticipated to

result from implementation of this

proposal.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

section 6(b) 6 of the Act, in general, and

furthers the objectives of section

6(b)(5),7 in particular, in that it is

designed to facilitate transactions in

securities, 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

PCX 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, Participants, or Others

No written comments were solicited

or received with respect to the proposed

rule change.

III. Date of Effectiveness of Proposed

Rule Change and Timing for

Commission Action

The PCX requests that the proposed

rule change be given accelerated