01-7007. Delegation of Authority to the Director of the Division of Market Regulation

AGENCY:

Securities and Exchange Commission.

ACTION:

Final rule.

SUMMARY:

The Securities and Exchange Commission is amending its rules to delegate authority to the Director of the Division of Market Regulation to grant exemptions from the provisions of the Quote Rule regarding transactions in listed options and the Trade-Through Disclosure Rule (Rules 11Ac1-1 and 11Ac1-7 under the Securities Exchange Act of 1934, respectively). This delegation of authority will facilitate the timely implementation of the Trade-Through Disclosure Rule and amendments to the Quote Rule.

EFFECTIVE DATE:

March 21, 2001.

FOR FURTHER INFORMATION CONTACT:

John Roeser, Attorney, at [phone], Office of Market Supervision, Division of Market Regulation, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-1001.

SUPPLEMENTARY INFORMATION:

The Securities and Exchange Commission (“Commission”) has adopted an amendment to Rule 30-3 of its Rules of Organization and Program Management governing Delegations of Authority to the Director of the Division of Market Regulation (“Director”).^[1] The amendment revises paragraph (a)(28) of Rule 30-3 to conform this paragraph to recent amendments to Rule 11Ac1-1 to clarify that the Director continues to have authority to grant exemptions from the provisions of Rule 11Ac1-1.^[2] In addition, the amendment adds new paragraph (a)(71) to Rule 30-3 to authorize the Director to grant exemptions from the provisions of Rule 11Ac1-7.^[3]

Generally, Rule 11Ac1-1 requires exchanges and broker-dealers to publish firm quotes. Rule 11Ac1-1(e) provides that the Commission may exempt from the provisions of this rule, either unconditionally or on specified terms and conditions, any responsible broker or dealer, electronic communications network, exchange, or association if the Commission determines that such exemption is consistent with the public interest, the protection of investors and the removal of impediments to and perfection of the mechanism of a national market system.

Rule 30-3(a)(28) currently authorizes the Director to grant exemptions from the provisions of Rule 11Ac1-1, pursuant to paragraph (d) of Rule 11Ac1-1. The Commission, however, recently amended Rule 11Ac1-1 to include transactions in listed options and, as a result, former paragraph (d) of Rule 11Ac1-1 was redesignated as paragraph (e).^[4] To clarify that Rule 30-3(a)(28) authorizes the Director to grant exemptions from Rule 11Ac1-1 including with regard to transactions in listed options, the Commission is now revising Rule 30-3(a)(28) to reference paragraph (e), rather than paragraph (d), of Rule 11Ac1-1.

Rule 11Ac1-7 requires a broker to disclose to its customer when the customer's order for listed options is executed at a price inferior to a better published quote on another market, unless the broker effects the transaction on an exchange that participates in an approved linkage plan that includes provisions reasonably designed to limit customers' orders from being executed at prices inferior to a better published price or the customer's order was executed as part of a block trade.

Rule 11Ac1-7(c) provides that the Commission may exempt from the provisions of this rule, either unconditionally or on specified terms and conditions, any broker or dealer if the Commission determines that such exemption is consistent with the public interest, the protection of investors, the maintenance of fair and orderly markets, or the removal of impediments to and perfection of the mechanism of a national market system. New paragraph (a)(71) to Rule 30-3 authorizes the Director to grant exemptions under this paragraph (c) of Rule 11Ac1-7.

The delegation of authority to the Director is intended to conserve Commission resources by permitting Division staff to grant exemptions, where appropriate and in a timely manner, from the provisions of Rules 11Ac1-1 and 11Ac1-7. The Commission anticipates that the delegation of authority will facilitate the timely implementation of the rules, particularly Rule 11Ac1-7. Nevertheless, the staff may submit matters to the Commission for consideration as it deems appropriate. The Commission does not expect that exemptions from Rules 11Ac1-1 and 11Ac1-7 will be routinely issued.

The Commission finds, in accordance with Section 553(b)(3)(A) of the Administrative Procedures Act,^[5] that these amendments relate solely to agency organization, procedure, or practice, and do not relate to a substantive rule. Accordingly, notice, opportunity for public comment, and publication of the amendment prior to its effective date are unnecessary.

List of Subjects in 17 CFR Part 200

• Administrative practice and procedure
• Authority delegations (Government agencies)
• Organization and functions (Government agencies)

Text of Amendment

In accordance with the preamble, the Commission hereby amends Title 17, Chapter II of the Code of Federal Regulations as follows:

PART 200—ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND REQUESTS

Subpart A—Organization and Program Management

1. The authority citation for Part 200, subpart A, continues to read, in part, as follows:

Authority: 15 U.S.C. 77s, 78d-1, 78d-2, 78w, 78 ll (d), 78mm, 79t, 77sss, 80a-37, 80b-11, unless otherwise noted.

* * * * *

2. Section 200.30-3 is amended in paragraph (a)(28) by revising the phrase “pursuant to paragraph (d)” to read “pursuant to paragraph (e)” and by adding paragraph (a)(71) to read as follows:

§ 200.30-3

Delegation of authority to Director of Division of Market Regulation.

* * * * *

(a) * * *

(71) Pursuant to paragraph (c) of Rule 11Ac1-7 (17 CFR 240.11Ac1-7), to grant exemptions, conditionally or unconditionally, from any provision or provisions of Rule 11Ac1-7.

* * * * *

By the Commission.

Dated: March 15, 2001.

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  17 CFR 200.30-3.

2.  17 CFR 240.11Ac1-1.

3.  17 CFR 240.11Ac1-7.

4.  See Securities Exchange Act Release No. 43591 (November 17, 2000), 65 FR 75439 (December 1, 2000).

5.  5 U.S.C. 553(b)(3)(A).