75992 Federal Register / Vol. 65, No. 234 / Tuesday, December 5, 2000 / Notices

7 17 CFR 200.30–3(a)(12).

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

2The Commission has modified the text of the

summaries prepared by OCC.

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 OCC. All submissions should

refer to File No. SR–OCC–00–05 and

should be submitted by December 26,

2000.

For the Commission by the Division

of Market Regulation, pursuant to

delegated authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–30882 Filed 12–4–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43632; File No. SR–OCC–

00–08]

Self-Regulatory Organizations; The

Options Clearing Corporation; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change Relating to

Instructions to Pledge and Release

Pledges

November 28, 2000.

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

Securities Exchange Act of 1934

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

September 8, 2000, The Options

Clearing Corporation (‘‘OCC’’) 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 primarily by OCC.

The Commission is publishing this

notice to solicit comments on the

proposed rule change from interested

parties.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change would

allow OCC to give effect on an intraday

basis to instructions to pledge long

options positions and instructions to

release pledges.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

OCC 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. OCC has prepared

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

and (C) below, of the most significant

aspects of these statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The purpose of the proposed rule

change is to accelerate the time when

OCC gives effect to instructions to

pledge or release long options for

purposes of determining margin

requirements. Currently, such

instructions are acted on during the

nightly processing cycle for effect the

next business day. As a result, positions

that have been released from pledge and

could be used to reduce a clearing

member’s margin requirement are

‘‘idled’’ during a business day. OCC

proposes to act on pledge and release

instructions on an intraday basis

thereby affording clearing members

more efficient use of their assets and

potentially greater flexibility in their

financing decisions. No effect would be

given to a requested pledge to the extent

that the pledge would cause the account

not to be adequately margined.

The proposed rule change is

consistent with the requirements of

Section 17A of the Act and the rules and

regulations thereunder applicable to

OCC because it increases the ability of

clearing members to manage their

financing arrangements while

maintaining OCC’s overall protection

against default.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

OCC does not believe that the

proposed rule change would impose any

burden on competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments were not and are

not intended to be solicited with respect

to the proposed rule change, and none

have been received.

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) of

the Exchange Act and Rule 19b–4(f)(6)

promulgated thereunder because the

proposal does not significantly affect the

protection of investors or the public

interest and does not impose any

significant burden on competition. In

accordance with Rule 19b–4(f)(6)(iii),

prior to the filing date, OCC submitted

written notice of its intent to file the

proposed rule change along with a brief

description and text of the proposed

rule change. In that notice of its intent,

OCC requested that the Commission

waive the requirement that the rule

change, by its terms, not become

operative for 30 days after the date of

the filing, as consistent with the

protection of investors and the public

interest. The Commission has decided

to waive that requirement. Accordingly,

the proposed rule change will become

effective upon filing pursuant to Section

19(b)(3)(A) of the Act and Rule 19b–

4(f)(6) thereunder. At any time within

sixty 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

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 OCC. All submissions should

refer to File No. SR–OCC–00–08 and

should be submitted by December 26,

2000.

Federal Register / Vol. 65, No. 234 / Tuesday, December 5, 2000 / Notices 75993

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 43407 (Oct.

3, 2000), 65 FR 60711 (Oct. 12, 2000) (SR–PHLX–

00–72).

4 15 U.S.C. 78f(b)(5).

5 In approving the proposal, the Commission has

considered the rule’s impact on efficiency,

competition, and capital formation. 15 U.S.C. 78c(f).

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–30884 Filed 12–4–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43625; File No. SR–Phlx–

00–72]

Self-Regulatory Organizations; Order

Approving a Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.,

Relating to Rules 501, 505, and 506

Regarding Allocation and Specialist

Appointment, as well as Rule 748,

Supervision, to Reflect Current

Circumstances on the Equity, Foreign

Currency Option and Option Trading

Floors

November 27, 2000.

On July 25, 2000, the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

amend Rules 501, 505, and 506

regarding Allocation and Specialist

Appointment, as well as Rule 748,

Supervision, to reflect current

circumstances on the equity, foreign

currency option and option trading

floors. The proposed rule change was

noticed in the Federal Register.3 No

comments were submitted on the

proposed rule change. This order

approves the proposed rule change.

I. Description of the Proposal

The Phlx proposes to amend Rules

501, 505, 506, and 748 to require certain

information be provided to the

Allocation, Evaluation and Securities

Committee (‘‘AES Committee’’) for

approval and to require certain

minimum staffing levels for specialist

units. Specifically, the Exchange

proposes to amend Rule 501(b)(4) to

require that option and foreign currency

option specialist units provide detailed

information on their application to

become a specialist unit regarding their

back-up arrangements with regard to

financial and staffing support.

The proposal would add Rule 501(c)

to require that the AES Committee

approve an individual before he may act

as a specialist on behalf of a specialist

unit. In addition, proposed Rule 501(c)

would require that applications for

individuals to act as specialist include

any other special information that the

AES Committee may require for

approval. Proposed Rule 501(c) would

also require that the AES Committee or

its designee approve an individual

before that individual may move from

one specialist unit to another specialist

unit.

The proposal would re-designate Rule

501(c) ad Rule 501(d), which requires

that to be approved and retain their

specialist privileges, option and foreign

currency option specialists must

maintain the clearing arrangements and

capital structure stated on their

application. In addition, Rule 501(d)

would require that changes regarding

back-up arrangements must be

submitted to and approved by the AES

Committee. The proposal would also

amend Rule 501(d) to require option

and foreign currency option specialists

to maintain a minimum staffing level for

each quarter turret of space on the

trading floor.

The proposal would add Rule 501(e),

which is similar to Rule 501(d), and

would contain the same staffing

requirements for equity specialists as

are currently contained in Rule

501(c)(2).

The proposal would re-designate Rule

501(d) as Rule 501(f) and amend the

language of 501(f) to state that once an

applicant is approved by the AES

Committee as a specialist unit, any

material change in the capital or staff of

the unit or any move by the head or

assistant specialist must be reported in

writing to the AES Committee within

two days of the change.

The proposal would add Rule 501,

Commentary .02, which states that for

purposes of Rule 748 on Supervision,

individuals employed or associated

with the back-up specialist will be

considered engaging in a business

activity of the specialist unit that they

are assisting. Rule 748(b) would also be

amended to refer to this situation.

The proposal would amend Rule 505

to require registrant specialist units to

report material changes on the

respective equity, option and foreign

currency option registration forms to the

AES Committee.

The proposal would amend Rule 506

to codify expressly that the AES

Committee may require applicant

specialist units to provide other

information, including system order

acceptance and execution levels, and

guarantees on the application for a

particular equity or option. The

proposal also would require that, should

a specialist be allocated that equity or

option, the specialist would be

immediately required to notify the

Exchange staff and submit for approval

to the AES Committee or its designee in

writing any change to the respective

system acceptance and execution levels

or any other material changes on that

application.

The proposal also would replace

references to the Department of

Securities in Rules 505 and 506 with

references to the Exchange staff.

II. Discussion

The Commission finds that the

proposed rule change is consistent with

the provisions of Section 6(b)(5) of the

Act,4 which require, among other

things, that the rules of the exchange be

designed to prevent fraudulent and

manipulative acts and practices, to

promote just and equitable principles of

trade, to foster cooperation and

coordination with respect to facilitating

transactions in securities, to remove

impediments to and perfect the

mechanism of a free and open market

and a national market system, and, in

general, to protect investors and the

public interest.5 The proposed

amendments will provide the AES

Committee with additional information

to make decisions regarding allocation,

reallocation, and transfer of specialist

books as well as the approval and

retention of specialists on the trading

floor.

The Commission believes that

proposed amendment to Rule 501(b)(4)

regarding back-up arrangements for

staffing and capital will help to ensure

that specialist books continue to trade

on the floor in an efficient manner by

requiring the specialist unit to have

sufficient staff to handle the high

volume in busy markets and requiring

the back-up to step in to act as a

specialist, when the assigned specialist

is unable to do so.

The Commission believes that the

proposed amendment to Rule 501(c)

regarding the AES Committee’s

supervision of the individuals applying

to be specialists on the floor will help

to ensure that applicants have sufficient

qualifications and experience to perform

the duties of a specialist in active

markets.