Federal Register / Vol. 66, No. 91 / Thursday, May 10, 2001 / Notices 23955

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

2 17 CFR 240.19b–4.

3The Committee’s Report is available online at

www.amex.com.

4The audit committee requirements are being

phased-in over an 18 month period for issuers that

were listed on the Amex at the time the changes

were adopted.

5Section 120 of the Amex Company Guide

specifies that ‘‘each company shall utilize [its]

Audit Committee or a comparable body of the

Board of Directors for the review of potential

conflict of interest situations where appropriate’’

(emphasis added).

Further, Applicants request authority

for the Intermediate Companies, through

the Authorization Period, to enter into

currency derivatives with National Grid

and the FUCO Subsidiaries. National

Grid represents that these transactions

will meet the criteria established by the

Financial Accounting Standards Board

in order to qualify for hedge-accounting

treatment, or will so qualify under

generally accepted accounting

principles in the United Kingdom

(‘‘U.K. GAAP’’). If these proposed

transactions qualify for hedge

accounting treatment under U.K. GAAP,

but not under generally accepted

accounting principles in the United

States (‘‘U.S. GAAP’’), National Grid’s

financial statements filed in accordance

with Form 20–F will contain a

reconciliation of the difference between

the two methods of accounting

treatment. National Grid further states

that no gain or loss on a hedging

transaction attributable to a company

outside the National Grid USA Group

will be allocated to any company in the

National Grid USA Group, regardless of

the accounting treatment accorded to

the transaction. These proposed

derivative transactions are designed to

facilitate the equity financing of the

Intermediate Companies and

accommodate foreign exchange hedging.

Applicants state that losses incurred by

any Intermediate Company in

connection with these swaps, and the

associated tax effects, would not be

transferred down the Intermediate

Company chain to National Grid USA,

and consequently would not adversely

affect National Grid USA or any of its

subsidiaries.

The Commission’s equity

capitalization standard and all other

terms of the Prior Order, with the

exception of the proposed increase in

the aggregate amount of convertible

bonds to be issued, would continue to

apply.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–11799 Filed 5–9–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44256; File No. SR–Amex–

2001–24]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of a Proposed Rule Change by the

American Stock Exchange LLC

Relating to Independent Director and

Audit Committee Requirements

May 3, 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 April 18,

2001, the American Stock Exchange LLC

(‘‘Amex’’ or ‘‘Exchange’’) 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 by the Amex. 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 Amex proposes to amend Section

121 of the Amex Company Guide to

clarify that domestic listed companies

are required to have a sufficient number

of independent directors on their board

of directors to satisfy the Exchange’s

audit committee. The text of the

proposed rule change is set forth below.

New text is in italics.

* * * * *

Section 121. INDEPENDENT DIRECTORS

AND AUDIT COMMITTEE

A. Independent Directors

The Exchange requires that domestic listed

companies have a sufficient number of

independent directors on the company’s

board of directors to satisfy the audit

committee requirements set forth below.

Independent directors are not officers of the

company and are, in the view of the

company’s board of directors, free of any

relationship that would interfere with the

exercise of independent judgment. The

following persons shall not be considered

independent:

(a)–(e) No change

* * * * *

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

Amex 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 Amex 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 Exchange is proposing to amend

Section 121A of the Amex Company

Guide to clarify that each domestic

listed company is required to have a

sufficient number of independent

directors on its board of directors to

satisfy the audit committee

requirements specified in part B of

Section 121. Section 121 was amended

in December 1999 to implement the

recommendations contained in the

February 1999 report of the Blue Ribbon

Committee on Improving the

Effectiveness of Corporate Audit

Committees 3 which were aimed at

strengthening the independence of the

audit committee, making the audit

committee more effective, and

addressing mechanisms for

accountability among the audit

committee, the outside auditors, and

management.4 Section 121, particularly

when analyzed in conjunction with

Section 120 of the Amex Company

Guide, currently requires the

independent directors referenced

therein to be members of the company’s

board of directors.5 However, inquiries

from several listed companies have led

the Exchange to conclude that there may

be some confusion among the listed

company community with respect to the

requirement. Accordingly, to avoid

further confusion, the Exchange is

proposing to amend Section 121 to

clarify that the independent directors

must be members of the company’s

board of directors.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

23956 Federal Register / Vol. 66, No. 91 / Thursday, May 10, 2001 / Notices

6 15 U.S.C. 78f(b)(5).

7 15 U.S.C. 78s(b)(3)(A)(i).

8 17 CFR 240.19b–4(f)(1).

9 17 CFR 200.30–3(a)(12)

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

Section 6(b)(5) 6 of the Act, which

requires, among other things, the

Exchange’s rules to 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.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange 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

The Exchange did not solicit or

receive written comments on the

proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The proposed rule change has become

effective pursuant to Section

19(b)(3)(A)(i) of the Act 7 and

subparagraph (f)(1) of Rule 19b–4

thereunder 8 because it constitutes as a

stated policy, practice, or interpretation

with respect to the meaning,

administration, or enforcement of an

existing rule of the Exchange. At any

time within 60 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 the furtherance 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

Room. Copies of the filing will also be

available for inspection and copying at

the principal office of the Amex. All

submissions should refer to the File No.

SR–Amex–2001–24 and should be

submitted by May 31, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

athority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–11801 Filed 5–9–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44260; File No. SR–DTC–

2001–03]

Self-Regulatory Organizations; The

Depository Trust Company; Notice of

Filing of Proposed Rule Change to

Make Foreign Securities Eligible for

Depository Services

May 4, 2001.

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

Securities Exchange Act of 1934

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

February 23, 2001, The Depository Trust

Company (‘‘DTC’’) 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 DTC. 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 DTC to make eligible for

depository services foreign securities

that are presently eligible for the

National Securities Clearing

Corporation’s (‘‘NSCC’’) foreign security

comparison and netting service.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

DTC 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. DTC has prepared

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

and (C) below, of the most significant

aspects of these 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 provide DTC and NSCC

participants who are presently using

NSCC’s foreign securities clearing

services the use, if applicable, of

depository services at DTC for these

securities. These securities are generally

foreign ordinary equities that have been

assigned security numbers (CINS) and

NASD symbols to automate the

comparison process. Most trades in

foreign ordinary shares that are

executed between two U.S. brokerdealers are forwarded to NASD’s

Automated Confirmation Transaction

system and submitted as locked-in

trades to NSCC.

Today, through NSCC’s Foreign

Securities Comparison and Netting

system, foreign securities are compared

and netted on a bilateral basis in a

standardized and automated fashion

through NSCC’s over-the-counter

system. Receive and deliver instructions

are automatically generated by NSCC

and are distributed to participants on

the morning after comparison, which

expedites the settlement process for

non-U.S. equity transactions. Trades are

netted on a bilateral participant-toparticipant basis thereby reducing the

number of deliveries for settlement in

the local market. NSCC does not

currently and will not under the

proposed rule change guarantee the

ultimate settlement of these transactions

or the clearance cash adjustment.

Given the increase in activity over the

last few years, U.S. broker-dealers have

become concerned about the number of

potential risk and operational issues

associated with the current process,

such as the lack of straight through

processing (‘‘STP’’) from the point of

trade to settlement. It is DTC’s plan to

enhance the settlement part of the

process and to deliver an automated

approach to complete the STP process

from trade to settlement. In doing so,

many operational issues will be

minimized or eliminated.

Today, there is a separation between

the physical movement of these foreign

securities and the money settlement of

the trades (i.e., there is no delivery

versus payment (‘‘DVP’’) as there is true

for U.S. trades). The delivery of the