6594 Federal Register / Vol. 62, No. 29 / Wednesday, February 12, 1997 / Notices

3The applicable transaction credit percentage is

applied on a marginal basis to the CHX monthly

CTA trade volume percentage by stock. For

example, if the CHX monthly CTA trade volume

percentage for a particular stock is 15%, the

applicable transaction credit rates are 18% for the

first 7% of the trade volume, 36% for the next 5%

of the trade volume, and 54% for the remaining 3%

of the trade volume. Conversation among Lou

Klobuchar, Jr., Executive Vice President, CHX,

George T. Simon, Foley & Lardner, and Howard L.

Kramer, Associate Director, Market Regulation,

SEC, Michael Walinskas, Senior Special Counsel,

Market Regulation, SEC, and George A. Villasana,

Attorney, Market Regulation, SEC, on February 3,

1997.

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

5 15 U.S.C. 78f(b)(4).

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

7 17 CFR 240.19b–4.

8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Amendment No. 1 was filed with the

Commission on February 4, 1997. The amendment

changed the numbering of the proposed rule change

from 4.10(c) to 4.21, further explained the

Exchange’s purpose for the rule change, and

explained why the rule change distinguishes

Per Tier × (CTA Trade Volume Per

Stock/CTA Trade Volume Per Tier).

For example, if Stock ABC had 3,000

consolidated market trades and was the

420th most active stock (Tier 4, as

described above) in the month, and

there were a total of 300,000

Consolidated Market trades in the tier,

the specialist’s fixed fee would equal:

Total CHX fixed fee Tier 4 fixed cost percent

Stock ABC CTA volume Tier 4 CTA volume Stock ABC fixed

monthly fee

$345,000 × 13% × (3000 / 300,000) = $448.50

The Exchange will waive the

specialist fixed monthly fee described

above for a period of two years

beginning February 1, 1997 for any

stock unassigned to any specialist as of

December 1, 1996, that is assigned to a

specialist without competition by May

1, 1997.

Specialists’ total monthly fees owed

to the Exchange will be reduced by the

application of certain transaction

credits. The transaction credits will be

based upon a percentage of the

externally-generated CTA tape revenue

obtained in each stock.3 This percentage

will increase as the level of this

externally-generated revenue, that

offsets Exchange fixed costs, also

increases. These credits, however, may

not exceed a specialist’s total monthly

billing invoice (excluding directly

rebilled services).

2. Statutory Basis

The proposed rule change is

consistent with Section 6(b) of the Act 4

in general and furthers the objectives of

Section 6(b)(4) 5 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 proposed rule change does not

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

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 constitutes

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 6 and

subparagraph (e) of Rule 19b–4

thereunder.7

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

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 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, NW.,

Washington, DC 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of The Chicago Stock Exchange.

All submissions should refer to File No.

SR–CHX–97–01 and should be

submitted by March 5, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–3427 Filed 2–11–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38241; File No. SR–PSE–

96–36]

Self—Regulatory Organizations;

Pacific Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change and Notice of Filing and Order

Granting Accelerated Approval of

Amendment No. 1 Relating to a

Requirement That all Non-Self-Clearing

PSE Floor Brokers Maintain Error

Accounts

February 5, 1997.

I. Introduction

On October 17, 1996, the Pacific Stock

Exchange, Incorporated (‘‘PSE’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘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 its rules to provide that each

non-self clearing floor broker on the

Exchange must establish and maintain

an error account for carrying positions

resulting from errors.

The proposed rule change, together

with the substance of the proposal, was

published for comment in Securities

Exchange Act Release No. 37903

(October 31, 1996), 61 FR 57507

(November 6, 1996). No comments were

received on the proposal. The Exchange

filed Amendment No. 1 with the

Commission on February 4, 1997.3 This
Federal Register / Vol. 62, No. 29 / Wednesday, February 12, 1997 / Notices 6595

between non-self-clearing floor brokers and selfclearing floor brokers. See letter from Michael D.

Pierson, PSE, to Heather Seidel, Attorney, Market

Regulation, Commission, dated February 4, 1997.

4 15 U.S.C. 78f(b)(5).

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

6See Amendment No. 1.

7See supra note 3.

8 15 U.S.C. 78s(b)(2).

9 17 CFR 200.30–3(a)(12).

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

2Securities Exchange Act Release No. 38059

(December 19, 1996), 61 FR 68087.

order approves the proposed rule

change, as amended.

II. Description

The rule change adopts new Rule 4.21

to provide that each member

organization whose principal business

is as a floor broker on the Exchange and

who is not self-clearing must establish

and maintain an account with a clearing

member of the Exchange, for the sole

purpose of carrying positions resulting

from bona fide errors made in the course

of its floor brokerage business. The new

rule further provides that with respect

to options floor brokers only, such an

account for options transactions must be

maintained with an entity that is also a

member of the Options Clearing

Corporation.

The purpose of the proposed rule

change is to strengthen the Exchange’s

ability to detect and deter rule

violations that may occur in connection

with floor brokers’ trading errors. The

proposed rule change would assist

routine examinations of the floor

brokers’ trading by the PSE’s

Department of Member Examinations.

The Exchange notes that the proposed

rule change is consistent with Rule

703(c)(vi) of the Philadelphia Stock

Exchange, Inc. (‘‘PHLX’’). The Exchange

believes that the proposed rule change

is consistent with Section 6(b) of the Act

in general and furthers the objectives of

Section 6(b)(5)4 in particular in that it is

designed to promote just and equitable

principles of trade and to protect

investors and public interest.

III. Discussion

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, and, in particular, with the

requirements of Section 6(b).5 More

specifically, the Commission believes

the proposal is consistent with the

Section 6(b)(5) requirements that the

rules of an exchange be designed to

promote just and equitable principles of

trade, to prevent fraudulent and

manipulative acts, and, in general, to

protect investors and the public,

because the proposed rule change

facilitates the enhanced surveillance of

floor brokers’ error trades.

The Commission believes that the

proposed rule change may enhance the

Exchange’s ability to detect and prevent

rule violations committed by floor

brokers that may arise in connection

with trading errors, by facilitating

routine surveillance examinations of

floor brokers with regard to error trades.

This enhanced surveillance capability

results from the Exchange’s ability to

more easily review trades designated by

floor brokers as errors by reviewing the

required error account for each floor

broker. The Commission notes that the

proposed rule change will conform the

treatment of error trades by non-selfclearing floor brokers with that

conducted by self-clearing floor brokers,

whose practice is to have one or more

trading accounts in which to segregate

errors.6

The Commission also notes that the

proposed rule change is similar to rule

703(c)(vi) of the PHLX, previously

approved by the Commission, which

requires all non-self-clearing floor

brokers to have error accounts.

Accordingly, the Commission believes

that the proposed rule change does not

raise any new significant regulatory

issues.

The Commission finds good cause for

approving Amendment No. 1 on an

accelerated basis prior to the thirtieth

day after the date of publication of

notice thereof in the Federal Register.

Specifically, the Commission believes

that accelerated approval of

Amendment No. 1 is appropriate

because the amendment does not

change the substance of the proposal.

Rather, it simply clarifies and explains

certain aspects of the proposed rule

change.7

Accordingly, the Commission believes

that it is consistent with Section 6(b)(5)

of the Act to approve Amendment No.

1 on an accelerated basis.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

1 to the proposed rule change. 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

rules change that are filed with the

Commission, and all written

communications relating to Amendment

No. 1 between the Commission and any

persons, 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 such filing will also be

available at the principal office of the

Exchange. All submissions should refer

to File No. SR–PSE–96–36 and should

be submitted by [insert date 21 days

from date of publication].

VI. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,8 that the

proposed rule change (SR–PSE–96–36),

as amended, is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–3429 Filed 2–11–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38252; File No. SR–PTC–

96–07]

Self-Regulatory Organizations;

Participants Trust Company; Order

Approving a Proposed Rule Change

Relating to the Right of Set-Off Upon

the Default of a Participant

February 6, 1997.

On December 2, 1996, the Participants

Trust Company (‘‘PTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) a proposed rule change

(File No. SR–PTC–96–07) pursuant to

Section 19(b)(1) of the Securities

Exchange Act of 1934 (‘‘Act’’) 1 to clarify

PTC’s right of setoff upon the default of

a participant. Notice of the proposal was

published in the Federal Register on

December 26, 1996.2 No comment

letters were received. For the reasons

discussed below, the Commission is

approving the proposed rule change.

I. Description

The proposed rule change clarifies

that upon a participant’s default in

payment of a debit balance PTC will setoff any credit balances in the

participant’s accounts to reduce the

unpaid obligation of the participant.

Participants maintain their securities

positions at PTC in one or more master

accounts, each of which is comprised of

one or more accounts of the following

types: proprietary accounts for

securities that are held by the

participant as principal; agency

accounts for securities that are held by

the participant as agent; pledgee

accounts for securities that are held by