[Federal Register Volume 62, Number 158 (Friday, August 15, 1997)]
[Notices]
[Pages 43764-43766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21593]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38912; File No. SR-PCX-97-23]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. 
(``PCX'' Relating to Revision of Membership Definitions in the PCX 
Constitution and Clarifying Constitutional Transfer Language

August 8, 1997.
    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 July 23, 1997, the Pacific Exchange Inc. (``PCX'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'' or 
``SEC'') 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.
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    \1\ 15 U.S.C. Sec. 78s(b)(1) (1988).
    \2\ 17 CFR 240.19b-4 (1991).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend Articles V and VII of the 
Constitution to reflect a Board and member vote to revise certain 
membership definitions in the Constitution and to clarify the Transfer 
of Membership Article in the Constitution. The text of the proposed 
rule change is below. Additions are italicized; deletions are 
bracketed.

[[Page 43765]]

Article V--Membership in the Exchange
para. 1351  Number of Memberships
    Sec. 1. No change.
para. 1356  Privileges
    Sec. 2. No change.
para. 1361  Definition of ``Member''
    Sec. 3. The term ``member'' as used throughout the Constitution and 
Rules of the Exchange shall refer to [mean] the natural person in whose 
name the membership is held and who is in good standing. [An 
``inactive'' member shall refer to a natural person who owns or 
inherits a membership which they intend to keep for the sole purpose of 
acting as a lessor.]
para. 1366  Definition of ``Member Firm''
    Sec. 4. The term ``member firm'' as used throughout the 
Constitution and Rules of the Exchange shall refer to [mean] a 
partnership, corporation, limited liability company or other 
organization in good standing who owns or leases a membership or upon 
whom [which] a member has conferred privileges of [his] membership 
pursuant to and in compliance with Article VIII of this Constitution.
para. 1369  Definition of ``Member Organization''
    Sec. 5. The term ``member organization'' as used throughout the 
Constitution and Rules of the Exchange shall refer to [mean] a sole 
proprietor, partnership, corporation, limited liability company or 
other organization in good standing who owns or leases a membership or 
upon whom [which] a member has conferred privileges of membership 
pursuant to and in compliance with Article VIII of this Constitution.
para. 1371  Definition of ``Allied Member''
    Sec. 6. The term ``allied member'' as used throughout the 
Constitution and Rules of the Exchange shall refer to a non-member, who 
is:
    [(I) A general partner in a member firm; or]
    (1) [(ii)] An employee of a member firm who controls such member 
firm, or [who is either:
    (a) A director of such corporation; or
    (b) A principal executive officer of such corporation.]
    (2) An employee of a member firm corporation who is a director or a 
principal executive officer of such corporation, or
    (3) An employee of a member firm limited liability company who is a 
manager or a principal executive officer of such limited liability 
company, or
    (4) A general partner in a member firm partnership;

and who has been approved by the Exchange as an allied member.
para. 1376  Definition of ``Associated Person''
    Sec. 7. The term ``associated person'' as used throughout the 
Constitution and Rules of the Exchange shall refer to a [means any] 
person who is a partner, officer, director, member of a Limited 
Liability Company, trustee of a Business Trust, [or] employee of a 
member organization or any person directly or indirectly controlling, 
controlled by or under common control with a member organization.
para. 1381  Definition of ``Floor Member'' [``Control'']
    Sec. 8. The term ``floor member'' [``control''] as used throughout 
the [in this] Constitution and Rules of the Exchange shall refer to an 
individual, approved as a member of the Exchange, who meets the 
qualification requirements for the purpose of exercising full trading 
privileges on a floor of the Exchange on behalf of a member 
organization [be defined in the Rules of the Board of Governors of the 
Exchange].
para. 1382  Definition of ``Inactive Lessor''
    Sec. 9. The term ``inactive lessor'' as used throughout the 
Constitution and Rules of the Exchange shall refer to a natural person, 
firm or other such entity as the Board may approve, who owns or 
inherits a membership for the sole purpose of acting as a lessor.
para. 1383  Definition of ``Non-Resident Member Organization''
    Sec. 10. The term ``non-resident member organization'' as used 
throughout the Constitution and Rules of the Exchange shall refer to:
    (1) In the case of an individual, one who resides in or has their 
principal place of business in any place not subject to the 
jurisdiction of the United States;
    (2) In the case of a corporation, one incorporated in or having its 
principal place of business in any place not subject to the 
jurisdiction of the United States;
    (3) In the case of a partnership or other unincorporated 
organization or association, one having its principal place of business 
in any place not subject to the jurisdiction of the United States.
* * * * *
Article VII--Transfer of Membership
para. 1451  Transfer
    Sec. 1. Transfer of Membership in the Exchange must comply with the 
provisions of Article VII [may be transferred by a member only in 
accordance with the provisions of this Article VII and only to a person 
whose application and election becomes effective under Article VI].

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

Purpose
    The purpose of the proposed rule change to Article V is to revise 
certain membership-related definitions in the Constitution. These 
proposed revisions are the result of several PCX Board approvals and 
member votes. Last year, the membership approved a comprehensive 
revision to Rule 1 of the Board of Governors, placing all of the 
relevant provisions relating to membership at the Exchange in a central 
location in the PCX rules. This included moving any membership-related 
definitions from various sections of the Constitution and placing them, 
complete with revisions, all into Rule 1 with the other provisions 
relating to membership. Prior to the actual proposed rule filing to 
remove and revise these Constitutional definitions, some members 
expressed concerns that these definitions should remain in the 
Constitution so that any changes would have to be effected by a member 
vote. Therefore, the Board approved the reinstatement of the revised 
definitions back into the Constitution and the members agreed. This 
proposed rule change revises the various sections of Article V of the 
Constitution to reflect the revised definitions agreed upon pursuant to 
the member votes and the Board approvals.
    The purpose of the proposed change to Article VII, Section 1, is to 
clarify the

[[Page 43766]]

language of the Article to clearly state that transfers of memberships 
needed to be made pursuant to this Constitutional Article. When the new 
Rule 1 was being revised, the Board and membership agreed to change the 
language of Section 1, Article VII. The proposed change was viewed as 
somewhat confusing by the membership. Consequently, after Board 
approval and member vote, the Exchange is now proposing to change 
Article VII so that it clearly states that transfers of membership must 
comply with the provisions of Article VII in the Constitution.
Basis
    Pursuant to Rule 19b-4(e)(3), the proposed rule change is concerned 
solely with the administration of the Exchange. The proposed rule 
change is consistent with Section 6(b) of the Act, in general, and 
Section 6(b)(5), in particular, in that it is designed to promote just 
and equitable principles of trade because the definitions, reflecting 
the changes desired by the membership, will be consistent throughout 
the PCX Constitution and Rules and a membership vote will be necessary 
to approve any changes to these definitions.

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

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has designated this proposal as concerned solely with 
the administration of the Exchange under Section 19(b)(3)(A)(iii) of 
the Act \3\ and subparagraph (e)(3) of Rule 19b-4,\4\ which renders the 
proposed rule change effective on July 23, 1997, the date of receipt of 
this filing by the Commission.
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    \3\ 15 U.S.C. Sec. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(e)(3).
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    At any time within sixty days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change it if 
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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. People making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 
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. Sec. 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 PCX's principal offices. 
All submissions should refer to File No. SR-PCX-97-23 and should be 
submitted by September 5, 1997.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-21593 Filed 8-14-97; 8:45 am]
BILLING CODE 8010-01-M