Federal Register / Vol. 65, No. 230 / Wednesday, November 29, 2000 / Notices 71185

7 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See letter from Cindy L. Sink, Senior Attorney,

PCX to Nancy J. Sanow, Division of Market

Regulation, Commission, dated October 16, 2000

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

Exchange confirmed that the proposed change to

the Constitution was approved by the PCX

membership on January 27, 2000. Also, the

Exchange revised the Purpose section of the filing

to clarify that the proposed rule change is designed

to assure a fair representation of its members in the

selection of Governors. The Exchange also

explained that the propose for eliminating the

requirement of a minimum number of floor

members on the Nominating Committee was to

provide flexibility in the nominating process.

Further, in Amendment No. 1, the Exchange made

clear that, pursuant to the proposed rule change,

only public Governors will be permitted on the

Nominating Committee. In this regard, the

Exchange represented that it will submit a revision

to Art. III, Section 4(a) of the Constitution for

membership vote by March 30, 2001 clarifying this

point. The Exchange also made technical

corrections to the proposal. Finally, in Amendment

No. 1, the Exchange requested accelerated approval

of the filing.

the proposed rule change become

operative upon the date of filing with

the Commission, October 16, 2000, in

order to immediately implement these

new revisions to its Guidelines. The

proposed rule change and Amendment

No. 1 to the proposed rule change are

a ‘‘stated policy, practice or

interpretation’’ concerned with the

administration of NYSE Rules 35 and

37.

At any time within 60 days of the

filing of the proposed rule change and

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

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 and Amendment No. 1 to the

proposed rule change 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 NYSE. All

submissions should refer to File No.

SR–NYSE–00–43 and should be

submitted by December 20, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–30376 Filed 11–28–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43576; File No. SR–PCX–

00–09]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Pacific Exchange,

Inc. Relating to the Composition of the

PCX Nominating Committee

November 16, 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 March 20,

2000, the Pacific Exchange, Inc. (‘‘PCX’’

or ‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) the proposed

rule change as described in Items I and

II below, which Items have been

prepared by the Exchange. On October

17, 2000, the Exchange filed

Amendment No. 1 to the proposal.3 The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons, and to

grant accelerated approval to the

proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to amend its

Constitution to change the composition

of the Nominating Committee to include

public Governors and Equity Trading

Permit (‘‘ETP’’) Holders, Equity ASAP

Holders, or Allied Persons of an ETP

firm or an Equity ASAP Holder. The text

of the proposed rule change follows.

Additions are in italics; deletions are in

[brackets].

ARTICLE III

* * * * *

1206 Election of Nominating

Committee

SEC. 4(a) At each annual meeting

there shall be elected by the

membership, by ballot, for a term of one

year, a Nominating Committee of nine

persons, one of whom shall be

nominated as Chair[man] and one of

whom shall be nominated as Vice

Chair[man] who are eligible for election

in accordance with Sec. 4(b) of this

Article III, none of whom shall be [a

Governor or] an officer of the Exchange.

The Nominating Committee shall

assume duties as provided in Sec. 4(d)

of this Article III.

1211 Eligibility of Members of

Nominating Committee

SEC. 4(b). The nine members of the

Nominating Committee eligible to be

elected at each annual meeting shall be

as follows:

At least one [Not less than two]

Committee member[s] shall be [floor

members and] a representative of the

public. At least seven Committee

members shall be members or office

members or office allied members [of

the Exchange.], Equity Trading Permit

Holders, Equity ASAP Holders or Allied

Persons of an ETP firm or an Equity

ASAP Holder.

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

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

1. Purpose

Currently, Article III, Section 4(a) of

the PCX Constitution states that at each

annual meeting a Nominating

Committee of nine persons shall be

elected. No person elected to the

Nominating Committee may be a

Governor or an officer of the Exchange.

The Exchange proposes to amend

Section 4(a) to make Governors eligible

for election to the Nominating

71186 Federal Register / Vol. 65, No. 230 / Wednesday, November 29, 2000 / Notices

4The Exchange has represented that it intends to

submit a revision to the Constitution for a

membership vote that clarifies that the only

Governors that may serve on the Nominating

Committee are public Governors. See Amendment

No. 1, supra note 3.

5The Exchange notes that, for purposes of the

Act, ETP Holders and Equity ASAP Holders are

‘‘members’’ of the PCX. See note 6, infra.

6See Securities Exchange Act Release No. 42759

(May 5, 2000), 65 FR 30654 (May 12, 2000) (order

approving PCX proposal to create PCX Equities,

Inc.).

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

8 15 U.S.C. 78f(b)(5).

9 15 U.S.C. 78f(b)(3).

10 15 U.S.C. 78f(b). 11 In approving this proposal, the Commission has

considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

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

12 15 U.S.C. 78f(b)(3).

Committee. The Exchange interprets

this proposed revision to mean that only

public Governors will be permitted to be

elected to sit on the Nominating

Committee.4

The Exchange believes that by

allowing public Governors to serve on

the Nominating Committee, the

requirement that at least one public

representative serve on the Committee

could be a met by electing a public

Governor. The Exchange proposes this

change in an effort to potentially

provide public representatives greater

influence in the Board of Governors

nomination process.

In addition, the Exchange proposes to

change references in Article III, Section

4(a) to ‘‘Chairman’’ and ‘‘Vice

Chairman’’ to ‘‘Chair’’ and ‘‘Vice Chair.’’

The Exchange proposes this change to

make the provisions gender-neutral.

Finally, the Exchange proposes to

amend PCX Constitution, Article III,

Section 4(b), entitled ‘‘Eligibility of

members of Nominating Committee.’’

Currently, this section states, ‘‘[t]he nine

members of the Nominating Committee

eligible to be elected at each annual

meeting shall be as follows: Not less

than two Committee members shall be

floor members and seven Committee

members shall be members or office

members of office allied members of the

Exchange.’’ The Exchange is proposing

to modify Section 4(b) in two respects.

First, with regard to the provision that

not less than two Nominating

Committee members shall be floor

members, the Exchange is proposing to

replace it with a new requirement that

at least one Nominating Committee

members shall be a representative of the

public. Accordingly, under the

proposal, there may be up to two public

representatives on the Nominating

Committee at a time, although there

must always be at least one. The balance

of seats on the Nominating Committee,

which will be either seven or eight

depending on the number of public

representatives nominated at the time,

shall be members, office members, office

allied members, ETP Holders, Equity

ASAP Holders, or allied persons of an

ETP Firm or Equity ASAP Holder. The

rule change eliminates the requirement

that at least two floor members be

represented on the Nominating

Committee so that the Exchange will

have the flexibility to meet its obligation

to have a fair representation of Exchange

members.5

Second, as noted above, the Exchange

is proposing to expand the list of

members who may serve on the

Nominating Committee to include ETP

Holders, Equity ASAP Holders, or

Allied Persons of an ETP Firm or Equity

ASAP Holder. These changes are

intended to expand the list of eligible

committee members to include new

types of members of PCX Equities, Inc.6

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

Section 6(b) 7 of the Act, in general, and

further the objectives of Section 6(b)(5),8

in particular, because they are designed

to promote just and equitable principles

of trade, and to protect investors and the

public interest. The Exchange further

believes that the proposed rule change

will further the objectives of Section

6(b)(3) 9 of the Act, because it is

designed to assure a fair representation

of Exchange members in the selection of

the Exchange’s Governors.

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

Written comments on the proposed

rule change were neither solicited nor

received.

III. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing,

including whether the proposal 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 PCX. All

submissions should refer to File No.

SR–PCX–00–09 and should be

submitted by December 20, 2000.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission has reviewed the

Exchange’s proposed rule change and

finds, for the reasons set forth below,

that the proposal, as amended, is

consistent with the requirements of

Section 6(b) of the Act 10 and the rules

and regulations thereunder applicable to

a national securities exchange.11

Specifically, the Commission believes

the proposal is consistent with Section

6(b)(3) 12 because it ensures that all

member constituencies of the Exchange,

including ETP Holders, Equity ASAP

Holders, or Allied Persons of an ETP

Firm of Equity ASAP Holder, will have

the opportunity to be represented on the

Nominating Committee. Section 6(b)(3)

of the Act requires that the rules of an

exchange ensure a fair representation of

its members in the selection of its

directors. The PCX Nominating

Committee is responsible for selecting

the slate of appropriate candidates to be

presented to the PCX’s members for

election to the PCX Board of Governors

and the PCX Nominating Committee.

Thus, by ensuring that all member

constituencies are permitted to be

represented on the Nominating

Committee, the Exchange’s proposal

should assure that its members are fairly

represented when selecting directors.

In addition, the Exchange has

proposed to permit public

representatives to serve on the

Nominating Committee. The

Commission believes that allowing

public representatives to serve on the

Nominating Committee will help to

ensure that qualified governors are

nominated for positions on the PCX

Board, as well as the PCX Nominating

Committee. As the Commission has

noted in the past, public representatives

should provide unique unbiased

Federal Register / Vol. 65, No. 230 / Wednesday, November 29, 2000 / Notices 71187

13See Securities Exchange Act Release Nos.

42235 (December 14, 1999), 64 FR 71839 (December

22, 1999); and 40760 (December 8, 1998), 63 FR

70884 (December 22, 1998). 14See note 6, supra. 15See Amendment No. 1, supra note 3.

16 15 U.S.C. 78f(b)(3).

17 15 U.S.C. 78s(b).

18 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3The extension of the pilot program incorporates

three changes to the initial pilot program: (1)

Payment for order flow fees are not eligible for

inclusion in the credit, (2) daughters-in-law and

sons-in-law are now included in the definition of

an immediate family member, and (3) the amount

of the credit will be included on the member’s

invoice instead of the member submitting a credit

form each month.

4Out-of-pocket expenses include charges for

wireless telephone services, postage, ILX machines

and Dow Jones News Service.

5Pass-through costs include charges for member

health insurance and parcel delivery services.

6Capital funding fees are assessed on owners to

provide funding for technological improvements

and other capital needs. On June 29, 2000, the

Commission approved the capital funding fee for a

36 month period. See Securities Exchange Act

Release No. 42993 (June 29, 2000), 65 FR 42415

(July 10, 2000) (SR–Phlx–99–51).

7Payment for order flow fees are fees imposed on

transactions by Phlx specialists and Registered

Options Traders in the Top 120 Options on the

Phlx. See Securities Exchange Act Release Nos.

43177 (August 18, 2000), 65 FR 51889 (August 25,

2000) (SR–Phlx–00–77); 43480 (October 25, 2000)

(SR–Phlx–00–86 and SR–Phlx–00–87); and 43481

(October 25, 2000), 65 FR 66277 (November 3, 2000)

(SR–Phlx–00–88 and SR–Phlx–00–89).

8The credit-eligible fees are fees assessed on

members and include transaction as well as trading

floor fees. Transaction fees include equity

transaction value charges, equity floor brokerage

transaction fees, option comparison charges and

option transaction charges. Trading floor fees

include charges for trading post/booth, controller

space, shelf space, transmission, execution/

communication charge and floor facility fees. Fees

assessed on foreign currency options participants

are not considered credit-eligible fees.

9See Securities Exchange Act Release No. 42791

(May 16, 2000), 65 FR 33606 (May 24, 2000). The

credit is part of the Exchange’s long-term financing

plan, which includes the $1,500 capital funding fee.

See supra note 6.

perspectives to the governance of an

exchange, and should enhance the

ability of an exchange to address issues

in a non-discriminatory fashion.13

Therefore, the Commission believes that

adding public representatives to the

Nominating Committee should enhance

the integrity of the nominating process.

The Exchange has also proposed to

permit PCX public Governors to serve as

the public representatives on the

Nominating Committee. The

Commission notes that as currently

drafted, the PCX Constitution seems to

permit any governor to serve on the

Nominating Committee. However, in

Amendment No. 1,14 the Exchange

clarified that only public Governors will

be permitted to serve on the Nominating

Committee, and committed to submit a

change to the PCX Constitution to

reflect this limitation to its members.15

The Commission notes that any such

clarification must be submitted to the

Commission as a proposed rule change

and expects such proposed rule change

to be submitted as soon as practicable

after the requisite member vote. Further,

the Commission notes that any change

to the PCX’s interpretation that this

proposal only permits public Governors

to be eligible for positions on the PCX

Nominating Committee would require a

rule change to be submitted to the

Commission. For purposes of this filing,

however, the Commission believes that

it is acceptable to permit public

governors to serve as public members of

the Nominating Committee.

To accommodate the public positions,

the Exchange has eliminated the

requirement that at least two floor

members be represented on the

Nominating Committee. Because the

Commission believes that public

representation on the Nominating

Committee enhances the ability of the

Committee to select eligible candidates

for the PCX Board and PCX Nominating

Committee, the Commission believes

that this change is consistent with the

Act. Further, the Commission notes that

the composition of the Nominating

Committee continues to contemplate all

types of PCX members. Thus, floor

members may continue to be

represented on the Nominating

Committee, if members are elected.

The Commission finds good cause for

approving the proposed rule change, as

amended, prior to the thirteenth day

after publication of notice thereof in the

Federal Register. The Commission

understands that the PCX’s Nominating

Committee is currently considering

candidates for election to the

Nominating Committee in January 2001.

Approval of this proposal on an

accelerated basis will enable the PCX

Nominating Committee to consider

public Governors for the public

representative positions on the January

2001 Nominating Committee, which as

described above, the Commission

believes will enhance the nominating

process. The Commission believes that

good cause exists consistent with

Sections 6(b)(3) 16 and 19(b) 17 of the Act

to approve the proposed rule change, as

amended on an accelerated basis.

V. Conclusion

It is Therefore Ordered, pursuant to

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

proposed rule change (SR–PCX–00–09),

as amended, is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.18

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–30385 Filed 11–28–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43567; File No. SR–Phlx–

00–100]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.

Extending Its Pilot Program To Assess

a Monthly Credit of up to $1,000 to

Qualified Members

November 15, 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

8, 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.

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, pursuant to Rule 19b–4

under the Act, proposes to extend its

current pilot program that allows certain

Exchange members to receive a monthly

credit of up to $1,000.3 The credit will

be applied against fees, dues, charges

and other amounts as may from time to

time be owed to the Exchange that

month, except fines, late fees, out-ofpocket expenses,4 pass-through costs,5

capital funding fees,6 payment for order

flow fees,7 and any fees paid by equity

trading permit holders in respect of any

trading permits the Exchange may issue,

(‘‘credit-eligible fees’’) 8 by members

who own the membership by which

they are a member (‘‘member-owners’’)

and certain other categories of members

described below. The current pilot

program became effective upon filing on

May 16, 2000 and expires on November

16, 2000; 9 the Exchange now proposes

to extend the pilot program for an

additional six-month period through

May 16, 2001.

In addition to member-owners, the

credit may be applied against creditVerDate 11<MAY>2000 17:49 Nov 28, 2000 Jkt 194001 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 E:\FR\FM\29NON1.SGM pfrm02 PsN: 29NON1