Federal Register / Vol. 62, No. 168 / Friday, August 29, 1997 / Notices 45901

9 15 U.S.C. 78s(b)(3)(A).

10 17 CFR 240.19b–4.

11See Securities Exchange Act Release No.

37619A (September 6, 1996), 61 FR 48290

(September 12, 1996) (File No. S7–30–95) (‘‘Order

Handing Rules Adopting Release’’); SEC, Report on

the Practice of Preferencing (‘‘Preferencing Study’’)

(April 11, 1997) at Part V.D.

12Order Handling Rules Adopting Release at

n.357.

13Compare Preferencing Study Tables V–8A to C

with Tables V–9A to C. Of course, the Preferencing

Study analyzed price improvement and

disimprovement in the aggregate. In evaluating

execution quality across markets, it is important

that broker-dealers consider that execution quality

may vary for different types of orders and securities.

See Preferencing Study at nn. 313 and 314. 1 15 U.S.C. 78s(b)(1) (1988).

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

Because the foregoing proposed rule

change: (1) Does not significantly affect

the protection of investors or the public

interest; (2) does not impose any

significant burden on competition: and

(3) does not have the effect of limiting

access to or availability of any Exchange

order entry or trading system, the NYSE

PRIME program has become effective

pursuant to Section 19(b)(3)(A) of the

Act 9 and Rule 19b–4(e)(5) thereunder.10

At any time within 60 days of the filing

of such rule change, the Commission

may summarily abrogate such 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.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

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. 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 at

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the Exchange. All submissions

should refer to File No. SR–NYSE–97–

24 and should be submitted by

September 19, 1997.

V. Commission Statement

As a general matter, price

improvement occurs when a customer

order is executed at a price that is

superior to the best contra-side bid or

ask quote prevailing among the markets

and market centers trading the security

at the time the order was received and

executed. Moreover, the Commission

has noted that it also is possible for a

customer order to receive negative price

‘‘improvement,’’ or price

disimprovement, instead of price

improvement.11 Price disimprovement

occurs when an order is executed at a

price that is inferior to the best contraside bid or ask quote prevailing among

the markets and market makers trading

the security at the time the order was

received and executed.

The Commission previously has noted

the importance of the opportunity for

price improvement as a factor in best

execution, particularly with regard to

broker-dealers routing orders for

automatic execution. In the Order

Handling Rules Adopting Release, the

Commission stated that where material

differences exist between the price

improvement opportunities offered by

markets or market makers, these

differences must be taken into account

by the broker-dealer. The Commission

made clear that in evaluating price

improvement opportunities, a brokerdealer must consider, among other

things, both the amount of price

improvement and price disimprovement

present in each market.12 More recently,

the Commission’s Preferencing Study

analyzed the amount of price

improvement and disimprovement on

the NYSE and the regional exchanges.

The Preferencing Study found that a

significant amount of price

disimprovement occurred on each

exchange.13

Therefore, a program such as NYSE

Prime, which only provides price

improvement numbers, should not be

used as the basis for best execution

evaluations. NYSE Prime provides some

information to firms on a transaction by

transaction basis. To be useful for best

execution evaluations, however, any

price improvement information

disseminated also should reflect the

amount of price disimprovement that

occurs on that market. Accordingly, a

market providing price improvement

statistics on an aggregate basis should

indicate the amount of price

disimprovement as well as the amount

of price improvement.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–23003 Filed 8–28–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38954; File No. SR–OCC–

97–08]

Self-Regulatory Organizations; The

Options Clearing Corporation; Notice

of Filing of Proposed Rule Change To

Create a New Office of Management

Vice Chairman and To Change the Title

of Vice Chairman to Member Vice

Chairman

August 21, 1997.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

May 9, 1997, The Options Clearing

Corporation (‘‘OCC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) and on May 12, 1997,

amended the proposed rule change as

described in Items I, II, and III below,

which Items have been prepared

primarily by OCC. The Commission is

publishing this notice to solicit

comments from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The purpose of the proposed rule

change is to amend OCC’s by-laws to

create a new office of Management Vice

Chairman and to change the title of Vice

Chairman to Member Vice Chairman.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

OCC 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. OCC has prepared

summaries, set forth in sections (A), (B),
45902 Federal Register / Vol. 62, No. 168 / Friday, August 29, 1997 / Notices

2The Commission has modified the text of the

summaries prepared by OCC.

3To distinguish the title of the current Vice

Chairman from the staff position of Management

Vice Chairman, the modifier ‘‘Member’’ has been

added to the office’s title. Conforming changes have

also been made to several other sections of OCC’s

by-laws to reflect addition of the modifier

‘‘Member’’ to the office’s title. 4 17 CFR 200.30–3(a)(12) (1995).

and (C) below, of the most significant

aspects of such statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The proposed rule change will amend

Article IV, Section 1 to clarify that the

existing Vice Chairman is elected by the

Board of Directors from among OCC’s

Member Directors 3 and will be renamed

the Member Vice Chairman. Article IV,

Section I will also be amended to create

the position of Management Vice

Chairman which will be elected at the

discretion of the Board of Directors, but

the board will not be required to fill this

position. Only OCC staff members will

be eligible to serve as the Management

Vice Chairman, and any person serving

in this office shall not be eligible to

serve concurrently in any other OCC

office.

Article IV, Section 7 will be amended

to provide for the duties and

responsibilities of the Management Vice

Chairman and to clarify the duties and

responsibilities of the Member Vice

Chairman. The duties of the

Management Vice Chairman will

include assuming all of the Chairman’s

responsibilities in the absence or

disability of the Chairman, including

presiding over meetings of the Board of

Directors and the shareholders. The

Member Vice Chairman will preside at

such meetings and assume all of the

Chairman’s responsibilities only in the

absence of the Chairman and

Management Vice Chairman. The

Member Vice Chairman will remain the

chair of any committee responsible for

evaluating the performance of OCC or

the compensation of OCC’s officers.

The proposed rule change also will

amend Article III, Section 15(e) to add

the office of Management Vice

Chairman to the list of officers who may

be granted emergency powers and who

may be empowered to act on behalf of

any other officer who is unable to fulfill

any emergency powers granted to such

office. Accordingly, the Management

Vice Chairman position will add

another person to OCC’s line of

succession, which should reduce the

risk that OCC would be without

qualified leadership. OCC believes it is

important that a clear line of succession

be established and be as routine and

trouble-free as possible. The addition of

the office of Management Vice

Chairman is intended to accomplish this

goal. In addition, a conforming

amendment to Article IV, Section 8 will

be made to clarify that the President’s

duty to act in the place of the Chairman

will arise only in the absence of the

Chairman, the Management Vice

Chairman, and the Member Vice

Chairman.

Finally, a technical correction to

Article IV, Section 1 is proposed. This

section currently requires that the Board

of Directors elect a senior management

officer of OCC to be in charge of each

OCC office that is (i) responsible for

20% or more of the volume of exchange

transactions cleared through OCC or (ii)

located in the same city as an exchange

on which 20% or more of the volume

of the exchange’s transactions are

cleared through OCC. OCC proposes to

delete this provision because it believes

that it is no longer necessary due to

advances in systems design. OCC

represents that the relevant exchanges

are aware of this proposed change and

concur with it.

OCC believes the proposed rule

change is consistent with the

requirements of Section 17A of the Act

and the rules and regulations

thereunder because adding the position

of Management Vice Chairman should

strengthen the line of succession in the

absence of the Chairman of the Board

and will ease any transition from an

existing Chairman of the Board to his or

her successor.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

OCC does not believe that the

proposed rule change will impose any

burden on competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments were not and are

not intended to be solicited with respect

to the proposed rule change, and none

have been received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within thirty-five 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

ninety 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 OCC consents, the

Commission will:

(A) By order approve such 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.

Persons making written submission

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington D.C. 20549. Copies of the

submissions, 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, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filings will also be available for

inspection and copying at the principal

office of OCC. All submissions should

refer to the file number SR–OCC–97–08

and should be submitted by September

19,1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.4

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–23012 Filed 8–28–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38955; File No. SR–PCX–

97–12]

Self-Regulatory Organizations; Pacific

Exchange, Inc.; Order Approving

Proposed Rule Change Modifying

Rules on Disclosure of Financial

Arrangements of Members and Notice

of Filing and Order Granting

Accelerated Approval of Amendment

Thereto

August 20, 1997.

I. Introduction

On April 23, 1997, the Pacific

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

filed with the Securities and Exchange

Commission (‘‘Commission’’ or ‘‘SEC’’)

pursuant to Section 19(b)(1) of the