30494 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

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

2 17 CFR 240.19b–4.

3The Exchange submitted a new Form 19b–4,

which replaces and supersedes the original filing in

its entirely (‘‘Amendment No. 1’’). Amendment No.

1 withdraws the proposed amendments to NYSE

Rule 36.20 in the original filing that would have

permitted certain off-floor communications by

members on the floor. The NYSE has stated that

these amendments will be subject to a separate

filing. Amendment No. 1 also amends proposed

NYSE Rule 36.30A to clarify the manner in which

Exchange specialists may communicate proprietary

orders in foreign specialty stock from their post to

off-floor broker-dealers. Finally, Amendment No. 1

amends proposed NYSE Rule 36.30C to include in

the definition of foreign security depositary shares

that represent a foreign company’s publicly traded

security.

Further information regarding topics

to be discussed, whether the meeting

has been canceled or rescheduled, and

the Chairman’s ruling on requests for

the opportunity to present oral

statements and the time allotted

therefor, can be obtained by contacting

the cognizant ACRS staff engineer, Mr.

Sam Duraiswamy (telephone 301/415–

7364) between 7:30 a.m. and 4:15 p.m.

(EDT). Persons planning to attend this

meeting are urged to contact the above

named individual one or two working

days prior to the meeting to be advised

of any potential changes to the agenda,

etc., that may have occurred.

Dated: May 31, 2001.

James E. Lyons,

Associate Director for Technical Support,

ACRS/ACNW.

[FR Doc. 01–14266 Filed 6–5–01; 8:45 am]

BILLING CODE 7590–01–P

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44368; File No. SR–NYSE–

00–31]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the New York Stock Exchange, Inc. To

Amend Rule 36.30 and Rule 104A.50

May 30, 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 July 3,

2000, the New York Stock Exchange,

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

The Exchange submitted an amendment

to the proposed rule change on May 21,

2001.3 The Commission is publishing

this notice to solicit comments on the

proposed rule change, as amended, from

interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change consists of

amendments to NYSE Rule 36.30,

concerning communications from

specialists’ posts on the floor of the

Exchange, and NYSE Rule 104A.50,

concerning specialists reporting

requirements. The text of the proposed

rule change is set forth below. Deletions

are in brackets. Additions are in italics.

Rule 36 Communications Between

Exchange and Members’ Offices

* * * * *

.30 Specialist Post Wires—[With the

approval of the Exchange, a specialist unit

may maintain a telephone line at its stock

trading post location to the off-Floor offices

of the specialist unit or the unit’s clearing

firm. Such telephone connection shall not be

used for the purpose of transmitting to the

Floor orders for the purchase or sale of

securities, but may be used to enter options

or futures hedging orders through the unit’s

off-Floor office or the unit’s clearing firm, or

through a member (on the floor) of an options

or futures exchange.]

A. With the approval of the Exchange, a

specialist unit may maintain a

communication link at its stock trading post

location:

1. To the off-Floor office of the specialist

unit or the unit’s clearing firm which may be

used for the purpose of entering options and

futures hedging orders, and orders in a

foreign security;

2. To a member (on the Floor) of an options

or futures exchange for the purpose of

entering options and futures hedging orders;

3. To an automated trading system

registered as a broker-dealer under the

Securities Exchange Act of 1934 (a

‘‘registered broker-dealer’’) or under the

auspices of a registered broker-dealer or

under the auspices of a foreign broker-dealer

subject to and in accordance with Rule 15a–

6 under the Securities Exchange Act of 1934

(‘‘Rule 15a–6’’) for the purpose of entering

orders in a foreign security; and 

4. To a registered broker-dealer or a foreign

broker-dealer subject to and in accordance

with Rule 15a–6 for the purpose of entering

orders in a foreign security.

B. No such communication link shall be

used for the purpose of transmitting to the

Floor orders for the purchase or sale of

securities.

C. For purposes of the Rule, a foreign

security is a security traded on the Exchange

which is a foreign ordinary security, a

depositary receipt or a depositary share that

represents a foreign company’s publicly

traded security. A specialist registered in the

depositary receipt or share may enter an

order either in such security or the related

ordinary security. A specialist registered in

the ordinary security may enter an order in

such security, or where applicable, a related

depositary receipt or share.

* * * * *

Rule 104A Specialists—General

* * * * *

.50 Equity Trading Reports—Every

specialist (including relief specialists) must

keep a record of purchases and sales initiated

on the Floor (including purchases and sales

resulting from commitments or obligations to

trade issued from the Exchange through ITS

or any other Application of the system), in

stocks in which he is registered, for an

account in which he has an interest.

Specialists must also maintain records of

purchases and sales in the Exchange’s offhours trading sessions. Such record must

show the sequence in which each transaction

actually took place, the time thereof, and

whether such transaction was at the same

price or in what respect it was at a different

price in relation to the immediately

preceding transaction in the same stock. The

price designations for transactions made in

another market center through ITS or any

other applications of the System are to be

determined from the immediately preceding

transaction price on the Exchange at the time

the commitment or obligation to trade is

issued. Specialists and relief specialists are

required to report such transactions in such

automated format and with such frequency as

may be prescribed by the Exchange.

Paragraph 2104.12 sets forth circumstances

under which specialists who maintain

investment accounts in specialty stocks are

required to submit an equity trading data

report.

Options trading data reports—Every

specialist (including relief specialists) must

keep a record of all options purchases and

sales to hedge his speciality stock positions

as permitted by Rule 105 and must report

such transactions in such automated format

and with such frequency as may be

prescribed by the Exchange.

Foreign securities reports—Every specialist

(including relief specialists) must keep a

record of all purchases and sales of foreign

securities (as defined in Rule 36.30) for an

account in which he has an interest.

Specialists and relief specialists are required

to report such transactions in such

automated format and with such frequency

as may be prescribed by the Exchange.

Inquiries.—Inquiries in connection with

these reports should be addressed to Market

Surveillance, 11 Wall Street, 10th Floor,

telephone 656–6755.

* * * * *

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.

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30495

4 17 CFR 240.15a–6.

5See File No. SR–NYSE–00–30. This proposal

has not yet been approved by the Commission. In

this filing the Exchange noted that the proposed

change in SR–NYSE–2000–30 to NYSE Rule 104

would give specialists the ability to react quickly

to changes in the price of foreign securities on the

Exchange based on price changes in the primary

market for the foreign security. The Exchange

believes that this would enhance the specialist’s

ability to maintain markets that are fair and orderly

for these stocks.

6Proposed Rule 36.30A states that any such

purchase or sale must be through a broker-dealer

registered with the Commission or directly with a

foreign broker-dealer pursuant to Rule 15a–6 under

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

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

NYSE Rule 36 (communications

Between Exchange and Members’

Offices) governs the establishment of

telephone or electronic communications

between the Exchange trading floor and

any other location. The Exchange

proposes to amend Rule 36 with respect

to communication links between

specialist posts and off floor locations.

Specialists Post Wires. NYSE Rule

36.30 governs the use of telephone lines

at a specialist unit’s post. The rule

currently permits telephone lines from

the post to the unit’s off-floor offices

and to the unit’s clearing firm. The rule

also permits specialists to have

telephone lines to the floor of an options

or futures exchange for the purpose of

entering hedging orders on the floors of

those exchanges.

The Exchange proposes to amend

NYSE Rule 36.30 to more clearly

identify the types of communications

that may emanate from the post. The

words ‘‘communication link’’ would

replace ‘‘telephone’’ to encompass a

wider range of communication methods.

The types of communications would be

expanded to give the specialist the

ability to enter orders in foreign stocks

directly from the post. In that regard, the

rule would permit a specialist to enter

orders to purchase or sell foreign

securities through a broker-dealer

registered with the Commission or

directly with a foreign broker-dealer

pursuant to Rule 15a–6 under the Act.4

The prohibition on receiving orders for

the purchase or sale of securities at the

post would be retained. The term

‘‘foreign security’’ would be defined to

include a foreign ordinary security, a

depositary receipt or a depositary share

representing a foreign security.

At the end of 1999, there were a total

of 394 foreign issues listed on the

Exchange. A total of 16.5 billion shares

of foreign stock traded on the Exchange,

representing an increase of 11% above

1998 totals. As foreign listing and

trading expands, issues related to

foreign securities have arisen in

discussions between the Exchange and

specialists. For example, in 2000,

amendments to NYSE Rule 104 were

submitted to the Commission to permit,

without first obtaining floor official

approval, specialists to effect certain

stabilizing transactions in a foreign

stock to achieve price parity with that

stock on its home country market.5

Similarly, the Exchange believes that

specialists may need to act quickly to

buy or sell or obtain information about

a foreign security specialty stock in

situations where the home country or

another market represents the best

opportunity to do so. The Exchange

proposes to amend NYSE Rule 36.30 to

permit specialists to have any

commercially available communication

link at the post over which it can

communicate directly to place an order

in a foreign security for the specialists’s

own account or seek information on the

current market for a foreign security.6

The communication links could be used

to receive information on stocks, data

for the U.S. or foreign markets, vendor

services or news. The receipt of

information would not be restricted, and

could include data from competing

markets. The communication link

would not be used to transmit orders to

specialists for execution on the

Exchange or to give nonmembers market

look information. Specialist units would

continue to have the ability to transmit

hedging orders in options or futures

from the post to its off-floor offices, its

clearing firm, or a member on the floor

of an options or futures exchange.

The Exchange believes that the

availability of all communication links

to specialists should be permitted. The

proposed rule change, however, would

not permit orders to be transmitted over

these links either into the floor or to

another market, except by specialists in

the circumstances outlined in NYSE

Rule 36.30.

Foreign Stock Transaction Reports.

The Exchange also proposes to amend

NYSE Rule 104A.50 to require

specialists to record and report to the

Exchange the details of all proprietary

transactions executed by the specialist

unit away from the Exchange in foreign

securities. Specialists would be

informed that the reports would be

required to be submitted on Form 81,

the electronic reporting mechanism

already used by specialists to report

proprietary transactions in speciality

stocks.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

section 6(b)(5) of the Act 7 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. The proposed rule

change supports the mechanism of free

and open markets by providing for

increased means by which

communications to and from the floor of

the Exchange may take place, while

continuing to prohibit entry of orders

from off the floor directly to the post, or

to the point of sale.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change, as amended,

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 has not solicited or

received written comments on the

proposed rule change.

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 Exchange consents,

the Commission will:

A. By order approve the 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, 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

30496 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3A ROT is a regular member or a foreign currency

options participant of the Exchange located on the

trading floor who has received permission from the

Exchange to trade options for his own account. See

Phlx Rule 1014(b).

4Auto-Quote is the Exchange’s electronic options

pricing system, which enables specialists to

automatically monitor and instantly update

quotations.

5The ROT must vocalize a different quote before

an order enters the system. If an ROT believes that

he or she has been unfairly allocated a portion of

the order, he or she can challenge the allocation

pursuant to Phlx Rule 124. Telephone call between

Rick Rudolph, Counsel, Phlx, Terri Evans, Special

Counsel, Division of Market Regulation

(‘‘Division’’), Commission, and Sonia Patton, Staff

Attorney, Division, Commission (May 24, 2001).

6See Order Instituting Public Administrative

Proceedings Pursuant to Section 19(h)(1) of the

Securities Exchange Act of 1934, Making Findings

and Imposing Remedial Sanctions. Securities

Exchange Act Release No. 43268 (September 11,

2000(‘‘Order’’).

7See Section IV.B.j. of the Order.

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 NYSE. All

submissions should refer to the File No.

SR–NYSE–00–31 and should be

submitted by June 27, 2001.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–14155 Filed 6–5–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44369; File No. SR–Phlx–

2001–26]

Self-Regulatory Organizations; Notice

of Filing of a Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.

Relating to ROT Vocalization

Requirements for Options Quotations

May 30, 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 March 5,

2001, the Philadelphia Stock Exchange,

Inc. (‘‘Phlx’’ or ‘‘Exchange’’) 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 Phlx. 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 Phlx proposes to amend

Commentary .01 to Exchange Rule 1080,

Philadelphia Stock Exchange

Automated Options Market (‘‘AUTOM’’)

and Automatic Execution System

(‘‘AUTO–X’’), to add an express

vocalization requirement for Phlx

Registered Options Traders (‘‘ROTs’’) 3

whose quotation for a particular option

series is different from the disseminated

quote. The proposal also would codify

the Exchange’s policy that the

disseminated market is deemed to

represent the quotation of all ROTs in

that option, unless otherwise indicated

pursuant to Phlx Rule 1080. The

proposed rule change would be set forth

in new subsection (c) of Commentary

.01. The text of the proposed rule

change is set forth below. New language

is in italics.

Rule 1080. Philadelphia Stock

Exchange Automated Options Market

(AUTOM) and Automatic Execution

System (AUTO–X)

(a)–(j) No change.

Commentary:

.01

(a) Automatic Quotation (Auto-Quote)

is the Exchange’s electronic options

pricing system, which enables

specialists to automatically monitor and

instantly update quotations.

(b) [RESERVED]

(c) The disseminated market (whether

by Auto-Quote or specialized quote

feed) is deemed to represent the

quotations of all ROTs in that option

unless a ROT has expressly indicated

otherwise in a clear and audible

manner, respecting either a specific

series, the class or the option (specifying

LEAPs), and with sufficient time for the

specialist to take action to update the

quote if necessary.

(d) If options trading systems throttle

quotations for at least three minutes, the

Chairman of the Board of Governors or

his designee may, for capacity

management purposes, mandate that the

Auto-Quote be set to update quotations

based on a certain minimum movement

in the underlying security for: (i) all

options; (ii) index options only; or (iii)

certain specified options, taking into

account certain factors that may

include, but are not limited to, the price

of the underlying security, volatility in

the underlying security, or whether

there has been any trading volume over

the last two trading days. Such

mandated minimum setting may

continue for a period of 15 minutes, and

may be continued every 15 minutes

thereafter, provided that the Exchange’s

options trading systems are throttling

quotations at the end of each such 15-

minute period.

* * * * *

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

Phlx 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 Phlx 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 clarify that the quote

disseminated by the Exchange’s AutoQuote system 4 or by a specialist’s

proprietary system that interfaces with

AUTOM (‘‘Specialized Quote Feed’’),

which electronically prices options, is

deemed to be the quote of all ROTs in

the crowd unless the ROT has vocalized

a different quote in a clear and audible

manner with sufficient time for the

specialist to take action to update the

quote, if necessary.5

On September 11, 2000, the

Commission issued an order 6 that

requires four of the five options

exchanges, including the Phlx to adopt

new, or amend existing, rules to include

any practice or procedure, not currently

authorized by rule, whereby market

makers determine by agreement the

spreads or option prices at which they

will trade any option, or the allocation

of orders in that option.7 Specifically,

the Order required by the Exchange to

file by March 12, 2001, draft proposed