Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Notices 29193

1The CDCC was formerly known as Trans Canada

Options Inc. (‘‘TCO’’). The name of the corporation

was changed in January 1996.

2 17 CFR 240.19b–1.

3The Commission initially approved the use and

distribution of the TCO ODD in 1984. See Securities

Exchange Act Release No. 21365 (October 2, 1984),

49 FR 39400 (October 5, 1984). The Commission

subsequently approved several amended versions of

the TCO ODD, and after 1996, the CDCC ODD. See

Securities Exchange Act Release Nos. 37569

(August 14, 1996), 61 FR 43281 (August 21, 1996);

29033 (April 1, 1991), 56 FR 14407 (April 9, 1991);

24480 (May 19, 1987), 52 FR 20179 (May 29, 1987);

and 22349 (August 21, 1985), 50 FR 34956 (August

28, 1985).

4 17 CFT 240.9b–1.

5Enhanced Capital Monitoring is a process

designed to assess and mitigate the credit risk of a

CDCC Clearing Member to which the CDCC is

exposed.

6This provision is intended to permit the

Commission either to accelerate or extend the time

period in which definitive copies of a disclosure

document may be distributed to the public.

7Rule 9b–1 under the Act provides that the use

of an ODD shall not be permitted unless the options

class to which the documents relates is the subject

of an effective registration statement on Form S–20

under the Securities Act of 1933. On April 20, 2001,

the Commission, pursuant to delegated authority,

declared effective the CDCC’s most recent PostEffective Amendment to its Form S–20 registration

statement. See File No. 2–69458.

8 17 CFR 240.9b–1.

9 17 CFR 200.30–3(a)(39)(i).

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

2 17 CFR 240.19b–4.

3See letter to Susie Cho, Division of Market

Regulation (‘‘Division’’), SEC, from Michael Simon,

Senior Vice President and General Counsel, ISE,

dated May 16, 2001 (‘‘Amendment No. 1’’). In

Amendment No. 1, the ISE noted that the trust

issued receipts will be issued upon the deposit of

the shares of underlying securities represented by

a round-lot of 100 receipts and that the trust will

cancel, and an investor may obtain, hold, trade or

surrender trust issued receipts in a round-lot and

round-lot multiples of 100 receipts. The ISE also

added proposed margin requirements for options on

trust issued receipts and corrected a typographical

error in the proposed rule language.

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44333; File No. SR–ODD–

00–04]

Self-Regulatory Organizations;

Canadian Derivatives Clearing

Corporation; Order Approving

Proposed Amendments to Options

Disclosure Document

May 22, 2001.

On May 17, 2001, the Canadian

Derivatives Clearing Corporation

(‘‘CDCC’’) 1 and Bourse de Montre ́al, Inc.

(‘‘Bourse de Montre ́al’’) submitted to the

Securities and Exchange Commission

(‘‘SEC’’ or ‘‘Commission’’), pursuant to

Rule 9b–1 under the Securities

Exchange Act of 1934 (‘‘Act’’),2 five

definitive copies of an amended options

disclosure document (‘‘ODD’’), which

describes the risks and characteristics of

Canadian exchange-traded put and call

options traded on the Bourse de

Montre ́al.3

The Commission has reviewed the

amended ODD and finds that it

complies with Rule 9b–1 under the

Act.4 Among other things, the CDCC

and Bourse de Montre ́al have revised

the ODD to describe changes in the

Canadian marketplace. Previously,

options cleared and settled by the CDCC

were purchased and sold in transactions

on the Montre ́al Exchange (now the

Bourse de Montre ́al), the Toronto Stock

Exchange (‘‘TSE’’), the Toronto Futures

Exchange (‘‘TFE’’), and the Vancouver

Stock Exchange (‘‘VSE’’). Under a

Memorandum of Agreement dated

March 15, 1999, the Alberta Stock

Exchange (‘‘ASE’’), the Bourse de

Montre ́al, the TSE, and the VSE agreed

that the ASE and the VSE would

combine to create a single junior

equities market, that all senior equities

would be transferred to the TSE, and

that the Bourse de Montre ́al would trade

all exchange-traded derivative products,

including any type of option contracts.

Under this agreement, derivative

products traded on the TFE were

transformed to the Bourse de Montre ́al.

Other revisions to the ODD include: a

discussion of Enhanced Capital

Monitoring,5 which was introduced in

October 2000; a clarification of certain

U.S. federal income tax aspects of

options transactions; and the addition of

new terms to the ODD glossary. The

revised ODD further states that the

CDCC is now issuing options on the

S&P/TSE 60 Index and deletes reference

to the TSE 35 Index options and TSE

100 Index options, which the CDCC no

longer issues.

Rule 9b–1 under the Act provides that

an options market must file five

preliminary copies of an amended ODD

with the Commission at least 30 days

prior to the date when definitive copies

of the ODD are furnished to customers,

unless the Commission determines

otherwise, having due regard to the

adequacy of information disclosed and

the protection of investors.6 The

Commission has reviewed the amended

ODD, and finds that it is consistent with

the protection of investors and in the

public interest to allow the distribution

of the disclosure document as of the

date of this order.7

It is therefore ordered, pursuant to

Rule 9b–1 under the Act,8 that the

proposed amendment to the CDCC and

Bourse de Montre ́al ODD (SR–ODD–00–

04) is approved on an accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–13330 Filed 5–25–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Docket No. 34–4331; File No. SR–ISE–

2001–11]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the International

Securities Exchange LLC To Trade

Standardized Equity Options on Trust

Issued Receipts

May 21, 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 20,

2001, the International Securities

Exchange LLC (‘‘ISE’’ and ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I and II below, which Items

have been prepared by the Exchange.

On May 17, 2001, the ISE submitted

Amendment No. 1 to the proposed rule

change.3 The Commission is publishing

this notice to solicit comments on the

proposed rule change from interested

persons and to approve the proposed

rule change on an accelerated basis.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to adopt new

listing and maintenance standards to

allow for trading of standardized equity

options on trust issued receipts. The

text of the proposed rule change

follows. Proposed new language is in

italics.

* * * * *

Rule 502. Criteria for Underlying

Securities

* * * * *

(j) Securities deemed appropriate for

options trading shall include shares or

other securities (‘‘Trust Issued

Receipts’’) that are principally traded on

a national securities exchange or

through the facilities of a national

29194 Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Notices

4The Exchange is not proposing at this time to

list FLEX options on trust issued receipts.

5See Securities Exchange Act Release No. 44138

(March 30, 2001), 66 FR 19593 (April 16, 2001)

(approving SR–PCX–2001–15); Securities Exchange

Act Release No. 43043 (July 17, 2000), 65 FR 46520

(July 28, 2000) (approving SR–CBOE–00–25); and

Securities Exchange Act Release No. 42947 (June

15, 2000), 65 FR 39211 (June 23, 2000) (approving

SR–Amex–99–37).

6The Exchange received approval to trade

options on exchange-traded fund shares on

February 28, 2001. See Securities Exchange Act

Release No. 44037 (March 2, 2001), 66 FR 14613

(March 13, 2001).

securities association and reported as a

national market security, and that

represent ownership of the specific

deposited securities held by a trust,

provided:

(1) the Trust Issued Receipts (i) meet

the criteria and guidelines for

underlying securities set forth in

paragraph (b) to this Rule; or (ii) must

be available for issuance or cancellation

each business day from the Trust in

exchange for the underlying deposited

securities, and

(2) not more than 20% of the weight

of the Trust Issued Receipt is

represented by ADRs on securities for

which the primary market is not subject

to a comprehensive surveillance

agreement.

Rule 503. Withdrawal of Approval of

Underlying Securities

* * * * *

(j) Absent exceptional circumstances,

securities initially approved for options

trading pursuant to paragraph (j) of

Rule 502 (such securities are defined

and referred to in that paragraph as

‘‘Trust Issued Receipts’’) shall not be

deemed to meet the Exchange’s

requirements for continued approval,

and the Exchange shall not open for

trading any additional series of option

contracts of the class covering such

Trust Issued Receipts, whenever the

Trust Issued Receipts are delisted and

trading in the Receipts is suspended on

a national securities exchange, or the

Trust Issued Receipts are no longer

traded as national market securities

through the facilities of a national

securities association. In addition, the

Exchange shall consider the suspension

of opening transactions in any series of

options of the class covering Trust

Issued Receipts in any of the following

circumstances:

(1) in accordance with the terms of

paragraph (b) this Rule 503 in the case

of options covering Trust Issued

Receipts when such options were

approved pursuant to subparagraph

(j)(1)(i) under Rule 502;

(2) the Trust has more than 60 days

remaining until termination and there

are fewer than 50 record and/or

beneficial holders of Trust Issued

Receipts for 30 or more consecutive

trading days;

(3) the Trust has fewer than 50,000

receipts issued and outstanding;

(4) the market value of all receipts

issued and outstanding is less than

$1,000,000; or

(5) such other event shall occur or

condition exist that in the option of the

Exchange makes further dealing in such

options on the Exchange inadvisable.

(k) For Holding Company Depositary

Receipts (HOLDRs), the Exchange will

not open additional series of options

overlying HOLDRs (without prior

Commission approval) if:

(1) the proportion of securities

underlying standardized equity options

to all securities held in a HOLDRs trust

is less than 80% (as measured by their

relative weightings in the HOLDRs

trust); or

(2) less than 80% of the total number

of securities held in a HOLDRs trust

underlie standardized equity options.

* * * * *

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 purpose of the proposed rule

change is to provide for the trading of

options on trust issued receipts.4 The

Exchange believes that the listing and

maintenance criteria proposed in its

new rule are consistent with the options

listing and maintenance criteria for trust

issued receipts currently used by the

American Stock Exchange LLC

(‘‘Amex’’), the Chicago Board Options

Exchange, Inc. (‘‘CBOE’’) and the Pacific

Exchange, Inc. (‘‘PCX’’),5 Trust issued

receipts are exchange-listed securities

representing beneficial ownership of the

specific deposited securities represented

by the receipts. They are negotiable

receipts issued by a trust representing

securities of issuers that have been

deposited and are held on behalf of the

holders of the trust issued receipts.

Trust issued receipts, which trade in

round-lots of 100, and multiples thereof,

may be issued after their initial offering

through a deposit with the trustee of the

required number of shares of common

stock of the underlying issuers. This

characteristic of trust issued receipts is

similar to that of exchange-traded fund

shares, which also may be created on

any business day upon deposit of the

requisite securities comprising a

creation unit.6 The trust will only issue

receipts upon the deposit of the shares

of underlying securities that are

represented by a round-lot of 100

receipts. Likewise, the trust will cancel,

and an investor may obtain, hold, trade

or surrender trust issued receipts in a

round-lot and round-lot multiples of

100 receipts.

Generally, options on trust issued

receipts are proposed to be traded to the

Exchange pursuant to the same rules

and procedures that apply to trading in

options on equity securities. The

Exchange will list option contracts

covering 100 trust issued receipts, the

minimum required round-lot trading

size for the underlying receipts. Strike

prices for trust issued receipts will be

set to bracket the trust issued receipts at

the same intervals that apply to other

equity options under ISE Rule 504 (i.e.,

21⁄2 point intervals for underlying equity

values up to $25; 5 point intervals for

underlying equity values greater than

$25 up to $200; and 10 point intervals

for underlying equity values greater

than $200). The proposed position and

exercise limits for trust issued receipts

would be the same as those established

for other equity options, as set forth in

ISE Rules 412 and 414, respectively.

The Exchange anticipates that most

options on trust issued receipts will

initially qualify for the lowest position

limit. However, as with other equity

options, applicable position limits will

be increased for options if the volume

of trading in the trust issued receipts

increases to the extent needed to permit

a higher limit.

The listing and maintenance

standards proposed for options on trust

issued receipts are set forth respectively

in proposed paragraph (j) under ISE

Rule 502, and in proposed paragraphs (j)

and (k) under ISE Rule 503. Pursuant to

the proposed initial listing standards,

the Exchange will list options only on

trust issued receipts that are principally

traded on a national securities exchange

or through the facilities of a national

securities association and reported as

national market securities. In addition,

Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Notices 29195

7Specifically, paragraph (b) of ISE Rule 502

requires the underlying security to have a public

float of 7,000,000 shares, 2,000 holders, trading

volume of 2,400,000 shares in the preceding 12

months, a share price of $7.50 for the majority of

the business days during the three calendar months

preceding the date of the selection, and that the

issuer of the underlying security is in compliance

with the Act.

8Specifically, paragraph (b) of ISE Rule 503

provides that an underlying security will not meet

the Exchange’s requirements for continued listing

when, among other things: (i) There are fewer than

6,300,000 publicly-held shares; (ii) there are fewer

than 1,600 holders; (iii) trading volume was less

than 1,800,000 shares in the preceding twelve

months; or (iv) the share price of the underlying

security closed below $5 on a majority of the

business days during the preceding six months.

9The Exchange represents that the weight of each

security in a HOLDR trust will be determined by

calculating the sum of the number of shares of each

security (represented in a single HOLDR) and

underlying options multiplied by its respective

share price divided by the sum of the number of

shares of all securities (represented in a single

HOLDR) multiplied by their respective share prices.

10An American-style option may be exercised at

any time prior to its expiration, while a Europeanstyle option may be exercised only at its expiration

date.

11The Exchange’s margin rules cross-reference

the rules of the CBOE and the New York Stock

Exchange, Inc (‘‘NYSE’’)

12The Exchange agrees to modify its margin rules

to reflect the proposed margin requirements for

options on trust issued receipts based on broadbased and narrow-based indexes. See Amendment

No. 1, supra note 3. 13 15 U.S.C. 78f(b)(5).

the initial listing standards require that

either: (i) The trust issued receipts meet

the uniform options listing standards in

paragraph (b) of ISE Rule 502, which

include criteria covering the minimum

public float, trading volume, and share

price of the underlying security in order

to list the option; 7 or (ii) the trust issued

receipts must be available for issuance

or cancellation each business day from

the trust in exchange for the underlying

deposited securities.

In addition, listing standards for

options on trust issued receipts will

require that any American Depository

Receipts (‘‘ADRs’’) in the portfolio on

which the Trust is based for which the

securities underlying the ADRs’ primary

markets are in countries that are not

subject to comprehensive surveillance

agreements will not in the aggregate

represent more than 20 percent of the

weight of the portfolio.

The Exchange’s proposed

maintenance standards provide that if a

particular series of trust issued receipts

should cease to trade on an exchange or

as national market securities in the over

the-counter market, there will be no

opening transactions in the options on

the trust issued receipts, and all such

options will trade on a liquidation-only

basis (i.e., only closing transactions to

permit the closing of outstanding open

options positions will be permitted). In

addition, the Exchange will consider the

suspension of opening transactions in

any series of options of the class

covering trust issued receipts if: (i) For

options on trust issued receipts that

were listed pursuant to the equity

option listing standards in paragraph

(j)(1)(i) of ISE Rule 502, the options fail

to meet the option maintenance

standards in paragraph (b) of ISE Rule

503; 8 (ii) the trust has more than 60

days remaining until termination and

there are fewer than 50 record and/or

beneficial holders of trust issued

receipts for 30 or more consecutive

trading days; (iii) the trust has fewer

than 50,000 receipts issued and

outstanding; (iv) the market value of all

receipts issued and outstanding is less

than $1,000,000; or (v) such other event

shall occur or condition exists that, in

the opinion of the Exchange, makes

further dealing in such options on the

Exchange inadvisable. Furthermore, the

Exchange will not open additional

series of options on any Holding

Company Depositary Receipts

(‘‘HOLDRs’’), a type of trust issued

receipt, without prior Commission

approval, if: (i) The proportion of

securities underlying standardized

equity options to all securities held in

a HOLDRs trust is less than 80 percent

(as measured by the relative weightings

in the HOLDRs trust); 9 or (ii) less than

80 percent of the number of securities

held by a HOLDR trust underlie

standardized options.

Options on trust issued receipts will

be physically settled and will have the

American-style exercise feature used on

all equity options, and not the

Europeans-style feature.10 The proposed

margin requirements for options on trust

issued receipts are at the same levels

that apply to options generally under

ISE Rule 1202,11 except, with respect to

trust issued receipts based on a broadbased portfolio, minimum margin must

be deposited and maintained equal to

100% of the current market value of the

option plus 15% of the market value of

equivalent units of the underlying

security value. Trust issued receipts that

hold securities based upon a narrowbased portfolio must have options

margin that equals at least 100% of the

current market value of the contract

plus 20% of the market value of

equivalent unit of the underlying

security value. In this respect, the

margin requirements proposed for

options on trust issued receipts are

comparable to margin requirements that

currently apply to broad-based and

narrow-based index options on the

NYSE and CBOE.12 Also, holders of

options on trust issued receipts that

exercise and receive the underlying

trust issued receipts must receive a

product description or prospectus, as

appropriate.

Lastly, the Exchange believes it has

the necessary system capacity to

support the additional series of options

that would result from the trading of

options on trust issued receipts, and it

has been advised that the Options Price

Reporting Authority (‘‘OPRA’’) also will

have the capacity to support these

additional series.

2. Statutory Basis

The ISE believes that the proposed

rule change is consistent with Section

6(b)(5) of the Act.13 Section 6(b)(5)

requires that exchange rules be 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 public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The ISE 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 did not solicit or

receive comments on the proposed rule

change.

III. 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 U.S.C. 552, will be

available for inspection and copying at

the Commission’s Public Reference

Room. Copies of such filing will also be

29196 Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Notices

14 15 U.S.C. 78f(b)(5). 15See supra note 5. 16 In approving this rule, the Commission notes

that it has also considered the proposed rule’s

impact on efficiency, competition, and capital

formation. 15 U.S.C. 78c(f).

17See supra note 5.

18 ISG was formed on July 14, 1983, to, among

other things, coordinate more effectively

surveillance and investigative information sharing

arrangements in the stock and options markets.

19See supra note 5.

20The Commission also notes that the ISE will

file a proposed rule change to amend its margin

rules, if necessary. See Amendment No. 1, supra

note 3.

21 15 U.S.C. 78s(b)(2).

22See supra note 5.

23 15 U.S.C. 78f(b)(5).

24 15 U.S.C. 78s(b)(2).

25 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 43928

(February 5, 2001), 66 FR 9737.

4See letter to the Secretary, SEC, from the Ad Hoc

Committee for Small Firm Financial and

Operational Responsibility (‘‘Ad Hoc Committee’’),

dated March 2, 2001 (‘‘Ad Hoc Committee Letter’’).

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to the File No.

SR–ISE–2001–11 and should be

submitted by June 19, 2001.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange, and in particular, with the

requirements of Section 6(b)(5).14 The

Commission notes that it has previously

approved similar listing standards

proposed by the Amex, CBOE, and PCX

for options on trust issued receipts, and

it believes that the ISE’s proposal

contains adequate safeguards, matching

those previously approved.15 As the

Commission found in its previous

approvals of the listing standards

proposed by the other exchanges, the

listing and trading of options should

give investors a better means to hedge

their positions in the underlying trust

issued receipts. The Commission also

believes that pricing of the underlying

trust issued receipts may become more

efficient, and market makers in these

shares, by virtue of enhanced hedging

opportunities, may be able to provide

deeper and more liquid markets. In sum,

the Commission believes that options on

trust issued receipts likely will

engender the same benefits to investors

and the marketplace that exist with

respect to options on common stock,

thereby serving to promote the public

interest, to remove impediments to a

free and open securities market, and to

promote efficiency, competition, and

capital formation.16

The Commission finds that the

Exchange’s listing and delisting criteria

for options on trust issued receipts are

adequate. The proposed listing and

maintenance requirements should

ensure that there exist adequate

supplies of the underlying trust issued

receipts in case of the exercise of an

option, and a minimum level of

liquidity to control against

manipulation and to allow for the

maintenance of fair and orderly markets.

The ISE’s additional requirements for

opening additional series of options on

HOLDRs will also ensure that the

underlying securities are options

eligible, and for the most part will

satisfy minimum thresholds previously

approved by the Commission.

The Commission also believes that the

surveillance standards developed by the

ISE for options on trust issued receipts

are adequate to address the concerns

associated with the listing and trading

of such securities. The ISE’s proposal to

limit the weight of the portfolio that

may be composed of ADRs whose

primary markets are in countries that

are not subject to comprehensive

surveillance agreements is similar to

that previously approved by the

Commission.17 As to domestically

traded trust issued receipts themselves

and the domestic stocks in the

underlying portfolio, the Intermarket

Surveillance Group (‘‘ISG’’) Agreement

will be applicable to the trading of

options on trust issued receipts.18

Finally, the Commission believes that

the ISE’s proposed margin requirements,

which mirror those of the CBOE, are

appropriate.19 The Commission notes

that they are comparable to margin

requirements that currently apply to

broad-based and narrow-based index

options, and to those previously

approved for use at the Amex, CBOE,

and PCX.20

The Commission finds good cause for

approving the proposed rule change

(SR–ISE–2001–11) prior to the thirtieth

day after the date of publication of

notice thereof in the Federal Register

under Section 19(b)(2) of the Act.21 As

noted above, the trading requirement for

options on trust issued receipts at the

ISE will be substantially similar to those

at the Amex, CBOE, and PCX, which the

Commission has approved.22 The

Commission does not believe that the

proposed rule change raises novel

regulatory issues that were not already

addressed and should benefit holders of

trust issued receipts by permitting them

to use options to manage the risks of

their positions in the receipts.

Accordingly, the Commission finds that

there is good cause, consistent with

Section 6(b)(5) of the Act,23 to approve

the proposal on an accelerated basis.

V. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,24 that the

proposed rule change (SR–ISE–2001–11)

is hereby approved on an accelerated

basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.25

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–13325 Filed 5–25–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44332; File No. SR–NASD–

00–77]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change by

the National Association of Securities

Dealers, Inc. Relating to Registration

Requirements for Limited PrincipalsFinancial and Operations and Limited

Principals-Introducing Broker/Dealer

Financial and Operations

May 21, 2001.

I. Introduction

On December 20, 2000, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’), through its subsidiary,

NASD Regulation, Inc. (‘‘NASD

Regulation’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) a proposed

rule change pursuant to section 19(b)(1)

of the Securities Exchange Act of 1934

(‘‘Exchange Act’’) 1 and Rule 19b–4

thereunder.2 The proposal amends

NASD Rule 1022(b), ‘‘Limited

Principal—Financial and Operations’’

(‘‘FINOP’’), NASD Rule 1022(c),

‘‘Limited Principal—Introduction

Broker/Dealer Financial and

Operations’’ (‘‘Introducing FINOP’’),

and NASD Rule 9610, ‘‘Procedures for

Exemptions.’’ Notice of the proposed

rule change was published for comment

in the Federal Register on February 9,

2001.3 The Commission received one

comment letter regarding the proposal.4

This order approves the proposed rule

change.