[Federal Register Volume 62, Number 248 (Monday, December 29, 1997)]
[Notices]
[Pages 67679-67680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33714]


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SECURITIES AND EXCANAGE COMMISSION

[Release No. 34-39469; File No. SR-PCX-97-45]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. 
Relating to ASAP Membership Requirements

December 19, 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 November 10, 1997,\3\ the Pacific Exchange, Inc. (``PCX'' or 
``Echange'') 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 self-
reuglaory organization. The Exchange has designated this proposal as 
non-controversial pursuant to Rule 19b-4(e)(b) under the Act.\4\ 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. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On November 3, 1997, the Exchange filed with the Commission 
a proposed rule change (PCX-97-42) containing the same substance as 
the present filing. That filing was submitted pursuant to Section 
19(b)(3)(A)(iii) of the Act and Rule 19b-4(6) thereunder. The filing 
was withdrawn on November 6, 1997. See letter from Michael D. 
Pierson, Senor Attorney, Regulatory Policy, PCX, to Michael A. 
Walinskas, Division of Market Regulation, SEC, date November 6, 
1997. Regarding the present filing (PCX-97-45), on November 21, 
1997, the Exchange filed Amendment No. 1 with the Commission. 
Amendments No. 1 constitute a substantive change in the proposal in 
that it redesignates the proposal as a ``non-controversial'' rule 
filing under Rule 19b-4(e)(6) rather than Rule 19b-(e)(5). See 
letter from Michael D. Pierson, Senior Attorney, Regulatory Policy, 
PCX, to Victoria Berberi-Doumar, Division of Market Regulation, 
Commission, dated November 21, 1997. On December 17, 1997. the 
Exchange filed Amendment No. 2 with the Commission. Amendment No. 2 
modified the text of the rule to clarify the proposed change.
    \4\ The Exchange has represented that the proposed rule change 
will not significantly affect the protection of investors or the 
public interest, and will not impose any significant burden on 
competition. See, letter from Michael D. Pierson, Senior Attorney, 
Regulatory Policy, PCX, to Vitoria Berberi-Doumar, Division of 
Market Regulation, SEC, date December 17, 1997.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    PCX is proposing to amend its rules on Automated System Access 
Privilege (``ASAP'') Memberships.\5\ The text of teh proposed rule 
change is available at the Office of Secretary, Amex, and at the 
Commission.
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    \5\ ASAP Memberships are governed by PCX Rule 1.14. Rule 1.14 
sets for the terms and conditons of the Exchange's program for 
Electronic. Access Membership. The rule provides that ASAP Members 
must be registered broker-dealers subject to the Exchange's 
disciplinary jurisdiction, and must pay an annual fee. The Rule 
further provides that such Members are entitled to access to Pacific 
Computerized Order Access sySTem (``P/COAST''), Pacific Options 
Exchange Trading System (``POETS''), and other systems approved by 
the Board of Governors.
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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 the 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 exaimed 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
    The Exchange is proposing to modify Rule 1.14 in two respects. 
First, Rule 1.14(a)(3) currently provides that telephone access is 
prohibited to ASAP Members, except by special exemption granted by the 
Board of Governors. The Exchange is proposing to eliminate this 
provision, so that ASAP Members may place orders over the telephone 
with Floor Brokers without first obtaining an exemption from the Board 
of Governors.
    Second, the Exchange is proposing to add a provision to Rule 1.14 
stating that at least 80% of an ASAP Member's total PCX trade (per 
calendar quarter) and at least 80% of an ASAP Member's total PCX volume 
(per calandar quater) must be executed electronically through POETS on 
P/COAST. The 80% requirements will apply to option contracts and equity 
securities individually. The proposed rule futher states that the Board 
of Governors may grant exemptions to the 80% requirements on a case-by-
case basis.
    Currently, under PCX Rules. 1.14(a)(3) and (1)(5), as ASAP Member 
may receive access to P/COAST and POETS (and other systems approved by 
the Board of Governors), but may not have telephone access to the 
Trading Floors without and exemption from the Board of Governors. Thus, 
currently, the only orders that an ASAP Member may send directly to the 
Trading Floors are orders entered electronically (unless and exemption 
has been granted). The rule change will codify a limited exemption to 
the current requirement that, in general ASAP Members may only enter 
orders electronically. Specifically, it will allow up to 20% of an ASAP 
Member's PCX orders to be executed by telephone. The Exchange believes 
that codifying this limited exemption will make the ASAP Membership 
program more attractive to investors and thus will promote a greaer use 
of electronic entry orders on the Exchange. It will also assure that 
Members holding ``electronic'' memberships are entering the vast 
majority of their PCX trades electronically.
    The Exchange believes the proposal will make the Exchange's program 
for electronic membership more viable, and as such, will allow the 
Exchange to be more competive in attracting order flow to the Exchange.
2. Statutory Basis
    The proposal is consistent with Section 6(b) of the Act, in 
general, and Section 6(b)(4), in particular, in that its designed to 
facilitate in securities and promote just and equitable principles of 
trade.

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.

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 asserted that the proposed rule change (i) will 
not significantly affect the protection of investors or the public 
interest, (ii) will not impose any significant burden on competition, 
and (iii) will not become operative for 30 days after the date of

[[Page 67680]]

this filing. The proposed rule change was originally submitted to the 
Commission on November 11, 1997. However, the submission of substantive 
Amendments No. 1 and No. 2 on November 21, and December 17, 1997, 
respectively, delay the statutorily required implementation date to 
January 16, 1998.\6\ For the foregoing reasons the rule filing will 
become operative as a ``non-controversial'' rule change pursuant to 
Rule 19b-4(e)(6) under the Act.\7\
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    \6\ The Commission notes that any substantive amendment to a 
proposed rule change filed under Section (e)(6) of Rule 19b-4 causes 
the 30 day delayed implementation period to be restarted from the 
date of the filing of the amendment. In addition, the Commission has 
waived the requirement that the Exchange notify the Commission of 
its intent to file this proposed rule change five business days 
prior to the filing. See Securities Exchange Act Release No. 35123 
(December 20, 1994), 59 FR 66692 (December 28, 1994).
    \7\ 17 CFR 240.19b-4(e)(6).
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    At any time within 60 days of the filing of such 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, 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 in the 
Commission's Public Reference Room, 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 PCX. All submissions should 
refer to File No. SR-PCX-97-45 and should be submitted by January 20, 
1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-33714 Filed 12-24-97; 8:45 am]
BILLING CODE 8010-01-M