29188 Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Notices

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

2 17 CFR 240.19b–4.

Exchange Commission, Office of Filings

and Information Services, Washington,

DC 20549.

Extension: Rule 15a–4; SEC File No.

270–7; OMB Control No. 3235–0010.

Notice is hereby given that, pursuant

to the Paperwork Reduction Act of 1995

(44 U.S.C. 3501 et seq.), the Securities

and Exchange Commission

(‘‘Commission’’) is soliciting comments

on the collection of information

summarized below. The Commission

plans to submit this existing collection

of information to the Office of

Management and Budget for extension

and approval.

Rule 15a–4 under the Securities

Exchange Act of 1934 (the ‘‘Exchange

Act’’) permits a natural person member

of a securities exchange who terminates

his or her association with a registered

broker-dealer to continue to transact

business on the exchange while the

Commission reviews his or her

application for registration as a brokerdealer if the exchange files a statement

indicating that there does not appear to

be any ground for disapproving the

application. The total annual burden

imposed by Rule 15a–4 is

approximately 106 hours, based on

approximately 25 responses (25

Respondents × 1 Response/Respondent),

each requiring approximately 4.23 hours

to complete. The total annual cost

burden is $5,875, based on

approximately 25 responses, each

costing approximately $235 to complete.

The Commission uses the information

disclosed by applicants in Form BD: (1)

to determine whether the applicant

meets the standards for registration set

forth in the provisions of the Exchange

Act; (2) to develop a central information

resource where members of the public

may obtain relevant, up-to-date

information about broker-dealers,

municipal securities dealers and

government securities broker-dealers,

and where the Commission, other

regulators and SROs may obtain

information for investigatory purposes

in connection with securities litigation;

and (3) to develop statistical

information about broker-dealers,

municipal securities dealers and

government securities broker-dealers.

Without the information disclosed in

Form BD, the Commission could not

effectively implement policy objectives

of the Exchange Act with respect to its

investor protection function.

The statement submitted by the

exchange assures the Commission that

the applicant, in the opinion of the

exchange, is qualified to transact

business on the exchange during the

time that the applications are reviewed.

Written comments are invited on: (a)

whether the proposed collection of

information is necessary for the proper

performance of the functions of the

agency, including whether the

information shall have practical utility;

(b) the accuracy of the agency’s estimate

of the burden of the proposed collection

of information; (c) ways to enhance the

quality, utility and clarity of the

information to be collected; and (d)

ways to minimize the burden of the

collection of information on

respondents, including through the use

of automated collection techniques or

other forms of information technology.

Consideration will be given to

comments and suggestions submitted in

writing within 60 days of this

publication.

Please direct your written comments

to Michael E. Bartell, Associate

Executive Director, Office of

Information Technology, Securities and

Exchange Commission, 450 Fifth Street,

N.W. Washington, DC 20549.

Dated: May 18, 2001.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–13385 Filed 5–25–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44327; File No. SR–ISE–

2001–04]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the International Securities Exchange

LLC Relating to Its Disciplinary

Procedures

May 18, 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 February

6, 2001, the International Securities

Exchange LLC (the ‘‘Exchange’’ or the

‘‘ISE’’) 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 ISE. 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 Exchange is proposing various

changes to its disciplinary rules and

procedures. A complete copy of the text

of the proposed rule change is available

at the Office of the Secretary, the ISE

and the Commission.

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

ISE 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 ISE 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 has entered into a

regulatory services agreement with

NASD Regulation (‘‘NASDR’’) pursuant

to which, among other things, NASDR

provides services related to conducting

regulatory investigations and

disciplinary actions. The ISE is

proposing to make changes to its

disciplinary rules and procedures to

reflect and facilitate this ‘‘hybrid’’

regulatory system. In particular, the

Exchange seeks to conform its

disciplinary rules and procedures to

those of NASDR where appropriate. In

addition, the Exchange has carefully

reviewed the disciplinary rules

currently in place at the other selfregulatory organizations (‘‘SROs’’) and

seeks to incorporate rules and standards

found in the rule of the other SROs in

a manner tailored to fit the needs of the

Exchange, while assuring a disciplinary

process that is fair to the Exchange’s

members as required by the Securities

Exchange Act of 1934, as amended

(‘‘Exchange Act’’). The specific changes

are discussed below.

The Exchange proposes to include in

separate Rules the provisions currently

contained in Rule 1601 that (1) require

members and persons associated with

Members to provide information upon

the request of the Exchange, and (2)

specify the Exchange’s authority and

obligation to investigate possible

violations within the disciplinary

jurisdiction of the Exchange. These

provisions will be contained in Rules

1601 and 1602, respectively. While Rule

1615 already provides the Exchange

authority to contract with another SRO

to perform some or all of the Exchange’s

Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Notices 29189

3See PCX Rule 10.2; Securities Exchange Act

Release No. 42756 (May 11, 2000).

4See NASD Code of Procedure, Rules 9138(a) and

9215(a).

5These provisions are similar to the recusal

guidelines provided for in the NASD and AMEX

rules. See NASD Code of Procedures, Rules 9233(a)

(specifying that the term ‘‘days’’ in the disciplinary

rules is ‘‘calendar’’ days) and 9234(a); AMEX Rules,

Exchange Disciplinary Proceedings, Rules 1 and

2(b).

6NASD Code of Procedure, Rules 9221(d) (25

days notice of hearing) and 9261(a) (requiring

submission of documentary evidence at least 10

days prior to hearing date).

7See NASDR Code of Procedure, Rule 9148; see

also Chicago Board Options Exchange (‘‘CBOE’’)

Rule 17.6(b).

disciplinary functions, a parenthetical

has been added in both Rules to specify

that another SRO acting on behalf of the

ISE can require members to provide

information and conduct investigations.

No substantive changes have been made

to these rules, although the language

specifying the Exchange regulatory

staff’s authority and obligation to

investigate possible violations has been

amended to reflect language more

recently approved by the Commission

for the Pacific Exchange (‘‘PCX’’).3

Rule 1602 is re-numbered to Rule

1603 and re-titled ‘‘Letters of Consent.’’

This rule currently permits a

disciplinary matter to be concluded

through a letter of consent prior to the

initiation of formal disciplinary

proceedings upon approval of the letter

of consent by the Business Conduct

Committee (‘‘BCC’’). The Exchange

proposes to change the existing

procedures to require that the Chief

Regulatory Officer accept a letter of

consent before it may be presented to

the BCC for consideration. The rule

specifies that if agreement on the terms

of a letter of consent cannot be reached

between a member or associated person

and regulatory staff, or if a letter of

consent is rejected by the Chief

Regulatory Officer, the Exchange may

then institute a formal disciplinary

action. The rule continues to require

that the BCC approve all letters of

consent before they may become final.

Rule 1603 (Charges) is re-numbered to

Rule 1604. This rule currently provides

that the Exchange will prepare a

statement of charges whenever it

appears that there is probable cause for

finding a violation within the

disciplinary jurisdiction of the

Exchange. The current language also

provides that the statement of charges

will be served upon the member or

person being charged (the

‘‘Respondent’’), and that the Respondent

will be given access to documents

related to the case. The proposed rule

change specifies that a statement of

charges will be prepared by regulatory

staff and must be approved by the Chief

Regulatory Officer.

Rule 1604 (Answer) is re-numbered to

Rule 1605. This rule currently provides

a Respondent with 15 days after service

of the charges to file a written answer.

The Exchange proposes to extend this

answer period to 25 calendar days to

conform with the period allowed under

NASDR procedures.4 In addition, the

Exchange proposes to add a provision

specifying that, upon review of a

Respondent’s answer, the Chief

Regulatory Officer may modify the

statement of charges and re-serve them

on the Respondent. The Respondent

will then be given additional time to

answer the amended charges.

Rule 1605 (Hearing) is re-numbered to

Rule 1606. This rule specifies the

procedure for conducting disciplinary

hearings. Currently, the rule specifies

that hearings will be held before ‘‘one or

more’’ members of the BCC. The

Exchange proposes to amend the rule to

specify that disciplinary hearings will

be held before a panel comprised of a

professional hearing officer and two

members of the BCC. The professional

hearing officer will be provided by

NASDR under our regulatory services

agreement, and under the proposal, this

person will be the Panel Chairman that

handles all procedural matters. The two

ISE member representatives on a panel

will be appointed by the Chairman of

the BCC from among the members of the

BCC. We propose to adopt guidelines

governing this appointment, as well as

a provision specifying that a panel

member must withdraw from a panel if

at any time he or she has a conflict of

interest or bias or circumstances

otherwise exist where his or her fairness

might reasonably be questioned.5

The Exchange proposes to extend

from 15 days to 28 calendar days the

notice period provided parties regarding

the time and place of the hearing. The

Exchange also proposes to change the

time in advance of a scheduled hearing

by which each party is required to

furnish the panel and the opposing

party copies of all documentary

evidence to be presented at the hearing

from five days to 10 calendar days.

These changes are made to conform

with NASDR procedures.6

The Exchange further proposes to

specify in Rule 1606 that interlocutory

Board review of decisions made by a

panel during a hearing will generally be

prohibited. The proposed provision

states that interlocutory review will be

permitted only if the panel agrees to

such review after determining that the

issue is a controlling issue of rule or

policy and that immediate Board review

would materially advance the ultimate

resolution of the case. Currently, there

is nothing in the Exchange rules with

respect to interlocutory review, and the

proposal is consistent with NASDR

procedures.7

Finally, the Exchange proposes to

amend Rule 1606 regarding ex parte

communications to specify that the

prohibition on ex parte communications

extends to members of a hearing panel

and to board members, in addition to

BCC members. It would be

inappropriate for a member or an

associated person to discuss a pending

disciplinary matter with any party that

may be called upon to render a decision

in the matter. In light of the proposed

changes discussed above that specifies

that a hearing panel will make

disciplinary determinations, and the

right for review of a panel decision by

the Board discussed below, the

prohibition should be extended to

members of panels and the Board.

Rule 1608 (Decision) is renumbered to

Rule 1607. The Exchange proposes to

delete paragraph (b) from the rule. This

provision specifies that if a hearing

panel is comprised of less than half of

the members of the BCC, there would be

an automatic review by a majority of the

BCC. As discussed above, the Exchange

is proposing that hearings be conducted

by a hearing panel instead of the BCC.

Therefore, paragraph (b) is not

applicable under the proposed change

to Rule 1607 (Hearings).

Rule 1606 (Summary Proceedings) is

re-numbered Rule 1608. This rule

currently specifies that a panel may

make a determination without a hearing

and may impose a penalty as to

violations that a Respondent has

admitted or has failed to answer on that

otherwise do not appear in dispute. The

Exchange proposed to specify that the

ten-day notice currently required under

the rule is ‘‘calendar’’ days and that it

be given to the panel chairman, but

proposes no substantive changes to this

rule.

Rule 1607 (Offers of Settlement) is renumbered Rule 1609. This rule provides

that a Respondent may submit a written

offer of settlement following service of

a statement of charges. The Exchange

proposes to re-organize this rule, as well

as specify that an offer of settlement

may be submitted to the Chief

Regulatory Officer if a panel has not yet

been formed. The Respondent may

submit a written statement in support of

the offer, but the Exchange proposes to

eliminate the right to request an oral

argument in support of the offer. The

proposal also specifies that where a

29190 Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Notices

8See NASD Code of Procedure, Rule 9311(a).

9See NASD Code of Procedure, Rule 8320(b).

10See NASD Code of Procedure, Rule 8330.

11This constitutes the requisite notification

required for minor rule violation plans under Rule

19d–1 of the Exchange Act.

12This language parallels that contained in the

Exchange’s existing hearing procedures contained

in Rule 1605(d), which is proposed to be amended

to Rule 1606(e).

panel or Chief Regulatory Officer

accepts an offer of settlement, it or he

will issue a decision, including findings

and conclusions and imposing a

sanction, consistent with the terms of

the offer. Where a panel or Chief

Regulatory Officer rejects an offer of

settlement, it or he will notify the

Respondent and the matter will proceed

as if such offer had not been made. A

decision to accept or reject an offer of

settlement is final, and the Respondent

may not seek review thereof.

Rule 1609 (Review) is re-numbered to

Rule 1610. This rules provides that the

Respondent has 15 days following a

decision to submit a petition for review

of a disciplinary decision. The Exchange

proposes to extend this period to 25

‘‘calendar’’ days and specify that the

review is conducted by the Board to be

consistent with the time allowed under

NASD rules.8 The Exchange does not

propose any other substantive changes

to this rule.

Rule 1610 (Judgment and Sanction) is

re-numbered to Rule 1611. This rule

provides generally that members and

associated persons may be disciplined

by, among other things, fine, censure,

expulsion, suspension, and limitation of

activities, functions and operations. The

Exchange proposes to adopt a provision

under this rule specifying that all fines

and other monetary sanctions be paid to

the Chief Financial Offer of the

Exchange. The proposal would permit

the Exchange to summarily suspend a

Member that fails to promptly pay a

fine, or terminate the association of a

person who fails to promptly pay a fine,

when such fine becomes finally due and

payable.9 In addition, the Exchange

proposes to require that a member or

associated person bear such costs of the

proceeding as the adjudicator deems fair

and appropriate under the

circumstances.10

Rule 1611 (Service of Notice) and

1612 (Extension of Time Limits) have

been combined in Rule 1612

(Procedural Matters). The Exchange

does not propose any substantive

changes to these rules.

The Exchange also proposes several

changes to the minor rule violation plan

contained in Rule 1614.11 Under this

rule, the Exchange staff has the

authority to issue ‘‘traffic tickets’’ for

violations that are minor in nature.

While violations are generally black and

white, recipients of penalties under the

minor rule violation plan have a right to

appeal the imposition of a fine to the

BCC and ultimately to the Board. The

Exchange proposes to specify that the

formal rules of evidence do not apply to

review hearings conducted by the BCC

under Rule 1614. The BCC will

determine the time and place of the

hearing and make all determinations

with regard to procedural or evidentiary

matters, as well as prescribe the time

within which all documents or written

materials must be submitted. Evidence

may be presented and witnesses may

testify and be subject to questioning by

the BCC and the opposing party. A

person fined under Rule 1614 is entitled

to be presented by counsel who may

participate fully in the hearing.12

The Exchange also proposes to clarify

the application of the Rule to particular

violations. Paragraph (d) of the rule

currently specifies sanctions for

violations of Rule 412 (Position Limits),

Rule 1403 (Focus Reports), Rule 1404

(Requests for Data), Rule 717 (Order

Entry), Rule 803 (Quotation Parameters)

and Rule 805 (Execution of Orders in

Appointed Options). The Exchange is

not proposing to include any additional

rules or to change any of the sanctions

with the exception of a time parameter

associated with Rule 803 and the

sanctions related to violations of Rule

805, both of which are discussed below.

Many of the sanction schedules for

violations of the Rules listed above

currently contain an indication that

upon a certain number of violations, a

referral will be made to the BCC. This

reference to the BCC is made because

the rules currently provide for the BCC

to issue formal charges that initiate

formal disciplinary actions. In light of

the proposed changes discussed above

that provide for the issuance of charges

by the Chief Regulatory Officer, the

Exchange proposes to remove the

reference to the BCC in the minor rule

schedules and instead indicate that the

level of violation subjects the member to

‘‘Formal Disciplinary Action,’’ which is

outside of the scope of Rule 1614. This

has the same effect as the prior reference

to the BCC and does not substantively

change the sanction schedules.

Rule 803 contains maximum

quotation spread parameters that

currently are uniform across the five

options exchanges. Unlike other options

exchanges, market makers on the ISE

quote independently from remote

locations, and each quote entered by a

market maker must have a size

associated with the price. Once the size

associated with a price is exhausted, the

price is automatically moved down for

a bid and up for an offer by the

Exchange according to parameters preset by the market maker. As a result, a

market maker might enter a quote with

an allowable bid-ask spread, but have its

bid and/or offer automatically moved by

the Exchange so that the spread

becomes too wide. Accordingly, market

makers must be given some amount of

time to update a quote to bring the

spread within the allowable parameters.

Currently, Rule 1614(d)(6) specifies that

a market maker must take immediate

action to adjust its quote to comply with

the maximum allowable spread, and

that except in unusual market

conditions, immediate means within

five seconds. This five second guideline

was adopted before the Exchange

initiated trading. Experience now

indicates that five seconds is

insufficient for a market maker to enter

an adjusted price and communicate the

new price to the Exchange. Accordingly,

the Exchange proposes to increase the

guideline to ten seconds. While ten

seconds remains a very short period of

time for a market maker to enter an

adjusted price, the Exchange believes it

is prudent to keep the guideline as low

as practically possible. If experience

with the ten second guideline indicates

that additional time is needed to create

a fair opportunity for members to

comply with the spread parameters, the

Exchange will consider amending the

rule to increase the guideline.

With respect to violation Rule 805,

the Exchange is proposing to increase

the fine amounts and clarify the

application of the sanction schedule.

Rule 805 requires market makers to

execute a minimum percentage of their

total volume in appointed options

measured on a quarterly basis. The

sanction schedule currently provides

that a member will receive a letter of

caution for the first violation of this

requirement within a rolling twelvemonth period, and will be subject to a

fine of $400, $800 and $1200 for the

second, third and fourth violations,

respectively. The Exchange believes that

it is appropriate to increase the fine

amounts to $500, $1000 and $2500,

respectively. In addition, the sanction

schedule currently indicates that a

member will receive a letter of caution

for the first offense ‘‘within 85% of the

requirement’’ and a fine for the second

offense ‘‘not within 85% of

requirement.’’ The Exchange proposes

that both of these references be deleted,

as they are inconsistent with each other

and the intent of the Rule 1614. In

Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Notices 29191

13See Program for Allocation of Regulatory

Responsibilities Pursuant to Rule 17d–2; Order

Granting Approval of Plan Allocating Regulatory

Responsibility; International Securities Exchange

LLC and National Association of Securities Dealers,

Inc., Securities Exchange Act Release No. 42815

(May 23, 2000), 65 FR 34762 (May 31, 2000).

14 15 U.S.C. 78f(b)(1).

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

16 15 U.S.C. 78f(b)(7).

particular, paragraph (a) of Rule 1614

states that the Exchange is not required

to impose a fine pursuant to the Rule

with respect to the violation of any Rule

included therein, and that the Exchange

may, whenever it determines that any

violation is not minor in nature, bring

a formal disciplinary action, rather than

impose the sanction contained in the

minor violation schedule. The Exchange

will consider the severity of the

violation of Rule 805 in every case,

whether it is the first, second, third or

fourth violation within a rolling twelvemonth period and determine whether it

is appropriate to apply the minor rule

sanction contained in the schedule or

whether formal disciplinary action

should be taken.

The final proposed rule change is to

Rule 1615, which states that the

Exchange may contract with another

SRO to perform some or all of the

Exchange’s disciplinary functions.13

This rule also states that the Exchange

shall specify to what extent the ISE’s

disciplinary rules govern ISE

disciplinary actions and to what extent

the rules of another SRO with which the

Exchange has contracted shall govern

such actions. Notwithstanding any

arrangement with another SRO, the ISE

retains ultimate legal responsibility for

and control of all disciplinary functions,

and this is also expressly stated in Rule

1615.

The Exchange proposes to adopt

Supplemental Material .01 to Rule 1615

to specify that it has entered into a

contract with NASDR to provide

professional hearing officers and to act

as an agent of the Exchange with respect

to the ISE’s disciplinary procedures.

The proposed provision states that all of

the ISE’s disciplinary rules shall govern

Exchange disciplinary actions. In

addition, the provision recognizes that

under Rule 1606(a) (as proposed in this

filing) the professional hearing officer is

designated as the chairman of a hearing

panel, and that under Rule 1606(e) (as

proposed in this filing), the chairman of

the panel has the sole responsibility to

determine procedural matters. In the

course of discharging his

responsibilities, the professional hearing

officer shall apply the standards

contained in the NASD Code of

Procedure, and policies, practices and

interpretations thereof, so long as the

ISE’s Rules are not in conflict.

The Exchange believes this provision

strikes the appropriate balance between

adopting and applying ISE procedures

and gaining the benefit of its

relationship with NASDR. Specifically,

as described above, the ISE has

proposed a disciplinary procedure that

is similar to those of other exchanges

and which it believes provides members

with due process. The ISE also seeks to

utilize the experience that has been

developed by NASDR over decades of

hearing cases and rendering opinions.

By directing the professional hearing

officer to apply the standards, policies,

practices and interpretations under the

NASD Code of Procedure where ISE

Rules are not in conflict, the ISE

represents that the Exchange and its

members are able to benefit from this

experience. As the ISE gains experience

with respect to procedural issues arising

during disciplinary hearings, it will

propose its own rules where appropriate

or when, in the opinion of the

Exchange, it believes an interpretation,

policy or practice different from what is

applied under the NASD Code of

Procedure should be applied to ISE

disciplinary hearings. In this respect,

the ISE will closely monitor

determinations made by professional

hearing officers and continually

evaluate whether procedural issues

should be made according to the NASD

Code of Procedure.

2. Statutory Basis

The ISE believes that the proposed

rule change, as amended, is consistent

with the provisions of Section 6(b)(1) of

the Act,14 which requires that an

exchange be organized and have the

capacity to be able to carry out the

purposes of this title and to comply, and

to enforce compliance by its members

and persons associated with its

members, with the provisions of the

Exchange Act, the rules and regulations

thereunder, and the rules of the

exchange. The proposal is designed to

further the purposes of Section 6(b)(6) 15

requiring the rules of an exchange to

provide that its members and persons

associated with its members be

appropriately disciplined for violation

of the provisions of the Exchange Act,

the rules or regulation thereunder, or

the rules of the exchange, as well as

Section 6(b)(7) 16 requiring the rules of

an exchange to provide a fair procedure

for the disciplining of members and

persons associated with members.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The ISE does not believe that the

proposed rule change, as amended, 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

Written comments on the proposed

rule change, as amended, were neither

solicited nor 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 ISE consents, the

Commission will:

(A) By order approve the proposed

rule change, as amended, or

(B) Institute proceedings to determine

whether the proposed rule change, as

amended, should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to

submit written date, views, and

arguments concerning the foregoing,

including whether the proposed rule

change, as amended 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, as amended,

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

at the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the ISE. All

submissions should refer to File No.

SR–ISE–2001–04 and should be

submitted by June 19, 2001.

29192 Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Notices

17 17 CFR 200.30–3(a)(12).

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

2A copy of NSCC’s proposed rule change is

available at the Commission’s Public Reference

Section or through NSCC.

3The Commission has modified the text of the

summaries prepared by NSCC.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.17

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–13328 Filed 5–25–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

(Release No. 34–44330; File No. SR–NSCC–

2001–08)

Self-Regulatory Organizations; The

National Securities Clearing

Corporation; Notice of Filing of

Proposed Rule Change Relating to

Processing Commission Payments

May 21, 2001.

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

Securities Exchange Act of 1934

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

April 27, 2001, The National Securities

Clearing Corporation (‘‘NSCC’’) 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

NSCC.2 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 amends the

process by which commissions are paid

to non-clearing members.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NSCC 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. NSCC has prepared

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

and (C) below, of the most significant

aspects of these statements.3

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

As part of NSCC’s ongoing efforts to

increase processing efficiencies, NSCC

has decided to modify its rules to

further standardize and automate the

processing of commission payments to

non-clearing members.

In accordance with NSCC Rule 16,

NSCC’s Commission Bill Service

currently permits non-clearing members

entitled to a credit to receive their

monthly commission bill payments

either electronically by Automated

Clearing House (‘‘ACH’’) wire transfer or

manually by check. At present, slightly

less than 50% of NSCC’s approximate

350 non-clearing members physically

receive their commission bill payments

by check. Such manual distributions are

made on the floors of the New York

Stock Exchange (‘‘NYSE’’) and the

American Stock Exchange (‘‘AMEX’’).

The proposed rule change will require

all non-clearing members to execute

appropriate ACH documentation in

order to receive their credit payments.

In the event a non-clearing member

does not pay the amount it owes to

NSCC, the rule is being changed to

explicitly permit NSCC to set-off any

future commission bill credits to which

it is entitled.

Subject to SEC approval, NSCC will

implement the proposed rule changes

on July 13, 2001. If a non-clearing

member has not executed the

appropriate ACH wire transfer

documentation such member will not

receive any credit payments until it

does.

The proposed rule change will

facilitate the prompt and accurate

payment of commission bill

transactions. The proposed rule change

is therefore consistent with Section 17A

of the Act and the rules and regulations

thereunder.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

NSCC does not believe that the

proposed rule change will have an

impact on or impose a burden on

competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

NSCC has worked with and received

the support of the NYSE and the AMEX

with respect to these proposed changes.

No written comments relating to the

proposed rule change have been

solicited or received. NSCC will notify

the Commission of any written

comments it receives.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within thirty-five 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 ninety 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 self-regulatory

organization 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

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

Section, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of NSCC. All submissions should

refer to File No. SR–NSCC–2001–08 and

should be submitted by June 19, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–13326 Filed 5–25–01; 8:45 am]

BILLING CODE 8010–01–M