3638 Federal Register / Vol. 66, No. 10 / Tuesday, January 16, 2001 / Notices

18CFR 200.30–2(a)(12).

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

2 17 CFR 240.19b–4.

3See Letter from Cynthia Hoekstra, Counsel,

Phlx, to Nancy Sanow, Assistant Director, Division

of Market Regulation, Commission, dated December

27, 2000 (‘‘Amendment No. 1’’). In Amendment No.

1, the Phlx represented that the Phlx’s Board has

the authority to adopt Article Nineteen pursuant to

Delaware corporate law, Pennsylvania contract law,

and the Exchange’s Certificate of Incorporation, bylaws, and rules.

4 In connection with this proposed rule change,

the Commission approved a propose rule change

that adopted Article Twentieth. See Securities

Exchange Act Release No. 42317 (January 5, 2000),

65 FR 2215 (January 13, 2000) (SR–Phlx–99–48).

Article Twentieth provides, in part, that the

Exchange’s Board of Governors (‘‘Board’’) shall have

the power to assess such fees, dues, and other

charges upon members, lessors and lessees of

memberships and holders of permits (or any of

them) as the Board may from time to time adopt by

resolution or set forth in the Rules of the Board. On

May 11, 2000 the Commission approved a proposed

rule change, which amended Article Twentieth to

include the words ‘‘owner’’ and ‘‘member

organization’’ and to define the word ‘‘owner’’ to

clarify the original intent of Article Twentieth. See

Securities Exchange Act Release No. 42773 (May

11, 2000), 65 FR 31622 (May 18, 2000) (SR–Phlx–

00–30).

5Section 242 of the DGCL permits the board of

a non-stock corporation to adopt amendments to the

corporation’s Certificate of Incorporation.

6See also 8 Del. C. § 121(a) (providing that in

addition to powers expressly granted by law or the

Certificate of Incorporation, the corporation and its

directors may exercise ‘‘any powers incidental

thereto, so far as such powers and privileges are

necessary or convenient to the conduct, promotion

or attainment of the business or purposes set forth

in its certificate of incorporation’’).

7Article Third states, in part, that the Exchange

may operate as and perform all functions of a

national securities exchange and engage in any

lawful act or activity for which corporations may

be organized under the DGCL.

8See, e.g., By-Law Art. XV, § 15–1(a) (providing

that a membership may be leased in accordance

with such rules as the Board may adopt); Rule 930

(setting forth required terms of lease agreement and

providing, among other things, that the Exchange

may dispose of a membership subject to a lease

agreement); Rule 960.1 (providing that all members,

member organizations and any persons associated

with any member are subject to expulsion,

suspension, termination as to activities at the

Exchange or any other fitting sanction for violation

of the Rules of the Exchange); see also Certificate

of Incorporation, Article 20th (giving Board plenary

authority to assess fees, dues and other charges and

to impose penalties, including cancellation of a

membership and forfeiture of all rights as a lessor

or lessee, for nonpayment).

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–00–43 and should be

submitted by February 6, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.18

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–1194 Filed 1–12–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43812; File No. SR–Phlx–

99–50]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.

Amending the Exchange’s Certificate

of Incorporation

January 5, 2001.

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

23, 1999, 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 Phlx filed an amendment to the

proposal on December 28, 2000.3 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

a. The Original Filing

The Phlx proposes to amend its

Certificate of Incorporation to add

Article Nineteenth, relating to the

leasing of memberships.4 A complete

copy of the text of Article Nineteenth is

available at the Office of the Secretary,

the Phlx, and at the Commission.

Proposed Article Nineteenth provides

that, in addition to all other powers

granted to the Board by law, the

Certificate of Incorporation or

otherwise, the Board shall have the

power to determine whether, and under

what terms and conditions,

memberships may be leased, and to

adopt by resolution or to set forth in the

Rules of the Board such rules with

respect to lease agreements, lessors and

lessees as the Board may from time to

time determine to be advisable. Such

rules may include rules regulating and

setting forth the rights and obligations of

lessors and lessees, the required terms

of lease agreements, and the fees, dues,

and other charges required to be paid by

lessors and lessees (or either of them) to

the Exchange in connection with, and

for the privilege of, leasing

memberships. In addition, proposed

Article Nineteenth provides that the

Board shall have the power to adopt

rules relating to the suspension or

termination of any or all lease

agreements with respect to

memberships, to issue provisional

trading privileges on such terms as the

Board shall determine to members

whose lease agreements are suspended

or terminated, and to amend, alter, or

repeal any or all of the Rules of the

Board with respect to any of the

foregoing matters.

b. Amendment No. 1

As a non-stock corporation organized

under the Delaware General Corporation

Law (‘‘DGCL’’), the Exchange represents

that it has ample authority to adopt

proposed Article Nineteenth. Because

the Exchange’s Certificate of

Incorporation does not require member

approval to adopt a charter amendment,

proposed Article Nineteenth may be

adopted by the Board of Governors

without approval by the members of the

Exchange (including lessees of

memberships) or the owners of

memberships (including lessors of

memberships). 8 Del. C. § 242(b)93).5

Therefore, the Exchange’s Board

adopted Article Nineteenth in

accordance with Section 242.

Furthermore, Section 141(j) of the

DGCL empowers the Board to direct the

business and affairs of the Exchange,

and the Exchange’s by-laws give the

Board broad power to adopt rules of the

Exchange. 8 Del. C. § 141(j); 6 By-Law

Art. IV, § 4–4. In addition, existing

Article Third of the Phlx Certificate of

Incorporation gives the Exchange

authority to do all things necessary to

run a national securities exchange.7

Numerous provisions of the Exchange’s

by-laws and rules already address

matters similar to those addressed by

proposed Article Nineteenth.8

Therefore, the adoption of Article

Nineteenth falls within the broad

authority expressly conferred by

Delaware law and existing provisions

under the Phlx Certificate of

Incorporation.

Federal Register / Vol. 66, No. 10 / Tuesday, January 16, 2001 / Notices 3639

9See, e.g., Certificate of Incorporation, article

Thirteenth (lessor entitled to vote on compromise

or arrangement); Certificate of incorporation, Article

Seventeenth (lessor entitled to receive any

distribution of assets upon liquidation); By-Law

Article I, Section 1–1 defining lessor and lessee);

By-Law Article XII, Section 12–8 (authorizing lessor

application fee as fixed from time to time by the

Board, lessor initiation fee and fee upon transfer of

equitable title to a membership); and Rule 930

(setting forth required terms of lease agreements).

10See Exchange By-Law Article XII, Section 12–

9. As a condition of the right to lease their seats,

lessors agree ‘‘to abide by the [Exchange’s] By-Laws

as they have or shall be from time to time amended,

and by all rules and regulations adopted pursuant

to the By-Laws.’’ Lessees, as members, likewise

make the same commitment.

11Other examples include By-Law Art. I, § 1–1

(defining lessor and lessee); By-Law Art. XII, § 12–

1 (a member conducts business on the Exchange);

By-Law Art. XII, § 12–8 (authorizing lessor

application fee, lessor initiation fee, and fees upon

transfer of equitable title); By-Law Art. XIV, §§ 14–

1, 14–2, 14–5 (the Exchange can impose charges on

members, including penalties for non-payment of

fees); By-Law Art. XV, § 15–1 (the Exchange

approves lessees); Rule 931 (the Exchange approves

lessors); Rule 960.1 et seq. (the Exchange may

discipline members).

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

13 15 U.S.C. 78f(b).

14 15 U.S.C. 78f(b)(5).

Pursuant to Article Nineteenth, the

Board would have the authority to make

rules that impact lease arrangements,

including adopting rules relating to the

termination of lease agreements. As

discussed, the Exchange’s Certificate of

Incorporation, by-laws and rules already

include several provisions addressing

such authority.9 Moreover, the

Exchange’s by-laws require lessors and

lessees (as members) to pledge to abide

by the rules as they may be amended

from time to time.10

Accordingly, under the DGCL and the

Exchange’s Certificate of incorporation,

by-laws, and rules, the Exchange

represents that its Board of Governors

has the authority to adopt Article

Nineteenth without approval thereof by

members, or by owners, lessors, or

lessees of memberships.

Proposed Article Nineteenth is also

permissible as a matter of Pennsylvania

contract law. The provisions of Article

Nineteenth authorizing the adoption of

rules affecting lease agreements between

lessors and lessees are lawful because,

under the terms of its relationships with

both lessors and lessees, the Exchange

has the right to adopt by-laws, rules, or

regulations that affect those lessors and

lessees. Pennsylvania law holds that a

contracting party may lawfully exercise

its own contractual rights against

another party to the contract, even if

doing so interferes with the terms of a

separate agreement of the other party.

Here, the potential suspension or

termination of a lease agreement in

accordance with the rules of the

Exchange is permissible under the terms

of the Exchange’s separate agreements

with each of the parties to the lease

agreement.

Both lessors and lessees (as members)

agree respectively as a condition of

approval of the right to lease seats and

as a condition of approval for

membership that the Exchange may

effectuate changes to their lease

agreements, including termination. As a

condition of the right to lease their

seats, lessors agree ‘‘to abide by the

[Exchange’s] By-Laws as they have or

shall be from time to time amended, and

by all rules and regulations adopted

pursuant to the By-Laws.’’ See By-Law

Art. XII, § 12–9(b). Lessees (as members)

likewise make the same commitment.

See id. at 12–9(a). By agreeing to abide

by future by-laws, rules, and

regulations, lessors and lessees

necessarily grant permission to the

Exchange to adopt rules pursuant to

which their lease agreements may be

suspended or terminated. Indeed, the

Exchange has already repeatedly

exercised its right to adopt rules and bylaws directly impacting lessors and

lessees in a variety of rules, including

Rule 930, which closely regulates the

terms and conditions of lease

agreements.11 Accordingly, article

Nineteenth, which would provide in

express form the authorization for the

adoption of rules suspending or

terminating lease agreements, would

simply authorize that which is

countenanced by the terms of the

Exchange’s existing relationships with

lessors and lessees, and is thereby

permissible as a matter of Pennsylvania

contract law.

Proposed Article Nineteenth was

properly adopted by the Exchange

Board under Delaware law and is

permissible as a matter of Pennsylvania

contract law. As a result, the Exchange

believes it should take effect in

accordance with its terms following SEC

approval and the filing of Article

Nineteenth with the Secretary of State of

the State of Delaware.

II. Self-Regulatory Organization’s

Statement Regarding 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

The purpose of the proposed rule

change is to amend the Exchange’s

Certificate of Incorporation to provide

for specific authority regarding the

regulation of leases, including the rights

and obligations of lessors and lessees.

Article Nineteen will enable the Board

to adopt and oversee specific rules

relating to the leasing of memberships to

protect and promote the best interests of

the Exchange.

The Exchange acknowledges that any

such rules or resolutions, which are

adopted by the Board, shall be filed

with the Commission to the extent

required pursuant to Section 19(b) of the

Act 12 and Commission rules

thereunder. Moreover, it is intended

that such rules or resolutions proposed

by the Exchange and related to the

leasing of memberships, primarily in

connection with the termination or

suspension of lease agreements, shall

delineate, if applicable, the notice and

procedural requirements that address

any potentially adversely affected party

to be followed prior to terminating or

suspending a lease agreement.

For these reasons, the Exchange

believes that the proposed rule change

is consistent with Section 6 of the Act,13

in general, and with Section 6(b)(5),14 in

particular, in that it promotes just and

equitable principles of trade and

protects investors and the public

interest by enabling the Board to

determine whether, and under what

terms and conditions, memberships may

be leased.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes that the

proposed rule change imposes no

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 neither

solicited nor received on 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

3640 Federal Register / Vol. 66, No. 10 / Tuesday, January 16, 2001 / Notices

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 Phlx 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

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the Phlx. All

submissions should refer to File No.

SR–Phlx–99–50 and should be

submitted by February 6, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–1154 Filed 1–12–01; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

Interest Rates

The Small Business Administration

publishes an interest rate called the

optional ‘‘peg’’ rate (13 CFR 120.214) on

a quarterly basis. This rate is a weighted

average cost of money to the

government for maturities similar to the

average SBA direct loan. This rate may

be used as a base rate for guaranteed

fluctuating interest rate SBA loans. This

rate will be 5.875 (57⁄8) percent for the

January–March quarter of FY 2001.

LeAnn M. Oliver,

Deputy Associate Administrator for Financial

Assistance.

[FR Doc. 01–1200 Filed 1–12–01; 8:45 am]

BILLING CODE 8010–01–P

OFFICE OF THE UNITED STATES

TRADE REPRESENTATIVE

Identification of Countries Under

Section 182 of the Trade Act of 1974:

Request for Public Comment

AGENCY: Office of the United States

Trade Representative.

ACTION: Request for written submissions

from the public.

SUMMARY: Section 182 of the Trade Act

of 1974 (Trade Act) (19 U.S.C. § 2242),

requires the United States Trade

Representative (USTR) to identify

countries that deny adequate and

effective protection of intellectual

property rights or deny fair and

equitable market access to U.S. persons

who rely on intellectual property

protection. (Section 182 is commonly

referred to as the ‘‘Special 301’’

provisions in the trade act.) In addition,

the USTR is required to determine

which of these countries should be

identified as Priority Foreign Countries.

Acts, policies or practices which are the

basis of a country’s identification as a

priority foreign country are normally the

subject of an investigation under the

Section 301 provisions of the trade act.

Section 182 of the Trade Act contains a

special rule for the identification of

actions by Canada affecting United

States cultural industries.

USTR requests written submissions

from the public concerning foreign

countries’ acts, policies, and practices

that are relevant to the decision whether

particular trading partners should be

identified under Section 182 of the

Trade Act.

DATES: Submissions must be received on

or before 12:00 noon on Friday,

February 16, 2001.

ADDRESSES: 600 17th Street, NW.,

Washington, DC 20508.

FOR FURTHER INFORMATION CONTACT:

Claude Burcky, Deputy Assistant U.S.

Trade Representative for Intellectual

Property (202) 395–6864; Kira Alvarez

or John Desrocher, Directors for

Intellectual Property (202) 395–6864, or

Stephen Kho, Assistant General Counsel

(202) 395–3851, Office of the United

States Trade Representative.

SUPPLEMENTARY INFORMATION: Pursuant

to Section 182 of the Trade Act, the

USTR must identify those countries that

deny adequate and effective protection

for intellectual property rights or deny

fair and equitable market access to U.S.

persons who rely on intellectual

property protection. Those countries

that have the most onerous or egregious

acts, policies, or practices and whose

acts, policies or practices have the

greatest adverse impact (actual or

potential) on relevant U.S. products are

to be identified as Priority Foreign

Countries. Acts, policies or practices

that are the basis of a country’s

designation as a Priority Foreign

Country are normally the subject of an

investigation under the Section 301

provisions of the Trade Act.

USTR may not identify a country as

a Priority Foreign Country if it is

entering into good faith negotiations, or

making significant progress in bilateral

or multilateral negotiations, to provide

adequate and effective protection of

intellectual property rights.

In identifying countries that deny

adequate and effective protection of

intellectual property rights in 2001,

USTR will continue to pay special

attention to other countries’ efforts to

reduce piracy of optical media (music

CDs, video CDs, CD–ROMs, and DVDs)

and prevent unauthorized government

use of computer software. USTR will

also focus on countries’ compliance

with their WTO TRIPS obligations,

which for developing country members

came due on January 1, 2000.

Section 182 contains a special rule

regarding actions of Canada affecting

United States cultural industries. The

USTR is obligated to identify any act,

policy or practice of Canada which

affects cultural industries, is adopted or

expanded after December 17, 1992, and

is actionable under Article 2106 of the

North American Free Trade Agreement

(NAFTA). Any such act, policy or

practice so identified shall be treated

the same as an act, policy or practice

which was the basis for a country’s

identification as a Priority Foreign

Country under Section 182(a)(2) of the

Trade Act, unless the United States has

already taken action pursuant to Article

2106 of the NAFTA.

USTR must make the abovereferenced identifications within 30

days after publication of the National

Trade Estimate (NTE) report, i.e., no

later than April 30, 2001.

Requirements for Comments

Comments should include a

description of the problems experienced

and the effect of the acts, policies and

practices on U.S. industry. Comments

should be as detailed as possible and

should provide all necessary