Federal Register / Vol. 66, No. 125 / Thursday, June 28, 2001 / Notices 34503

5 15 U.S.C. 78s(b)(3)(A)(i).

6 17 C.F.R. 240.19b–4(f).

7 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The MSRB does not believe that the

proposed rule change will impose any

burden on competition not necessary or

appropriate in furtherance of the

purposes of the Act since it would apply

equally to all dealers.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

Written comments were neither

solicited nor received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The MSRB has designated this

proposed rule change as constituting a

stated policy, practice, or interpretation

with respect to the meaning,

administration, or enforcement of an

existing MSRB rule under section

19(b)(3)(A)(i) of the Act,5 and

subparagraph (f) of Rule 19b–4,

thereunder.6 At any time within 60 days

of the filing of this proposed rule

change, the Commission may summarily

abrogate this rule change if it appears to

the Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

V. 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, N.W.,

Washington, D.C. 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 MSRB’s principal offices. All

submissions should refer to File No.

SR–MSRB–2001–02 and should be

submitted by July 19, 2001.

For the Commission, by the Division of

Market Regulations, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–16257 Filed 6–27–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44465; File No. SR–NYSE–

2001–15]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the New York Stock Exchange, Inc.

Amending NYSE Rules 104 and 1100

Relating to Trading of ETFs

June 22, 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 June 15,

2001, 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.

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 proposed rule change consists of

an amendment to NYSE Rule 104 to

facilitate trading in Exchange Traded

Funds (‘‘ETFs’’), and amendments to

Rule 1100 to clarify that rules relating

to Investment Company Units apply to

such securities traded on the basis of

unlisted trading privileges (‘‘UTP’’), and

to authorize the Exchange to close

trading in an ETF at 4:05 p.m. when

trading in a related futures contract has

closed at that time on the last trading

day of the month. Text of the proposed

rule change follows. Additions are

italicized; deletions are bracketed.

Dealings by Specialists

Rule 104

No specialist shall effect on the Exchange

purchases or sales of any security in which

such specialist is registered, for any account

in which he, his member organization or any

other member, allied member, or approved

person, (unless an exemption with respect to

such approved person is in effect pursuant to

Rule 98) in such organization or officer or

employee thereof is directly or indirectly

interested, unless such dealings are

reasonably necessary to permit such

specialist to maintain a fair and orderly

market, or to act as odd-lot dealer in such

security.

.10 Regular Specialists

* * * * *

(7) The requirement to obtain Floor Official

approval for transactions for a specialist’s

own account contained in subparagraphs

(5)(i)(A), (B) and (6)(i)(A) above shall not

apply to transactions effected for the purpose

of bringing the price of an investment

company unit (the ‘‘unit’’), as that term is

defined in Section 703.16 of the Listed

Company Manual, into parity with the value

of the index on which the unit is based, [or]

with the net asset value of the securities

comprising the unit[.], or with a futures

contract on the value of the index on which

the unit is based. Nevertheless such

transactions must be effected in a manner

that is consistent with the maintenance of a

fair and orderly market and with the other

requirements of this rule and the

supplementary material herein.

Rule 1100

Scope

(a) The provisions of this Rule 1100 apply

only to ‘‘Investment Company Units’’, as

defined and used in Para. 703.16 of the

Listed Company Manual. This term shall also

mean and apply to securities which fit within

said definition but are admitted to dealings

by the Exchange on an unlisted trading

privileges basis. Except to the extent that

specific provisions in this Rule govern, or

unless the context otherwise requires, the

provisions of the Constitution, all other

Exchange Rules and policies shall be

applicable to the trading of Investment

Company Units on the Exchange. Pursuant to

Exchange Rule 3 (‘‘Security’’), Investment

Company Units are included within the

definition of ‘‘security’’ or ‘‘securities’’ as

those terms are used in the Constitution and

Rules of the Exchange.

* * * * *

Hours of Trading

(e) Any series of Investment Company

Units so designated by the Exchange may be

traded on the Exchange until 4:15 p.m. each

business day. The Exchange may close

trading at an early time to coincide with the

close of trading in a related futures contract

on the last business day of the month, or any

other day when trading in a related futures

contract closes earlier than 4:15 p.m.

* * * * *

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

34504 Federal Register / Vol. 66, No. 125 / Thursday, June 28, 2001 / Notices

3See Securities Exchange Act Release No. 37016

(March 22, 1996), 61 FR 14185 (March 29, 1996)

approving filing SR–NYSE–96–04. 4 15 U.S.C. 78f(b)(5). 5 17 CFR 200.30–3(a)(12).

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 Exchange plans to begin trading

certain ETFs on the Exchange pursuant

to UTP on July 19, 2001. These ETFs are

the NASDAQ 100 Trust (symbol QQQ),

Standard and Poor’s Depositary Receipts

(symbol SPY) and the Dow Industrials

DIAMONDS (symbol DIA). ETFs are

securities, which are Investment

Company Units as defined in Section

703.16 of the Exchange’s Listed

Company Manual. The Exchange

proposes to amend NYSE Rule 1100(a)

to clarify that NYSE rules applying to

Investment Company Units also apply

to securities fitting that definition that

are traded on the Exchange on the basis

of UTP.

NYSE Rule 104 governs specialists’

dealings in their specialty stocks. NYSE

Rule 104.10 requires specialists to

obtain Floor Official approval when

purchasing on a direct plus tick or

selling on a direct minus tick, or when

purchasing on a zero plus tick more

than 50% of the stock offered. These

transactions are seen as destabilizing,

and may be effected by the specialist

only with Floor Official approval. NYSE

Rule 104.10(7) was amended several

years ago to permit a specialist

registered in an Investment Company

Unit to effect proprietary destabilizing

trades without Floor Official approval to

bring the security into parity with the

value of the index on which the unit is

based or with the net asset value of the

securities comprising the unit. The

purpose of that amendment was to

permit a specialist registered in a

‘‘country basket’’ to act expeditiously to

bring the basket into parity with the

value of the securities comprising the

basket.3

As noted above, ETFs are within the

meaning of the term Investment

Company Units, and thus an ETF

specialist is permitted under Rule

104.10(7) to effect proprietary

destabilizing trades without Floor

Official approval to bring the ETF into

parity with the underlying index or the

value of the securities comprising the

ETF. In certain situations, however,

market participants may seek to ‘‘trade

through’’ these parity values to bring the

ETF into parity with a futures contract

on the index on which the ETF is based.

The Exchange believes it would be

appropriate to permit an ETF specialist

to effect proprietary destabilizing

transactions without Floor Official

approval as appropriate in this

situation. Such transactions remain

subject to the requirement that they be

effected in a manner that is consistent

with the maintenance of a fair and

orderly market.

The Exchange understands that

futures trading in stock index products

on the Chicago Mercantile Exchange

closes at 4:05 p.m. (Eastern time) on the

last business day of each month. The

Exchange understands that trading in

related ETFs on other market centers

closes at such time on such days as

well. Accordingly, the Exchange

proposes to close trading in an ETF at

the same time that trading in a related

futures contract closes on the last

business day of the month.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

section 6(b)(5) 4 of the Act, which

requires among other things, that an

Exchange 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

Exchange believes that the proposed

rule change is consistent with these

objectives because it fosters efficient

market making in ETF securities.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange 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 Exchange has neither solicited

nor received written comments on 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 self-regulatory

organization consents, the Commission

will:

(A) By order approve the 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 NYSE. All

submissions should refer to File No.

SR–NYSE–2001–15 and should be

submitted by July 13, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–16258 Filed 6–27–01; 8:45 am]

BILLING CODE 8010–01–M