33118 Federal Register / Vol. 66, No. 119 / Wednesday, June 20, 2001 / Notices

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

2 17 CFR 240.19b–4.

3See CSE Rule 11.9(a)(4) (defining the term

‘‘Approved Dealer’’.

4 Id.

5The ITS Committee also imposed a formula

restriction on CSE outbound commitments, as well

as the requirement that all CSE rule filings be

submitted for review by the ITS Committee before

filing with the Commission.

6See Section 8(a)(iv) of the ITS Plan. On

November 3, 2000, the Commission approved the

Fifteenth Amendment to the ITS Plan, which the

ITSOC, among other things, relabeled section 8(a)(v)

as section 8(a)(iv). See Securities Exchange Act

Release No. 43520 (Nov. 3, 2000), 65 FR 68165

(Nov. 14, 2000).

7On April 16, 2001, the Sub-Committee of the

ITS Committee met and determined that the

Additional Probing Requirement was not a

necessary condition for PCX/ARCA to generate

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44426; File No. SR–CSE–

2001–02]

Self-Regulatory Organizations; Notice

of Filing of a Proposed Rule Change by

the Cincinnati Stock Exchange, Inc.

Relating to the Elimination of the

Requirement To Expose Market and

Marketable Limit Orders for Fifteen

Seconds Before Formatting as

Intermarket Trading System Trade

Commitments

June 14, 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 May 25,

2001, the Cincinnati Stock Exchange,

Incorporated (‘‘CSE’’ 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 CSE. The

Commission is publishing this notice to

solicit comment 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 CSE proposes to amend CSE

Rules 11.9(o)(2) and 11.9(o)(3) to

eliminate the Exchange requirement that

public agency market and marketable

limit orders be exposed for fifteen

seconds to all Approved Dealers 3 before

being formatted into an Intermarket

Trading System (‘‘ITS’’) outbound

commitment to trade. The text of the

proposed rule change is available at the

Office of the Secretary, the CSE and the

Commission.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

CSE 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 CSE 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 this proposed rule

change is to eliminate the Exchange

requirement that market and marketable

limit orders be exposed for fifteen

seconds (the ‘‘Additional Probe’’ or

‘‘Additional Probing Requirement’’) to

all Approved Dealers 4 before being

formatted as an ITS outbound

commitment to trade. The Operating

Committee of the Intermarket Trading

System (the ‘‘ITS Committee’’ or

‘‘ITSOC’’) imposed the Additional

Probing Requirement, codified as CSE

Rules 11.9(o)(2) and 11.9(o)(3), as a

condition for implementing an

automated interface with ITS in 1985.5

The ITS Committee claimed that such

an Additional Probe was necessary

because the CSE systems would be

submitting computer generated

commitments to ITS in lieu of using ITS

stations located on an exchange floor.

The ITSOC’s concern was that such a

practice would turn ITS into an order

routing mechanism on behalf of CSE

Members. However, the CSE maintains

that the Additional Probing

Requirement is an unfair

anticompetitive burden upon the CSE

because (1) the ITS Plan imposes no

such systemic Additional Probing

Requirement upon all ITS Participants;

(2) the CSE ensures that it satisfies the

ITS Plan’s restrictions on automated

routing practices by operating within

the imposed formula restrictions; and

(3) the ITS Committee has voted to

accept the computer generated

commitments of the Pacific Exchange in

combination with Archipelago, LLC

(‘‘PCX/ARCA’’) without an Additional

Probing Requirement.

The CSE believes that the imposition

of the extraordinary Additional Probing

Requirement upon the CSE has always

been an unreasonable condition for

automated participation in the ITS Plan.

The ITS Plan itself does not impose

specific Additional Probing

Requirements for any ITS Participant,

but instead states that ITS Participants

should not automatically reroute orders

to other ITS Participant markets without

first making reasonable efforts to probe

the market and achieve satisfactory

execution in their own market. Section

8(a)(iv) (‘‘Automated Generation of

Commitments’’) 6 of the ITS Plan

provides that ITS Participants should

not routinely use ITS as an order

delivery system to reroute a substantial

portion of orders to ITS when those

orders were originally sent to another

Participant market for execution. As

section 8(a)(iv) of the ITS Plan requires,

‘‘* * * most orders received within the

market of an Exchange Participant are

expected to be executed within that

market.’’ CSE would not violate section

8(a)(iv) without the Additional Probe.

In the CSE’s electronic market

environment, the CSE represents that

every order entering its National

Securities Trading System (‘‘NSTS’’) is

exposed to all open interest on the

Exchange. CSE Designated Dealers, in

fulfilling their duties as specialists,

display their best bids and offers and

customer limit orders as required.

Unlike in 1986 when the ITS Committee

imposed the Additional Probing

Requirement, the CSE believes that the

Commission’s Limit Order Display Rule

ensures that any agency interest in a

given security is displayed in

accordance with the Rule, and therefore

subject to execution against contra-side

interest. The CSE believes that its

electronic market fully complies with

section 8(a)(iv) of the ITS Plan.

Moreover, with the CSE continuing to

be subject to the ITS formula restrictions

contained in section 8(e)(iv) of the ITS

Plan, the CSE believes that the

Additional Probe requirement is a

redundant impediment that imposes

anti-competitive restrictions on the CSE,

while providing little, if any, support to

the policies expressed in section 8(a)(iv)

of the ITS Plan. The ITS Committee

itself has supported this position in a

recent action, unanimously approving

the 18th Amendment to the ITS Plan.

As part of the approval process for the

proposed 18th Amendment to the ITS

Plan, which incorporates the

configuration of the Pacific Exchange—

Archipelago, LLC merger into the ITS

Plan, the ITS Committee determined

that PCX/ARCA would not be required

to implement an Additional Probing

Requirement despite the fact that PCX/

ARCA computer generates orders into

ITS commitments in a manner

substantially similar to that of CSE.7

Federal Register / Vol. 66, No. 119 / Wednesday, June 20, 2001 / Notices 33119

automated computerized submissions of ITS

formatted trades.

8Section 8(a)(ii)(B) (‘‘Percentage of ARCA Facility

ITS Volume’’) of the proposed 18th Amendment to

the ITS Plan.

9See Letter from Mr. Allen Bretzer, Senior Vice

President, CHX, to the ITSOC (May 14, 2001).

10 Id.

11 Id. CSE Rejected the NYSE’s proposal because

the PCX/ARCA Facility Formula, designed to

accommodate PCX/ARCA’s market structure, failed

to provide a ‘‘period to cure.’’ A period to cure is

a period of time during which an ITS Participant

that has violated the formula restrictions may take

appropriate measures to address such violations

without being subject to immediate prohibition of

ITS use. Immediate cessation of ITS access is

unacceptable to the CSE market model and is not

contemplated by CSE’s current forumla restrictions.

12As noted above, the most significant difference

between the two formulae is that PCX/ARCA’s

formula does not provide a period to cure.

Apparently, the NYSE will not require an

Additional Probe as long as it can ‘‘pull the plug’’

on a National Market System participant should

such participant violate the PCX/ARCA formula.

12As noted above, the most significant difference

between the two formulae is that PCX/ARCA’s

formula does not provide a period to cure.

Apparently, the NYSE will not require an

Additional Probe as long as it can ‘‘pull the plug’’

on a National Market System participant should

such participant violate the PCX/ARCA formula.

13See letter from Mr. James E. Buck, Senior VicePresident, NYSE, to mr. Jonathan Katz, Secretary,

The ITS Committee’s rationale was that

PCX/ARCA’s Facility Formula 8

provided a sufficient mechanism to

comply with section 8(a)(iv) of the ITS

Plan. This position was reiterated in a

recent letter drafted after the ITSOC’s

approval of the 18th Amendment to the

ITS Operating Committee from the

Committee’s Chairman.9 In the letter,

the Chairman emphasizes that

compliance with the operational

parameters (i.e., the PCX/ARCA Facility

Formula) would satisfy the

requirements of section 8(a)(iv) of the

ITS Plan.10 Although CSE believed that

its affirmative vote on the 18th

Amendment would be in return for

ITSOC support for eliminating CSE’s

probe, the letter states that the New

York Stock Exchange’s (‘‘NYSE’’)

proposal [to eliminate CSE’s Additional

Probe] was predicated on CSE signing

on to the same operational parameters

as PCX/ARCA.11

The CSE fails to see any rational basis

for applying an Additional Probe under

the CSE formula, while eliminating the

Additional Probe under the PCX/ARCA

formula.12 CSE bases this position on

the complete reversal of positions by the

NYSE and the ITS Committee. The

Additional Probe requirement was

originally claimed by the NYSE to be

based on the methodology used by

Participants to generate ITS

commitments. The NYSE has long

claimed that the probe requirement is

paramount to the formula restriction.

The NYSE has stated in the past: ‘‘***

assuming its compliance with the Plan’s

probing requirement, it would

somewhat lessen our concerns that a

primary market function of optimark

would be to provide access to the

primary market. In that event, we would

have some flexibility in establishing the

‘‘ceiling’’ numbers in the formula.’’ 13

The CSE believes that the ITSOC has

now turned the probe and formula

requirements on their respective heads.

The ITS Committee proposed that if CSE

is willing to accept the PCX/ARCA

Formula, it may, with the support of the

ITSOC, remove its Additional Probe.

What this means is that the

methodology for generating ITS

commitments is now secondary to the

limitation on outbound commitments.

PCX/ARCA is in compliance with

section 8(a)(iv) of the ITS Plan because

it has agreed to the limitations

contained in the PCX/ARCA Formula.

Primarily, PCX/ARCA is subject to an

immediate cessation of access, not

because it modified its systems to

impose a probe. Today, the PCX/ARCA

proposal is exactly as it was months ago

when the NYSE begain its campaign to

require PCX/ARCA to institute an

Additional Probe.

If PCX/ARCA need not impose a

fifteen second delay before computer

generating outbound ITS commitments,

CSE believes it should be relieved of

that obligation as well. The CSE remains

willing to comply with the CSE Formula

so as to ensure that it does not send a

significant portion of its order flow

through ITS. Since the imposition of the

formula restriction, CSE has never

exceeded its formula limitations.

However, based on the recent ITSOC

action to emasculate the probe

requirement, the CSE respectfully

proposes that its Additional Probing

Requirement is no longer an ITS

requirement, and therefore requests

Commission approval of its proposed

rule change.

In the interest of maintaining efficient

trading rules and in order to conform

CSE rules to the rules and procedures of

other ITS Participants and the ITS Plan

itself, the CSE proposes to eliminate the

Additional Probing Requirement

contained in CSE Rules 11.9(o)(2) and

11.9(o)(3).

2. Statutory Basis

The proposed rule change is

consistent with section 6(b) of the Act

in general,14 and furthers the objectives

of sections 6(b)(5) in particular.15 The

proposed rule change is consistent with

section 6(b)(5) 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, in general, to protect

investors and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The CSE does not believe that the

proposed rule change will 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

The CSE has neither solicited nor

received written comments on the

proposed rule change, not necessary or

appropriate in furtherance of the

purposes of the Act.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the 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 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 Exchange.

33120 Federal Register / Vol. 66, No. 119 / Wednesday, June 20, 2001 / Notices

16 17 CFR 200.30–3(a)(12).

All submissions should refer to File

No. SR–CSE–2001–02 and should be

submitted by July 11, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to the delegated

authority.16

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–15530 Filed 6–19–01; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

[Declaration of Disaster #3346]

State of Kentucky

Laurel County and the contiguous

counties of Clay, Jackson, Knox,

McCreary, Pulaski, Rockcastle and

Whitley constitute a disaster area due to

damages caused by severe storms and

tornadoes that occurred on June 2, 2001.

Applications for loans for physical

damage may be filed until the close of

business on August 10, 2001 and for

economic injury until the close of

business on March 11, 2002 at the

address listed below or other locally

announced locations: U.S. Small

Business Administration, Disaster Area

2 Office, One Baltimore Place, Suite

300, Atlanta, GA 30308.

The interest rates are:

For Physical Damage

Homeowners With Credit Available

Elsewhere: 6.625%

Homeowners Without Credit Available

Elsewhere: 3.312%

Businesses With Credit Available

Elsewhere: 8.000%

Businesses and Non-Profit

Organizations Without Credit

Available Elsewhere: 4.000%

Others (Including Non-Profit

Organizations) With Credit Available

Elsewhere: 7.125%

For Economic Injury

Businesses and Small Agricultural

Cooperatives Without Credit

Available Elsewhere: 4.000%

The number assigned to this disaster

for physical damage is 334611 and for

economic injury the number assigned is

9L8500.

(Catalog of Federal Domestic Assistance

Program Nos. 59002 and 59008)

Dated: June 11, 2001.

John Whitmore,

Acting Administrator.

[FR Doc. 01–15454 Filed 6–19–01; 8:45 am]

BILLING CODE 8025–01–U

SMALL BUSINESS ADMINISTRATION

[Declaration of Disaster #3348]

State of Louisiana

As a result of the President’s major

disaster declaration on June 11, 2001, I

find that the following Parishes in the

State of Louisiana constitute a disaster

area due to damages caused by Tropical

Storm Allison occurring on June 5, 2001

and continuing: Ascension,

Assumption, East Baton Rouge,

Iberville, Lafayette, Lafourche,

Livingston, St. Martin, Terrebonne and

Vermilion Parishes. Applications for

loans for physical damage as a result of

this disaster may be filed until the close

of business on August 10, 2001, and for

loans for economic injury until the close

of business on March 11, 2002 at the

address listed below or other locally

announced locations: U.S. Small

Business Administration, Disaster Area

3 Office, 4400 Amon Carter Blvd., Suite

102, Fort Worth, TX 76155.

In addition, applications for economic

injury loans from small businesses

located in the following contiguous

Parishes may be filed until the specified

date at the above location: Acadia,

Cameron, East Feliciana, Iberia,

Jefferson, Jefferson Davis, Pointe

Coupee, St. Charles, St. Helena, St.

James, St. John The Baptist, St. Landry,

St. Mary, Tangipahoa, West Baton

Rouge and West Feliciana Parishes in

Louisiana.

The interest rates are:

For Physical Damage

Homeowners With Credit Available

Elsewhere: 6.625%

Homeowners Without Credit Available

Elsewhere: 3.312%

Businesses With Credit Available

Elsewhere: 8.000%

Businesses and Non-Profit

Organizations Without Credit

Available Elsewhere: 4.000%

Others (Including Non-Profit

Organizations) With Credit Available

Elsewhere: 7.125%

For Economic Injury

Businesses and Small Agricultural

Cooperatives Without Credit

Available Elsewhere: 4.000%

The number assigned to this disaster

for physical damage is 334808 and for

economic injury the number assigned is

9L8800.

(Catalog of Federal Domestic Assistance

Program Nos. 59002 and 59008)

Dated: June 12, 2001.

Herbert L. Mitchell,

Associate Administrator for Disaster

Assistance.

[FR Doc. 01–15453 Filed 6–19–01; 8:45 am]

BILLING CODE 8025–01–P

SMALL BUSINESS ADMINISTRATION

[Declaration of Disaster #3345]

State of West Virginia: Amendment #1

In accordance with a notice received

from the Federal Emergency

Management Agency, dated June 11

2001, the above-numbered Declaration

is hereby amended to include Cabell,

Clay, Lincoln, Mason, McDowell,

Mingo, Roane, Summers, and Wayne

Counties in the State of West Virginia as

disaster areas caused by flooding, severe

storms, and landslides beginning on

May 15, 2001 and continuing.

In addition, applications for economic

injury loans from small businesses

located in Braxton, Calhoun, Greenbrier,

Monroe and Wirt Counties in the State

of West Virginia; Buchanan in the State

of Virginia; Boyd, Martin, Lawrence and

Pike Counties in the State of Kentucky;

and Gallia, Lawrence and Meigs

Counties in the State of Ohio 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 economic injury numbers

assigned are 9L8900 for Kentucky and

9L9000 for Ohio.

All other information remains the

same, i.e., the deadline for filing

applications for physical damage is

August 2, 2001, and for loans for

economic injury is March 4, 2002.

(Catalog of Federal Domestic Assistance

Program Nos. 59002 and 59008)

Dated: June 12, 2001.

James E. Rivera,

Acting Associate Administrator for Disaster

Assistance.

[FR Doc. 01–15452 Filed 6–19–01; 8:45 am]

BILLING CODE 8025–01–P

SOCIAL SECURITY ADMINISTRATION

Agency Information Collection

Activities: Proposed Request

The Social Security Administration

(SSA) publishes a list of information

collection packages that will require

clearance by the Office of Management

and Budget (OMB) in compliance with

Pub. L. 104–13 effective October 1,

1995, The Paperwork Reduction Act of