Federal Register / Vol. 62, No. 225 / Friday, November 21, 1997 / Notices 62393

12See supra note 6.

13See supra notes 7 and 8.

14Section 15A(b)(6) requires that the Association

amend its rules to prevent fraudulent and

manipulative acts and practices, to remove

impediments to and perfect the mechanism of a free

and open market, and in general, to protect

investors and the public interest.

15Section 15A(i) requires the Association to: (1)

Establish and maintain a toll-free telephone listing

to receive inquiries regarding disciplinary actions

involving its members and their associated persons,

and (2) promptly respond to such inquiries in

writing. 16 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1).

sponsor, bank, or savings association.’’

The Association intended that the same

definition apply for the Form U–5, but

the word ‘‘issuer’’ was inadvertently

omitted. Thus, on the interim Form U–

5, this omission is corrected so that both

the interim Form U–4 and Form U–5 set

forth the same definition. Similarly, the

definition of the term ‘‘appropriate

signatory’’ on the interim Form U–5 is

corrected to refer to ‘‘issuer’’ rather than

‘‘issuer of securities’’ because the former

term was intended to be used

consistently on the amended Forms U–

4 and U–5. Thus, the interim Forms U–

4 and U–5 have been corrected to reflect

the intended reference and its consistent

application.

The instructions to and reformatted

pages of the proposed interim Forms U–

4 and U–5 were submitted with the

proposal as Attachment A.12 The NASD

proposes to make the interim Forms and

the disclosure of the additional

information set forth in this rule filing

effective on February 17, 1998. This

effective date will permit members and

the NASD to complete annual

registration renewals and permit the

NASD to train members on the use of

the interim Forms before the interim

Forms are implemented. The NASD

proposes to begin responding to

electronic inquiries for Public

Disclosure Program information via the

Internet after this rule filing is

approved, on or about January 1, 1998.

The information that would be released

from January 1 to February 17, 1998,

would include only that information

that currently is required to be reported

on the Forms U–4 and U–5 and is

currently released under IM–8310–2.13

2. Statutory Basis

The NASD believes the proposed rule

change is consistent with Sections

15A(b)(6) 14 and 15A(i) 15 of the Act. The

NASD believes the proposed rule

change will further the goals of these

sections of the Act inasmuch as the

increased disclosure will enhance the

access of members of the public to

information that will help them to

determine whether to conduct or

continue to conduct business with an

NASD member or any of the member’s

associated persons.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD does not believe the

proposed rule change will result in 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 were neither

solicited nor received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 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

90 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 the self-regulatory

organization 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 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 principal office of the NASD. All

submissions should refer to the file

number in the caption above and should

be submitted by December 12, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.16

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–30623 Filed 11–20–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39328; File No. SR–PCX–

97–44]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Pacific Exchange, Incorporated

Relating to Applicant Specialists on

the Exchange

November 14, 1997.

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

Securities Exchange Act of 1934

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

November 10, 1997, the Pacific

Exchange, Incorporated (‘‘PCX’’ or

‘‘Exchange’’) filed with the Securities

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

PCX. The Commission is publishing this

notice to solicit comment 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 PCX is proposing to make

technical changes to its rules on the

procedures relating the approval process

for applicant specialists on the

Exchange. The text of the proposed rule

changes is available at the Office of the

Secretary, PCX, and in the Public

Reference Room at the Commission.

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

PCX 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 PCX has prepared

summaries, set forth in section A, B, and

C below, of the most significant aspects

of such statements.
62394 Federal Register / Vol. 62, No. 225 / Friday, November 21, 1997 / Notices

2The Commission has recently approved a PCX

rule change to extend its specialist evaluation pilot

program for six months and to make certain changes

to the pilot program. See Exchange Act Release No.

38806 (July 1, 1997) 62 FR 36860 (July 9, 1997).

3The Exchange notes that as a matter of practice,

the Allocation Committee will only waive the first

performance review in situations where a specialist

transfers from one post to another, and has received

a performance review at the post from which he or

she has transferred.

4 15 U.S.C. 78f(b).

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

6 15 U.S.C. 78s(b)(3)(A)(iii).

7 17 CFR 240.19b–4(e)(3).

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

PCX Rule 5.27(d) currently provides

that an applicant for appointment as a

registered specialist (the ‘‘applicant

specialist’’) must function in a market

making capacity at a specialist post on

the floor of the Exchange for a minimum

period of three months, and that the

applicant specialist will be required to

perform primary market making

responsibilities in at least one issue

throughout this minimum period. It

further provides that the applicant

specialists’ performance will be

reviewed by the Equity Allocation

Committee after the first thirty days and

again after the first seventy-five days.

Finally, it states that the evaluation of

the applicant specialist’s performance

will be based upon the results of an

Applicant Specialist Evaluation

Questionnaire Survey and, where

applicable, the National Market System

Quote Performance and P/COAST Limit

Order Acceptance Performance.

The Exchange is proposing to

eliminate the provision that states that

the applicant specialists’ performance

will be reviewed after three months (or

seventy-five days). Such reviews

currently may be, and generally are,

waived pursuant to Rule 5.27(e).

However, as discussed below, the

Exchange is proposing to add a

provision to Rule 5.27(e) to permit a

review of an applicant specialist’s

performance (i.e., a review after the first

thirty-day review) on a case-by-case

basis. The Exchange is also proposing to

eliminate superfluous language in Rule

5.25(d) that refers to the Specialist

Evaluation that is conducted pursuant

to Rule 5.37(a).2 In addition, the

Exchange is proposing to add a cross

reference to Rule 5.37(a) in order to

clarify the term ‘‘Applicant Specialist

Evaluation.’’

PCX Rule 5.27(e) currently states, in

part, that the Equity Allocation

Committee will make recommendations

with respect to each applicant specialist

to the Joint Equity Floor Trading

Committee based upon its review of the

responses contained in the Applicant

Specialist Evaluation Questionnaire

Survey, National Market System Quote

Performance, P/COAST Limit Order

Acceptance Performance, as well as any

written comments solicited or received

from other floor members. The

Exchange is proposing to remove the

words ‘‘Questionnaire Survey, National

Market System Quote performance, P/

COAST Limit Order Acceptance

Performance’’ from this rule because

they are superfluous. In addition, the

Exchange is proposing to add a cross

reference in Rule 5.27(e) to Rule 5.37(a)

in order to clarify the term ‘‘Applicant

Specialist Evaluation.’’

PCX Rule 5.27(e) currently states, in

part, that in such cases as the Equity

Allocation Committee deems

appropriate, the three month

performance evaluation required for an

applicant specialist may be waived, and

that such a waiver will be based upon

the Equity Allocation Committee’s

determination that the applicant

specialist has demonstrated a degree of

knowledge and experience which will

enable the Committee to immediately

make a favorable recommendation to the

Joint Equity Floor Trading Committee

concerning the applicant specialists’

qualifications. The Exchange is

proposing to replace those provisions

with the following provisions: ‘‘In such

cases as the Equity Allocation

Committee deems appropriate, the

thirty-day performance evaluation

required for an applicant specialist may

be extended or waived. Such a waiver

or extension will be based upon the

Equity Allocation Committee’s

determination of whether the applicant

specialist has demonstrated a degree of

knowledge and experience that will

enable the Committee to immediately

make a favorable recommendation to the

Joint Equity Floor Trading Committee

concerning the applicant specialist’s

qualification.’’ This new provision will

allow the Equity Allocation Committee

to continue to require an applicant

specialist to be evaluated more than

once before being approved, but it

eliminates the specification of a review

after 75 days in such situations.

The Exchange is also proposing to

modifying Rule 5.27(d) so that it will

state that applicant specialists must

function in a market making capacity at

a specialist post on the floor of the

Exchange for a minimum period of

thirty days, unless the Allocation

Committee waives this requirement

pursuant to Rule 5.27(e).

The purpose of the proposed rule

change is to assure that Rules 5.27 (d)

and (e) reflect the Exchange’s current

practice on approving an applicant for

appointment as a registered specialist.

Specifically, those rules will now reflect

the fact that applicants are generally

considered for appointment as

registered specialists just one time, after

thirty days. As under the current rule,

the Allocation Committee can require an

additional review of the applicant’s

performance, but such a review would

not need to be conducted after the first

75 days. Thus, under the rule change,

the Committee will have greater

flexibility as to the timing of the second

review. In addition, under the rule

change, the Allocation Committee will

be permitted to waive the first

performance review (after the first thirty

days.3

The Exchange believes the proposed

rule change is consistent with Section

6(b) 4 of the Act in general and furthers

the objectives of Section 6(b)(5) 5 in

particular in that it is designed to

promote just and equitable principles of

trade and remove impediments to and

perfect the mechanism of a free and

open market by clarifying the rules and

making the rules better reflect how the

applicant specialist review process is

generally implemented.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The PCX 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

No written comments were solicited

or received with respect to the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the foregoing rule changes

have been designated by the Exchange

as a policy effecting a change solely in

the administration of the Exchange that

does not significantly affect the

protection of investors or the public

interest and does not impose any

significant burden on competition, it

has become effective pursuant to

Section 19(b)(3)(A)(iii) 6 of the Act and

Rule 19b–4(e)(3) 7 thereunder. At any

time within 60 days of the filing of a

rule change, the Commission may

summarily abrogate the 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.
Federal Register / Vol. 62, No. 225 / Friday, November 21, 1997 / Notices 62395

8 17 CFR 200.30–3(a)(12).

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

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

3 15 U.S.C. 78f(b)(4).

4 15 U.S.C. 78s(b)(3)(A).

5 17 CFR 240.19b–4(e)(2).

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

Room. Copies of such filing will also be

available for inspection and copying at

the principal of the PCX. All

submissions should refer to File No.

SR–PCX–97–44 and should be

submitted by December 12, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–30628 Filed 11–20–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39325; File No. SR–PHLX–

97–58]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.,

Relating to a Revision to the

Exchange’s Equity Floor Brokerage

Assessment Fee

November 13, 1997.

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

Securities Exchange Act of 1934

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

November 5, 1997, the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’ 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 self-regulatory

organization. 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 Phlx, pursuant to Rule 19b–4

under the Act, proposes to amend the

Exchange’s Equity Floor Brokerage

Assessment schedule which currently

determines the rate of the assessment on

a member’s monthly equity floor

brokerage based upon whether the

member is a specialist with funds on

deposit at the Stock Clearing

Corporation of Philadelphia (SCCP) or

not. The Exchange hereby proposes to

change the fee to a flat rate of 1.25% of

the amount that any member bills out in

floor brokerage on the Phlx Equity floor

each month. The schedule will be

amended as follows (brackets indicate

deletions, italics indicates additions):

Summary of Equity Charges

EQUITY FLOOR BROKERAGE

ASSESSMENT

[5%] 1.25% of net floor brokerage

income [with specialist credits]

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

self-regulatory organization 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 self-regulatory organization 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

Currently, the Exchange assesses a

monthly fee on the amount of money a

floor broker bills to its customers each

month for floor brokerage services with

respect to equity securities. The rate

used to calculate the fee is either 5% if

the member only conducts business as

a floor broker, or is discounted to 1.25%

if the member also conducts business as

an equity specialist with funds on

deposit at SCCP. When this fee was

originally adopted in 1974, the

Exchange intended to encourage

members who conducted business on

the equity floor as floor brokers to also

become specialists and open an account

at SCCP. In recent years, the Exchange

has observed that almost all floor

brokers on the Equity floor were also

specialists, thereby taking advantage of

the lower rate. The Exchange has now

decided that the fee should be

determined solely by the amount of

business a floor broker conducts.

Accordingly, the Exchange is proposing

to redesignate the fee as 1.25% of a

member’s floor brokerage on the

Exchange Equity floor.

2. Statutory Basis

The Exchange represents that the

proposed rule change is consistent with

Section 6(b) of the Act,2 in general, and

furthers the objectives of Section

6(b)(4) 3 in particular, in that it provides

for the equitable allocation of reasonable

dues, fees, and other charges among the

Exchange’s members and other persons

using its facilities.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any inappropriate burden on

competition.

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

The foregoing rule change establishes

or changes a due, fee, or other charge

imposed by the Exchange and, therefore,

has become effective pursuant to

Section 19(b)(3)(A) of the Act 4 and

subparagraph (e)(2) of Rule 19b–4

thereunder.5

At any time within 60 days of the

filing of the proposed 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