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

18The exemption provided by this order is based

upon representations by Euroclear Bank, its officers

and attorneys, facts contained in Euroclear Bank’s

Modification Application, and other information

known to the Commission regarding the substantive

aspects of Euroclear Bank’s proposal (collectively,

‘‘representations and facts’’). In addition, as

described in the 1998 Exemption Order, Euroclear

Bank, like MGT-Brussels, will be required to file

with the Commission amendments to its

application for exemption on Form CA–1 if it makes

any fundamental change affecting its clearance and

settlement business with respect to eligible U.S.

government securities. Any changes in the

representations or facts as represented to the

Commission may require a modification of this

order. Responsibility for compliance with all

applicable U.S. securities laws rests with Euroclear

Bank and its U.S. participants, as appropriate.

Euroclear Bank also is advised that this order does

not exempt Euroclear Bank from the anti-fraud or

anti-manipulation provisions of the Exchange Act

or any of the rules promulgated thereunder.

1 15 U.S.C. 78s(b)(1). This notice incorporated

typographical changes made by the Exchange in

letter Amendment No. 1 filed September 29, 2000.

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 43394

(September 29, 2000), 65 FR 60705.

4Securities Exchange Act Release No. 43127

(August 14, 2000), 65 FR 49617.

5The approval order was conditioned on the

Exchange putting into place specific information

barrier policies and surveillance policies that are

consistent with the Exchange’s existing rules and

that are acceptable to the Commission’s Office of

Compliance Inspections and Examinations

(‘‘OCIE’’). Id. at 49620. Nothing herein is intended

to change the requirement that the Exchange get its

surveillance plan approved by OCIE.

6See Letter from John A. Boese, Assistant Vice

President, to Madge Hamilton, Division of Market

Regulation, Commission, dated December 1, 2000

(‘‘Amendment No. 2’’).

7The proposal originally allowed the floor

examination to be waived. Amendment No. 3

3. Modification of Order

The Commission may modify by order

the terms, scope, or conditions of

Euroclear’s exemption from registration

as a clearing agency granted to Euroclear

Bank as operator of the Euroclear

System if the Commission determines

that such modification is necessary or

appropriate in the public interest, for

the protection of investors, or otherwise

in furtherance of the purposes of the

Exchange Act.18 Furthermore, the

Commission may limit, suspend, or

revoke this exemption if the

Commission finds that Euroclear Bank

has violated or is unable to comply with

any of the provisions set forth in this

order if such aciton is necessary or

appropriate in the public interest, for

the protection of investors, or otherwise

in furtherance of the purposes of the

Exchange Act for the protection of

investors and the public interest.

V. Conclusion

The Commission finds that the

application by MGT-Brussels and

Euroclear Bank to modify the exemption

from registration as a clearing agency for

Euroclear Bank as operator of the

Euroclear System meets the standards

and requirements deemed appropriate

for such an exemption.

It is Therefore Ordered, pursuant to

section 19(a)(1) of the Exchange Act,

that the Modification Application to

modify the exemption from registration

as a clearing agency filed by MGTBrussels and Euroclear Bank (File No.

601–01) be, and hereby is, approved

subject to the conditions contained in

this order.

By the Commission.

Jonathan G. Katz,

Secretary.

[FR Doc. 01–216 Filed 1–3–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43766; File No. SR–BSE–

00–13]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change and

Notice of Filing and Order Granting

Accelerated Approval to Amendments

No. 2 and 3 to the Proposed Rule

Change by the Boston Stock

Exchange, Inc. to Issue Electronic

Trading Permits for BEACON Remote

Units

December 22, 2000.

I. Introduction

On September 21, 2000, the Boston

Stock Exchange, Inc. (‘‘BSE’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘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

that would add rules regarding the

issuance of Electronic Trading Permits

(‘‘ETPs’’) to specialists and registered

floor clerks of Exchange members for

remote specialist operations. The ETPs

will allow Exchange members access to

the BEACON trading system from

remote locations using authorized

terminals and related equipment. The

proposed rule change was published for

comment in the Federal Register on

October 12, 2000.3 No comments were

received on the proposal.

The Exchange filed Amendment No. 2

to the proposed rule on December 4,

2000 and on December 21, 2000, the

Exchange filed Amendment No. 3. This

order approves the proposed rule

change and grants accelerated approval

to Amendments No. 2 and 3 of the

proposed rule change. The Commission

is also soliciting comments on

Amendments No. 2 and 3.

II. Description of the Proposal

In August 2000,4 the Commission

approved the Exchange’s remote

specialist program that generally

permitted Exchange specialists to

conduct regular trading activities off the

Exchange’s trading floor using the

BEACON trading system. The

Exchange’s pending filing supplements

its remote specialists filing. As noted by

the Exchange, it is proposing to issue

ETPs primarily as a surveillance tool to

monitor its remote specialists

operations.5

The Exchange proposes to add

paragraph (o) to Chapter XXXIII, Section

9, BEACON Remote, to require and

establish guidelines for Electronic

Trading Permits (‘‘ETP’’) for remote

specialist operations. Each BEACON

Remote terminal will be individually

identified and associated with (an)

authorized and qualified specialist(s)

and/or registered clerk(s). The Exchange

will specifically authorize and approve

each ETP based on certain

qualifications. Each ETP will provide

remote access to the BEACON system

from remote locations using authorized

terminals and related equipment. The

ETP is in addition to the membership

requirements, and even a specialist who

holds a membership will be required to

hold an ETP. Each Beacon remote

specialist operation still requires a

membership in the Exchange

notwithstanding the ETP requirements.

According to the Exchange, the ETP’s

are non-transferable permits that will be

primarily used for surveillance

purposes.6

The Exchange states that remote

specialists and associated registered

clerks with ETPs, like current Exchange

floor specialist units, will receive

orders, commitments over the

Intermarket Trading system (‘‘ITS’’) and

administrative messages through the

BEACON system. The existing Exchange

systems and rules will support remote

specialists as they currently support the

physical trading floor. As noted above,

the BSE has also adopted specific rules

applicable to remote specialist

operations. All executions occurring

within BEACON, whether conducted on

the floor or electronically from remote

locations, will be considered to be

executions occurring on the Exchange.

The proposal, among other things,

requires that all registered specialists

and clerks complete a floor-training

program, unless waived as discussed

below, as well as successfully complete

a BSE floor examination and the Series

63 (NASAA Uniform State Law Exam).7

Federal Register / Vol. 66, No. 3 / Thursday, January 4, 2001 / Notices 823

deletes the provision that permitted this waiver.

BSE notes that this deletion will ensure the remote

specialist examination requirements are consistent

with the floor examination requirements for onfloor specialists and registered clerks. These

requirements currently do not permit waivers.

8The on-site floor training includes, among other

things: communication procedures with Floor

Brokers, Front Desk Operations, Surveillance,

Systems Support, and ITS coordination with the

Floor; Competing Specialist Initiative and Unlisted

Trading Privilege applications and procedures,

stock allocation procedures; trading halt

procedures; and books and records/reports

available.

9 15 U.S.C. 78f(b)(5).

10 15 U.S.C. 78k(a)(1)(B).

11 15 U.S.C. 78f(b)(5).

12 15 U.S.C. 78k–1.

13 In approving this rule, the Commission has

considered the proposed rule’s impact on

efficiency, competition and capital formation. 15

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

14The Commission notes that the Exchange’s

ETPs are separate and distinct from other trading

permits that the Commission has previously

reviewed. The Exchange’s ETP will be a nontransferable permit which will be used primarily for

surveillance purposes, by allowing the BSE to

identify each BEACON terminal with an individual

specialist or registered clerk. Each BEACON Remote

Specialist operation requires a membership in the

Exchange. Therefore, only specialists and registered

clerks who work for a member can be issued an

ETP. The ETP is in addition to the membership

requirement of the Exchange. The Exchange notes

that the ETP does not constitute membership on the

Exchange, nor does it carry with it any of the

benefits or responsibilities of membership.

Accordingly, the ETPs do not raise the same fair

representation issue that have been at issue with

other trading permits that confer certain

membership rights to non-members.

15This requirement is in concert with the twoweek training program mandated in BEACON

Remote rule for specialists specifically (see Chapter

XXXIII, BEACON, Section 9, BEACON Remote,

Commentary).

Amendment No. 2 clarified when the

two week on-floor training requirement

could be waived for ETP applicants.

Training would be waived for current

floor specialists and registered clerks

who transfer to remote specialist

operations. The two week on-site floor

training period could also be waived for

other people in exceptional

circumstances, if other arrangements are

made with and approved by the

Exchange. In such exceptional

circumstances, a waiver will only be

permitted if the Exchange is assured

that the person requesting the waiver

has made other arrangements that

ensure that the person meet all of the

training requirements listed in the BSE

proposal.8 However, the two week onsite floor training period could not be

waived for easily remedied reasons such

as geographical location or

inconvenience. Furthermore,

Amendment No. 2 clarified that a

registered clerk in a remote specialist

operation, who qualified for an ETP,

would be operating under the direct

supervision of a registered specialist,

just as a registered clerk is supervised in

the on-floor environment.

III. Discussion

The Commission finds that the

proposed rule change is consistent with

section 6(b)(5) of the Act 9 and section

11A of the Act.10 Section 6(b)(5) of the

Act 11 requires, among other things, that

the rules of an exchange be designed to

promote just and equitable principles of

trade, to foster cooperation and

coordination with persons engaged in

regulating, clearing, settling, processing

information with respect to, and

facilitating transactions in securities, 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. Section 11A of the Act

promotes, among other things, the

development of a national market

system for securities to assure

economically efficient execution of

securities transactions and fair

competition among brokers and dealers,

among exchange markets and markets

other than exchange markets.12

After having carefully reviewed the

proposal, the Commission finds that the

proposed rule is designed to protect

investors and the public interest by

permitting the Exchange to better

surveil the activities of specialists and

registered clerks that utilize the

BEACON remote access system.13 The

Commission also finds for the same

reasons that the proposed rule is

designed to promote just and equitable

principles of trade.

Each BEACON Remote terminal will

be specifically identified and associated,

by the use of the ETP, with an

authorized and qualified specialist or

registered clerk.14 Any activity taking

place on each terminal will be directly

attributable to an individual specialist

or registered clerk. According to the

Exchange, the ETP is a necessary device

which should assist it in attempting to

replicate the visual surveillance of user

terminals on the Exchange floor.

Although BEACON Remote registered

clerks will be required to obtain an ETP,

there is nothing in the ETP which will

grant them any more rights or privileges

than a current on-floor registered clerk

possesses. Registered clerks will be

under the direct physical supervision of

a specialist at all times. It should also

be noted that if an ETP registered clerk

were to leave a firm a new ETP

application would be required for a new

clerk.

Under the Exchange’s proposal, ETPs

must be approved by the Exchange. In

addition, each specialist unit must have

a registered seat assigned to it and meet

certain other requirements to issue an

ETP, such as completion of the required

floor training program; successful

completion of the Exchange floor

examination within 90 days of

application; successful completion of

the Series 63 (NASAA Uniform State

Law Exam) and registrations with the

Commonwealth of Massachusetts; and

submission of fingerprint records to the

Exchange. The Commission generally

believes that the ETPs should provide

the BSE with an adequate monitoring

tool for remote operations. In addition,

the training and examination

requirements should help to ensure that

remote specialists are adequately

trained to operate from a remote

location.

The proposed rule requires all

specialists to complete a floor training

program.15 Under the Exchange’s rule,

there is a mandatory two-week training

period required of all ETP applicants.

This two week training period would be

waived for current on floor specialists

and registered clerks who transfer to

remote specialist operations. The

Commission believes this waiver is

reasonable because these on-floor

specialists and registered clerks already

have had the required training.

The rule also allows for a waiver of

the floor training requirement in

exceptional circumstances if other

arrangements are made with and

approved by the Exchange. The BSE

may only grant the waiver if it is

assured that the person requesting the

waiver has made other arrangements

that ensure the person meets all of the

specific training requirements

designated in the BSE rule. The rule

also states that the on-floor training

period will not be waived for easily

remedied reasons such as geographical

location or inconvenience. The BSE

stated, however, that there may be other

situations whereby the Exchange may

deem it appropriate to accept an

alternative training venue or program. In

justification for this waiver the

Exchange has stated that it does not

want to limit itself from considering

other circumstances which may arise in

the future, which could delay or prevent

a firm from commencing or conducting

business.

While the Commission would be

extremely concerned about waivers of

appropriate training, it appears that the

Exchange has drafted its rule narrowly

to only deal with exceptional

circumstances. Further, the rule

specifically requires anyone receiving a

waiver to be appropriately trained and

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

16See supra note 8.

17 15 U.S.C. 78k–1.

18 15 U.S.C. 78f(b)(5).

19 15 U.S.C. 78s(b)(2).

20 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

meet all the training requirements.16

Accordingly, the Commission has

decided to approve this portion of the

Exchange’s proposal. The Commission,

however, requests the Exchange to

carefully monitor the use of exceptional

waivers to ensure they are only used in

accordance with the standards in the

rule.

The Commission also finds that the

proposed rule should assist the

Exchange in promoting economically

efficient execution of securities

transactions and fair competition

consistent with section 11A of the Act.17

The proposed rule is designed to

support remote access of the BEACON

trading system. Each specialist unit

identified by the member firm will be

assigned an account (‘‘give up’’) and

will be evaluated under the Exchange’s

Specialist Performance Evaluation

Program, which currently measures

performance in several separate

categories comprising a relative overall

performance ranking. This provision,

along with other provisions of the

proposed rule, should assist the

Exchange in efficient and effective

market operations.

In summary, the Commission believes

that the issuance of ETPs under the

requirements outlined above should aid

and support the development of the

Exchange’s remote specialists operation.

All of the requirements in the remote

specialists rules will remain in place

and must be followed. As noted above,

the ETPs are not intended to transfer

any specialist membership or trading

rights but are primarily a survelliance

tool. In addition, remote specialists and

registered clerks are not permitted to do

anything different from Exchange

specialist units operating on the floor.

Based on the above, the Commission

believes the proposal should be

approved consistent with the Act.

The Commission finds good cause for

approving Amendments No. 2 and 3

prior to the thirtieth day after the date

of publication of notice thereof in the

Federal Register. Amendment No. 2

clarifies when BSE may waive the

required two week on-floor training for

ETP applicants. In addition,

Amendment No. 2, clarifies that a

registered clerk in a remote specialist

operation, who has qualified for an ETP,

will be operating under the direct

supervision of a registered specialist,

just as a registered clerk is supervised

on the floor of the Exchange.

Amendment No. 3 deletes the privison

that permitted BSE to waive the floor

examination requirement for BEACON

Remote specialists. Both Amendments

clarify and strengthen BSE’s proposal.

In addition, the Amendments modify

the proposal to make it consistent with

other BSE rules. Those Amendments

did not change the underlying nature of

the original proposal that was noticed

for comment, and for which no

comments were received. Based on the

above the Commission believes that

good cause exists, consistent with

section 6(b)(5) 18 and 19(b)(2) 19 of the

Act, to accelerate approval of

Amendments No. 2 and 3.

III Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendments No.

2 and 3, including whether it 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 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 abovementioned self-regulatory organization.

All submissions should refer to file

number SR–BSE–00–13 and should be

submitted by January 25, 2001.

V. Conclusion

It is Therefore Ordered, pursuant to

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

proposed rule change SR–BSE–00–13,

including Amendments, No. 1, No. 2

and No. 3, is approved.

For the Commission, by the Division of

Market Regulation, pursuant to

delegated authority.20

Jonathan G. Katz,

Secretary.

[FR Doc. 01–156 Filed 1–3–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43768; File No. SR–NASD–

00–74]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval on a Temporary

Basis Until January 31, 2001 of

Proposed Rule Change by National

Association of Securities Dealers, Inc.

Relating to EWN II Fees for

Subscribers Who Are Not NASD

Members

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 December

14, 2000, the National Association of

Securities Dealers, Inc. (‘‘NASD’’),

through its wholly-owned subsidiary,

The Nasdaq Stock Market, Inc.

(‘‘Nasdaq’’) filed with the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) the proposed rule

change as described in Items I and II

below, which Items have been prepared

by the Exchange. The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons.

I. Self-Regulatory Organization’s

Statement of Terms of Substances of the

Proposed Rule Change

The National Association of Securities

Dealers, Inc. (‘‘NASD’’), through its

wholly-owned subsidiary, The Nasdaq

Stock Market, Inc. (‘‘Nasdaq’’) is

herewith filing a proposed rule change

to increase the fees associated with the

Enterprise Wide Network II (‘‘EWN II’’)

to pass on costs related to increasing its

capacity. The proposed rule change is

intended to amend the current fee

schedule for subscribers who are not

members of the NASD. Nasdaq is filing

a parallel rule filing to effect the same

amendments to the EWN II fee structure

to apply to NASD members. Below is

the text of the proposed rule change.

Proposed new language is underlined;

proposed deletions are in brackets.

NASD Rule 7010. System Services

(a)–(e) No Change

(f) Nasdaq Workstation Service

(1) No Change

(2) The following charges shall apply

to the receipt of Level 2 or Level 3

Nasdaq Service via equipment and

communications linkages prescribed for

the Nasdaq Workstation II Service: