30258 Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices

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

2 17 CFR 240.19b–4.

3See May 25, 2001 letter from Louise Corso, Vice

President Director of Enforcement, Phlx, to Joseph

P. Morra, Special Counsel, Division of Market

Regulation, Commission (‘‘Amendment No. 1’’). In

Amendment No. 1, the Phlx added language to the

proposal regarding Advice B–12, PHLX ROTs and

Specialists Entering Orders for Execution on Other

Exchanges in Multiply Traded Options, which was

inadvertently omitted in the original filing.

4The Phlx does not propose to make changes to

advices A–11; B–6, Sections C and D; and F–2.

Changes to those Advices will be made in separate

rule filings. No changes have been proposed for the

Advices that relate to foreign currency options: B–

7, F–16, F–17, F–18, F–20, and F–21. Finally, no

change is proposed for Advice F–27 because the

Phlx considers it to be more akin to a fee than a

fine.

5The following Advices are affected by the

proposed change to a two-year calendar basis: A–

1, A–7, A–12, A–13, A–14, B–2, B–3, B–5, B–6, C–

1, C–2, C–5, C–7, C–8, E–1, F–1, F–3, F–4, F–6, F–

11, F–12, F–15, F–24(c)(iii), F–25, and G–1.

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44366; File No. SR–Phlx–

2001–36]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 by the Philadelphia

Stock Exchange, Inc. To Revise the

Fine Schedule for Options Floor

Procedure Advices

May 29, 2001.

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

Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rule 19b–4 2 thereunder,

notice is hereby given that on May 17,

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 Exchange.

The Phlx amended the proposal on May

29, 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 Exchange proposes to amend the

fine schedule applicable to Option Floor

Procedure Advices (‘‘Advices’’) such

that there would be two fine schedules:

a minor fine schedule and a major fine

schedule.4 The minor fine schedule is

proposed to be:

1st Occurrence—$250.00

2nd Occurence—$500.00

3rd Occurrence—$1,000.00

4th Occurrrence and Thereafter—

Sanction is discretionary with

Business Conduct Committee

For purposes of determining which

fine schedule applies, the following

Advices and portions of Advices are

considered to be minor:

• A–1, Responsibility of Displaying Best

Bids and Offers

• A–2, Types of Orders to be Accepted

onto the Specialist’s Book

• A–6, Cancel/Replacement Process

• A–7, Responsibility to Cancel

• A–12, Opening Rotations and SORT

Procedures

A–13, paragraph (b), Failure to Receive

Approval to Disengage Auto-X

• A–14, Equity and Index Option

Opening Parameters

• B–2, Crowd Courtesy

• B–3, Trading Requirements

• B–8, Use of Floor Brokers by an ROT

While on the Floor

• B–12, PHLX ROTs and Specialists

Entering Orders for Execution on

Other Exchanges in Multiply Traded

Options

• C–1, Ascertaining the Presence of

ROTs in a Trading Crowd

• C–8, Option Specialist Evaluations

• F–1, Use of Identification Letters and

Numbers

• F–3, Members’ Requests for Sold Sale

Designation

• F–4, Orders Executed as Spreads,

Straddles, Combinations or Synthetics

and Other Order Ticket Marking

Requirements

• F–6, Option Quote Parameters

• F–15(b)(i), Minor Infractions of

Position/Exercise Limits and Hedge

Exemptions

• F–23, Clerks in the Crowd

• F–24(c)(iii), Signing-on/off the Wheel

• F–25, Fingerprinting Floor Personnel

• G–1, Index Option Exercise Advice

Forms

The major fine schedule is proposed

to be:

1st Occurrence—$500.00

2nd Occurence—$1,000.00

3rd Occurrence—$2,000.00

4th Occurrrence and Thereafter—

Sanction is discretionary with

Business Conduct Committee

For purposes of determining which

fine schedule applies, the following

Advices or portions of the Advices are

considered to be major:

• A–13, paragraph (a), Auto Execution

Engagement/Disengagement

Responsibility

• B–1, Responsibility to Make Markets

• B–4, Phlx ROTs Entering Orders From

On-Floor and Off-Floor for Execution

on the Exchange

• B–5, Agency-Principal Restrictions

• B–6, Section B, Priority Of Options

Orders for Equity and Index Options

by Account Type

• C–2, Clocking Tickets for Time of

Entry on the Floor

• C–3, Handling Orders of Phlx ROTs

and Other Registered Options Market

Makers

• C–4, Floor Brokers Handling Orders

for Same Firm

• C–5, ROTs Acting as Floor Brokers

• C–7(b), Responsibility to Represent

Orders to the Trading Crowd

• E–1, Required Staffing of Options

Floor

• F–5, Changes or Corrections to

Material Terms of a Matched Trade

• F–8, Failure to Comply with an

Exchange Inquiry

• F–9, Dual Affiliations

• F–11, Splitting Orders

• F–12, Responsibility for Assigning

Participation

• F–13, Supervisory Procedures

Relating to ITSFEA

• F–15(a) and (b)(ii), Minor Infractions

of Position/Exercise Limits and Hedge

Exemptions

• F–19, Clearing Agents’ Responsibility

for Carrying Positions in Market

Maker Accounts

• F–30, Options Trading Floor Training.

The Exchange proposes that

violations of Advice C–9, Floor Brokers

and Clerks Trading in their Customer

Accounts, be immediately referred to

the Business Conduct Committee to

determine the appropriate sanction.

The Exchange also proposes to change

all the fine schedules that currently

operate on a one-year calendar basis to

a two-year calendar basis.5 For example,

a second violation of the same Advice

that occurs within a 24-month period

would be considered a second

occurrence.

The text of the proposed rule change

is available at the principal office of the

Exchange and at 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

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.

Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices 30259

6Securities Exchange Act Rule 19d–1(c)(1), 17

CFR 19d–1(c)(1), requires any self-regulatory

organization for which the Commission is the

appropriate regulatory agency that takes any final

disciplinary action with respect to any person to

promptly file a notice thereof with the Commission.

However, minor rule violations not exceeding

$2,500 are not deemed final and therefore not

subject to the same reporting requirements.

7See Securities Exchange Act Release No. 23296

(June 4, 1986) 51 FR 21430 (June 12, 1986) (SR–

Phlx–86–11). See also Securities Exchange Act

Release No. 43126 (Aug. 7, 2000), 65 FR 49621

(Aug. 14, 2000) (SR–Phlx–00–34).

8See Advices A–3, A–4, B–9, B–10, D–1, D–2, F–

7, F–10, and F–22.

9See Advices A–5, A–9, A–10, B–3(b), B–11, C–

7(a), C–9, F–14, F–24 (except (c)(iii)), F–28, and G–

2.

10A ‘‘two-year running calendar basis’’ means

that a violation of an Advice that occurs within two

years of the first violation of that Advice will be

treated as a second occurrence, and any violation

of an Advice within two years of the previous

violation of that Advice will be subject to the next

highest fine specified in the Advice. See Securities

exchange Act Release No. 41201 (March 22, 1999),

64 FR 15391 (March 31, 1999) (SR–Phlx–99–06).

The terms ‘‘running’’ and ‘‘rolling’’ calendar basis

are often used interchangeably. See, e.g., Securities

Exchange Act Release No. 33130 (November 2,

1993), 58 FR 59502 (November 9, 1993) (SR–Phlx–

93–28).

11See Advices A–2, B–1, B–4, B–8, C–4, F–2, F–

5, F–8, F–9, F–13, F–19, F–23, and F–30.

12 15 U.S.C. 78f.

13 15 U.S.C. 78f(b)(5). 14 15 U.S.C. 78f(b)(6).

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The Phlx proposes to amend the fine

schedule applicable to Advices such

that there would be two fine schedules:

a minor fine schedule and a major fine

schedule. The fine schedules associated

with these Advices are administered

pursuant to Phlx Rule 970, which

codifies the Exchange’s minor rule

violation enforcement and reporting

plan (‘‘Plan’’).6

This proposal would increase the

fines above their current levels, delete

‘‘warnings’’ as a sanction for the first

occurrence, and ease the burden of floor

officials in administering fines by

having only two fine schedules. For

example, Advice B–6, Priority of

Options Orders for Equity Options and

Index Options by Account Type,

misrepresenting a broker-dealer order in

order to receive priority over a

customer, the first violation of section B

of this Advice currently only receives a

warning. Under the proposal, the first

violation would be subject to a fine of

$500. The Phlx believes that the

Advices designated as major are

particularly important to the

maintenance of fair and orderly markets

in options on the Exchange as well as

for the protection of investors and the

public interest. For example, the Phlx

proposes that violations of Advice B–1,

Responsibility to Make Markets, be

considered a major violation because

the ability of customers to receive

certain execution guarantees may be

compromised where floor traders fail to

provide the liquidity required under

Advice B–1.

In addition, certain fine schedules

have not been updated for a long time,

or at all. For example, Advice A–1,

Responsibility of Displaying Best Bids

and Offers, still applies the original fine

schedule from when it was first

adopted.7 The Exchange believes that

the fine schedules should be updated to

better reflect the severity of the

violations.

Certain Advices currently do not have

a fine schedule because they do not

contain a finable offense.8 These appear

in the Advice handbook for ease of

reference on the trading floor or merely

contain explanatory (as opposed to

obligatory) language. Certain other

Advices require referral to the Business

Conduct Committee for sanctions due to

the severity of the violation.9 For these

two types of Advices, the Phlx does not

propose any modifications at this time.

The Exchange also proposes to

increase the time period for relating

back to prior violations for all fine

schedules, such that those on a one-year

running calendar basis shall be

increased to a two-year running

calendar basis.10 Some fine schedules

operate on a three-year running calendar

basis.11 This proposed increase in the

time period would subject violators to

greater sanctions. The Phlx believes that

imposing higher penalties for violations

of an Advice which occur more than

once during a two-year period is

consistent with the existing framework

of graduated fines and should increase

the Exchange’s ability to deter repeat

offenders.

2. Statutory Basis

The Phlx believes the proposed rule

change is consistent with Section 6 of

the Act 12 in general, and furthers the

objectives of Section 6(b)(5) 13 in

particular, in that it is designed to

promote just and equitable principles of

trade, and to remove impediments to

and perfect the mechanism of a free and

open market and a national market

system, and protect investors and the

public interest because it should

provide an appropriate form of

deterrence for violation of certain

Advices. In addition, the Phlx believes

that the proposed rule change is

consistent with Section 6(b)(6) of the

Act 14 which requires that rules of the

Exchange provide that its members be

appropriately disciplined for violations

of the Act as well as the rules and

regulations thereunder; specifically, the

proposal provides prompt, appropriate,

and effective discipline for repeat

violations of Advices.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Phlx does not believe that the

proposed rule change would impose any

inappropriate burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No written comments were either

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

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 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 20529–0609. 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 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

30260 Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices

15 17 CFR 200.30–3(a)(12).

the Commission’s Public Reference

Room. Copies of such filings will also be

available for inspection and copying at

the principal office of the Phlx. All

submissions should refer to File No.

SR–Phlx–2001–36 and should be

submitted by June 26, 2001.

For the Commission, By the Division of

Market Regulation, pursuant to delegated

authority.15

Jonathan G. Kaz,

Secretary.

[FR Doc. 01–14028 Filed 6–4–01; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

[Declaration of Disaster #3341, Amdt. #1]

State of Minnesota

In accordance with a notice received

from the Federal Emergency

Management Agency, dated May 29,

2001, the above-numbered Declaration

is hereby amended to establish the

incident period for this disaster as

beginning on March 23, 2001 and

continuing through May 29, 2001. The

above-numbered Declaration is also

amended to include Aitkin, Big Stone,

Carlton, Clay, Dakota, Kanabec, Lac qui

Parle, Mille Lacs, Morrison, Mower,

Norman, Olmstead, Otter Trail, Pine,

Polk, Ramsey, Redwood, Renville, Rice,

Sibley, Stearns, Swift, Todd, Traverse,

Wilkin and Wright Counties in the State

of Minnesota as disaster areas caused by

flooding and severe winter storms,

flooding and tornadoes occurring

between March 23, 2001 and May 29,

2001.

In addition, applications for economic

injury loans from small businesses

located in Becker, Brown, Carver, Cass,

Clearwater, Cottonwood, Crow Wing,

Hennepin, Isanti, LeSueur, Mahnomen,

Marshall, McLeod, Meeker, Murray,

Nicollet, Pennington, Red Lake, Scott

and Wadena Counties in the State of

Minnesota; Mitchell and Howard

Counties in the State of Iowa; Cass,

Grand Forks, Richland and Traill

Counties in the State of North Dakota;

and Grant and Roberts Counties in the

State of South Dakota may be filed until

the specified date at the previously

designated location. Any counties

contiguous to the above named primary

counties and not listed here have been

previously declared.

The number assigned for economic

injury in the State of North Dakota is

9L7700.

All other information remains the

same, i.e., the deadline for filing

applications for physical damage is July

15, 2001 and for economic injury the

deadline is February 15, 2002.

(Catalog of Federal Domestic Assistance

Program Nos. 59002 and 59008.)

Dated: May 30, 2001.

James E. Rivera,

Acting Associate Administrator for Disaster

Assistance.

[FR Doc. 01–14111 Filed 6–4–01; 8:45 am]

BILLING CODE 8025–01–P

SMALL BUSINESS ADMINISTRATION

National Small Business Development

Center Advisory Board, Public Meeting

The U.S. Small Business

Administration National Small Business

Development Center Advisory Board

will hold a public meeting on Sunday,

June 17, 2001, from 9:00 a.m. to 5:00

p.m. PST. at the Doubletree Hotel

Seattle Airport, Seattle, Washington,

Cascade Room 1 to discuss such matters

as may be presented by members, staff

of the U.S. Small Business

Administration or others present.

Anyone wishing to make an oral

presentation to the Board must contact

Ellen Thrasher, in writing by letter or

fax no later than June 6, 2001 in order

to be included on the agenda. For

further information, please write or call

Ellen Thrasher, Designated Federal

Officer U. S. Small Business

Administration, 409 Third Street, SW,

Fourth Floor, Washington, DC 20416.

Telephone number (202) 205–6817,

FAX (202) 205–7727.

Nancyellen Gentile,

Committee Management Officer.

[FR Doc. 01–14095 Filed 6–4–01; 8:45 am]

BILLING CODE 8025–01–U

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

Aviation Proceedings, Agreements

Filed During the Week Ending May 25,

2001

The following Agreements were filed

with the Department of Transportation

under the provisions of 49 U.S.C. 412

and 414. Answers may be filed within

21 days after the filing of the

application.

Docket Number: OST–2001–9725.

Date Filed: May 21, 2001.

Parties: Members of the International

Air Transport Association.

Subject: PTC31 SOUTH 0106 dated

May 18, 2001. Expedited South Pacific

Resolutions r1–r4. Intended effective

date: August 1, 2001.

Andrea M. Jenkins,

Federal Register Liaison.

[FR Doc. 01–14100 Filed 6–4–01; 8:45 am]

BILLING CODE 4910–62–P

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

Notice of Applications for Certificates

of Public Convenience and Necessity

and Foreign Air Carrier Permits Filed

Under Subpart B (Formerly Subpart Q)

During the Week Ending May 25, 2001

The following Applications for

Certificates of Public Convenience and

Necessity and Foreign Air Carrier

Permits were filed under subpart B

(formerly subpart Q) of the Department

of Transportation’s Procedural

Regulations (See 14 CFR 301.201 et

seq.). The due date for Answers,

Conforming Applications, or Motions to

Modify Scope are set forth below for

each application. Following the Answer

period DOT may process the application

by expedited procedures. Such

procedures may consist of the adoption

of a show-cause order, a tentative order,

or in appropriate cases a final order

without further proceedings.

Docket Number: OST–2001–9737.

Date Filed: May 22, 2001.

Due Date for Answers, Conforming

Applications, or Motion to Modify

Scope: June 12, 2001.

Description: Application of Vensecar

Internacional C.A. pursuant to 49 U.S.C.

41302 and 14 CFR Parts 211 and 302

(subpart B), requesting a foreign air

carrier permit, authorizing it to engage

in scheduled foreign air transportation

of property and mail between a point or

points in Venezuela, on the one hand,

and Miami, Florida, on the other hand,

via the Netherlands West Indies,

Jamaica and Cuba, as permitted by the

U.S.-Venezuela Bilateral Air Transport

Services Agreement.

Andrea M. Jenkins,

Federal Register Liaison.

[FR Doc. 01–14099 Filed 6–4–01; 8:45 am]

BILLING CODE 4910–62–P