10544 Federal Register / Vol. 66, No. 32 / Thursday, February 15, 2001 / Notices

25See Securities Exchange Act Release No. 43084

(July 28, 2000), 65 FR 48406, 48420 (August 8,

2000) (proposing release for rules relating to

disclosure of order execution and routing practices).

26 15 U.S.C. 78s(b)(2).

27Id.

2817 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 43814

(January 8, 2001), 66 FR 3630.)

4Nasdaq previously filed under section

19(b)(3)(A)(ii) a proposed rule change to increase

the fees beginning December 13, 2000, which was

immediately effective upon filing. Securities

Exchange Act Release No. 43769 (December 22,

2000) (SR–NASD–00–73), 66 FR 826 (January 4,

2001). Nasdaq also filed a parallel rule filing to

effect amendments to the EWN II fee structure to

apply to non-NASD members. Securities Exchange

Act Release No. 43768 (December 22, 2000) (SR–

NASD–00–74), 66 FR 824 (January 4, 2001).

5Subscriber Bulletins are mailed to Nasdaq

Workstation II subscribers and also may be found

at www.nasdaqtrader.com/trader/news/

subscriberbulletins.

customer limit orders—the lesser of

$0.05 per share or one-half of the

current inside spread—is appropriate

for the pilot program. As the

Commission has previously noted,

market makers electing to trade ahead of

customer limit orders must be required

to do so by a sufficiently large

increment, otherwise the benefits of

limit orders on price competition are

lost.25 The Commission believes that the

proposed increment for the pilot

program satisfactorily balances the

interests of providing limit order

protection against the benefits of

offering price improvement. However,

the Commission expects that, during the

pilot period, Nasdaq will study all

aspects of new NASD Rule 6541. After

reviewing the pilot’s operation, Nasdaq

will have the opportunity to propose

further refinements to the rule, if

necessary.

In addition, one commenter

recommended that NASD Rule 6541

include a two-minute standard for

contemporaneous executions, rather

than five minutes proposed by Nasdaq.

The Commission believes that the fiveminute standard is a reasonable first

step, and that Nasdaq will have the

opportunity to propose any appropriate

refinements to NASD Rule 6541 at the

conclusion of the pilot program.

B. Pilot Program

The Commission is approving this

proposal on a 12-month pilot basis

ending as of February 8, 2002. As noted

above, Nasdaq has stated that NASD

Rule 6541 will not become operational

until 30 days after issuance of a Notice

to Members discussing the operation of

the new rule and that the pilot securities

will be subject to a phase-in period.

C. Accelerated Approval of Amendment

Nos. 1 and 2

The Commission finds good cause for

approving Amendment Nos. 1 and 2 to

the proposal prior to the thirtieth day

after the date of public of notice in the

Federal Register, pursuant to Section

19(b)(2) of the Act.26 The original

proposal has been published in the

Federal Register, and public comment

on the proposal was favorable. The

Commission believes that Amendment

Nos. 1 and 2 do not materially alter the

original filing, but merely clarify the

obligations imposed by NASD Rule

6541 in a manner consistent with the

obligations that already exist with

respect to Nasdaq National Market and

SmallCap securities. The Commission

believes, moreover, that approving

Amendment Nos. 1 and 2—which set

forth and describe the trading-ahead

increment—at the same time as the

original proposal furthers the investor

protection goals of the Act.

VI. Solicitation of Comments on

Amendments Nos. 1 and 2

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment 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

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 NASD. All

submissions should refer to File No.

SR–NASD–00–22 and should be

submitted by March 8, 2001.

VII. Conclusion

It is therefore ordered, pursuant to

section 19(b)(2) of the Act,27 that the

proposed rule change (SR–NASD–00–

22) is approved on a pilot basis and that

Amendment Nos. 1 and 2 thereto are

approved on an accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.28

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–3800 Filed 2–14–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43943; File No. SR–NASD–

00–79]

Self-Regulatory Organizations; Order

Granting Accelerated Approval of

Proposed Rule Change by the National

Association of Securities Dealers, Inc.,

Relating to EWN II Fees for NASD

Members

February 8, 2001.

Introduction

On December 21, 2000, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’), through its subsidiary, The

Nasdaq Stock Market, Inc. (‘‘Nasdaq’’),

submitted to 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 relating to

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

Fees for NASD Members.

The proposed rule change was

published for comment in the Federal

Register on January 16, 2001.3 No

comments were received on the

proposal. This order approves the

proposal.

II. Description of the Proposal

In its proposed rule change, Nasdaq

proposed to pass on costs associated

with increased bandwidth demands of

the EWN II to NASD members for the

period December 1–12, 2000.4 In the

September/October 200 issue of

Nasdaq’s Subscriber Bulletin,5 Nasdaq

announced that it had increased the

bandwidth of its Enterprise Wide

Network II from 128 kilobits (‘‘kb’’) to

192 kb. This increased bandwidth

provides Nasdaq with the ability to

support increased share volume and

new products and trading applications

that will be introduced. A description of

the history of EWN II and the recent

bandwith increase may be found in SR–

Federal Register / Vol. 66, No. 32 / Thursday, February 15, 2001 / Notices 10545

6Securities Exchange Act Release No. 43769

(December 22, 2000) (SR–NASD–00–73), 66 FR 826

(January 4, 2001). 7 15 U.S.C. 78o–3. 8 15 U.S.C. 78o–3(b)(5). 9 Id.

10 In approving this rule, the Commission notes

that it has also considered the proposed rule’s

impact on efficiency, competition, and capital

formation. 15 U.S.C. 78c(f).

11Telephone conversation between Mary Dunbar,

Vice President, Nasdaq, and Geoffrey Pemble,

Attorney, Division of Market Regulation,

Commission, on February 7, 2001.

12Securities Exchange Act Release No. 43769

(December 22, 2000) (SR–NASD–00–73), 66 FR 826

(January 4, 2001).

13Securities Exchange Act Release No. 43814

(January 8, 2001) (SR–NASAD–00–79), 66 FR 3630

(January 16, 2001).

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

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

16 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Letter dated November 20, 2000 from Cindy L.

Sink, Senior Attorney, PCX, to Nancy Sanow,

Assistant Director, Division of Market Regulation,

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

No. 1 specifies an implementation plan for the

proposed rule change.

4Securities Exchange Act Release No. 43641

(Nov. 29, 2000), 64 FR 55514.

5See Securities Exchange Act Release Nos. 42231

(Dec. 14, 1999), 64 FR 71523 (Dec. 21, 1999)

(approving SR–NASD–99–48); 42232 (Dec. 14,

1999), 64 FR 71518 (Dec. 21, 1999) (approving SR–

AMEX–99–38); 42233 (Dec. 14, 1999), 64 FR 71529

(Dec. 21, 1999) (approving SR–NYSE–99–39).

NASD–00–73.6 The Subscriber Bulletin

also announced that the increased cost

of the expanded bandwidth ($375 per

month per circuit) would be passed on

to Nasdaq subscribers beginning

December 1, 2000. Nasdaq absorbed all

of increased costs for the month of

November 2000.

Because the original filing relating to

NASD members was made under

section 19(b)(3)(A)(ii), which makes the

rule change immediately effective upon

filing with the Commission, the fee

increase became effective as of

December 13, 2000. In this filing,

Nasdaq seeks to recover the costs

associated with the expanded

bandwidth for the period of December

1–12, 2000, as announced in the

Subscriber Bulletin.

III. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission has reviewed the

Nasdaq’s proposed rule change and

finds, for he reasons set forth below,

that the proposal is consistent with the

requirements of section 15A of the Act 7

and the rules and regulations

thereunder applicable to a national

securities exchange. Specifically, the

Commission believes the proposal is

consistent with sections 15A(b)(5) of the

Act.8 Section 15A(b)(5) requires that the

rules of a registered securities

association provide for the equitable

allocation of reasonable dues, fees and

other charges among members and

issuers and other persons using any

facility or system which the association

operates or controls. The fee increases

proposed by Nasdaq would pass on the

costs associated with increasing the

capacity of EWN II to users of the

Nasdaq Workstation II service.

The Commission believes that

Nasdaq’s proposal to increase NASD

members’ fees relating to the EWN II for

the period December 1–12, 2000 is a fair

means of recovering the costs associated

with increasing the bandwidth of the

EWN II. The Commission finds that the

proposal is consistent with section

15A(b)(5) 9 insofar as the new fees

reflect the additional cost that Nasdaq is

incurring as a result of the expanded

bandwidth. The Commission believes

that such fee increases, necessitated by

recent system volume increases, are a

reasonable means by which Nasdaq

intends to ensure adequate capacity of

its EWN II system and thus, protect the

ongoing integrity of the Nasdaq

market.10

Nasdaq has requested that the

Commission approve this proposed rule

change on an accelerated basis.11 The

original EWN II fee increases for

members were effective upon filing with

the Commission on December 13, 2000,

and have been subject to a full notice

and comment period,12 and that this

current proposal imposing the same fees

for the period of December 1–12, 2000,

has been subject to a full notice and

comment period.13 No comments were

received on either filing. Thus, the

proposed rule change concerns issues

that previously have been the subject to

a full comment period pursuant to

section 19(b) of the Act.14 For these

reasons, the Commission believes

accelerated approval of the proposal is

appropriate. Accordingly, the

Commission finds good cause for

approving the proposed rule change

(SR–NASD–00–79) prior to the thirtieth

day after the date of publication of

notice thereof in the Federal Register.

IV. Conclusion

It is therefore Ordered, pursuant to

section 19(b)(2) of the Act,15 that the

proposed rule change (SR–NASD–00–

79) is approved.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.16

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–3804 Filed 2–14–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43941; File No. SR–PCX–

00–40]

Self-Regulatory Organizations; Order

Approving a Proposed Rule Change by

the Pacific Exchange, Inc. Relating to

Audit Committee Requirements for

Listed Companies

I. Introduction

On October 23, 2000, the Pacific

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

through its wholly-owned subsidiary,

PCX Equities, Inc. (‘‘PCXE’’), submitted

to the Secreties 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 amending the

PCXE’s audit committee requirements.

PCXE filed Amendment No. 1 to the

proposed rule change on November 22,

2000.3 The Federal Register published

the proposed rule change for comment

on December 7, 2000.4 The Commission

received no comments on the proposal.

This order approves the proposed rule

change.

II. Description of the Proposed Rule

Change

PCXE proposes to modify PCXE Rule

5.3(b), regarding audit committee

requirements for listed domestic issuers,

to conform to recommendations made

by the Blue Ribbon Committee on

Improving Effectiveness of Corporate

Audit Committees and rule changes

adopted by other self-regulatory

organizations (‘‘SROs’’).5 The proposed

rule change specifies four requirements

for qualified audit committees, defines

certain terms for purposes of the

proposed audit committee requirements,

and sets forth requirements for

companies listing on PCXE in

conjunction with an initial public

offering.

First, proposed rule 5.3(b)(1) requires

the board of directors of companies

listed on PCXE to adopt and approve a