13820 Federal Register / Vol. 66, No. 45 / Wednesday, March 7, 2001 / Notices

10 In approving this proposal, the Commission has

considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

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

11See supra, note 3.

12 15 U.S.C. 78f(b)(5) and (b)(8).

13See, e.g., Securities Exchange Act Release Nos.

42835 (May 26, 2000), 65 FR 35683 (June 5, 2000),

and 42848 (May 26, 2000), 65 FR 36206 (June 7,

2000).

14 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3The ISE filed its proposed rule change on

November 20, 2000. On December 18, 2000, the ISE

filed Amendment No. 1 that entirely replaced the

original rule filing.

4See Securities Exchange Act Release No. 43803

(January 4, 2001), 66 FR 3624 (January 16, 2001).

5 15 U.S.C. 78f.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes that the

proposed rule change will impose no

burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No written comments were solicited

or received with respect to the proposed

rule change.

III. 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 the filing will also be

available for inspection and copying at

the principal offices of the Exchange.

All submissions should refer to File No.

SR–Amex–01–10 and should be

submitted by March 28, 2001.

IV. Commission Findings and Order

Granting Accelerated Approval of the

Proposed Rule Change

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange.10 In its original approval of

the pilot program,11 the Commission

detailed its reasons for finding its

substantive features consistent with the

Act, and, in particular, the requirements

of sections 6(b)(5) and 6(b)(8) of the

Act.12 The Commission has previously

approved rules on other exchanges that

establish substantially similar programs

on a permanent basis,13 and the

extension of the pilot program on the

Amex—pending review of its related

proposal to revise the program and

make it permanent—raises no new

regulatory issues for consideration by

the Commission.

The Commission finds good cause,

consistent with sections 6(b) and

19(b)(2) of the Act, for approving the

proposed rule change prior to the

thirtieth day after the date of

publication of the notice of filing thereof

in the Federal Register. The proposal

will allow the pilot program, otherwise

due to expire on February 27, 2001, to

remain effective and in place

uninterrupted while revisions are being

considered, and does not raise any new

regulatory issues.

It is therefore ordered, pursuant to

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

proposed rule change be, and hereby is,

approved on an accelerated basis as a

pilot program through May 28, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to

delegated authority.14

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–5543 Filed 3–6–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44017; File No. SR–ISE–

00–20]

Self Regulatory Organizations; Order

Approving Proposed Rule Change by

the International Securities Exchange

LLC Relating to Limitations on Orders

February 28, 2001.

I. Introduction

On November 20, 2000, the

International Securities Exchange LLC

(‘‘ISE’’ 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 to

amend ISE Rule 717 relating to

limitations on orders.3 The proposed

rule change was published for comment

in the Federal Register on January 16,

2001.4 The Commission received no

comments on the proposed rule change.

This order approves the proposal.

II. Description of the Proposal

Exchange market makers must be firm

at their quotations for all orders,

although they can set different sizes for

customer and broker-dealer orders.

When the size of a particular quote is

exhausted, the Exchange’s trading

system automatically moves the quote to

an inferior price according to

parameters preset by the market maker.

However, the system moves only the

quotation in the options series in which

there was a trade, leaving the market

maker exposed to the risk that multiple

orders may be executed nearly

simultaneously in many series of the

same option. This situation increases an

ISE market maker’s ‘‘delta risk’’ (the

amount of underlying stock that would

be necessary to hedge the options

position), due to exposure across

multiple series. This could result in ISE

market makers providing more liquidity

than may be available in the underlying

stock. Under the ISE’s proposed new

paragraph (h), members shall not cause

the entry of more than one order every

fifteen seconds for the account of the

same beneficial owner in options on the

same underlying security.

The Exchange also proposes to amend

paragraph (g) of ISE Rule 717, which

currently prohibits an Electronic Access

Member (‘‘EAM’’) from entering an

order for any other member of the

Exchange. The amendment will limit

the scope of ISE Rule 717(g) to only

prohibit EAMs from entering orders for

ISE market maker accounts.

III. Discussion

The Commission has reviewed the

ISE’s proposed rule change and finds,

for the reasons set forth below, that the

proposal is consistent with the

requirements of section 6 of the Act 5

and the rules and regulations

thereunder applicable to a national

securities exchange.

The Commission notes that amending

ISE Rule 717 to prohibit members from

causing the entry of more than one order

for the same beneficial account within

a fifteen second period should help

reduce ISE market maker risk exposure.

The Commission believes that fifteen

seconds is a sufficient time period to

allow market makers to change their

quotations following an execution,

while at the same time not unduly long

Federal Register / Vol. 66, No. 45 / Wednesday, March 7, 2001 / Notices 13821

6 15 U.S.C. 78f(b).

7 15 U.S.C. 78f(b)(5).

8 In approving the proposal, the Commission has

considered the rule’s impact on efficiency,

competition, and capital formation. 15 U.S.C. 78c(f).

9 15 U.S.C. 78s(b)(2).

10 17 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. 41479, 64

FR 31667 (June 11, 1999).

4Securities Exchange Act Release No. 43111

(August 2, 2000), 65 FR 49046 (August 10, 2000)

(‘‘Extension Proposal’’).

5See letter from James E. Buck, Senior Vice

President and Secretary, NYSE, to Nancy J. Sanow,

Assistant Director, Division of Market Regulation,

SEC dated January 18, 2001 and accompanying

amended Form 19b–4 (‘‘Amendment No. 1’’).

6See Securities Exchange Act Release No. 43647

(November 30, 2000), 65 FR 77407 (December 11,

2000) (proposal to extend the effectiveness of the

pilot through February 28, 2001). See also

Securities Exchange Act Release No. 43329 (October

2, 2000), 65 FR 58833 (October 2, 2000) (proposal

to extend the effectiveness of the pilot period

through November 30, 2000).

7 15 U.S.C. 78f(b)(5).

as to place a burden on investors

seeking to execute transactions on the

Exchange.

The Commission also notes that the

amendment to ISE Rule 717(g), which

will limit the scope of that rule solely

to prohibit EAMs from entering orders

for ISE market maker accounts,

recognizes that there are legitimate

reasons why a member may enter orders

on the Exchange through an EAM.

These reasons can vary. For example,

some EAMs may desire a temporary

means of routing orders to the ISE until

they are connected directly to the

Exchange. In addition, a few members

have clearing relationships with EAMs

and thus route orders through those

EAMs.

Therefore, the Commission finds that

the proposed revisions to ISE Rule 717

are consistent with section 6(b) of the

Act 6 in general, and furthers the

objectives of section 6(b)(5) 7 in

particular, in that they are designed to

prevent fraudulent and manipulative

acts and practices, to promote just and

equitable principles of trade, to remove

impediments to and perfect the

mechanism for a free and open market

and a national market system, and, in

general, to protect investors and the

public interest.8

IV. Conclusion

It is therefore ordered, pursuant to

section 19(b)(2) of the Act,9 that the

proposed rule change (SR–ISE–00–20) is

approved.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–5541 Filed 3–6–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44018; File No. SR–NYSE–

01–04]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the New

York Stock Exchange, Inc., to Extend

the Pilot Regarding Shareholder

Approval of Stock Option Plans

Through March 31, 2001

February 28, 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 February

26, 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 Exchange proposes to extend,

until March 31, 2001, the effectiveness

of the amendments to section 312.01,

312.03 and 312.04 of the Exchange’s

Listed Company Manual with respect to

the definition of a ‘‘broadly based’’ stock

option plan, which amendments were

approved by the Commission on a pilot

basis (the ‘‘Pilot’’) on June 4, 1999.3

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

On July 12, 2000, the Exchange filed

a proposed rule change seeking to

extend the effectiveness of the Pilot

until September 30, 2003.4 Following

receipt of comments from interested

parties and the SEC staff, on January 19,

2001, the Exchange filed an Amendment

No. 1 to that filing proposing to shorten

the three-year extension until

September 30, 2001, and to amend the

definition of ‘‘broadly based’’ under the

Exchange’s rule.5 Prior to the filing of

Amendment No. 1, the Pilot had been

extended to provide the Commission

and the Exchange with additional time

to review and evaluate comment letters

submitted to the Commission regarding

the Extension Proposal.6

The Exchange now proposes to

further extend the effectiveness of the

Pilot until March 31, 2001 to provide

the Commission and the Exchange with

additional time to complete the review

and evaluation of the above-referenced

comment letters.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

section 6(b)(5) of the Act,7 which

requires, among other things, that the

rules of an exchange be designed to

prevent fraudulent and manipulative

acts and practices, to promote just and

equitable principles of trade, to foster

cooperation and coordination with

persons engaged in 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.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose