33734 Federal Register / Vol. 66, No. 122 / Monday, June 25, 2001 / Notices

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

2Pursuant to Phlx Rule 511(b), specialist

evaluations are employed by the Committee when

allocating new options classes approving transfers

and reallocating existing option classes.

3Under Phlx Rule 515(b), routine reviews are

conducted every six months for option specialist

units. Special reviews are commenced: (i) Where a

specialist unit’s performance in a particular market

situation was so egregiously deficient as to call into

question the Exchange’s integrity or impair the

Exchange’s reputation for maintaining efficient, fair

and orderly markets; (ii) where a material change

in the specialist unit has occurred; (iii) within 60

days after a transfer of one or more equity books or

option classes has become effective pursuant to

Phlx Rule 511(d)(2); or (iv) within 90 days after a

new allocation.

4The relief, when granted, permits specialists to

disengage Auto-X and orders are then handled

manually. Phone call between Linda Christie,

Counsel Phlx, and Terri Evans, Attorney, and John

Riedel, Attorney, Division of Market Regulation

(‘‘Division’’), Commission (June 12, 2001).

5See Phlx Rule 1080(e) Advice A–13. The

Exchange will grant only the relief provided for by

the rules cited. Phone call between Linda Christie,

Counsel, Phlx, and Terri Evans, Attorney, and John

Riedel, Attorney, Division, Commission (June 12,

2001).

6See Phlx Rule 1080(e).

7See Phlx Rule 1014(f)(ii), Advice F–6.

8See Advice A–5.

9See Phlx Rule 1082(c).

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44436; File No. SR–Phlx–

2001–50]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.

Relating to the Specific Inclusion of

Trade Correction Data and Exemptive

Relief Information in the Specialist

Evaluations Conducted by the Options

Allocation, Evaluation and Securities

Committee

June 15, 2001.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

May 1, 2001, the Philadelphia Stock

Exchange, Inc. (‘‘Phlx’’ 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.

The Commission is publishing this

notice to solicit comments on the

proposed rule change from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Phlx proposes to amend Phlx

Rule 515, Specialist Evaluations,

Supplementary Material .02, Option

Specialist Evaluation (‘‘Rule 515(.02)’’)

to specifically include trade correction

data and exemptive relief information in

the specialist evaluations conducted by

the Options Allocation, Evaluation and

Securities Committee (the

‘‘Committee’’).

The following is the text of the

proposed rule change. New language is

italicized.

515 Specialist Evaluations

* * * * *

Supplementary Material

.02 Options Specialist Evaluation

The Committee shall conduct specialist

performance evaluations to determine

whether a specialist unit has fulfilled

performance standards relating to among

other things; quality of markets, observance

of ethical standards and administrative

responsibilities. As part of the specialist

evaluation process, the Committee will

consider trade correction data and

information concerning exemptive relief of

each specialist unit. Options specialist units

are evaluated on the basis of questionnaires

completed by floor brokers. Floor brokers

shall be invited but are not required to meet

with any specialist about which they have

submitted negative comments and the

Committee may mediate such a meeting. To

the extent possible, evaluations of specialist

units shall also include an objective

performance evaluation survey. The

Committee may consider any relevant

information in addition to the questionnaire

including but not limited to the unit’s and its

members’ regulatory history (both final

disciplinary actions and minor rule plan

infractions), trading data, timeliness of

openings, written complaints and such other

factors and data as may be pertinent. A

registered specialist unit will be presumed to

have performed below minimum standards if

the specialist unit is rated in the bottom 10%

of all specialist units in the aggregate results

for the specialist evaluation questionnaire.

The Committee may also presume that a

specialist unit failed to meet minimum

performance standards if the questionnaire or

information aside from said questionnaire

supports findings of a failure of the specialist

unit to fulfill any of the above standards.

Separate evaluations will be conducted for

each quarter or contiguous half turret in

which a specialist unit conducts an operation

on the trading floor, thus any reference to

‘‘specialist unit’’ within this rule or Rule

511(c)(2) will mean the unit as a whole or

any subpart of its operation subject to

evaluation. For instance, a unit which

conducts a specialist operation at two

separate turrets will be evaluated as XYZ

specialist unit-A and XYZ specialist unit-B

and a presumption of failure to meet

minimum performance standards at unit A

will not be determinative of whether unit B

has failed to meet minimum performance

standards but may be considered by the

Committee.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

Exchange included statements

concerning the purpose of and basis for

the proposed rule change and discussed

any comments it received on the

proposed rule change. The text of these

statements may be examined at the

places specified in Item IV below. The

Exchange has prepared summaries, set

forth in Sections A, B, and C below, of

the most significant aspects of such

statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The purpose of the proposed rule

change is to amend Rule 515(.02) to

specifically include trade correction

data and exemptive relief information in

the specialist evaluations conducted by

the Committee.2 Under Rule 515 the

Committee is responsible for conducting

both routine and special evaluations of

options specialist units.3 Currently,

Rule 515(.02) provides, in relevant part,

that the Committee may consider any

relevant information including, but not

limited to the unit’s and its members’

regulatory history (both final

disciplinary action and minor rule plan

infractions), trading data, timeliness of

openings, written complaints, and such

other factors and data as may be

pertinent. Although the current rule

provides the Committee with discretion

to consider trade data and regulatory

history in the specialist review process,

the proposed rule change specifically

requires including trade correction data

and information concerning exemptive

relief in the specialist evaluation

process. The current rule also provides

the Committee with the discretion to

consider ‘‘such other factors and data as

may be pertinent.’’

Specialist evaluations are a factor

used in the allocation of option classes

to specialist units. By specifically

including trade correction data and

exemptive relief information in the

specialist evaluations, the Committee

will be better able to consider effectively

specialist floor trade practices in their

evaluation process. Currently, the

following types of exemptive relief 4 are

granted by the Phlx: (1) Auto-X

disengagement,5 (2) NBBO Feature

relief,6 (3) parameter relief; 7 (4) stop

and stop limit order relief,8 and (5) firm

quote relief.9

The Exchange proposes to provide

such exemptive relief information to the

Committee. The Exchange believes that

Federal Register / Vol. 66, No. 122 / Monday, June 25, 2001 / Notices 33735

10See Phlx Rule 1054, Advice F–5.

11The AUTOM Desk is a help desk designed to

service firms connected the Phlx through the

AUTOM system.

12Phlx clarified that excessive utilization of trade

corrections by a specialist, in all cases, not just in

extreme cases, may reveal a pattern of the specialist

not executing at the national best bid or offer.

Phone call between Linda Christie, Counsel, Phlx,

Terri Evans, Attorney, and John Riedel, Attorney,

Division, Commission (June 14, 2001).

13 It should be noted that requests for exemptive

relief and trade corrections are a normal part of

everyday business at the Exchange and all other

exchanges, and that in the ordinary case, such

requests are entirely appropriate. The Exchange

believes, however, that unusual levels of activity in

these two areas by a specialist, relative to other

specialists, after taking into account the market

conditions for the relevant options and underlying

securities, as well as market conditions at the time

that such requests or corrections are made, may be

an indicator of the quality of the specialist’s overall

performance.

14 15 U.S.C. 78f(b).

15 15 U.S.C. 78f(b)(5). 16 17 CFR 200.30–3(a)(12).

excessive or inappropriate use of

exemptive relief may indicate that a

specialist is not fulfilling adequately the

obligations of a specialist. As a result,

the Exchange’s Surveillance Department

monitors and documents requests for

such relief. Thus, the Exchange believes

that exemptive relief information is

relevant to the regular option specialist

performance evaluations made by the

Committee.

Trade corrections occur if a specialist

believes that an execution was either

improperly priced or executed.10 In

such cases, the specialist may, with

floor official approval, notify the

AUTOM Desk or the AUTOM trade

correction.11 Excessive utilization of

trade corrections by a specialist may

reveal a pattern of the specialist not

executing at the national best bid or

offer,12 may demonstrate a pattern of

customers obtaining inferior price than

first reported, or result in trades not

properly reported to the tape. Therefore,

the Exchange believes that trade

correction data should be considered as

part of the overall mix of information

considered by the Committee in its

specialist evaluation.

In summary, the Exchange believes

that exemptive relief and trade

correction information should enable

the Committee to allocated books with

a more thorough understanding of each

specialist unit’s activities and

performance on the trading floor.13

2. Statuory Basis

The Exchange believes the proposed

rule change is consistent with section

6(b) of the Act 14 in general, and furthers

the objectives of section 6(b)(5)15 in

particular, in that it is designed to

perfect the mechanisms of a free and

open market and a national market

system, to promote just and equitable

principles of trade, and, in general, to

protect investors and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Phlx does not believe that the

proposed rule change will impose any

burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

The Phlx has neither solicited nor

received written comments with respect

to the proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the date of

publication of this notice in the Federal

Register or within such longer period (i)

as the Commission may designate up to

90 days of such date if it finds such

longer period to be appropriate and

publishes its reasons for so finding or

(ii) as to which the Phlx 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 submissions, 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

Section. Copies of such filing will also

be available for inspection and copying

at the principal office of the Phlx. All

submissions should refer to File No.

SR–Phlx–2001–50 and should be

submitted by July 16, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.16

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–15798 Filed 6–22–01; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF STATE

[Public Notice #3679]

Notice of Meetings; United States

International Telecommunication

Advisory Committee (ITAC);

Telecommunication Sector Committee

(ITAC–T); ITAC–T U.S. Study Group A;

ITAC–T U.S. Study Group D

The Department of State announces

meetings of the U.S. International

Telecommunication Advisory

Committee. The purpose of the

Committee is to advise the Department

on policy and technical issues with

respect to the International

Telecommunication Union.

The ITAC will meet on July 2, 2001

from 1:30 to 3:30 at the

Telecommunication Industry

Association (TIA) offices at 1300

Pennsylvania Avenue, NW., Suite 350

(North Tower), Washington, DC to

debrief the recent ITU Council meeting.

The ITAC–T will meet July 11, 2001

at the offices of the Alliance for

Telecommunications Industry Solutions

(ATIS), 1200 G Street, NW., Suite 500,

Washington, DC from 9:30–12:30 to

continue working on the ITAC–T

Guidelines.

U.S. Study Group A will meet from

9:30 to noon on July 31, 2001 and

August 15, 2001 to prepare for the next

meeting of ITU–T Study Group 2. The

location of the July 31 meeting will be

announced. The August 15 meeting will

be at the Federal Communications

Commission, 6 North Conference room,

445 Twelfth Street, SW., Washington,

DC. Attendees should enter through the

12th St. entrance, use the North

elevators to go to the sixth floor and call

the receptionist (202 418–1460) from the

North Elevator lobby for admittance.

The U.S. Study Group A meeting

previously scheduled for August 22,

2001 is cancelled.

U.S. Study Group D will meet at the

offices of the Alliance for

Telecommunications Industry

Solutions, 1200 G Street, NW., Suite

500, Washington, DC from 1:30 to 3:30

on July 11, 2001 to begin preparations

for the next ITU–T Study Group 9

meeting.