[Federal Register Volume 66, Number 104 (Wednesday, May 30, 2001)]
[Notices]
[Page 29368]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13473]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44336]


Order Extending the Deadlines for the Exchanges and the National 
Association of Securities Dealers, Inc. To Submit Studies and Rule 
Filings Concerning the Implementation of Decimal Pricing in Equity 
Securities and Options Pursuant to Section 11A(a)(3)(B) of the 
Securities Exchange Act of 1934

May 22, 2001.
    Notice is hereby given that, pursuant to section 11A(a)(3)(B) of 
the Securities Exchange Act of 1934 (``Exchange Act''),\1\ the 
Securities and Exchange Commission (``Commission'') modifies its June 
8, 2000 Order \2\ to the American Stock Exchange LLC (``Amex''), the 
Boston Stock Exchange, Inc., the Chicago Board Options Exchange, Inc., 
the Chicago Stock Exchange, Inc., the Cincinnati Stock Exchange, Inc., 
the International Securities Exchange, LLC, the National Association of 
Securities Dealers, Inc. (``NASD''), the New York Stock Exchange, Inc., 
the Pacific Exchange, Inc., and the Philadelphia Stock Exchange, Inc. 
(collectively the ``Participants'' and individually a ``Participant'') 
to extend the deadlines set forth in the June 8, 2000 Order that 
require the Participants to submit studies concerning the 
implementation of decimal pricing in equity securities and options by 
June 8, 2001, and rule filings to establish the minimum price variation 
(``MPV'') in each market for quoting equity securities and options by 
July 9, 2001.
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    \1\ Section 11A(a)(3)(B) authorizes the Commission, in 
furtherance of its statutory directive to facilitate the 
establishment of a national market system, by rule or order, ``to 
authority or require self-regulatory organizations to act jointly 
with respect to matters as to which they share authority under [the 
Act] in planning, developing, operating, or regulating a national 
market system (or a subsystem thereof) or one or more facilities 
thereof.'' 15 U.S.C. 78k-1(a)(3)(B).
    \2\ Securities Exchange Act Release No. 42914 (June 8, 2000), 65 
FR 38010 (June 19, 2000).
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    The Commission's June 8, 2000 Order establish the framework for the 
Participants to convert their quotation prices in equity securities and 
options from fractions to decimals. Pursuant to the Order, the 
Participants submitted an implementation plan and successfully 
completed the phasing-in of decimal pricing in all equity securities 
and options on April 9, 2001.
    The June 8, 2000 Order also established two other requirements. 
First, the Order required the Participants to submit to the Commission 
by June 8, 2001 studies that would analyze how the decimal conversion 
had affected systems capacity, liquidity, and trading behavior. These 
studies would offer insights into proper MVPs that should be maintained 
for pricing equity securities and options, as well as any changes to 
self-regulatory rules necessary to maintain fair and orderly markets. 
Second, the Order required the Participants to submit by July 9, 2001 
rule filings that would individually establish an MPV for each market.
    In view of the complexities of more of the issues that have been 
raised concerning decimal pricing,\3\ the Commission believes that it 
is necessary and appropriate to extend the original deadlines set forth 
in the June 8, 2000 Order for the Participants to submit their studies 
and rule filings. The Commission believes that such an extension is 
necessary to give the Participants adequate time to thoroughly analyze 
all of the vital investor protection and market integrity issues that 
need to be addressed in order to preserve the benefits of 
decimalization.
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    \3\ The difficulties inherent in conducting useful analyses of 
the effects of decimalization in such a short time frame were also 
discussed in a letter from the Amex requesting an extension of the 
June 8, 2001 deadline for decimalization studies. See letter to 
Annette Nazareth, Director, Division of Market Regulation, from 
Peter Quick, Amex President, dated My 9, 2001. The Commission 
believes that the study deadline should be extended not only from 
the Amex, but also for the other securities exchanges and the NASD.
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    It Is Hereby Ordered, pursuant to section 11A(a)(3)(B) of the 
Exchange Act,\4\ that the Participants shall submit their studies to 
the Commission no later than September 10, 2001, and that the 
Participants shall submit their rule filings pursuant to Section 
19(b)(2) of the Exchange Act no later than November 5, 2001. All other 
aspects of the Commission's June 8, 2000 Order remain in effect until 
otherwise ordered by the Commission.
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    \4\ 15 U.S.C. 78K-1(a)(3)(B).

    By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-13473 Filed 5-29-01; 8:45 am]
BILLING CODE 8010-01-M