[Federal Register Volume 65, Number 232 (Friday, December 1, 2000)]
[Notices]
[Pages 75323-75324]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-30668]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43605; File No. 4-208]


Intermarket Trading System; Order Approving Sixteenth Amendment 
to the ITS Plan Relating to Decimal Pricing in Listed Securities

November 21, 2000.
    On August 24, 2000, the Intermarket Trading System (``ITS'') 
submitted to the Securities and Exchange Commission (``Commission'') an 
amendment to the restated ITS Plan (``Plan'') pursuant to section 11A 
of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 11A3a3-2 
thereunder.\2\ The Participants filed the amendment to: (1) Recognize 
the transition from quoting in fractions to decimal pricing; (2) reduce 
the pre-opening price change parameter for certain securities; and (3) 
expand the pre-opening price change parameters for certain stocks. 
Notice of the proposal appeared in the Federal Register on September 8, 
2000 to solicit comments on the amendment from interested persons.\3\ 
The Commission made the proposed amendment summarily effective upon 
publication of the notice for a period of 120 days.\4\ The Commission 
received no comments on the proposal. For the reasons discussed below, 
the Commission is approving the proposal.
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    \1\ U.S.C. 78k-1.
    \2\ 17 CFR 240.11Aa3-2. The ITS is a National Market System 
(``NMS'') plan, which was designed to facilitate intermarket trading 
in exchange-listed equity securities based on current quotation 
information emanating from the linked markets. See Securities 
Exchange Act Release No. 19456 (January 27, 1983), 48 FR 4938 
(February 3, 1983).
    The ITS participants include the American Stock Exchange LLC 
(``Amex''), the Boston Stock Exchange, Inc. (``BSE''), the Chicago 
Board Options Exchange, Inc. (``CBOE''), the Chicago Stock Exchange, 
Inc. (``CHX''), the Cincinnati Stock Exchange, Inc. (``CSE''), the 
National Association of Securities Dealers, Inc. (``NASD''), the New 
York Stock Exchange, Inc. (``NYSE''), the Pacific Exchange, Inc. 
(``PCX''), and the Philadelphia Stock Exchange, Inc. (``PHLX'') 
(``Participants'')
    \3\ Securities Exchange Act Release No. 43236 (August 31, 2000), 
65 FR 54571 (September 8, 2000).
    \4\ See 17 CFR 240.11Aa3-2(c)(4) (allowing the Commission to 
summarily put into effect on a temporary basis a Plan amendment ``if 
the Commission finds that such action is necessary or appropriate in 
the public interest, for the protection of investors or the 
maintenance of fair and orderly markets, to remove impediments to, 
and perfect mechanisms of, a national market system or otherwise in 
furtherance of the purpose of the Act'').
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    The proposal amends section 6(a)(ii) of the Plan to recognize the 
transition from fractions to decimal pricing, the new method of pricing 
for equity securities and options. In addition, the proposal amends 
section 7(a) of the Plan

[[Page 75324]]

to reduce the pre-opening price change parameter for certain securities 
from \1/8\ point ($0.125) to $0.10, as well as change pricing 
references to decimal pricing. Finally, the proposal expands the pre-
opening price change parameters for certain stocks, which are reported 
on Network B of the Consolidated Tape Association, similar to those 
stocks reported on Network A.
    The Commission finds that the proposed amendment is consistent with 
the Act in general, and in particular, with section 
11A(a)(1)(C)(ii),\5\ which provides for fair competition among the 
Participants and their members, and section 11A(a)(1)(D),\6\ which 
provides for linking of markets for qualified securities through 
communications and data processing facilities that foster efficiency, 
enhance competition, increase the information available to brokers, 
dealers, and investors, facilitate the offsetting of investors' orders, 
and contribute to the best execution of such orders. The Commission 
also finds that the amendment is consistent with Rule 11Aa3-2(c)(2),\7\ 
which requires the Commission to determine that the amendment is 
necessary and appropriate in the public interest, for the protection of 
investors and the maintenance of fair and orderly markets, to remove 
impediments to, and perfect the mechanisms of, a national market system 
or otherwise in furtherance of the purposes of the Act.
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    \5\ 15 U.S.C. 78k-1(a)(1)(C)(ii).
    \6\ 15 U.S.C. 78k-1(a)(1)(D).
    \7\ 17 CFR 240.11Aa3-2(c)(2).
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    On June 8, 2000, the Commission ordered the self-regulatory 
organizations (``SROs'') to submit a plan that would begin phasing in 
decimal pricing in equity securities and options on or before September 
5, 2000, and complete this phase-in no later than April 9, 2001.\8\ On 
July 24, 2000, the SROs submitted a phase-in plan to the Commission. On 
August 7, 2000, the SROs filed proposed rule changes necessary to 
implement decimal pricing. The Commission believes that the proposed 
amendment to the ITS Plan is another required adjustment in the process 
of the market-wide conversion to decimal pricing that may improve the 
efficiency and reliability of ITS. Lastly, the proposed amendment is 
necessary to accommodate decimal pricing, the new method of pricing for 
equity securities among the Participants, and therefore is consistent 
with ITS's purpose: to facilitate intermarket trading in listed equity 
securities.
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    \8\ See Securities Exchange Act Release No. 42914 (June 8, 
2000), 65 FR 38010 (June 19, 2000).
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    For the foregoing reasons, the Commission finds that the proposed 
amendment is consistent with Act and the rules and regulations 
thereunder applicable to the ITS and, in particular, sections 
11A(a)(1)(C)(ii) and (D) of the Act \9\ and Rule 11Aa3-2(c)(2) 
thereunder.\10\
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    \9\ 15 U.S.C. 78k-1(a)(1)(C)(ii) and (D).
    \10\ 17 CFR 240.11Aa3-2(c)(2).
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    It is Therefore Ordered, pursuant to section 11A(a)(3)(B) of the 
Act,\11\ that the proposed amendment be, and hereby is, approved.
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    \11\ 15 U.S.C. 78k-1(a)(3)(B).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(29).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-30668 Filed 11-30-00; 8:45 am]
BILLING CODE 8010-01-M