77058 Federal Register / Vol. 65, No. 237 / Friday, December 8, 2000 / Notices

10 17 CFR 200.30–3(a)(12).

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

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

change and the attached exhibit are available at the

Commission’s Public Reference Section or through

OCC.

3The Commission has modified the text of the

summaries prepared by OCC.

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

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the ISE. All

submissions should refer to the File No.

SR–ISE–00–14 and should be submitted

by December 29, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–31298 Filed 12–7–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43637; File No. SR–OCC–

00–11]

Self-Regulatory Organizations; The

Options Clearing Corporation; Notice

of Filing and Immediate Effectiveness

of a Proposed Rule Change Relating to

Investment of Excess Funds and to

Procedures Applicable to the

Safeguarding of Such Investments

November 29, 2000.

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

Securities Exchange Act of 1934

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

October 5, 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 amend its By-Laws to

expand the types of investments that

OCC may make its funds in excess of

those needed for working capital and to

update the procedures applicable to the

safeguarding of such investments.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,

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.3

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The purpose of this rule change is to

expand the types of investments that

OCC is permitted to make its funds in

excess of those needed for working

capital and to update the procedures

applicable to the safeguarding of such

investments.

Article IX, section 1(a) currently

provides that the board of directors may

invest OCC’s excess funds in

Government securities. The By-Laws are

amended to allow the board or a

committee thereof to approve the

investment of OCC’s funds in other

securities or financial instruments. This

change permits portfolio diversification

and allows OCC to hedge its obligation

under stock-based compensation plans.

The By-Laws are further amended to

explicitly allow OCC to hold securities

in accounts at registered broker-dealers.

Section 1(a) currently provides that one

director (other than the Management

Director) must act jointly with an officer

of OCC to access or withdraw securities

that are the property of OCC. Section

1(a) is being amended to allow

withdrawals by joint action of an officer

of the rank of vice president or above

and the treasurer or an assistant

treasurer.

The proposed rule change is

consistent with the requirements of

section 17A of the Act because it

provides reasonable procedures

governing the investment of OCC funds

in excess of those needed for working

capital and for the safeguarding of such

investments.

(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)(A)(iii) of the Act and Rule 19b–

4(f)(3) thereunder as it is concerned

solely with the administration of a selfregulatory organization. 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, 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,

Federal Register / Vol. 65, No. 237 / Friday, December 8, 2000 / Notices 77059

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

2 17 CFR 240.19b–4.

3See Letter from Richard S. Rudolph, Counsel,

Phlx, to Nancy J. Sanow, Assistant Director,

Division of Market Regulation, Commission, dated

November 24, 2000 (‘‘Amendment No. 1’’). In

Amendment No. 1, the Phlx clarified certain aspects

of the proposed rule change. Among other things,

Amendment No. 1: (i) Specifies the number of, and

selection criteria for, options selected for the pilot

program; (ii) represents that the Exchange will post

on its website a list of options included in the

program and will issue a circular to this effect; (ii)

clarifies that orders received by AUTO–X that

exceed the minimum guarantee will receive a

partial automatic execution; and (iv) clarifies that

upon the implementation of quotes with size,

initially size will not be decremented, and the

specialist will be responsible to fill orders at its

disseminated quote up to the disseminated size.

4AUTOM is the Exchange’s electronic order

delivery and reporting system, which provides for

the automatic entry and routing of equity option

and index option orders to the Exchange trading

floor. Orders delivered through AUTOM may be

executed manually, or certain orders are eligible for

AUTOM’s automatic execution feature, AUTO–X.

Equity option and index option specialists are

required by the Exchange to participate in AUTOM

and its features and enhancements. Option orders

entered by Exchange members into AUTOM are

routed to the appropriate specialist unit on the

Exchange trading floor.

5See Amendment No. 1, supra note 3.

6See Amendment No. 1, supra note 3.

7Exchange Rule 1080(c) provides, in relevant

part, that ‘‘[t]he Options Committee may for any

period restrict the use of AUTO–X on the Exchange

in any option series.’’ See Securities Exchange Act

Release No. 38792 (June 30, 1997), 62 FR 36602

(July 8, 1997) (SR–Phlx–97–24).

8Any orders delivered in excess of the minimum

AUTO–X guarantee will be executed to the

guaranteed amount and the excess will be dropped

to the specialist for manual execution. See

Amendment No. 1, supra note 3.

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–00–11 and should be

submitted by December 29, 2000.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–31276 Filed 12–7–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43652; File No. SR–Phlx–

00–96]

Self Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change and Amendment No. 1

Thereto by the Philadelphia Stock

Exchange, Inc. To Disengage Its

Automatic Execution System (‘‘AUTO–

X’’) for a Period of Thirty Seconds

After the Number of Contracts

Automatically Executed in a Given

Option Meets the AUTO-X Minimum

Guarantee for That Option

December 1, 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

30, 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 and II below, which Items

have been prepared by the Exchange.

On November 27, 2000, the Phlx filed

Amendment No. 1 to the proposed rule

change.3 The Commission is publishing

this notice to solicit comments on the

proposed rule change, as amended, from

interested persons and to approve the

amended proposal on an accelerated

basis.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Phlx proposes a systems change

to ‘‘AUTO–X,’’ the automatic execution

feature of the Exchange’s Automated

Options Market System (‘‘AUTOM’’),4

that would disengage AUTO–X for a

period of thirty seconds after the

number of contracts automatically

executed in a given option meets the

AUTO–X minimum guarantee for that

option. During such thirty-second

period, all orders received via AUTOM

would be executed manually by the

specialist. The Exchange proposes to

implement the systems change on a sixmonth pilot basis initially involving

fifteen to thirty options approved by the

Exchange’s Options Committee.5

AUTOM users would be notified of the

systems change and of the options

included in the pilot program through

the issuance of a regulatory circular and

on the Exchange’s website.6

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

any 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

The purpose of the proposed rule

change is to enable the Exchange to take

a first step towards the implementation

of the dissemination of options

quotations with size, as expected to be

made available by the Options Price

Reporting Authority (‘‘OPRA’’) in

January, 2001. It is anticipated that the

systems change would assist specialists

in maintaining fair and orderly markets

during peak market activity, by allowing

specialists to execute orders delivered

via AUTOM manually for a limited

period of time after the AUTO–X

minimum guarantee is met.

The Exchange’s Options Committee,

pursuant to its authority under

Exchange Rule 1080(c),7 has determined

to propose the implementation of a

limited pilot program that would

include the following features:

• Once an automatic execution occurs

via AUTO–X in an option, the system

would begin a ‘‘counting’’ program,

which would count the number of

contracts executed automatically for

that option, up to the AUTO–X

guarantee, regardless of the number of

executions.

• When the number of contracts

executed automatically for that option

meets the AUTO–X guarantee (for

example, fifty contracts executed)

within a fifteen second time frame, the

system would cease to automatically

execute for that option, and would drop

all AUTO–X eligible orders in that

option for manual handling by the

specialist for a period of thirty seconds

to enable the specialist to refresh quotes

in that option.8

• Upon the expiration of thirty

seconds, automatic executions would

resume and the ‘‘counting’’ program

would be set to zero and begin counting

the number of contracts executed

automatically within a fifteen second

time frame again, up to the AUTO–X

guarantee.

• Again, when the number of

contracts automatically executed meets

the AUTO–X guarantee within a fifteen

second time frame, the system would

drop all subsequent AUTO–X eligible

orders for manual handling by the

specialist for a period of thirty seconds.

The Exchange believes that the pilot

program set forth above would enable

the Exchange to take a first step towards

the implementation of options

quotations that include size (i.e., the

number of contracts generally available