69980 Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Notices

6See PCX Rule 6.52, Commentary .04. Prior to

placing an order into the Order Book Official’s

custody, a Floor Broker must use due diligence in

handling that order. See generally, PCX Rule 6.46. 7OPRA disseminates the options exchanges’ best

bid and offering prices, but does not disseminate

the corresponding size of those markets. However,

the sizes of the best bid and offer in the book are

displayed on the overhead screens on the PCX floor,

subject to certain conditions. See PCX Rule 6.55. 8This process requires a member of the Order

Book Official’s staff to enter the order into the

system. 9See PCX Rule 6.55. 10See Amendment No. 2, supra note 4. 11See generally, Report Concerning Display of

Limit Orders, Office of Compliance, Inspections and

Examinations and Office of Economic Analysis,

Commission (May 4, 2000).

12The Exchange represents that, currently, no

PCX members operate any of the limit order books

on the PCX Options Floor. Therefore, initially, the

proposed change to PCX Rule 6.55 will apply only

to PCX staff. However, the Exchange anticipates

that in the future, PCX members may begin to

operate limit order books on the options floor, and

accordingly, the rule, as modified, will apply to

members. See Securities Exchange Act Release No.

41595 (July 2, 1999), 64 FR 38064 (July 14, 1999)

(order approving a PCX proposed rule change to

permit PCX members to operate limit order books)

(File No. SR–PCX–98–02).

13 15 U.S.C. 78f.

14 15 U.S.C. 78f(b)(5).

15 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

broker, who places a written, timestamped order ticket into the proper

receptacle at the trading post.6 An

electronic order is routed to the Order

Book Official when a member firm

places an order through the Exchange’s

Member Firm Interface to the Pacific

Options Exchange Trading System

(‘‘POETS’’). The order is then

electronically entered into the Order

Book Official’s book through the AutoBook function of POETS. Orders entered

electronically into the book that

improve the disseminated quote are

immediately displayed on the overhead

screens on the trading floor and are

disseminated to the public through the

Options Price Reporting Authority

(‘‘OPRA’’).7 However, orders entered

manually must be entered into the

POETS system before they can be

displayed on the floor or disseminated

through OPRA.8

PCX Rule 6.55 currently requires the

Order Book Official to continuously

display the best bid and offer ‘‘so far as

practicable.’’ 9 The Exchange believes

that the practicality requirement is no

longer appropriate. PCX Rule 6.55 was

codified before orders could be entered

electronically through POETS. Today,

only a small percentage of options

orders are routed to the Order Book

Officials manually. Accordingly, the

Exchange proposes to amend PCX Rule

6.55 to eliminate the practicability

requirement for the display of options

transactions and replace it with a

requirement that all orders must be

displayed ‘‘immediately.’’ The proposed

rule change defines the term

‘‘immediately’’ to mean as soon as

practicable after receipt, which under

normal market conditions means no

later than 30 seconds.10

In modifying this rule, the Exchange

is mindful of the importance of

immediately displaying limit orders that

represent the best bid and offer on the

Exchange. Indeed, the Exchange notes

that the Commission has recently

emphasized the critical importance of

improving industry practices relating to

the display of limit orders.11 In that

regard, the Exchange is modifying PCX

Rule 6.55 to help further this important

objective.12

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

the requirements of section 6 of the

Act,13 in general, and further the

objectives of section 6(b)(5) of the Act,14

in particular, in that it is designed to

prevent fraudulent and manipulative

acts and practices, promote just and

equitable principles of trade, foster

cooperation and coordination with

persons engaged in facilitating

transactions in securities, and remove

impediments to and perfect the

mechanism of a free and open market

and a national market system.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes that the

proposed rule change will not 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

The Exchange has neither solicited

nor received written 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 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, 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, NW., Washington, DC 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 Exchange. All

submissions should refer to File No.

SR–PCX–00–15 and should be

submitted by December 12, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.15

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–29708 Filed 11–20–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43547; File No. SR–Phlx–

00–95]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.

Relating to Registration Fees for

Registered Representatives

November 13, 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

25, 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 Exchange.

On November 2, 2000, the Phlx filed

Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 / Notices 69981

3 In Amendment No. 1, the Phlx corrected a

typographical error which stated that ‘‘initial,

maintenance, and transfer registration fees

pertaining to Registered Representative registration

will each be increased from $125 to $45.’’ The

correct amount of the increase, as stated above, is

from $25 to $45. The Phlx also provided a corrected

Exhibit B with rule language that conforms to its

initial filing. See Letter from Murray L. Ross, Vice

President and Secretary, Phlx, to Sapna C. Patel,

Law Clerk, Division of Market Regulation,

Commission, dated November 1, 2000.

4See Securities Exchange Act Release No. 32833

(September 14, 1993), 58 FR 48922 (September 20,

1993).

5See Securities Exchange Act Release No. 36348

(October 6, 1995), 60 FR 53450 (October 13, 1995).

6See Securities Exchange Act Release No. 39044

(September 10, 1997), 62 FR 48914 (September 17,

1997).

7See Securities Exchange Act Release No. 42122

(November 10, 1999), 64 FR 63098 (November 18,

1999).

8The Exchange has represented that initial,

transfer, and maintenance Registered

Representative fees have traditionally been billed

and collected by the NASD. The NASD would

continue to bill for and collect these fees under the

proposed rule change. Phone message from Jurij

Trypupenko, Counsel, Phlx, to Melinda Diller, Law

Clerk, Division, Commission, on October 28, 1999.

See Securities Exchange Act Release No. 42122

(November 10, 1999), 64 FR 63098 (November 18,

1999), at footnote 7.

9See supra note 7.

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

11 15 U.S.C. 78f(b)(4).

12 15 U.S.C. 78s(b)(3)(A)(ii).

13 17 CFR 240.19b–4(f)(2).

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 Exchange, pursuant to Rule 19b–

4 under the Act, proposes to amend its

fee schedule for Registered

Representative registration. Specifically,

the initial, maintenance, and transfer

registration fees pertaining to Registered

Representative registration will each be

increased from $25.00 to $45.00. The

proposed effective date of the increase

is January 1, 2001. Below is the text of

the rule change. Additions are italicized

and deletions are in brackets.

Fee Schedule

* * * * *

Registered Representative

Registration:

Initial [$25.00] $45.00

Maintenance [$25.00

annual]

$45.00

annual

Transfer [$25.00] $45.00

II. Self-Regulatory Organization’s

Statements 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 proposes to increase its

fees for the initial registration,

maintenance, and transfer of Registered

Representative registrations with the

Exchange from $25.00 to $45.00. These

fees, which were adopted in 1993,4 and

subsequently adjusted in 1995,5 1997 6

and 1999,7 are payable by member

organizations that apply for, maintain,

and transfer Registered Representative

registrations. The proposed fee increase

would become effective on January 1,

2001. The $45.00 fees apply to year

2001 registrations. Any initial

registration in 2000 would continue to

be subject to the $25.00 initial

registration fee. Similarly, any

maintenance and transfer fees incurred

for calendar year 2000 would continue

to be subject to the $25.00 maintenance

or transfer fee. The National Association

of Securities Dealers, Inc. (‘‘NASD’’)

will bill for the year 2001 fees in

November 2000, and will thereafter

collect the fees for the Exchange.8

The purpose of the proposed rule

change is to address the increased costs

associated with maintaining

surveillance and regulatory programs in

an increasingly sophisticated trading

environment. The Exchange continues

to believe that strong surveillance and

regulatory programs are essential to the

ability of the Exchange to maintain a fair

and orderly market for the investment

community.

According to the Exchange, the

general costs associated with the

Exchange’s surveillance and regulatory

programs have continued to rise. Since

the last Registered Representative fee

increase in 1999,9 costs associated with

the Exchange’s surveillance and

regulatory programs have increased

dramatically. This increase in costs is

attributable to, among other things,

inflationary and competitive pressures

upon the cost of staffing, equipment,

computer technology as well as

expansion of the Exchange’s

surveillance and regulatory programs.

Moreover, the Exchange has listed, and

will likely continue to list, new issues

and products, which trigger significant

additional surveillance and regulatory

costs.

2. Statutory Basis

The Exchange believes the proposed

rule change is consistent with Section

6(b) of the Act 10 in general and furthers

the objectives of Section 6(b)(4) of the

Act 11 in particular, in that is provides

for the equitable allocation of reasonable

dues, fees, and other charges among its

members and issuers and other persons

using its facilities.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange 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 Exchange has neither solicited

nor received written comments on the

proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change establishes

or changes a due, fee, or other charge

imposed by the Exchange and, therefore,

has become effective pursuant to

Section 19(b)(3)(A)(ii) of the Act 12 and

Rule 19b–4(f)(2) thereunder,13 upon the

date Amendment No. 1 was received,

November 2, 2000. The Exchange

intends to implement the fee effective as

of January 1, 2001. At any time within

60 days of the filing of Amendment No.

1 to 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

purpose 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

Commission, 450 Fifth Street, NW,

Washington, DC 20549–0609. Copies of

the submission, all subsequent

amendments, all written statements

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,