69982 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Notices

14 17 CFR 200.30–2(a)(12).

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

2 17 CFR 240.19b–4.

3Amendment No. 1 superseded the original filing

in its entirety. See letter from Richard S. Rudolph,

Counsel, Phlx, to Nancy J. Sanow, Assistant

Director, Division of Market Regulation,

Commission, dated October 19, 2000.

4The underlying currency is the Euro. The

trading currency, in which the strike price and

premium are quoted, is the U.S. dollar.

5The Phlx previously traded options on the

European Currency Unit (‘‘ECU’’), but delisted the

product in July 1997 due to lack of open interest

and trading activity. The Phlx reintroduced the ECU

options in May 1998 with a 2¢ strike price interval.

See Securities Exchange Act Release No. 39940

(April 30, 1998), 63 FR 25258 (May 7, 1998) (SR–

Phlx–98–17). This provided investors with an

investment vehicle during the conversion from the

ECU to the Euro, which occurred in January 1999.

The Phlx began trading the Euro FCO in January

1999. Securities Exchange Act Release No. 40953

(Jan. 15, 1999), 64 FR 3734 (Jan. 25, 1999) (SR–

Phlx–99–01).

6See Securities Exchange Act Release No. 25685

(May 10, 1988), 53 FR 17524 (May 17, 1988) (Order

approving narrower strike price intervals with

respect to foreign currency options on the British

pound denominated in U.S. dollars) (SR–Phlx–88–

13); Securities Exchange Act Release No. 35631

(April 20, 1995), 60 FR 20544 (April 26, 1995)

(Order approving narrower strike price interval

with respect to foreign currency options on the

French franc denominated in U.S. dollars) (SR–

Phlx–95–06).

7See Phlx Rule 1012, Commentary .04.

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 No.

SR–Phlx–00–95 and should be

submitted by December 12, 2000.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.14

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–29711 Filed 1–20–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43539; International Series

Release No. 1234; File No. SR–Phlx–00–66]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.

Relating to the Narrowing of the

Exercise Strike Price Interval for

Foreign Currency Options on the Euro

November 9, 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 July 12,

2000, the Philadelphia Stock Exchange,

Inc. (‘‘Phlx’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by the Phlx. On October 20,

2000, the Phlx submitted Amendment

No. 1 to the proposed rule change.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 Phlx proposes to revise its

exercise strike price policy with respect

to foreign currency options on the Euro

denominated in U.S. dollars (‘‘Euro

FCOs’’).4 The Phlx proposes to reduce

the exercise strike price interval of

American and European style,

standardized Euro FCOs from 2¢ to 1¢

in all six expiration months.

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 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 Phlx 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 reduce

the exercise strike price interval of

American and European style,

standardized Euro FCOs from 2¢ to 1¢

in all six expiration months. The

Exchange’s exercise strike price interval

policies are administered in accordance

with Phlx Rule 1012 (Series of Options

Open for Trading). Pursuant to Phlx

Rule 1012, there are regular and monthend Euro FCO contracts listed, with one,

two, three, six, nine and twelve months

until expiration. Euro FCO contracts are

currently listed at 2¢ intervals, and have

strike prices of 80, 82, 84, 86, 88 and 90

in all of the six expiration months, as

specified above. Under the proposal,

strike prices of 80, 81, 82, 83, 84, 85, 86,

87, 88, 89, and 90 could become

available for trading.

The Exchange proposes to reduce the

exercise strike price interval of all Euro

FCO series from 2¢ to 1¢, due to the

decrease in the spot price of the Euro in

terms of the U.S. dollar. In 1999, the

Euro was worth $1.18738. As of the date

of this filing, the Euro was worth only

$.8544, a dramatic decline in the value

of the Euro in terms of the U.S. dollar.5

The Phlx represents that the purpose

of the proposed rule change is to

respond to customer demand for a

narrower strike price interval due to the

decrease in the underlying price of the

Euro. The Exchange believes that the

proposed rule change makes economic

sense because a narrower strike price

interval in Euro FCOs would provide

investors and traders of the options with

the ability to more closely tailor

investment strategies to the precise

movement of the underlying currency

(i.e., the Euro). The Exchange notes that

the Commission has permitted narrower

exercise strike price intervals with

respect to foreign currency options

based on the market value of the

respective underlying security.6

Although the proposal makes

available more foreign currency option

series, the Phlx’s Options Floor

Procedure Advice F–18, Selective

Quoting Facility (‘‘SQF’’), continues to

apply. The Commission notes that,

based on the application of the SQF,

generally only a foreign currency option

series that is designated by the

Exchange as having an ‘‘update strike’’

would have its quotes made available

for continuous dissemination to the

public throughout the trading day.7 The

Phlx represents that the SQF,

implemented in 1994, was intended to

reduce the number of strike prices

continuously being updated and

disseminated, thus resulting in more

timely and accurate foreign currency

options quote displays. Therefore, the

Exchange believes that with the use of

the SQF, the predicted increase in the

number of Euro FCO series should not

adversely affect the Exchange’s quote

traffic and computer processing

capacity. The Exchange represents that

it will distribute a memorandum to all

of its members and foreign currency

options participants notifying them of

the change in the exercise strike price

interval for Euro FCO contracts,

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Notices 69983

8Telephone conversation between Richard

Rudolph, Counsel, Phlx, and Hong-Anh Tran,

Special Counsel, Division of Market Regulation,

Commission, October 25, 2000.

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

10 15 U.S.C. 78f(b)(5).

11 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

effective as of the date of Commission

approval of the proposed rule change.8

2. Statutory Basis

The Phlx believes that the proposed

rule change is consistent with Section 6

of the Act,9 and in particular Section

6(b)(5) thereof,10 in that it is designed to

promote just and equitable principles of

trade by enabling investors and traders

of Euro FCO contracts to manage the

foreign currency risks with respect to

the Euro more effectively.

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 Comments on the

Proposed Rule Change Received from

Members, Participants or Others

The Phlx neither solicited nor

received any written comments.

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 Phlx 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 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 Phlx. All

submissions should refer to File No.

SR–Phlx–00–66 and should be

submitted by December 12, 2000.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–29712 Filed 11–20–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43546; File No. SR–Phlx–

00–47]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.

(‘‘Phlx’’) Relating to Requirement That

Certain Members and Member

Organizations for Whom the Phlx is the

Designated Examining Authority Give

Prior Written Notice to the Phlx’s

Examinations Department of Any

Changes in Business Operation

November 9, 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

3, 2000, the Philadelphia Stock

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

filed with the Securities and Exchange

Commission (‘‘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 Rule 610

to require that members and member

organizations for which the Exchange is

the Designated Examining Authority

(‘‘DEA’’), that operate as a specialist,

floor broker and/or Registered Options

Trade (‘‘ROT’’) and that have changed

their business operations, or engaged in

new business (for example, an ROT

engages in off-floor proprietary trading),

which materially affects the net capital,

examinations and registration

requirements to which the member or

member organization is subject, to

provide prior written notice to the

Exchange’s Examinations Department of

any such changes in business

operations. Below is the complete text

of the proposed rule change. Proposed

new text is in italics.

* * * * *

Philadelphia Stock Exchange, Inc.

* * * * *

Regulation of Members and Member

Organizations

* * * * *

Rule 610. Notification of Changes in

Business Operations

Any member or member organization

for which the Exchange is the

Designated Examining Authority

(‘‘DEA’’), that operates as a specialist,

floor broker and/or Registered Options

Trader (‘‘ROT’’), shall provide prior

written notification to the Examinations

Department of any change in the

business operations of such member or

member organization which would

cause the member or member

organization to be subject to additional

or modified net capital requirements,

examination schedules or other

registration, examination or regulatory

requirements.

* * * * *

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 Orgnaization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The purpose of the proposed rule is

to provide notification to the Exchange’s

Examinations Department of changes in

the business operations of member and