28008 Federal Register / Vol. 66, No. 98 / Monday, May 21, 2001 / Notices

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

2 17 CFR 240.19b–4.

3 17 CFR 240.19b–4(f)(6).

4The NYSE recently amended its Policy to

provide special procedures and to establish a new

allocation committee for ETFs. The Commission

accelerated approval of these amendments on a

pilot basis through May 7, 2002. See Securities

Exchange Act Release No. 44272 (May 7, 2001) (File

No. SR–NYSE–2001–07).

5See note 4 supra.

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

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

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44306; File No. SR–NYSE–

2001–10]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the New

York Stock Exchange, Inc. To Amend

Its Allocation Policy Relating to

Exchange-Traded Funds Traded on an

Unlisted Trading Privileges Basis

May 15, 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 May 14,

2001, the New York Stock Exchange,

Inc. (‘‘Exchange’’ or ‘‘NYSE’’) 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 NYSE. The

proposed rule change has been filed by

the NYSE as a ‘‘non-controversial’’ rule

change under Rule 19b–4(f)(6) under the

Act.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

The NYSE proposes to amend its

Allocation Policy (‘‘Policy’’) 4 for

allocating Exchange-Traded Funds

(‘‘ETFs’’) traded on an unlisted trading

privileges (‘‘UTP’’) basis to specify that

specialist units may appear before the

special committee responsible for

allocating ETFs.

Below is the text of the proposed rule

change. Proposed new language is

italicized and proposed deletions are in

brackets.

* * * * *

Policy for Allocation of Exchange-Traded

Funds Admitted to Trading on the Exchange

on an Unlisted Trading Privileges Basis

Exchange-traded funds (‘‘ETFs’’) (as

defined in paragraph 703.16 of the Listed

Company Manual) admitted to trading on the

Exchange on an unlisted trading privileges

basis shall be allocated pursuant to this

Policy rather than the Exchange’s policy for

allocating securities to be listed on the

Exchange.

ETFs shall be allocated by a special

committee consisting of the Chairman of the

Allocation Committee, the three most senior

Floor broker members of the Allocation

Committee, and four members of the

Exchange’s senior management as designated

by the Chairman of the Exchange. This

committee shall solicit allocation

applications from interested specialist units,

and shall review the same performance and

disciplinary material with respect to

specialist unit applicants as would be

reviewed by the Allocation Committee in

allocating listed stocks. The committee shall

reach its decisions by majority vote with any

tie votes being decided by the Chairman of

the Exchange. Specialist unit applicants

[shall not] may appear before the committee.

Special Criteria

In their allocation applications, specialist

units must demonstrate:

(a) An understanding of the trading

characteristics of ETFs;

(b) Expertise in the trading of derivativelypriced instruments;

(c) Ability and willingness to engage in

hedging activity as appropriate;

(d) Knowledge of other markets in which

the ETF to be allocated trades;

(e) Willingness to provide financial and

other support to Exchange marketing and

educational initiatives with respect to the

ETF to be allocated.

Allocation Freeze Policy

The Allocation Freeze Policy as stated in

the Allocation Policy for listed stocks shall

apply.

Prohibition on Functioning as Specialist in

ETF and Specialist in any Component

Security of the ETF

No specialist member organization may

apply to be allocated an ETF if it is registered

as specialist in any security which is a

component of the ETF. A specialist member

organization which is registered as specialist

in a component stock of an ETF may

establish a separate member organization

which may apply to be the specialist in an

ETF. The approved persons of such ETF

specialist member organization must obtain

an exemption from specified specialist rules

pursuant to Rule 98.

If, subsequent to an ETF being allocated to

a specialist member organization, a security

in which the specialist member organization

is registered as specialist becomes a

component security of such ETF the

specialist organization must (1) withdraw its

registration as specialist in the security

which is a component of the ETF; (ii)

withdraw its registration as specialist in the

ETF; or (iii) establish a separate specialist

member organization, which will be

registered as specialist in the ETF and whose

approved persons have received an

exemption from specified specialist rules

pursuant to Rule 98.

* * * * *

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

NYSE 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 NYSE 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

According to the Exchange, the intent

of its current Policy is: (1) To ensure

that the allocation process is based on

fairness and consistency and that all

specialist units have a fair opportunity

for allocations based on established

criteria and procedures; (2) to provide

an incentive for ongoing enhancement

of performance by specialist units; (3) to

provide the best possible match between

specialist unit and security; and (4) to

contribute to the strength of the

specialist system.

The Exchange recently modified its

conventional allocation process to

provide that ETFs traded on a UTP basis

be allocated by a special committee, and

to establish special criteria to be

considered by the special committee.5

This current Policy for ETFs trading

on a UTP basis states that specialist

units shall not appear before the special

committee. The Exchange proposes to

amend its Policy to specify that

specialist units may meet with the

special committee. The Exchange has

determined that due to the unique

aspects of certain ETF products, it may

be helpful for the special committee to

meet with the interview specialist units

before making an allocation decision.

2. Statutory Basis

The Exchange believes the proposed

rule change is consistent with section

6(b) of the Act 6 in general, and furthers

the objectives of section 6(b)(5) of the

Act 7 in particular, because it is

designed to promote just and equitable

principles of trade, remove

impediments to and perfect the

mechanism of a free and open market

and a national market system, and, in

Federal Register / Vol. 66, No. 98 / Monday, May 21, 2001 / Notices 28009

8 15 U.S.C. 78s(b)(3)(A).

9 17 CFR 240.19b–4(f)(6).

10As required under Rule 19b–4(f)(6)(iii), the

Exchange 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

or such shorter period as designated by the

Commission.

11For 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).

12See note 4 supra.

13 17 CFR 200.30–3(a)(12).

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 that is not necessary 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 either

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the foregoing 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

19(b)(3)(A) 8 of the Act and Rule 19b–

4(f)(6) 9 thereunder.10

A proposed rule change filed under

Rule 19b–4(f)(6) normally does not

become operative prior to 30 days after

the date of filing. However, Rule 19b–

4(f)(6)(iii) permits the Commission to

designate a shorter time if such action

is consistent with the protection of

investors and the public interest. The

NYSE seeks to have the proposed rule

change become operative immediately

to allow it to begin the process of

selecting specialists to enable ETFs to

trade on a UTP basis.

The Commission, consistent with the

protection of investors and the public

interest, has determined to make the

proposed rule change operative

immediately as of May 15, 2001,

because the proposed amendment to the

NYSE’s Policy effects a minor change

with respect to the allocation of ETF’s

listed and traded on the Exchange on a

UTP basis.11 The Commission notes that

the NYSE’s Policy regarding ETFs

traded on a UTP basis was approved on

a pilot basis.12 Thus, the instant

proposed rule change is operative as of

May 15, 2001 through May 7, 2002. 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, 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 form 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 NYSE. All

submissions should refer to File No.

SR–NYSE–2001–10 and should be

submitted by June 11, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.13

Jonathan G. Katz,

Secretary.

[FR Doc. 01–12691 Filed 5–18–01; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF STATE

[Public Notice 3673]

Bureau of Educational and Cultural

Affairs Request for Grant Proposals

(ECA/PE/C/CU–01–64): Creative Arts

Exchange Programs for Africa, East

Asia and the Pacific, and Central Asia

SUMMARY: The Cultural Programs

Division of the Bureau of Educational

and Cultural Affairs (ECA) announces

an open competition for assistance

awards for international Creative Arts

Exchanges. Public and private U.S. nonprofit organizations meeting the

provisions described in IRS regulation

26 CFR 1.501(c) may submit proposals

to conduct programs for Cultural

Tourism in Africa; Performing Arts

Presenters in East Asia and the Pacific;

or Protecting Cultural Heritage: Film

And Documentary Archives In Central

Asia.

Program Information

Overview: The Bureau of Educational

and Cultural Affairs (ECA) invites

applicants to submit proposals that

promote the institutional capacity,

professional expertise and economic

viability of arts institutions and cultural

entities in Africa, East Asia and the

Pacific, and Central Asia. Programs

supported by the Creative Arts

Exchanges grants should create or

expand ongoing institutional

partnerships, and offer experiential

learning activities, and share methods

and materials that will enhance the

development of their cultural

institutions and management skills.

This program is not academic in nature;

programs should be designed to provide

practical, hands-on experience.

Guidelines: The proposal should

anticipate a grant period that will begin

no earlier than September 1, 2001.

Competitive proposals usually have

the following characteristics: (1) An

active, existing partnership between a

U.S. organization and the foreign

partner institution(s), or strong potential

to develop a sustainable, productive

partnership; (2) a proven successful

track record for conducting similar

program activity; (3) experienced staff

with knowledge of the region and local

language(s) ability; (4) a clear and

reasonable implementation plan and

well-articulated expected outcomes; (5)

a two-way exchange; and (6) concrete

ideas for possible follow-on activities to

take place after the funded grant period.

Proposals should reflect a practical

understanding of the current cultural,

political, economic and social

environment that is relevant to the

theme addressed in the proposal.