834 Federal Register / Vol. 66, No. 3 / Thursday, January 4, 2001 / Notices

25 17 CFR 2000.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 42913

(June 8, 2000), 64 FR 55514.

4Letter from Craig S. Tyle, General Counsel,

Investment Company Institute (‘‘ICI’’) to Jonathan

G. Katz, Secretary, Commission, dated July 6, 2000

(‘‘ICI Letter’’).

5Letter from Daniel Parker Odell, Assistant

Secretary, Exchange, to Nancy Sanow, Assistant

Director, Division of Market Regulation

(‘‘Division’’), Commission, dated August 17, 2000

(‘‘Amendment No. 1’’). Amendment No. 1 clarifies

several items relating to Rule 1000, 1004, and 1005.

With respect to Rule 1000, Amendment No. 1

clarifies that orders that are not automatically

executed will be entered in the auction market, and

an order entered into the auction market is treated

the same as any other limit order entered on the

Exchange through the SuperDOT system.

Amendment No. 1 also clarifies that proposed Rules

1000(ii) and (v) are, in effect, examples of proposed

Rule 1000(iv) because both relate to situations

where the Exchange’s published bid or offer is 100

shares. The Exchange further explained that to

‘‘gap’’ a quotation involves setting the bid and

asked prices at a spread wider than normal in a

stock in order to alert market participants that a

special situation exists. With respect to Rule 1004,

Amendment No. 1 clarifies that executions of orders

entered in NYSe Direct+ (or ‘‘auto ex orders’’) shall

elect stop limit orders as well as stop orders and

percentage orders electable at the price of such

executions. With respect to Rule 1005, Amendment

No. 1 clarifies the prohibition on the entry of auto

ex orders within 30 seconds for the same customer

applies on a per stock basis. Finally, Amendment

No. 1 states that the Exchange intends to choose the

stocks eligible for participation in the pilot program

for NYSe Direct+ based on a number of criteria,

including volume, trading characteristics and floor

location.

6Letter from James E. Buck, Secretary and Senior

Vice President, Exchange, to Jack Drogin, Assistant

Director, Division, Commission, dated December

20, 2000 (‘‘Amendment No. 2’’). Amendment No. 2

replaces the phrase ‘‘is being completed’’ with ‘‘has

been agreed upon’’ in proposed Rule 1003.

Amendment No. 2 also deletes the prohibition in

proposed Rule 1005 against orders larger than 1,099

shares being broken up in smaller amounts for the

purpose of receiving an automatic execution.

7To be exposed or entered in the Exchange’s

auction market means that the order would be

treated like orders received from the SuperDOT

system. See Amendment No. 1, supra note 5.

8See proposed Rule 1000.

9The Exchange file a separate proposed rule

change to implement Rule 1006, which provides for

the automatic execution of coupled orders of 1099

shares or less at a price that is at or within the

Exchange’s published quotation. Securities

Exchange Act Release No. 43110 (August 2, 2000),

65 FR 48776 (August 9, 2000).

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing,

including whether the proposal, 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 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 the filing will also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to the File No.

SR–NASD–99–46 and should be

submitted by January 25, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.25

Johnathan G. Katz,

Secretary.

[FR Doc. 01–154 Filed 1–3–01; 8:45 am]

BILLING CODE 8010–10–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43767; File No. SR–NYSE–

00–18]

Self-Regulatory Organizations; New

York Stock Exchange, Inc.; Order

Approving Proposed Rule Change and

Notice of Filing and Order Accelerating

Approval of Amendment Nos. 1 and 2,

on a Pilot Basis Ending on December

21, 2001, Relating to NYSe Direct+, the

Exchange’s Automatic Execution

Facility for Certain Limit Orders of

1099 Shares or Less

December 22, 2000.

I. Introduction

On May 1, 2000, the New York Stock

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

submitted to the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change

implementing NYSe Direct+, an

automatic execution facility for certain

limit orders of 1099 shares or less. The

proposed rule change was published for

public comment in the Federal Register

on June 15, 2000.3 The Commission

received one comment letter regarding

the proposed rule change.4 The

Exchange submitted Amendment Nos. 1

and 2 to the proposed rule change on

August 21, 2000 5 and December 21,

2000,6 respectively. This order approves

the proposed rule change on a pilot

basis ending on December 21, 2001 and

grants accelerated approval to

Amendment Nos. 1 and 2. The

Commission is also soliciting comment

on Amendment Nos. 1 and 2 to the

proposed rule change.

II. Description of the Proposed Rule

Change

The proposed rule change establishes

a new trading platform, NYSe Direct+,

for the automatic execution of certain

limit orders of 1099 shares or less (‘‘auto

ex’’ orders) against trading interest

reflected in the Exchange’s published

quotation. Limit orders priced at or

above the Exchange’s published offer

price (in the case of an auto ex order to

buy), and limit orders priced at or below

the Exchange’s published bid price (in

the case of an auto ex order to sell) are

eligible for automatic execution via

NYSe Direct+. The contra side of the

auto ex order would be the trading

interest reflected in the Exchange’s bid

or offer, in accordance with the

Exchange’s auction market principles of

priority and parity codified in Exchange

Rule 72. Auto ex orders would receive

automatic executions without being

exposed to the auction market.7

However, if the automatic execution

feature is not available,8 the auto ex

order would be entered for execution in

the Exchange’s auction market. Auto ex

transactions would be identified on the

Consolidated Tape with a unique

identifier, and the Exchange’s published

bid or offer would be automatically

decremented to the extent of the size of

the auto ex order to reflect the automatic

execution.

It would not be mandatory that all

eligible limit orders of 1099 shares be

entered as auto ex orders NYSe Direct+.

Member organizations (or their

customers if enabled by the member

organization) can choose to use NYSe

Direct+ when the speed and certainty of

an execution at the Exchange’s

published bid or offer price is in the

customer’s best interest. If a customer’s

interest would best be served by

affording the customer’s order the

opportunity for price improvement, the

member (or customer) may enter a limit

or market order by means of the

SuperDOT system for representation in

the auction market, rather than an auto

ex order.

The Exchange’s proposal would be

implemented in proposed Rules 1000

through 1005.9 Rule 1000 species the

types of orders eligible for entry as auto

ex orders. In addition, the Rule lists six

instances where the automatic

execution feature would not be available

due to, for example, particular market

situations, lack of depth in the

published quotation, or inappropriate

Federal Register / Vol. 66, No. 3 / Thursday, January 4, 2001 / Notices 835

10The Exchange notes that Rules 1000(ii) and (v)

are, in effect, examples of proposed Rule 1000(iv).

See Amendment No. 1, supra note 5.

11For purposes of Rule 1001(a)(iv), the only

circumstances under which interest reflected in the

published quotation ‘‘is no longer available’’ are

either: (1) The published quotation reflects interest

that has received an execution, but the quotation

has not been updated to reflect this fact; or (2) the

published quotation reflects interest that has been

cancelled, but the quotation has not been updated

to reflect this fact. See Letter regarding NYSe

Direct+ (December 21, 2000) (‘‘Exemption Letter’’).

rule 1001(a)(iv) is the subject of an exemption

issued by the Commission to the Exchange granting

certain relief from Commission Rule 10a–1. Id.

12See Amendment No. 2, supra note 6. Rule 1003

is also the subject of an exemption issued by the

Commission to the Exchange granting certain relief

from Commission Rule 10a–1. See Exemption

Letter.

13See Amendment No. 1, supra note 5.

14Amendment No. 1 clarifies that executions of

auto ex order shall elect stop limit orders as well

as stop orders and percentage orders electable at the

price of such executions. See Amendment No. 1,

supra note 5.

15Amendment No. 1 clarifies that the prohibition

on entering orders within 30-seconds applies on a

per stock basis. See Amendment No. 1, supra note

5.

16See Amendment No. 2, supra note 6.

17See supra note 4.

18The Exchange responded to these concerns in

a phone call between Brian McNamara, Vice

President, Market Surveillance, NYSE, Donald

Siemer, Director, Market Surveillance, NYSE,

Rebekah Liu, Special Counsel, Division,

Commission, and Sonia Patton, Attorney, Division,

Commission (August 31, 2000).

19See Amendment No. 2, supra note 6.

20 Id.

pricing of the auto ex order.10 Rule 1001

sets forth the execution parameters for

orders entered in NYSe Direct+,

including the contra side interest

reflected in the Exchange’s published

quotation. Rule 1001(a)(iv) provides that

the specialist shall be the contra party

to any automatic execution of an auto ex

order where interest reflected in the

published quotation against which the

auto ex order was executed is no longer

available.11 Rule 1002 addresses when

the system is available for automatic

execution each trading day. Rule 1003

governs the application of tick tests to

auction market transactions when an

auto ex order is reported at a different

price after an auction market transaction

has been agreed upon, but before the

market transaction is reported.12 This

rule provides that any tick test

applicable to the auction market

transaction will be based on the last

reported auction market sale.13 Rule

1004 provides that auto ex orders may

elect stop orders and percentage orders

electable at the price of such

executions.14 Rule 1005 prohibits the

entry of auto ex orders in intervals of

less than 30 seconds on a per stock

basis.15 The Exchange also proposes to

amend Exchange Rule 13 to add the

definition of auto ex orders and to

amend Exchange Rule 476A to add

Rules 1000–1005 to the list of rules

subject to summary fine procedures.

Interpretive Issues

The Exchange also requested that the

Commission approve interpretations of

Exchange Rules 123A.40, 91, and 104.

These interpretations arise in situations

under proposed Rule 1001(a)(iv) where

the specialist is required to take the

contra side of an auto ex execution

against the published quotation, as

discussed above. In short, the

interpretations provided by the

Exchange state that when the specialist

is required to take the contra side of an

auto ex order pursuant to Rule

1001(a)(iv), the specialist may not be

required to fill any stop orders elected

by an auto ex execution at the price of

the electing sale pursuant to Rule

123A.40; that the transaction

confirmation requirements of Rule 91 do

not apply; and that in any instance in

which the specialist is effecting a direct

tick transactions only because he or she

has been required to assume the contra

side of an auto ex execution, the

transaction shall be deemed a ‘‘neutral’’

transaction for purposes of Exchange

Rule 104.

Commission Rule 10a–1.

As stated in the notice for this

proposed rule change, Commission Rule

10a–1 and Exchange Rule 440B do not

permit short sales to be effected on a

minus or zero minus tick. However, the

Exchange proposed that under Rule

1001(a)(iv), the specialist should be

permitted to sell short on a minus or

zero minus tick when he or she takes

the contra side of an auto ex execution

because either: (1) the published

quotation reflects interest that has

received an execution, but the quotation

has not been updated to reflect this fact;

or (2) the published quotation reflects

this fact. The Exchange believes that the

specialist should be exempted from

Commission Rule 10a–1 under these

circumstances because the specialist is

required to trade at a price set by other

market participants.

In addition, as also set forth in the

notice for this proposed rule change, the

Exchange has requested an exemption

from Commission Rule 10a–1 for Rule

1003. Rule 1003 provides that if a

transaction has been agreed upon 16 in

the auction market, and an execution

involving auto ex orders is reported at

a different price before the auction

market transaction is reported, any tick

test applicable to the auction market

transaction will be based on the last

reported trade prior to the reporting of

the auto ex transaction.

III. Comments

The Commission received one

comment letter from the Investment

Company Institute (‘‘ICI’’).17 The ICI

questioned the purpose and necessity of

the 30-second delay between entry of

auto ex orders. Specifically, the ICI

stated that the delay would ‘‘defeat the

purpose of providing investors with a

facility to automatically execute limit

orders without intervention of a dealer.’’

The ICI also strongly supported the idea

of increasing the maximum number of

shares that can be entered into NYSe

Direct+ for automatic execution, and

recommended that the pilot program

include ‘‘securities representing a

substantial portion of the NYSE market,

e.g., the top 100 NYSE listed securities,

with the remainder chosen from

quintiles of NYSE securities.’’ In

response to the ICI’s comments on these

particular issues, the Exchange noted

that the proposed parameters are

appropriate for the initial launch of the

pilot program.18 The Exchange also

noted that a primary purpose of the

pilot program is to allow the Exchange,

NYSe Direct + participants, and the

Commission to examine the operation of

the system on a controlled basis. Thus,

the Exchange believes that the

parameters regarding each of the issues

noted above are appropriate at this pilot

stage.

The ICI also questioned the

prohibition on breaking up orders for

entry into NYSe Direct+. The ICI noted

that it is unclear what type of ‘‘order’’

the proposed rules are referring to, and

requested clarification whether a broker

for an institution asked to ‘‘work’’ a

large order could utilize NYSe Direct+

to execute all or part of the institution’s

order. In response, the Exchange has

deleted this prohibition from the

proposed rule change although it has

retained the 30-second interval between

orders on a per share basis.19 The

Exchange noted, moreover, that a broker

‘‘working’’ an institutional client’s order

by simply breaking the order up for

entry into NYSe Direct+ may not be

executing the order consistent with the

broker’s duty of best execution.20

Finally, the ICI recommended that

strict price/time priority be applied to

the execution of NYSe Direct+ orders,

rather than executed in accordance with

Exchange Rule 72, which provides for

executions pursuant to principles of

priority and precedence. Specifically,

the ICI noted that applying strict price/

time priority would ‘‘rectify, for

example, a situation where a market

836 Federal Register / Vol. 66, No. 3 / Thursday, January 4, 2001 / Notices

21 Id.

22 15 U.S.C. 78f(b)(5).

23 15 U.S.C. 78k–1(a)(1).

24 In approving the proposed rule change, the

Commission has considered its impact on

efficiency, competition, and capital formation. 15

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

25See supra Section II and note 4.

26This is consistent with the Exchange’s

representations in Amendment No. 1, supra note 5.

27The interpretations of these Rules are as

follows:

Exchange Rule 123A.40. The specialist shall not

be required to fill any stop orders elected by an auto

ex execution at the price of the electing sale in any

instance where the specialist was required by Rule

1001(a)(iv) to take the contra side of an auto ex

execution.

Exchange Rule 91. As the specialist does not

accept an auto ex order for execution or act as agent

for such order, the transaction confirmation

requirements of Rule 91 will not apply in any

instance where the specialist is the contra party to

an auto ex execution.

Exchange Rule 104. Exchange Rule 104 contains

the specialist’s affirmative and negative obligations,

and restricts the specialists’ ability to purchase

stock on direct plus ticks, and sell stock on direct

minus ticks. The Exchange is proposing that any

instance in which the specialist is effecting such a

direct tick transaction only because he or she has

been required to assume the contra side of an auto

ex execution as described above shall be deemed to

be a ‘‘neutral’’ tranaction for purposes of Rule 104,

and shall be deemed not to be in violation of the

rule. The Exchange believes that this interpretation

is appropriate because the specialist is not setting

the price, but is simply being required to trade at

a price set by other market participants.

28See Exemption Letter.

participant would be able to participate

on the contra side of an automatic

execution even though another

participant may have placed an order in

the NYSE earlier in time.’’ In response,

the Exchange stated that it believes that

all orders, including orders entered in

NYSe Direct+, executed on the

Exchange should be subject to the same

execution principles of priority and

precedence, as set forth in Exchange

Rule 72.21

IV. Discussion

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. In particular, the Commission

finds that the proposed rule change is

consistent with section 6(b)(5) of the

Act 22 which requires an Exchange to

have rules that are 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 is also consistent with section

11A(a)(1) of the Act 23 which states that

it is in the public interest and

appropriate for the protection of

investors and the maintenance of fair

and orderly markets to assure

economically efficient execution of

securities transactions and the

practicability of brokers executing

investor orders in the best market, and

to provide an opportunity for investors’

orders to be executed without the

participation of a dealer.24

The Commission finds that by

allowing the automatic execution of

limit orders against the interest reflected

in the Exchange’s published quotation,

NYSe Direct+ helps to perfect the

mechanism of a free and open market by

providing a trading venue for customers

who value the speed and certainty of

automatic execution more than the

opportunity for price improvement

offered by the Exchange’s agencyauction trading floor. NYSe Direct+ also

facilitates securities transactions to the

benefit of investors by allowing direct

access by a member organization, or its

customer, to the trading interest

reflected in the Exchange’s published

quotation. The Commission notes that

this direct access, in turn, may attract

more order flow and increase the depth

and liquidity of the Exchange’s market

to the benefit of investors and the public

interest.

The Commission further finds that

NYSe Direct+ provides an opportunity

for a customer’s order to be executed

with limited broker participation,

consistent with the goals of the Act.

Although a member firm must still act

as the gateway for any customer wishing

to utilize NYSe Direct+, the direct and

automatic matching of customer limit

orders against the interest reflected in

the Exchange’s quotation minimizes the

involvement of the member firm. The

Commission also believes that NYSe

Direct+ may have the potential to lower

transaction costs, another potential

benefit to Exchange customers.

The Commission also finds that

operation of NYSe Direct+ is consistent

with the protection of investors and the

public interest and should help to

maintain a fair and orderly market. The

proposed rules specifically outline the

terms under which a customer’s order

would be handled by the NYSe Direct+

system, and they provide for the

handling of those orders if there is no

contra-side interest in the Exchange’s

published quotation.

The Commission finds that the

Exchange has addressed the most

significant concerns raised by the ICI

Letter.25 The Commission agrees that

the proposed parameters are appropriate

for the initial launch of the pilot

program. A primary purpose of the pilot

program is to allow the Exchange, NYSe

Direct+ participants, and the

Commission to examine the operation of

the system on a controlled basis. Thus,

the Commission finds that the proposed

parameters by the Exchange for NYSe

Direct+ are appropriate at this pilot

stage. The Commission notes that it will

expect the Exchange to choose stocks

eligible for the pilot program based on

a number of appropriate criteria,

including volume, trading

characteristics and floor location.26

With respect to the ICI’s request for

further clarification on the prohibition

of breaking up orders of greater than

1099 shares into smaller amounts, the

Commission notes that the Exchange

amended the proposed rule change to

delete the explicit prohibition against

breaking up orders for the purpose of

receiving an automatic execution. The

Commission believes that amended Rule

1005 provides an appropriate

mechanism to discourage brokers from

breaking up large orders solely to obtain

an automatic execution, while allowing

brokers acting on behalf of institutions

to use NYSe Direct+ to ‘‘work’’ large

orders, consistent with their duty of best

execution. The Commission also finds

that for purposes of consistency and

uniformity, all bids or offers executed

on the Exchange should be subject to

the execution principles set forth in

Exchange Rule 72.

Interpretative Issues

The Commission also approves the

Exchange’s interpretation of Exchange

Rules 123A.40, 91, and 104.27 These

interpretations all concern a situation

where, pursuant to proposed Rule

1001(a)(iv), the specialist is required to

take the contra side of an auto ex

execution against the published

quotation, even though the specialist’s

interest was not part of the published

quotation. In addition, the Commission

has granted the Exchange exemptive

relief from Commission Rule 10a–1 for

purposes of proposed Rule 1001(a)(iv).28

The Commission therefore finds the

requested interpretations are

appropriate and necessary for the proper

functioning of the NYSe Direct+ trading

platform.

Commission Rule 10a–1

Commission Rule 10a–1 and

Exchange Rule 440B did not permit

short sales to be effected on a minus or

zero minus tick. As discussed above, the

Exchange has requested an exemption

from Rule 10a–1 when a specialist is

required to take the contra side of an

auto ex execution pursuant to Exchange

Rule 1001(a)(iv). In addition, the

Exchange has requested an exemption to

Federal Register / Vol. 66, No. 3 / Thursday, January 4, 2001 / Notices 837

29See Exemption Letter. The exemption granted

with respect to proposed rule 1001(a)(iv) is limited

to situations where the specialist is required to take

the contra side of an auto ex execution against the

published quotation, even though the specialist’s

interest was not part of the published quotation,

because: (1) The published quotation reflects

interest that has received an execution, but the

quotation has not been updated to reflect this fact:

or (2) the published quotation reflects interest that

had been cancelled, but the quotation has not been

updated to reflect this fact. The no-action relief

with respect to proposed Rule 1003 is subject to

certain limitations. First, when an auto ex trade is

reported between the time that the auction market

short sale is agreed upon and when it is reported,

and the auto ex trade report is at a price that would

result in the auction market trade being reported as

a minus or zero-minus tick, the auction market

short sale must be presented to an NYSE floor

official. In addition, the NYSE floor official must:

(a) Find that the short sale was presented for

reporting immediately after agreement to the trade;

(b) find that the short sale was priced in compliance

with Rule 10a–1 at the time that the floor brokers

agreed to the trade; (c) find that the short sale price

is not lower than the best bid displayed in the

auction market at the time the transaction is

reported; and (d) direct that the trade be reported

as a ‘‘sold sale.’’ Finally, the NYSE must keep

records of all floor brokers’ transactions relying

upon this exemption, and present this information

upon request to the Division.

30 15 U.S.C. 78f(b)(5).

31 15 U.S.C. 78s(b).

32 15 U.S.C. 78s(b)(2).

33 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See November 30, 2000 letter from James E.

Buck, Corporate Secretary, NYSE, to Joseph P.

Morra, Special Counsel, Division of Market

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

Amendment No. 1, the NYSE asked the

Commission to consider the proposal pursuant to

Section 19(b)(3)(A) of Act and Rule 19b–4(f)(6)

thereunder. 15 U.S.C. 78s(b)(3)(A), 17 CFR 240.19b–

4(f)(6). The Commission has agreed to accept the

original proposal as satisfying the 5-day pre-filing

requirement pursuant to Rule 19b–4(f)(6). 17 CFR

240.19b–4(f)(6).

4 15 U.S.C. 78s(b)(3)(A).

5 17 CFR 240.19b–4(f)(6). For purposes of

calculating the 60-day abrogation period, the

Commission considers the period to begin as of the

date the Exchange filed Amendment No. 1,

November 30, 2000.

permit floor brokers to effect short sales

in the auction market based upon the

last reported transaction at the time of

the agreement to the auction market

trade, and irrespective of auto ex trades

that are reported while the transaction

is being completed, as contemplated by

Rule 1003. In a letter dated December

21, 2000, the Commission granted to the

Exchange certain exemptive relief from

Commission Rule 10a–1 regarding these

Exchange rules for the duration of the

pilot, subject to the conditions

described in the letter.29 Consequently,

the Commission finds that in light of the

relief granted from Rule 10a–1, Rule

10a–1 does not prohibit implementation

of NYSe Direct+ as discussed in this

order, during the pilot program. If the

Exchange decides to continue the

program, the Exchange would be

required to submit a proposed rule

change extending, or requesting

permanent approval of, the pilot, and

another request for relief from

Commission Rule 10a–1.

Accelerated Approval for Amendment

No. 1

The Commission finds good cause for

accelerating approval of Amendments

Nos. 1 and 2 to the proposed rule

change prior to the thirtieth day after

publication in the Federal Register. The

Commission notes that these

Amendments provide useful

clarifications to the proposed rules.

Accordingly, the Commission finds that

good cause exists, consistent with

sections 6(b)(5) of the Act,30 and section

19(b) of the Act 31 to accelerate approval

of Amendments Nos. 1 and 2 to the

proposed rule change.

V. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendments

Nos. 1 and 2, including whether the

amendments are 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

Commissions 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–00–18 and should be

submitted by January 25, 2001.

VI. Conclusion

It Is Therefore Ordered, pursuant to

section 19(b)(2) of the Act,32 that the

proposed rule change (SR–NYSE–00–

18), as amended, is approved on a pilot

basis until December 21, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.33

Jonathan G. Katz,

Secretary.

[FR Doc. 01–155 Filed 1–3–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43771; File No. SR–NYSE–

00–33]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the New

York Stock Exchange, Inc., Amending

NYSE Rule 15A Relating to the

Intermarket Trading System

December 22, 2000.

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 18,

2000, the New York Stock Exchange,

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

the Securities and Exchange

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

the proposed rule change as described

in Items I, II and III below, which Items

have been prepared by the Exchange.

On November 30, 2000, the Exchange

filed an amendment to the proposed

rule change.3 As amended, the proposal

is effective upon filing with the

Commission, pursuant to section

19(b)(3)(A) of the Act,4 and Rule 19b–

4(f)(6) thereunder.5 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 proposes to amend

NYSE Rule 15A with respect to the

definition of ‘‘ITS/CAES Market

Maker.’’ Below is the text of the

proposed rule change. Additions are

italicized and deletions are in brackets.

NYSE Rule 15A(a)(6)

‘‘ITS/CAES Market Maker’’, as that

term is used in the Rule, means a NASD

member that is registered as a market

maker with the NASD for the purposes

of the Applications with respect to one

or more specified System securities

[‘‘ITS/CAES securities’’ as more fully

described in the ITS Plan].

II. Self-Regulatory Organization’s

Statement of the Purposes 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