27188 Federal Register / Vol. 66, No. 95 / Wednesday, May 16, 2001 / Notices

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

8 15 U.S.C. 78f(b)(4).

9 15 U.S.C. 78s(b)(3)(A)(ii).

10 17 CFR 240.19b–4(f)(2). 11 17 CFR 200.30–3(a)(12).

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

2 17 U.S.C. 240.19b–4.

Booth type

New fees

as of

July 1, 2001

New fees

as of

July 1, 2002

Former fees

Type 4 (‘‘machine’’) ............................................................................................ 6,000 7,000 $5,000–$5,400.

The revised fee schedule is designed

to provide partial recovery by the

Exchange of costs associated with

constructing and maintaining booth

rental space.

(4) Membership Registration and IDC

Fee Schedule:

The Exchange is amending its fee

schedule, effective May 1, 2001,

applicable to membership registration to

bring such charges in line with those of

other exchanges. Renewal fees will be

raised from $30 to $47, initial fees will

be raised from $55 to $60, and

termination fees will be raised from $25

to $30.

2. Statutory Basis

The Amex believes the proposed rule

change is consistent with the provisions

of section 6(b) of the Act 7 in general,

and furthers the objectives of section

6(b)(4) of the Act 8 in particular, in that

it is designed to provide for the

equitable allocation of reasonable dues,

fees and other charges among members,

issuers, and other persons using

Exchange facilities.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Amex 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

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

The proposed rule change has become

effective pursuant to section

19(b)(3)(A)(ii) of the Act 9 and

subparagraph (f)(2) of Rule 19b–4

thereunder 10 because it establishes or

changes a due, fee, or other charge

imposed by the Exchange. 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 proposal 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 Amex. All

submissions should refer to file number

SR–Amex–2001–22 and should be

submitted by June 6, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–12281 Filed 5–15–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44289; File No. SR–CHX–

2001–09]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Chicago Stock Exchange, Inc., To

Allow Floor Brokers To Clear a

Specialist’s Post By Telephone

May 10, 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 23,

2001, the Chicago Stock Exchange, Inc.

(‘‘CHX’’ or ‘‘Exchange’’) filed with the

Securities Exchange Act Commission

(‘‘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.

1. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to amend

CHX Article XX, Rule 10 to permit floor

brokers to clear a specialist’s post

telephonically. The text of the proposed

rule change is below. Proposed

additions are in italics. Proposed

deletions are in brackets.

ARTICLE XX, RULE 10

Manner of Bidding and Offering

Rule 10. Bids and offers to be effective

must be audibly made at the post and shall

remain in full force until the person making

the bid or offer shall audibly announce that

he is out of the market or until he leaves the

post.

* * * Interpretations and Policies: .01

Although there may be certain amount of

negotiation by voice away from the post,

every trade must be consummated at the

post. .02 Clearing the Post.

Policy. All orders received by floor brokers

or originated by market makers on the floor

of the Exchange must effectively clear the

post before the orders may be routed to

another market[, either] via the ITS [System]

or through the use of alternative means.

Floor brokers who receive an order on the

floor have a fiduciary responsibility to seek

a best price execution for such order. This

responsibility includes clearing of the

Exchange’s post prior to routing an order to

another market so that other buying and

selling interest at the post can be checked for

a potential execution equal to [that may be

as good as] or better than the execution

available in another market. It is not

inconsistent with a floor broker’s fiduciary

responsibility to effectively clear the post

telephonically, provided that: (i) through the

specialist, the floor broker probes the market

for other buying and selling interest at the

post, and (ii) after probing the market, if

equal or better buying or selling interest is

available at the post, the floor broker, while

physically present at the post, consummates

the trade at the post.

Federal Register / Vol. 66, No. 95 / Wednesday, May 16, 2001 / Notices 27189

3 15 U.S.C. 78f(b).

4 15 U.S.C. 78f(b)(5).

Market makers are required to provide

depth and liquidity to the Exchange market,

among other things. Exchange Rules require

that all market maker transactions constitute

a course of dealings reasonably calculated to

contribute to the maintenance of a fair and

orderly market. In so doing, market makers

must adhere to traditional agency auction

market principles on the floor. Transactions

by Exchange market markers on other

exchanges, which fail to clear the Exchange

post, do not constitute such a course of

dealings.

Notwithstanding the above, it is

understood that on occasion a customer will

insist on special handling of a particular

order that would preclude it from clearing

the post on the Exchange floor. For example,

a customer might request that a specific order

be given primary market execution. These

situations must be documented and reported

to the Exchange. Customer directives for

special handling of all orders in a particular

stock or all stocks, however, will not be

considered as exceptions to the clearing the

post policy.

All executions resulting from bids and

offers reflected on Instinet terminals resident

on the Exchange floor constitute ‘‘orders’’

which are ‘‘communicated’’ to the Exchange

floor. Therefore, all orders resulting from

interest reflected on Instinet terminals on the

Exchange floor must be handled as any other

order communicated to the floor. All such

orders must be presented to the post during

normal trading hours. All trades between

Instinet and Exchange floor members are

Exchange trades and must be executed on the

Exchange.

Method of Clearing the Post. Subject to

Article XX, Rule 11 relating the cabinet

securities, the Exchange’s general clearing

the post policy requires [the] floor brokers

and [or] market makers to be physically

present at the post, but permits floor brokers,

as a means of clearing the post, to

telephonically probe a market through the

specialist in order to more efficiently fulfill

their fiduciary responsibility to seek a best

price execution for their customer orders. A

market maker, after requesting the specialist’s

market quote, must bid or offer the price and

size of his intended interest at the post. A

floor broker must clear the post be requesting

a market quote from the specialist. If the

specialist or any other member who has the

post indicates an interest to trade at the price

that was bid or offered by the market maker

or the price of the floor broker’s order (even

through that order has not yet been bid or

offered), then the trade may be consummated

with the specialist (or whomever has the

post) in accordance with existing Exchange

priority, parity and precedence rules. If the

specialist (or any other member who has the

post) indicates interest to trade at that price

but the member communicating the intended

interest, including Instinet interest,

determines not to consummate the trade with

the specialist or such member, then, to

preserve the Exchange’s existing priority,

party and precedence rules, the trade may

not be done with any other Exchange floor

member. (See Article XXX, Rule 2). If the

trade is consummated with the specialist or

other member who has the post, the

specialist (or any customer represented by

the specialist) is not required to pay any fees

to the broker or market maker in connection

with the execution of the order, unless such

fee is expressly authorized by an Exchange

Rule. If the specialist does not indicate an

interest to trade, then the trade may be

consummated with another Exchange floor

member on the Exchange floor with a

resultant Exchange print. Failure to clear the

post result in a ‘‘trade-through’’ or ‘‘trading

ahead’’ of other floor interest. In addition,

failure to properly clear the post may result

in a violation of the Exchange’s Just and

Equitable Trade Principles Rule (Article VIII,

Rule 7) and a market maker rule that requires

all market maker transactions to constitute a

course of dealing reasonably calculated to

contribute to the maintenance of a fair and

orderly market (Article XXXIV, Rule 1).

Failure to properly clear the post may also

subject members [the violator] to a fine

[minor rule violation] under the Exchange’s

Minor Rule Violation Plan.

* * * * *

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

The Exchange proposes to amend

CHX Article XX, Rule 10 to allow floor

brokers to clear a specialist’s post by

phone. Under the Exchange’s current

rules, physical presence at a specialist’s

post is the only satisfactory method to

clear the post before executing an order

on the floor with another member or

transmitting an order to another market

center for execution via the Intermarket

Trading System or through other means.

The Exchange believes that permitting

floor brokers, while on the CHX floor, to

telephonically clear a specialist’s post—

for the purpose of determining the

presence of other buying and selling

interest on the CHX—would expand the

manner of probing the CHX market in a

faster, more efficient way while

continuing to satisfy the rule’s purpose.

This change also will permit floor

brokers to more efficiently fulfill their

fiduciary obligations to seek the best

available price in the national market

for their customers’ orders.

The proposed rule does not place any

absolute responsibility on specialists to

permit floor brokers to clear a post by

phone, but allows specialists to require

floor brokers to come to the post if there

is an active crowd or if the specialist is

too busy to probe the market. Under the

proposed rule, all trades must

nevertheless continue to be

consummated at the post.

2. Statutory Basis

The Exchange believes that the

proposed rule is consistent with the

requirements of the Act and the rules

and regulations thereunder that are

applicable to a national securities

exchange, and with the requirements of

section 6(b).3 In particular, the

Exchange believes the proposed rule is

consistent with section 6(b)(5) of the

Act 4 in that it is designed to promote

just and equitable principles of trade, 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 inappropriate burden on

competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No written comments were either

solicited or received.

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 CHX 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

27190 Federal Register / Vol. 66, No. 95 / Wednesday, May 16, 2001 / Notices

5 17 CFR 200.30–3(a)(12).

1Letter from Nikki M. Poulos, Vice President and

Associate General Counsel, GSCC (April 10, 2001).

Subsequent to filing GSCC–2001–01, GSCC filed a

rule proposal (SR–GSCC–2001–02) that became

immediately effective under Section 19(b)(3). The

letter states that GSCC–2001–02 amends rules

previously listed by GSCC–2001–01 in Exhibit A

and that both rule filings are consistent with each

other. The amendment does not amend any

language in GSCC–2001–01 as originally filed with

the Commission and as presented herein.

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

change and the attached exhibits are available at the

Commission’s Public Reference Section or through

GSCC.

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 CHX. All

submissions should refer to File No.

SR–CHX–2001–09 and should be

submitted by June 6, 2001.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–12280 Filed 5–15–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44282; File No. SR–GSCC–

2001–01]

Self-Regulatory Organizations;

Government Securities Clearing

Corporation; Notice of Filing of

Proposed Rule Change Relating to the

Redesign of Comparison Rules

May 8, 2001.

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

Securities Exchange Act of 1934

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

January 16, 2001, the Government

Securities Clearing Corporation

(‘‘GSCC’’) filed with the Securities and

Exchange Commission (‘‘Commission’’)

and on April 11, 2001,1 amended the

proposed rule change as described in

Items I, II, and III below, which items

have been prepared primarily by GSCC.

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 GSCC to redesign its comparison

rules in order to implement real-time

interactives services.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,

GSCC 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. GSCC 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

In a white paper distributed to all

members in early 1997, GSCC outlined

its long-range plans to provide straightthrough processing and a point-of-trade

guarantee to its members primarily

through the implementation of real-time

interactive services. Last year, GSCC

announced that it would implement its

interactive services in three phases.

Phase 1 will introduce interactive

messaging to support real-time

comparison; phase 2 will introduce

interactive messaging to support netting;

and phase 3 will introduce support of

same-day settlement of repo start legs.

During the latter part of 2000, GSCC

implemented the necessary technical

changes to its automated system to

implement the first phase of its

interactive processing service (i.e.,

making available the interactive

messaging facility to support real-time

comparison). Up until this point,

GSCC’s processing experience has been

essentially batch. Members now have

the ready ability, from a technological

perspective, to submit trade input on an

automated basis to GSCC intraday as

trades are executed. While GSCC will

continue to support its existing batch

input and output facilities initially, it

plans to eventually stop supporting

these older formats. Members will be

encouraged to make the shift from batch

to interactive processing as soon as it is

feasible for them to do so. At some point

in time, once a sufficient nucleus of

members has begun processing

interactively, GSCC will implement

disincentives to discourage members

from continuing to submit and receive

data via the old batch formats.

Concurrent with this development,

GSCC has been redesigning its matching

and comparison procedures to better

meet the needs of its members during

their transition from a batch on an

interactive environment. This redesign

is the subject of this rule filing. GSCC’s

central goal in this redesign is to

provide straight-through processing by

allowing for the easy identification and

resolution of trades intraday to achieve

100 percent comparison. GSCC believes

that interactive messaging and enhanced

real-time trade matching processing are

critical steps in helping to reduce risk

by ensuring that more transactions are

compared earlier in the day and then

eventually also netted and guaranteed

through GSCC so that intraday credit

exposure to counterparties is

minimized.

In the current environment, most

trades are compared within the GSCC

system as a result of bilateral

comparison with the exception being

certain locked-in trades, such as

members’ Federal Reserve auction

purchases. To facilitate real-time

comparison while still providing

members with the flexibility to

transition from batch to interactive

submission according to a timeframe

suitable to their own needs and

resources, GSCC is proposing to: (i)

Amend its rules to provide for three

types of trade comparison: (a) Bilateral

comparison, (b), demand comparison,

and (c) locked-in comparison and (ii)

make certain other related rules changes

as further discussed below.

Bilateral Comparison

Bilateral comparison, which is the

traditional method of comparison, will

continue to require that the two trade

counterparties (or if one or both of the

counterparties are not GSCC members,

the members acting on their behalf)

submit trades to GSCC in which certain

mandatory details either match or fall

within predefined parameters to effect a

match. Bilateral comparison will remain

the primary comparison type for dealerto-dealer trades and will be available in

both real-time and batch. Members may

elect to submit interactively regardless