Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Notices 77405

9 15 U.S.C. 78f(b)(5).

10 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Exchange Act Release No. 43344 (September

26, 2000), 65 FR 59038 (October 3, 2000).

4See Exchange Act Release No. 39729, 63 FR

12559 (March 13, 1998) (order approving File No.

SR–NASD–97–56).

5See In the Matter of National Association of

Securities Dealers, Inc., Exchange Act Release No.

37538 (August 8, 1996); Administrative Proceeding

File No. 3–9056 (‘‘SEC Order’’).

professional traders who determine to

send electronically generated orders

would, thus, be able to avoid violations

by inputting two keystrokes or by

inputting one touch of a computer

screen. Consequently, the proposed

interpretation provides some leeway for

the Exchange to determine what

constitutes minimal human

intervention.

The Exchange will be willing to

provide interpretive guidance to its

members in order to help them

determine what type of action will be

deemed to be minimal human

intervention and what type of activity

will not be considered minimal human

intervention. The Exchange will also be

willing to provide advice to its members

about whether a particular surveillance

mechanism to detect violations of this

Rule by its customers is adequate.

2. Statutory Basis

The proposed rule change is

consistent with and furthers the

objectives of Section 6(b)(5) of the Act 9

in that it is designed to remove

impediments to a free and open market

and protecting investors and the public

interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The CBOE does not believe that the

proposed rule change will impose any

burden on competition that is not

necessary or appropriate in furtherance

of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No written comments were solicited

or received with respect to the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the date of

publication of this notice in the Federal

Register or within such longer period (i)

as the Commission may designate up to

90 days of such date if it finds such

longer period to be appropriate and

publishes its reasons for so finding or

(ii) as to which the self-regulatory

organization consents, the Commission

will:

(A) by order approve such proposed

rule change, or

(B) institute proceedings to determine

whether the proposed rule change

should be disapproved.

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. Copies of such filing will also

be available for inspection and copying

at the principal office of CBOE. All

submissions should refer to the File

Number SR–CBOE–00–57 and should be

submitted by January 2, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–31387 Filed 12–8–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43654; File No. SR–

NASD–00–70]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

National Association of Securities

Dealers, Inc. Relating to the Extension

of the Effective Date of Phase Three for

Order Audit Trail System Rules

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 November

30, 2000, the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), through its whollyowned subsidiary, NASD Regulation,

Inc. (‘‘NASD Regulation’’) 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 NASD Regulation. 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

NASD Regulation proposes to amend

Rule 6957 to extend the effective date of

the implementation of Phase Three of

the Order Audit Trail System (‘‘OATS’’)

rules until 120 days after the SEC

approves File No. SR–NASD–00–23,3

which also proposes changes to the

OATS rules. The text of the proposed

rule change is available at the Office of

the Secretary, NASD Regulation and the

Commission.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NASD Regulation 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.

NASD Regulation 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

On March 6, 1998, the SEC approved

NASD OATS Rules 6950 through 6957.4

OATS provides a substantially

enhanced body of information regarding

orders and transactions that improves

NASD Regulation’s ability to conduct

surveillance and investigations of

member firms for violations of

Association rules. In addition, OATS is

intended to fulfill one of the

undertakings contained in the order

issued by the SEC relating to the

settlement of an enforcement action

against the NASD for failure to

adequately enforce its rules.5 Pursuant

to the SEC Order, OATS is required, at

77406 Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Notices

6 Id.

7ACT is an automated system owned and

operated by Nasdaq that captures transaction

information in real-time. 8On August 31, 2000, NASD Regulation filed a

proposed amendment with the Commission for

immediate effectiveness to extend the

implementation date of Phase Three from October

31, 2000 to December 15, 2000. See Exchange Act

Release No. 43263 (September 8, 2000), 65 FR

55661 (September 14, 2000).

9See supra note 3.

10 In response to the Federal Register publication

of SR–NASD–00–23, some commenters indicated

that members would require 90 days from the date

the OATS Technical Specifications are amended to

incorporate necessary systems changes resulting

from SEC approval of SR–NASD–00–23. In this

regard, NASD Regulation believes that the OATS

Technical Specifications will be amended within 30

days of SEC approval of SR–NASD–00–23.

Accordingly, NASD Regulation believes that 120

days after the date of SEC approval of SR–NASD–

00–23 should provide adequate time for the OATS

Technical Specifications to be amended and

published, and for members to make necessary

systems and programming changes.

11 15 U.S.C. 78o–3(b)(6).

12 15 U.S.C. 78s(b)(3)(A).

13 17 CFR 240.16b–4(f)(6).

14For purposes only of accelerating the operative

date of this proposal, the Commission has

considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

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

15See supra note 8.

a minimum, to (1) provide an accurate,

time-sequenced record of orders and

transactions, beginning with the receipt

of an order at the first point of contact

between the broker/dealer and customer

or counterparty and further

documenting the life of the order

through the process of execution, and

(2) provide for market-wide

synchronization of clocks used in

connection with the audit trail.6

In general, OATS imposes obligations

on member firms to record in electronic

form and to report to NASD Regulation

certain information with respect to

orders originated, received, transmitted,

modified, canceled, or executed

(‘‘reportable events’’) by NASD members

relating to a Nasdaq Stock Market, Inc.

(‘‘Nasdaq’’) equity security. This

information is integrated with quote

information and transaction information

reported to the Automated Confirmation

Transaction Service (‘‘Act’’) 7 to provide

the Association with an accurate, timesequenced record of orders and other

transactions.

The effective dates for OATS

requirements are set forth in NASD Rule

6957, which provides for different

phases of implementation. All members

were required to synchronize their

computer system clocks and all

mechanical clocks that record times for

regulatory purposes by August 7, 1998,

and July 1, 1999, respectively. In

addition, the implementation schedule

required that electronic orders received

at the trading department of a member

that is a market maker in the subject

securities and those received by

electronic communications networks

(‘‘ECNs’’) be entered into OATS as of

March 1, 1999 (‘‘Phase One’’). Not all

information relating to electronic orders

received by market makers was required

to be reported to OATS during Phase

One. Information items relating to all

electronic orders, however, was

required to be reported to OATS by

August 1, 1999 (‘‘Phase Two’’). Under

the current implementation schedule,

the OATS rules will apply to all manual

orders on December 15, 2000 (‘‘Phase

Three’’).8

Since the implementation of OATS,

NASD Regulation has been closely

reviewing OATS activities with the goal

of identifying ways in which to improve

OATS and enhance the effectiveness of

OATS as a regulatory tool. In this

regard, NASD Regulation has proposed

certain changes to OATS that it believes

will enhance NASD Regulation’s

automated surveillance for compliance

with trading and market making rules

such as the NASD’s Limit order

Protection Interpretation, the SEC’s

Order Handling Rules, and a member

firm’s best execution obligations.9

Several of these proposed changes

would alter the requirements that will

become effective as part of Phase Three

under current OATS Rules. For

example, one proposed change would

require that a different order origination

and receipt time be recorded and

reported for certain orders. Another

proposed amendment would change the

definition of reporting member, which

would eliminate OATS reporting

requirements for certain firms. To

provide adequate time for these

proposed changes to be considered and

potentially acted upon, NASD

Regulation is proposing that the

effective date of Phase Three

implementation be 120 days after the

SEC approves File No. SR–NASD–00–

23.10 NASD Regulation believes that by

linking the effective date of Phase Three

to SEC approval of pending proposed

changes to OATS rules, members will be

provided sufficient time to implement

internal systems programming and other

changes resulting from the rule change.

2. Statutory Basis

NASD Regulation believes that the

proposed rule change is consistent with

the provisions of Section 15A(b)(6) of

the Act,11 which requires, among other

things, that the Association’s rules be

designed to prevent fraudulent and

manipulative acts and practices, to

promote just and equitable principles of

trade, and, in general, to protect

investors and the public interest. NASD

Regulation believes that extending the

effective date of Phase Three

implementation of OATS will provide

the additional time necessary to fully

analyze and consider the proposed

changes to OATS rules and determine

whether the proposed rule changes are

appropriate.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

NASD Regulation does not believe

that the proposed rule change will result

in 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

NASD Regulation has neither

solicited nor received written comments

on the proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Pursuant to Section 19(b)(3)(A) of the

Act 12 and Rule 19b–4(f)(6)

thereunder,13 the proposed rule change

has become effective upon filing as it

effects a change that: (1) Does not

significantly affect the protection of

investors or the public interest; (2) does

not impose any significant burden on

competition; and (3) by its terms, does

not become operative for 30 days from

the date of filing, or such shorter time

that the Commission may designate if

consistent with the protection of

investors and the public interest. NASD

Regulation provided the Commission

with written notice of its intent to file

the proposed rule change at least five

business days prior to the filing date

and has requested that the Commission

accelerate the operative date of the

proposal to become effective

immediately.

The Commission finds good cause for

accelerating the operative date of the

proposal as of the date of this notice.14

In order to prevent unnecessary systems

changes, NASD Regulation needs to give

its members as much notice as possible

that the effective date of Phase Three

has been extended. The Commission

also notes that the previous proposal to

extend the implementation date of

Phase Three from October 31, 2000 to

December 15, 2000 did not become

operative for 30 days from the date of

filing, and the Commission received no

comments.15

Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Notices 77407

16 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 41479, 64

FR 31667 (June 11, 1999).

4Securities Exchange Act Release No. 43111

(August 2, 2000), 65 FR 49046 (August 10, 2000)

(‘‘3-Year Extension Proposal’’).

5Securities Exchange Act Release No. 43155, 65

FR 49046 (August 23, 2000). The original comment

period was schedule to expire on August 31, 2000.

See 3-Year Extension Proposal, supra note 4.

6Securities Exchange Act Release No. 43329, 65

FR 58833 (October 2, 2000).

7 15 U.S.C. 78f(b)(5).

At any time within 60 days of the

filing of 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 is consistent with the Act.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington D.C. 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–00–70 and should be

submitted by January 2, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.16

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–31384 Filed 12–8–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43647; File No. SR–NYSE–

00–52]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the New

York Stock Exchange, Inc. To Extend

the Pilot Regarding Shareholder

Approval of Stock Option Plans

Through February 28, 2001

November 30, 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

29, 2000, the New York Stock Exchange,

Inc. (‘‘NYSE’’ 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 Exchange is proposing to extend,

until February 28, 2001, the

effectiveness of the amendments to

Sections 312.01, 312.03 and 312.04 of

the Exchange’s Listed Company Manual

with respect to the definition of a

‘‘broadly-based’’ stock option plan,

which were approved by the

Commission on a pilot basis (‘‘Pilot’’) on

June 4, 1999.3

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 IV 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

On July 12, 2000, the Exchange filed

a proposed rule change seeking to

extend the effectiveness of the Pilot

until September 30, 2003.4 On August

15, 2000, the Commission, in response

to a commenter’s request, extended the

comment period for the 3-Year

Extension Proposal until September 20,

2000.5 On September 22, 2000, the Pilot

was extended through November 30,

2000 to accommodate the extended

comment period on the 3-Year

Extension Proposal.6

The Exchange now proposes to

further extend the effectiveness of the

Pilot until February 28, 2001 to provide

the Commission and the Exchange with

additional time to review and evaluate

comment letters submitted to the

Commission regarding the 3-Year

Extension Proposal.

2. Basis

The Exchange believes that the

proposed rule change is consistent with

the requirements of Section 6(b)(5) 7 of

the Act because it is designed to prevent

fraudulent and manipulative acts and

practices, to promote just and equitable

principles of trade, to foster cooperation

and coordination with persons engaged

in 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.

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

The Exchange has neither solicited

nor received written comments on the

proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the proposed rule change (1)

does not significantly affect the

protection of investors or the public

interest; (2) does not impose any

significant burden on competition; and

(3) does not become operative for 30

days from the date of filing, or such

shorter time as the Commission may

designate if consistent with the

protection of investors and the public

interest, the proposed rule change has

become effective pursuant to Section