70862 Federal Register / Vol. 65, No. 229 / Tuesday, November 28, 2000 / Notices

57See CBOE Rule 12.3(c)(5) and NYSE Rule

431(f)(2).

58See CBOE Approval Order and NYSE Approval

Order, supra note 7.

59 Id.

60 15 U.S.C. 78s(b).

61 15 U.S.C. 78s(b)(2).

62 17 CFR 200.30–3(a)(12).

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

addition, the Commission believes that

it is reasonable for NASD Regulation to

move its definitions of ‘‘current market

value,’’ ‘‘current market price,’’

‘‘exercise settlement amount,’’

‘‘aggregate exercise price,’’ and

‘‘aggregate current index value’’ from

NASD Rule 2520 to NASD Rule 2522 for

ease of reference purposes so that all the

definitions relating to transactions in

options, currency warrants, currency

index warrants and stock index

warrants will be located under NASD

Rule 2522. The Commission believes

that NASD members and other market

participants will find the consolidated

margin definitions easier to locate and

use.

Further, the Commission believes that

it is reasonable for NASD Regulation to

modify NASD Rule 2450(f)(2)(D) to

provide that the minimum customer

margin requirement for a short put on a

listed equity will be the current value of

the put plus 10% of the put’s aggregate

exercise price; and that the minimum

customer margin requirement for a short

put on an OTC equity will be 10% of the

put’s aggregate exercise price. The

proposed change will make NASD

Regulation’s treatment of short equity

put options consistent with the CBOE

and NYSE treatment of short equity put

options.57

The revisions to NASD margin rules

will significantly impact the way NASD

members calculate margin for options

customers. The Commission believes

that it is important for NASD Regulation

to be adequately prepared to implement

and monitor the revised margin

requirements. To best accommodate the

transition, the Commission believes that

a phase-in period is appropriate.

Therefore, the approved margin

requirements shall not become effective

until the earlier of February 26, 2001 or

such date NASD Regulation represents

in writing to the Commission that NASD

Regulation is prepared to fully

implement and monitor the approved

margin requirements.

The Commission expects NASD

Regulations to issue a notice to members

that discusses the revised margin

provisions and provides guidance to

members regarding their regulatory

responsibilities. The Commission also

believes that it would be helpful for

NASD Regulation to publicly

disseminate (i.e., via web site posting) a

summary of the most significant aspects

of the new margin rules and provide

clear examples of how various options

positions will be margined under the

new provisions.

The Commission finds good cause for

approving the proposal prior to the

thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register because the

proposal is substantially identical to

proposals filed by the CBOE and NYSE,

which the Commission approved

previously.58 The Commission also

finds good cause for approving

proposed Amendment Nos. 1 and 2

prior to the thirtieth day after the date

of publication of notice of filing thereof

in the Federal Register. Amendment

No. 1 strengthens NASD Regulation’s

proposal by, among other things,

clarifying the requirements for stock

index option and stock index warrant

spreads carried in a cash account.

Specifically, NASD Rule

2520(f)(2)(M)(ii)d, as amended, provides

that if the long stock index option or

warrant position is not listed, it must be

guaranteed by the carrying broker-dealer

or the offsetting short position would

not be eligible for the cash account and

would be margined separately pursuant

to NASD Rule 2520(f)(2)(D). Because

this change conforms the NASD’s rule to

the CBOE and NYSE rules that were

approved by the Commission,59 the

change raises no new material

regulatory issues. In addition,

Amendment No. 1 makes technical

corrections, clarifies the purpose of

proposed definitions, and indicates that

the minimum amount of margin that

must be maintained in various hedged

strategies is the aggregate exercise price

(rather than the exercise price).

Amendment No. 2 strengthens the

NASD’s proposal by making technical

corrections and by clarifying the

definitions of ‘‘American-style option,’’

and ‘‘escrow agreement,’’ as used in

connection with cash settled

instruments.

Based on the above, the Commission

finds that good cause exists, consistent

with Section 19(b) of the Act,60 to

accelerate approval of the proposal and

Amendment Nos. 1 and 2 to the

proposal.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing,

including whether the proposed rule

change and Amendment Nos. 1 and 2

are 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 File No.

SR–NASD–00–15 and should be

submitted by December 19, 2000.

V. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,61 that the

proposed rule change (SR–NASD–00–

15), as amended, is approved. The

approved margin requirements shall

become effective the earlier of February

26, 2001 or such date the Association

represents in writing to the Commission

that the Association is prepared to fully

implement and monitor the approved

margin requirements.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.62

Jonathan G. Katz,

Secretary.

[FR Doc. 00–30196 Filed 11–27–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43597; File No. SR–NSCC–

00–11]

Self-Regulatory Organizations;

National Securities Clearing

Corporation; Notice of Filing and Order

Granting Accelerated Approval of a

Proposed Rule Change Relating to

Automated Customer Account

Transfer Services Procedures

November 20, 2000.

Pursuant to section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

August 28, 2000, the National Securities

Clearing Corporation (‘‘NSCC’’) filed

with the Securities and Exchange

Commission (‘‘Commission’’) and on

September 25, 2000, amended the

proposed rule change as described in

Federal Register / Vol. 65, No. 229 / Tuesday, November 28, 2000 / Notices 70863

2A copy of the text of NSCC’s proposed rule

change and the attached exhibits are available at the

Commission’s Public Reference Section or through

NSCC. Please note that Exhibit A also contains rule

text additions previously submitted by NSCC in

SR–NSCC–00–05, which is pending review by the

Commission.

3The Commission has modified the text of the

summaries prepared by NSCC.

4Rule 50 of NSCC’s Rules and Procedures

governs the use of the ACAT Service by members.

5NYSE Rule 412 and NASD Rule 11870.

6A reclaim occurs when cash or certain securities

are mistakenly delivered as part of the ACAT

Service transfer. 7 15 U.S.C. 78q–1(b)(3)(F).

Items I and II below, which items have

been prepared primarily by NSCC. The

Commission is publishing this notice

and order to solicit comments from

interested parties and to grant

accelerated approval of the proposed

rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change modifies

NSCC’s rules and procedures pertaining

to acceptance procedures for partial

accounts, initiating partial account

transfers, and reclaim transfer

procedures in the Automated Customer

Account Transfer Service (‘‘ACAT

Service’’).2

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NSCC 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. NSCC has prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

aspects of these statements.3

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

NSCC’s ACAT Service facilitates the

automated transfer of customer accounts

between members.4 In operation since

1985, the ACAT Service was designed to

complement the New York Stock

Exchange (‘‘NYSE’’) and the National

Association of Securities Dealers

(‘‘NASD’’) rules that require NYSE and

NASD members to use automated

clearing agency customer account

transfer services and to affect customer

account transfers within specified

timeframes.5 Under the proposed rule

change, NSCC proposes to make three

enhancements to the ACAT Service

rules and procedures.

The first enhancement relates to the

rejection by Receiving Members of

account assets transferred through the

ACAT Service. Pursuant to section 8 of

Rule 50, Receiving Members may not

reject individual account assets but

rather they may only accept or reject

accounts in their entirety. The proposed

rule change will modify Section 8 by

providing a Receiving Member with the

ability to either accept all assets in the

account being transferred or to the

extent permitted by the Receiving

Member’s designated examining

authority accept only some of the assets

in the account. NSCC proposes to

implement these changes in January

2001 and will notify members through

distribution of an Important Notice.

The second enhancement relates to

transfer requests initiated by a

Delivering Member. Under section

12(1), NSCC will reject a Delivering

Member initiated transfer if the details

contain an edit or format error. The

proposed rule change will add language

stating that NSCC will report to both the

Delivering Member and the Receiving

Member the details of the account if no

edit or format errors in the asset data are

discovered by NSCC.

NSCC also proposes to amend section

12(2) of Rule 50 relating to the treatment

of reclaim procedures.6 Currently, if a

Receiving Member is going to reject any

transfer request initiated by a Delivering

Member, the Receiving Member must do

so on the same day it receives the

request. In connection with reclaim

transfer requests only, NSCC has

determined that Receiving Members

need additional time to research these

types of transfer requests. The proposed

rule change will permit a Receiving

Member to reject a reclaim transfer

request no later than two business days

following the day the reclaim transfer

request is received. No action is

required by the Receiving Member if it

determines to accept the reclaim

transfer request. Settlement date for all

reclaim transfer requests will be one

business day following the day the

Receiving Member accepts or is deemed

to accept the reclaim transfer request.

NSCC proposes to implement these

changes to section 12(2) in January

2001. NSCC will notify members by

Important Notice.

The third enhancement relates to the

ability of Receiving Members to initiate

transfers for partial customer accounts.

Section 13 of Rule 50 currently provides

that a Receiving Member may submit a

request to a Delivering Member to

initiate the transfer of a partial customer

account. The Receiving Member’s

request is delivered by NSCC to the

Delivering Member on the same day that

it is received by NSCC. Each day NSCC

produces a report that reflects all

requests received by it for that day. The

Delivering Member is not required to

take any action if it determines not to

respond.

Under the proposed rule change,

section 13 will be revised to provide

additional time for a Delivering Member

to review a Receiving Member’s request

for a partial account transfer. NSCC will

continue to produce a report reflecting

outstanding transfer requests for a

period not to exceed three days. NSCC

will also require a Delivering Member to

indicate a reason for any requests

rejected by the member. Pending

approval, NSCC plans to implement the

revisions to section 13 in November

2000 and will notify members by

Important Notices.

NSCC believes the proposed rule

change is consistent with Section

17A(b)(3)(F) of the Act and the rules

thereunder because it will facilitate the

prompt and accurate clearance and

settlement of securities transactions and

in general, protect investors and the

public interest.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

NSCC does not believe that the

proposed rule change will have an

impact or impose a burden on

competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Industry groups, including the

Executive Committee of the Securities

Industry Association’s Customer

Account Transfer Division and the

Investment Company Institute’s Mutual

Fund User Group, were advised of and

concur with these modifications to

NSCC’s rules. No written comments

relating to the proposed rule change

have been solicited or received. NSCC

will notify the Commission of any

written comments received by NSCC.

III. Date of Effectiveness of the Proposed

Rule Change and Timing for

Commission Action

Section 17A(b)(3)(F) 7 of the Act

requires that the rules of a clearing

agency by designed to remove

impediments to and perfect the

mechanism of a national system for the

prompt and accurate clearance and

settlement of securities transactions. For

these reasons set forth below, the

70864 Federal Register / Vol. 65, No. 229 / Tuesday, November 28, 2000 / Notices

8 17 CFR 200.30–3(a)(12).

Commission believes that NSCC’s rule

change is consistent with this

obligation.

The rule change will permit NSCC to

make certain enhancements to its ACAT

Service that will afford members more

specificity in the manner in which they

accept, reject, or initiate transfers of

customer account assets. These

enhancements should improve the

mechanism by which members transfer

customer account assets and should

improve the communication between

members using the ACAT Service.

Therefore, the Commission finds that

the proposed rule change is consistent

with NSCC’s obligations to remove

impediments to and perfect the

mechanism of a national system for the

prompt and accurate clearance and

settlement of securities transactions.

NSCC has requested that the

Commission find good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice of the filing. The

Commission finds good cause for so

approving the proposed rule change

because accelerated approval will

permit NSCC to implement it and

members and their customers to benefit

from these enhancements to the ACAT

Service as soon as possible.

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

Section, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of NSCC. All submissions should

refer to File No. SR–NSCC–00–11 and

should be submitted by December 19,

2000.

It Is Therefore Ordered, pursuant to

section 19(b)(2) of the Act, that the

proposed rule change (File No. SR–

NSCC–00–11) be and hereby is

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.8

Jonathan G. Katz

Secretary.

[FR Doc. 00–30194 Filed 11–27–00; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

[Applicant No. 99000399]

East Gate Private Equity Fund III, L.P.;

Notice Seeking Exemption Under

Section 312 of the Small Business

Investment Act, Conflicts of Interest

Notice is hereby given that East Gate

Private Equity Fund III, L.P., 2192

Fortune Drive San Jose California 95131,

an applicant for a Federal License under

the Small Business Investment Act of

1958, as amended (‘‘the Act’’), in

connection with the financing of a small

concern, has sought an exemption under

section 312 of the Act and section

107.730, Financings which Constitute

Conflicts of Interest of the Small

Business Administration (‘‘SBA’’) rules

and regulations (13 CFR 107.730

(2000)). East Gate Private Equity Fund

III, L.P. proposes to provide equity

financing to Qixo, Inc., 2192 Fortune

Drive San Jose California 95131. The

financing is contemplated for working

capital, the acquisition of machinery

and equipment, and marketing.

The financing is brought within the

purview of Sec. 107.730(a)(1) of the

Regulations because East Gate Cayman

Corporation, an Associate of East Gate

Private Equity Fund III, L.P., currently

owns greater than 10 percent of Qixo,

Inc. and therefore Qixo, Inc. is

considered an Associate of East Gate

Private Equity Fund III, L.P., as defined

in Sec. 107.50 of the regulations.

Notice is hereby given that any

interested person may submit written

comments on the transaction to the

Associate Administrator for Investment,

U.S. Small Business Administration,

409 Third Street, SW., Washington, DC

20416.

Dated: November 15, 2000.

Don A. Christensen,

Associate Administrator for Investment.

[FR Doc. 00–30264 Filed 11–27–00; 8:45 am]

BILLING CODE 8025–01–P

SMALL BUSINESS ADMINISTRATION

[Declaration of Disaster #3305;

Amendment #1]

State of Arizona

In accordance with notices received

from the Federal Emergency

Management Agency, dated November 8

and November 16, 2000, the abovenumbered Declaration is hereby

amended to include Pinal County and

the Gila River Indian Community in the

State of Arizona as a disaster area due

to damages caused by severe storms and

flooding, and to establish the incident

period for this disaster as beginning on

October 21, 2000 and continuing

through November 8, 2000.

In addition, applications for economic

injury loans from small businesses

located in the contiguous county of

Graham, Arizona may be filed until the

specified date at the previously

designated location. All other

contiguous counties have been

previously declared.

All other information remains the

same, i.e., the deadline for filing

applications for physical damage is

December 26, 2000 and for economic

injury the deadline is July 27, 2001.

(Catalog of Federal Domestic Assistance

Program Nos. 59002 and 59008.)

Dated: November 20, 2000.

Herbert L. Mitchell,

Acting Associate Administrator for Disaster

Assistance.

[FR Doc. 00–30262 Filed 11–27–00; 8:45 am]

BILLING CODE 8025–01–P

SMALL BUSINESS ADMINISTRATION

[Declaration of Disaster #3295;

Amendment #1]

State of California

In accordance with information

received from the Federal Emergency

Management Agency, dated November

9, 2000, the above-numbered

Declaration is hereby amended to

extend the deadline for filing

applications for physical damage caused

by this disaster from November 13, 2000

to November 30, 2000.

All other information remains the

same, i.e., the deadline for filing

applications for economic injury is June

14, 2001.

(Catalog of Federal Domestic Assistance

Program Nos. 59002 and 59008.)